Today I am going to write about what I've learnt from the course that I am taking currently about Project Management.
As I have said in my previous post,I'm going to talk about CBA(aka Cost-benefit Analysis).
CBA is a process that is used to compare project benefits to its costs, the goal is to reduce waste and invest resources responsibly.
Project Managers don't make decisions based on gut instinct, they ask questions, gather data to analyze, use tools...
Below are some questions to consider when determining the benefits and costs of a project.
Example of questions to determine benefits :
1.What value will the project create ?
2.How much money could this project save ?
3.How much time will be saved ?
Example of questions to determine costs :
1.How much time will people spend on this project ?
2.What will be the one time cost ?
3.Are there any ongoing costs ?
There is many ways to calculate costs & benefits of a project (known also as ROI : Return On Investment), here is one of them :
(G - C)/C = ROI
G : Financial Gain
C : Costs
Let's take un example to calculate ROI :
Consider a project that costs 5000$ upfront plus 25$ per month for 12 months. You estimate that the project will gain 10000$ using the formula above, ROI = (10000-5300)/5300, the result is : 0.88 or 88%.
Depending on the ROI, the project manager and stakeholders will decide to pursue the project or not.
This is the end of this post, thanks for reading it.
Have a good day :)