Cost Benefit Analysis Homework Assignment

The following steps should guide the write-up of the cost benefit analysis: 

Cost Benefit Analysis Steps 

 Present the Objective of the Project 

 Examination of the Relevant Alternatives 

 Select 3 Criteria and briefly define (Use the criteria in a decision matrix and a weighted score table) 

 Identification of Costs and Benefits – indirect vs. direct 

 Measurement of Costs and Benefits 

 Determine Net Benefits (Use a Generic Cost Benefit Calculation) 

Please see the CBA example to get an idea about how to layout your table. There should be a 1to 2pp write-up and interpretation of the results. 

Sheet1

Criterion D

Criterion A Criterion B Criterion C Criterion D Criterion D Criterion E Total Benefit
Option 1

0 0 0 0 0 0

Option 2 0 0 0 0 0 0 0
Option 3 0 0 0 0 0 0 0
Total Benefit

Option 1 0

Option 2 0 $0 ERROR:#DIV/0!
Option 3 0 $0 ERROR:#DIV/0!

Decision Matrix

Criterion A

Criterion B

Criterion C

Criterion D

Criterion E

Option 1

Option 2

Option 3

Criterion weight

Generic Decision Matrix: Weighted Scores, Tradeoffs and

Total Benefit

0

Green = High

Orange = Middling

Red = Low

Weighted score = raw score X importance weight

Total benefit = sum of weighted scores

Generic Cost-Benefit Calculation

Value = (Benefit/Cost)

Cost ($)

Benefit per $

$0

ERROR:#DIV/0!

Step 1: Add your criteria: B3:G3

Step 2: Add your options: A4:A6

Step 3: Add criteria weights: B8 – G8

Step 4: Rate how well the options contribute to each criterion: B4:G8

Step 5: View weighted results andand tradeoffs: B13:G15

Step 6: View the Total Benefit of each options: H13:H15

Step 7: Add the cost of each option.

Step 8: Make a decision!

Note: Obviously, you may need more rows for options and columns for criteria. Just add them within the framework provided.

© 2014, Sean Brady, Prism Decision Systems, LLC