Do the benefits of providing a service or product outweigh the costs? How efficient is a particular process? Which is the most cost effective method of doing a job?
To stay competitive and profitable, all of these questions need to be asked and answered in the every-day running of your business.
Today, I would like to look at each of these 3 questions in a bit more detail:
1. Do the benefits of providing a service or product outweigh the costs?
Doing a cost-benefit analysis will answer this question. A cost-benefit analysis can be done on either an individual product basis or on a project basis.
Doing a cost-benefit analysis weighs the total expected costs against the total expected benefits and provides estimates of the costs and benefits PRIOR to implementing a service or producing a product.
The process may uncover unexpected costs as well. A cost-benefit analysis can help a company set priorities where resources are limited.
2. How efficient is a particular process?
Efficiency analysis is the process of analyzing how efficient a current process is and from this analysis determining areas where improvement or change may be necessary.
3. Which is the most cost effective method of doing a job?
Cost effectiveness analysis is the process of comparing resource allocation alternatives to assist in determining the most effective and/or least expensive way to produce something or attain a particular beneCost effectiveness analysis is also used to measure the financial cost of arriving at a specified outcome. If something is dubbed “cost effective” it is considered to be good value.
Cost effectiveness analysis supports objective decision making. It is often used wherever resources are limited.
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Tracy Wright,CMA
Tel: 250-470-8421
mailto: tracy@wrightwayconsulting.ca
http://www.wrightwayconsulting.ca/
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