Project Planning; Importance Of Benefit/Cost Analysis In The Management of Projects

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Usually, people engage in project on a daily basis without even realizing it, which is so surprising by the way. Project is any endeavour embarked on to create a tangible output, often within a planned budget and a stipulated time period. It’s noteworthy that so many inputs go through a series of development processes to get that unique output. Cooking, for instance, comprises of one or many inputs (ingredients, utensils etc.) that plays an important role in achieving the desired output.

Managing Project Expectations

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As project managers, we measure outputs periodically against the planned project goals and objectives in order to prevent against deviations or spot deviations as soon as possible, and to deploy the right resources to correct the deviations.

Instances where the project is not adhering to schedule, the project manager have to make an overall assessment of all the project resources because the issue of schedule slippage can be influenced by a number of things; the manpower, lack of adequate funding, indecision on the part of the project owner, faulty equipment and machineries, unavailability of the right material resources which will definitely cause an interruption to the flow of operation etc.

However, assessment of the overall project resources is just a step further in the right direction. The project manager needs to identify the root cause of the problem because only then can it tackle it accordingly. After identifying the root cause of the problem, the project manager might still have to project-crash if the project owner is still bent on having the project ready by the deadline, which means the project will be using more of resources in ensuring the schedule is intact by the project deadline.

Why B/C Analysis?

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The B in “B/C ANALYSIS” represents Benefit i.e., what the stakeholders stand to gain during and upon completion of the project. A proper assessment of our benefits against the cost of each project input can pose a major influence in determining the viability of a project. The “C” represents Cost i.e., what it would take to push the project from planning, all through development and then completion.

Carrying out a benefit-cost analysis helps us to determine whether a project is even worth embarking on. It just won’t make any sense for us to discover mid-way into project implementation that a project is no longer sustainable. We can safely attribute this to one of the many reasons why we have many failed projects out there. For a very effective and efficient project management, it’s imperative that we spend quality time not just to plan the inputs but also the outputs, and this helps us to achieve some level of certainty as regards what to expect in output if the plan is strictly adhered to.

From a holistic standpoint, a project is a go-go if the benefit outweighs the costs. In other words, why pursue an unprofitable venture? Likewise, a project is a no-go if the cost outweighs the benefits. It’s as simple as that.