Allow us to share with you these 6 Free Cost Benefit Analysis Templates in MS Word format to help you prepare your own Cost Benefit Analysis quickly.
Large organizations and multinational companies have a board of directors, chief executives, and other high-importance staff members to make critical decisions but for a small company, the owners usually act like chief executives to make final calls for important decisions. One of these decisions is to decide if it’s beneficial to take on a new project or if it’s in favor of the company to sit this one out. In order to accurately analyze the outcomes and costs of each project, an evaluation process is conducted known as cost-benefit analysis. This analysis is also referred to as benefit-cost analysis or CBA.
Importance of Cost Benefit Analysis:
CBA or cost-benefit analysis programs are beneficial for small companies and multinational organizations because they simplify the entire process of decision-making. For someone who has not done this practice before, it sounds like a complex situation where you need to solve critical problems and equations to carefully estimate the cost and benefit of a project but the beauty of this system is that it makes everything simple and easy. Not only that this analysis allows the users and executives to calculate the costs of a project without any error or just a small error percentage but the benefits that are calculated in this process are both tangible and intangible benefits.
Free Cost Benefit Analysis Templates
Here are several free Cost Benefit Analysis Templates to assist you in understanding how to conduct Cost Benefit Analysis professionally.
Guidelines to create a Cost Benefit Analysis:
Think of Costs and Benefits:
There are only a few of the analysis techniques and tools that require thinking and brainstorming rather than collecting data in the beginning. A cost-benefit analysis is also one of these techniques where you need to sit with your team members and focus on all the costs and benefits. For instance, if you are thinking of hiring a new employee or starting a new project, start by estimating the costs. You need to make sure to add all the costs including the ones you didn’t think in the first place. Once costs are done, you should move on to the benefits. In this portion, you need to think of all the benefits that you will get after hiring a new employee or starting a new project.
Allocate Financial Value to Costs:
Once the costs are analyzed, now it’s time to give a certain monetary value to each cost. For instance, in the process of hiring a new employee, first, you need to look for suitable candidates, and then they will be asked to apply. Once the applications are received, the hiring committee will review the applications to interview suitable candidates. Even after hiring the employee, you need to train them which will again cost money. Once the project is finished, will you still keep that employee which can increase your overhead, or will terminate him to save costs?
Allocate Financial Value to Benefits:
Same as the above step, when you give financial value to each cost, you also need to do the same job for the benefits. At this step, there are two types of assets involved; tangible and intangible. Tangible assets are certain assets that have a definitive value i.e. getting an employee trained will increase productivity and efficiency at the workplace while intangible assets are not easy to calculate i.e. the impact of a project on the environment after completion.
Do a Comparison:
Before making up your mind if the costs are higher than the benefits or if starting a new project will have more benefits than costs, it’s important to do a comparison. In this comparison, you need to analyze costs and benefits side by side with each other. Hopefully, in the end, you will be able to see if a project is beneficial for your organization or not.
Conclusion:
This is the last step which is more of a statement that you give at the end of the analysis. In this statement, you summarize the entire analysis process and state if the costs are higher or if the benefits are bigger. After the statement, you also need to suggest an action plan for the organization.