Cost Benefit Analysis Models

The cost benefit analysis project

The cost benefit analysis project

Do your cost benefit analysis projects take too long, cost too much, and produce questionable results?

Are you frustrated because your most promising new projects with the highest potential ROI are bogged down in endless debate because they don't have fact-based, hard-dollar operational cost benefit calculations?

Does your cost benefit analysis methodology optimize your ROI with what-if analysis (scenario analysis)?

Do you have a perfect record of achieving every cent of ROI you've predicted?

We're experts at building cost benefit analysis models in complex operations. No one delivers more accurate, more comprehensive and more affordable cost benefit analysis models. Our clients are some of the world's most demanding companies and include domestic and global cost benefit models delivered to Citigroup companies, Chubb Insurance companies, and Abbott Labs.

We guarantee our cost benefit analysis models will not only precisely calculate your benefits and ROI but also help you optimize your benefits by helping you discover opportunities to increase your operational benefits.

Within weeks you could have...

   Cost Benefit Analysis Models (CBAMs) that calculate the precise impact of your project,
      including labor savings and shortened cycle times.
   CBAMs that are easy to use by all departments, including Finance, IT, Operations
      and Marketing.

   CBAMs  that increase revenue by identifying opportunities to make your products

       and services more competitive and profitable.

   CBAMs that optimize your ROI on new technology and re-engineering expenditures.

   Bullet-proof business cases with impartial cost benefit calculations that are the result of a

      collaborative approach with all stakeholders.

Cost benefit analysis models are sets of related charts and graphs prepared from a database which provide detailed information so results can be easily determined, understood and optimized.

Our cost benefit analysis models are both analysis and design documents that help managers optimize the ROI (return on investment) of an idea under study. They help easily discover and quickly  analyze scenarios you would never have considered. You will play "what if" with a variety of scenarios to determine the best design that will achieve the highest ROI.  You will also optimize your project scope, approach, and schedule.

Every expenditure today requires precise cost benefit calculations to make the business case for approval. But accurate cost benefit forecasts also set realistic expectations that determine whether your project, and you, will be judged as successful.

Costs are easy to assemble. It's the benefits that are tough, especially benefits like work reduction savings, service quality improvement, and increased revenue and profits from increased revenue producing activities. Far too often, cost benefit calculations are not comprehensive or impartial. A weak approach and methodology produce misleading conclusions that ultimately cause failed projects.

Our Cost Benefit Models deliver precise cost benefit calculations, optimize your ROI (return on investment) and bullet-proof your business case.

This cost benefit analysis chart summarizes:

The cost of a technology project (the red line).
The operational savings (green line).
The cash flow (black line) moving from negative to positive as the project
    achieves ROI (return on investment).

Ø The BE (break even) point was 11/05 (November of 2005) 11 months after it started.
Ø The project has cost $3 million to date
Ø This project has reduced operational costs by $9 million so far
Ø The project has earned $6 million, for a 300% ROI (return on investment).

The cost benefit analysis project

Cost Benefit Analysis Case Study

Summary: This national bank engaged Orient Point Consulting to build Activity Information Models that would provide the information needed to analyze, optimize, and predict the value of automated transaction status messaging. It achieved an annual operating cost reduction of $14 million with a technology project cost of $2.1 million, a 666% return on its investment. The bank's customers where quick to recognize the value of immediate transaction status messages.

This National Bank knew it had lost-productivity costs and poor service quality problems that were caused by "follow up" and inquiry reply activities that were required because its systems did not provide transaction status information for any of its 270 banking products. They could easily determine the costs of adding status functionality to their systems but they could not determine which product systems needed this functionality the most or quantify the cost savings if they modified their systems.

The Operations and IT departments engaged Orient Point to deliver operating cost benefit models that provided time and cost information about all "follow up" and "transaction inquiry reply" activities. These cost benefit models calculated the operating cost reductions and improvements (benefits) that automated transaction status messages would achieve. The exhibit report below was part of this model.

Using these cost benefit models, a collaborative team of operations and IT staff were able to determine the specific labor cost savings that would be earned if transaction status functionality was added to each of its systems. This "what if" analysis was completed in 3 days using their cost benefit models. They determined that 91% of their follow up labor costs could be eliminated by adding automatic transaction status messaging to eleven (11) product systems.  This bank's managers determined that they would reduce their follow up and inquiry reply activity costs by more than $14 million per year. The IT costs of the status messaging functionality would be 2.1 million in the first year and $300,000 annual maintenance thereafter.

They proceeded to implement the system enhancements that provided receipts of transaction requests, confirmations of completed transactions, and the status of pending transactions. They booked operating cost savings of $11 million during the first 12 months and reduced operating expenses by more than $14 million thereafter. They also improved their customer service and saw their customer retention improve, which increased profits as well. The automated transaction messages were frequently mentioned by their customers in focus groups as high value and the reason they were keeping and/or increasing their business.

The Cost Benefit Analysis Models Project

Our cost benefit analysis models built with Activity Information Modeling will provide you with detailed and precise cost, time, and incidence metrics and measurements.