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:

  1. Option 1: Purchase a pre-built LMS from a leading vendor.

  2. Option 2: Develop a custom LMS in-house.

  3. 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

  1. Quantify costs of each LMS solution, including short-term and long-term expenditures.

  2. Evaluate benefits, such as increased operational efficiency and improved learner outcomes.

  3. Recommend the best option based on net benefits and risk assessments.

III. Alternatives

  1. Option 1: Pre-Built LMS

    • Description: Purchase a ready-made solution with ongoing support from a leading vendor.

    • Vendor: EduTech Solutions.

  2. Option 2: Custom LMS Development

    • Description: Build a tailored LMS using internal development resources.

    • Timeline: 18 months for initial development.

  3. Option 3: Outsourced LMS

    • Description: Contract an external company to develop and maintain a custom LMS.

    • Provider: GlobalEd Innovations.

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

  • Option 1: Training staff: $50,000 annually.

  • Option 2: Staff workload adjustments during development: $150,000.

  • Option 3: Vendor management overhead: $100,000 annually.

C. Opportunity Costs

  • Option 1: Limited customization may reduce flexibility, estimated loss of $200,000 over 5 years.

  • Option 2: Delayed implementation may postpone benefits by 12 months, valued at $300,000.

  • 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

  • Option 1: Quick implementation with proven system reliability.

  • Option 2: Full customization ensures alignment with corporate culture.

  • 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

  • Option 1 Risks: Limited flexibility and reliance on vendor updates.

  • Option 2 Risks: Longer development time may result in higher costs and delays.

  • Option 3 Risks: High dependency on vendor continuity and expertise.

B. Strategic Alignment

  • Option 1: Supports operational goals with minimal disruption.

  • Option 2: Aligns perfectly with unique internal needs but requires substantial resources.

  • 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

  1. Detailed Calculation Tables: Include cost breakdown and benefit projections.

  2. Assumptions:

    • Discount Rate: 5%

    • Revenue projections assume 10% annual growth.

  3. Graphs and Charts: NPV and ROI visual comparisons.

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