Everything you Need to Know About Cost Benefit Analysis
In today’s competitive business scenario, its more of a necessity to get the most of every idea, investment, and opinion. Don’t you agree? To succeed in doing so, organizations including start-ups and well-established businesses use cost benefit analysis to make crucial business decisions. Cost benefit analysis is advantageous for businesses across industries mainly because it simplifies decision making while finding effective ways to maximize benefits. Different projects involve different types of expenses, cost benefit analysis acts as an instrumental tool that helps to link such complex factors in simple terms to determine the net benefit associated with them.
However, there is no set standard for performing cost benefit analysis, but there are a few core elements common to all types of cost benefit analysis. Here are a few basic steps involved in cost benefit analysis:
- Establish a basic framework that outlines the parameters of the analysis
- Identify and categorize the costs and the associated benefits
- Compare costs and benefits using aggregate information
- Analyze results and make well-informed business decisions
About the Client
The client- a leading player in the energy industry in the U.S.
Cost benefit analysis acts as an invaluable tool in developing a robust business strategy by providing an unclouded view of the consequences of a decision. To gain an evidence-based agnostic view of the issues being faced a leading player in the renewable energy industry approached SpendEdge to leverage its expertise in cost benefit analysis and yield concrete results to aid the development of reasonable conclusions around the feasibility of business decisions.
Due to their inefficient decision-making strategies, the renewable energy industry player faced several procurement-related challenges including historical data issues, a huge backlog of unplaced requisitions, and unplanned cycled requisitions. With their current processes in place, the client experienced several discrepancies in decision making, resulting in several dollars in loss. This prompted them to leverage cost benefit analysis and assess opportunities for future improvements. Our expertise in cost benefit aided the renewable energy industry client to gain a broad view of the costs and the associated benefits that included direct, indirect cost factors while considering the interests of all the concerned stakeholders.
The cost benefit analysis experts at SpendEdge leveraged an in-depth research methodology that assessed the potential cost factors and the benefits. The comprehensive research approach included primary and secondary research coupled with qualitative and quantitative data collection procedures. A formal assessment of the client’s project costs and benefits led to the development of solutions that helped the energy industry player to measure and compare the efficiency of project options. This not only reduced the associated losses but also assisted the energy industry player to determine the best approach to maximize benefits while improving overall savings.
Though cost benefit analysis is a simple concept, it can take a million different shades. Don’t you agree? To stay away from all the turmoil, Get in Touch Today!