cost-benefit-analysis

Overview

Based on The Business Analysis Handbook by Helen Winter - the Benefits Realization Framework that traces every requirement through output to benefit to business objective, ensuring nothing is built without a measurable business outcome. Also draws on Business Process Change by Paul Harmon for Activity-Based Costing in process improvements, and Business Analysis Techniques by James Cadle for the structured CBA technique with worked examples. The key insight from Winter: a cost-benefit analysis that only counts costs and tangible revenue misses the point. Benefits must be mapped to business objectives, and intangible benefits need proxy metrics.

Workflow

Step 1: Define the decision

State what is being evaluated:

DECISION: [What are we comparing?]
OPTIONS: [Build vs. Buy / Option A vs. B / Do vs. Don't]
TIME HORIZON: [3-5 years is standard]
DISCOUNT RATE: [organization's cost of capital or hurdle rate]