Free Cost Benefit Analysis Comparison Template
Cost Benefit Analysis Comparison
I. Executive Summary
This Cost-Benefit Analysis (CBA) evaluates the financial and non-financial impacts of implementing an AI-driven Learning Management System (LMS). The analysis compares three alternatives:
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Option 1: Purchase a pre-built LMS from a leading vendor.
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Option 2: Develop a custom LMS in-house.
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Option 3: Outsource the development and maintenance of the LMS.
The recommended solution is based on financial feasibility, implementation risks, and alignment with [YOUR COMPANY NAME]’s goals for efficiency and innovation.
II. Objectives
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Quantify costs of each LMS solution, including short-term and long-term expenditures.
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Evaluate benefits, such as increased operational efficiency and improved learner outcomes.
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Recommend the best option based on net benefits and risk assessments.
III. Alternatives
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Option 1: Pre-Built LMS
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Description: Purchase a ready-made solution with ongoing support from a leading vendor.
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Vendor: EduTech Solutions.
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Option 2: Custom LMS Development
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Description: Build a tailored LMS using internal development resources.
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Timeline: 18 months for initial development.
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Option 3: Outsourced LMS
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Description: Contract an external company to develop and maintain a custom LMS.
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Provider: GlobalEd Innovations.
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IV. Costs
A. Direct Costs
|
Category |
Option 1 |
Option 2 |
Option 3 |
|---|---|---|---|
|
Initial Licensing |
$500,000 |
N/A |
$750,000 |
|
Development |
N/A |
$1,200,000 |
$900,000 |
|
Annual Maintenance |
$100,000 |
$200,000 |
$250,000 |
B. Indirect Costs
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Option 1: Training staff: $50,000 annually.
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Option 2: Staff workload adjustments during development: $150,000.
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Option 3: Vendor management overhead: $100,000 annually.
C. Opportunity Costs
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Option 1: Limited customization may reduce flexibility, estimated loss of $200,000 over 5 years.
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Option 2: Delayed implementation may postpone benefits by 12 months, valued at $300,000.
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Option 3: Dependency on vendor expertise, potential risk of $150,000.
V. Benefits
A. Tangible Benefits
|
Benefit Category |
Option 1 |
Option 2 |
Option 3 |
|---|---|---|---|
|
Increased Revenue |
$1,000,000/year |
$1,200,000/year |
$1,100,000/year |
|
Operational Efficiency |
$200,000/year |
$300,000/year |
$250,000/year |
|
Learner Engagement Boost |
$150,000/year |
$200,000/year |
$175,000/year |
B. Intangible Benefits
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Option 1: Quick implementation with proven system reliability.
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Option 2: Full customization ensures alignment with corporate culture.
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Option 3: Continuous innovation and access to vendor expertise.
VI. Quantitative Analysis
A. Net Present Value (NPV)
|
Option |
NPV (10 Years) |
|---|---|
|
Option 1 |
$3,200,000 |
|
Option 2 |
$4,000,000 |
|
Option 3 |
$3,800,000 |
B. Return on Investment (ROI)
|
Option |
ROI (%) |
|---|---|
|
Option 1 |
150% |
|
Option 2 |
170% |
|
Option 3 |
160% |
C. Payback Period
|
Option |
Payback Period (Years) |
|---|---|
|
Option 1 |
4 Years |
|
Option 2 |
5 Years |
|
Option 3 |
4.5 Years |
VII. Qualitative Analysis
A. Risk Assessment
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Option 1 Risks: Limited flexibility and reliance on vendor updates.
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Option 2 Risks: Longer development time may result in higher costs and delays.
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Option 3 Risks: High dependency on vendor continuity and expertise.
B. Strategic Alignment
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Option 1: Supports operational goals with minimal disruption.
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Option 2: Aligns perfectly with unique internal needs but requires substantial resources.
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Option 3: Balances customization and operational support.
VIII. Conclusion and Recommendation
Recommended Option: It is best to use Option 2: Custom LMS Development
Rationale: While it has the highest upfront costs, this option provides the best long-term value, strategic alignment, and customization potential for [YOUR COMPANY NAME].
IX. Appendix
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Detailed Calculation Tables: Include cost breakdown and benefit projections.
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Assumptions:
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Discount Rate: 5%
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Revenue projections assume 10% annual growth.
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Graphs and Charts: NPV and ROI visual comparisons.
