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Managing
IT Projects
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Cost Benefit Analysis
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Tangible benefits are those that, through improved performance, quality or
service produce measurable financial benefits. These benefits should be
estimated over the anticipated life of the IT investment. However, the
value of benefits arising beyond two or three years should be heavily discounted
as they will disappear in the mists caused by the many different, and
unpredictable factors that will impact on the organisation in the years to come.
Tangible benefits should be grouped into:
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REVENUE INCREASES |
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COSTS SAVED, and |
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COSTS AVOIDED. |
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Intangible Benefits
Intangible benefits may improve performance, quality or service but cannot be
measured or valued. Examples might include the release of professional
time; improvements in staff morale; or improvements in the quality and
timeliness of management and financial information.
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Cost Summary
IT project costs can be grouped into:
 | Development |
| Annual running |
Development costs must be identified over the entire economic life of the
project and will include a wide range of different costs. Costs examples
are shown below:
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People costs including in-house
staff, contractors and consultants. |
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Training |
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Hardware purchases |
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Software purchases including
packages and additional user licenses |
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Communications costs such as
cabling, hubs, routers, processors, software and call connection charges |
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Financing costs including costs
of borrowing, interest charges, hire purchase charges, rentals or leasing |
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Additional establishment costs
such as desks, storage or office re-fitting |
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Annual running costs are those that will recur regularly throughout the life
of the project.
Costs examples are shown below:
| Hardware maintenance |
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| Software maintenance |
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| Help desk support |
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| Equipment repairs |
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| Upgrade or replacement of hardware |
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4-consulting
15 Palmerston Road,
Edinburgh, EH9 1TL
Tel 0131 668 2112
Copyright © 2002 4consulting |
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