When creating or managing a project, there are different points that you must consider before building it effectively. It includes the number of steps, the competition in its area, and, most importantly, the total costs of this project.

It is vital for a project that its benefits outweigh the costs. Without this, the project won’t even evolve from a mere idea. 

The cost-benefit is considered the most significant factor in a project’s viability, and creating a cost-benefit analysis template can be the perfect tool for making this task easier.

Now that you know what cost-benefit analysis is and when to use it, it is time to start creating your template. Be sure to deeply analyze your business and your company goals to understand better what projects can help accomplish them.

Identify the Project and Its Goals

The first thing you want to do when making a cost-benefit analysis template is to define the project you want to work on. By doing this, you will be able to answer essential questions like:

• What do you need to accomplish the project?
• What are the goals you want to achieve with it?
• What is the size of the project?
• How long will it take to complete the project?

Answering these questions will help you analyze the monetary value needed for many parts of the project. Moreover, this will lead to a much more accurate result when identifying costs for non-monetary parts of it.

List Your Costs and Benefits

This is the most crucial step of cost-benefit analysis templates. You need to list all the items that can generate either costs or benefits for the project and the company. It is also vital that you create two separate lists for them so it is easier to analyze them in the end.

Be aware that there are different types of costs in a project. You must understand their differences and list them to create an effective cost-benefit analysis template.

Direct Costs

This is the easiest one to calculate. It regards all the costs directly related to the project, including production and development.

Some examples are:

• Labor Costs
• Material Costs
• Manufacture Costs
• Inventory Costs

Indirect Costs

These expenses are pretty similar to the previous one but with the difference that they are not directly related to the project. They are typically fixed costs that contribute to the maintenance of the business.

Some examples are:

• Rent
• Internet Bills
• Utilities

Intangible Costs

The intangible costs of cost-benefit analysis are all current and future costs that are hard to quantify or measure. They can be really hard to identify in some cases.

Some examples are:

• Reduced customer satisfaction
• Decrease in productivity levels
• Fewer repeat buys

Opportunity Costs

The last type you should include in cost-benefit analyses is opportunity costs. As previously mentioned, when creating a new project, you will find different ways of doing it and paths you can explore. The opportunity cost regards the lost benefits and opportunities by pursuing one path instead of another.

Benefits Types

As for the benefits, there are also different types. Each one with different characteristics that can positively impact your business.

The main types of benefits are:

• Direct Benefits: Increased revenue and sales directly related to the product
• Indirect Benefits: Increases interest in your brand or business
• Intangible Benefits: Increase in employee morale and customer loyalty
• Competitive Benefits: First-mover in a new vertical market

Choose an Amount or Value for Each Cost and Benefit

The next step of your cost-benefit analysis template is assigning monetary values to each item you listed. Some items involve non-monetary costs, so you can decide how to value them. It is highly recommended that you use a dollar amount for the items you attribute money to. This is a significant step for making a good comparison of the pros and cons of the project. 

Deciding the correct amount for intangible and indirect costs can be a little challenging, especially compared to direct profits and costs that are quite easy to quantify. But being challenging doesn’t mean that you should skip the part. It is indispensable that you give an amount to each listed item.

Tally Values and Compare

Now that you have already written down each item's value, the next step of your cost-benefit analysis is to compare these values. Next, you just need to tally each list and compare them.

The decision is very simple to make. If the operational expenses and associated costs outcome the benefits, then the project probably should not move forward. 

On the other hand, if the monetary and non-monetary benefits are more significant than the project’s costs, it is a good idea to keep working on it. But remember that here you are just comparing numbers. Some aspects can not be measured by that, like accomplishing business goals, for example.

Final Analysis

Now that you have finished all the steps of your cost-benefit analysis, it’s time to sum up all the information you acquired and decide if you will move forward with the project. Don’t forget that cost-benefit analysis will only consider monetary values. 

There are other aspects, like business goals and milestones, that you must consider when making this kind of decision. The most important part of project planning is the cost of production. But many aspects go far beyond just money, especially considering the intangible benefits. 

Be sure to analyze your business in order to make the best decision. Each case is different and will need further analysis.

Regarding the creation of cost-benefit analysis templates, the two best tools available in the market are Microsoft Word and Excel. Both software has large sets of tools that provide all the features needed to create the perfect cost-benefit analysis template for your business.

You can edit even the smallest details of your document to create a template that truly fits your needs and expectations. This way, you will have an efficient and objective record capable of telling when you can safely move on with a project.

The Microsoft Office package allows you to edit any information from net present value to recurring costs to create a more accurate analysis. Since Microsoft Office is an industry-standard, you can use it for almost any business task, dismissing the need of buying new software for each of them.

If you don’t have a Microsoft Office activation key, you can buy one at RoyalCDKeys for a considerably lower price when compared to Microsoft Store. This way, you save money that can be used for other parts of your business and project lifecycle.

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Template #2

Cost-benefit template with graphics and dashboard. Indicated for a deeper analysis of the project and total cash flows.

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Template #3

Simple vertical sheet template for cost-benefit analysis. Perfect for small businesses.

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