When launching a project, you must keep in mind a few things. Are you meeting a need? Providing a service? And most importantly, can you do it within a timeframe and for a reasonable cost that provides a return on the investment? That last consideration is likely the biggest factor when deciding the viability of your project.
Use our free cost benefit analysis template to crunch the numbers and determine if the project expenses are justified. Get started now by downloading our free cost benefit analysis template for Excel.
What Is Cost Benefit Analysis?
A cost benefit analysis is used to compare what you expect to pay for a project against what benefits or opportunities it will provide. It’s a tool to determine if a project is viable or not from a cost perspective.
It does this by placing a dollar amount against every cost and benefit to the project. When you subtract the benefits from the cost, you get an idea of profits; both financially and in terms of business objectives and goals.
When your estimated benefits are greater than the costs, then it’s more than likely you should move forward. If your calculations go the other way, then you’ll probably want to avoid taking on the project.
The more data you have, the better your decision-making. Project management software helps you monitor your work and get the information you need to succeed. ProjectManager is cloud-based, you’re getting real-time data. It feeds the live dashboard, which is capturing high-level performance and progress, such as time, cost and more. Want to try ProjectManager for free? That’s a decision you don’t need to analyze, just sign up now.
Why You Need a Cost Benefit Analysis Template
Our cost benefit analysis template is designed to help you decide whether to move forward with your project. When embarking on a cost benefit analysis, you’re unlikely to just examine one path. Rather, you will explore several different ways you can proceed.
Our template makes it easy to run several cost benefit analyses at once. Just copy as many of the templates as you need. This way, you can work through a range of forecasts, say, from conservative to liberal to get more data to steer your decision-making.
The template gives decision-makers at an organization the information they need to make well-measured choices. Projects can be expensive ventures and one doesn’t go into them lightly. Using our free cost benefit analysis template mitigates some of the risk.
When to Use a Cost Benefit Analysis Template?
The clearest use for a cost benefit analysis is before a project begins. They are usually employed as you’re gauging the scope, creating a success criteria, looking for risks, etc.
Even once you’re sure the project is on solid ground, the cost benefit analysis doesn’t have to collect dust on the shelf until another project is explored. The template can be used to compare the impact of a course of action within the project itself.
Therefore, the cost benefit analysis can be used whenever you’re not sure if it’s in your interest to proceed as planned. For example, you might get a change order and want to analyze whether the benefits will outweigh the costs involved.
Who Should Use the Cost Benefit Analysis Template?
The cost benefit analysis template should be used by anyone who is trying to figure out whether an investment or any decision is worth making. They will also get to see how much the benefits potentially outweigh the cost.
Certainly, any decision-maker at an organization or the project manager of a project will use a cost benefit analysis to determine if a proposal is worth pursuing. But the cost benefit analysis can be used for any decision.
How to Use ProjectManager’s Cost Benefit Analysis Template
Our free cost benefit analysis template is set up to serve businesses, projects and personal matters alike and makes replicating the process quick and easy. Just download the template and start using it. Add your company logo and customize it any way you want. It’s a powerful and flexible tool.
- Project Information: The top of the template is dedicated to identifying the project you’re doing the cost benefit analysis on. The project name, project manager and date compiled or revised are laid out for you to fill in. If you’re working on something other than a project, simply change the heading to reflect what you’re analyzing.
- Quantitative Costs: On top are your quantitative costs. There are three types listed: indirect, intangible and opportunity. Then there are columns for the costs associated with each year. We go six years into the future, but you can go as far as you want. Each column is added up automatically at the bottom, as well as a total cost for that particular type of cost.
- Types of Costs: The three types of cost are defined as follows: indirect costs are usually your fixed expenses, such as rent; intangible costs are those that are difficult to measure, such as reduced customer satisfaction due to some change in customer service; and opportunity costs are lost benefits when a business proceeds with one strategy over another. After you list all your costs, there is a row that automatically adds up the overall costs for each column.
- Quantitative Benefits: The next section collects your quantitative benefits. These are broken into four sections: direct benefits, indirect benefits, intangible benefits and competitive benefits. Again, there are columns to automatically add up the benefits over a six-year period.
- Types of Benefits: These benefits are defined as follows: direct benefits are those that increase your sales or revenue because you’ve launched a new product or service; indirect benefits are measured by customer interest in your brand; intangible benefits are again those difficult to measure, such as a boost in team morale; and competitive benefits place you at an advantage with other companies in your business space.
- Cost Benefit Analysis: Just as the three cost sections are added up column by column, so are the four benefits sections. Now you have a total cost to compare to a total benefit. This will guide you in your decision-making.
How ProjectManager Lets You Act on Your Cost Benefit Analysis
If the cost benefit analysis points to moving forward with your initiative, then you’re going to need a project management software tool to keep you organized and productive. ProjectManager is a cloud-based solution for planning, monitoring and reporting all with real-time data for greater insights.
Just because the project is beneficial doesn’t mean it’ll manage itself. You have to figure out all the tasks that lead to your final deliverable. To organize this work, prioritize it and break it up into milestones requires an online Gantt chart. We automatically calculate the critical path and then you can set a baseline to compare your plan to actual progress and know if you’re keeping to your schedule.
Monitoring progress and performance is key to meeting deadlines and staying within your budget. Our live dashboard gives you a high-level view of the project. Unlike other software tools, you don’t have to set up a dashboard. Our widgets are in place and automatically calculate project variance, cost, time and more. You can catch issues before they become problems.
Managing a project is more than time, cost and scope. There are your stakeholder expectations to keep in mind as well. They want to know things are going smoothly. Keep them informed with our one-click reports. Filter them to show just the data they want to see. Then easily share it as a PDF or even invite them into the tool. You set the security so they have view-only access. Update stakeholders while maintaining the integrity of your project.
More Templates to Move Forward With Your Cost Benefit Analysis
If you’re going to take action on your idea but are not ready to invest in project management software, we have dozens of free project management templates that can carry your project forward. While there are templates addressing many aspects of project management, we picked a few to get started.
To realize your idea, you need a plan. Our free project plan template lets you figure out the project scope, list milestones, detail the project phases and more. This template acts as a framework to capture the actions necessary to end up with the deliverable you want.
Your project isn’t going to come together without an investment. Using our free project budget template gives you the tools to define costs associated with labor, materials, rentals and other resources. Once you list everything you’re going to have to pay for you’ll have an accurate forecast of how much the project will cost.
If you’re building something, you’ll need our free production schedule template. It lets you manage the supply and demand of the commodities you’ll require to make your widget. The template gives you the tools to balance costs and boost efficiencies.
There’s more to ProjectManager than great software and free templates. Our site is a hub for all things project management. We publish several blogs a week, have hundreds of tutorial videos and guidebooks for those new to the field or seasoned professionals. Here are a few links to get you started.
- Cost Benefit Analysis for Projects—A Step-by-Step Guide
- Risk Analysis 101: How to Analyze Project Risk
- How to Create a Small Business Plan: A Quick Guide
Being able to determine beforehand the viability of a project is important. But once you start the work, having a dynamic project management tool is often what separates failure from success. ProjectManager is award-winning software that organizes your work for greater productivity. Join the tens of thousands of teams who use our tool on projects for NASA, the US Postal Service and the Bank of America. Try the software for free today!