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Cost Benefit Analysis Example Cost-Benefit Analysis  Cost of Training  Projected Savings.

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Presentation on theme: "Cost Benefit Analysis Example Cost-Benefit Analysis  Cost of Training  Projected Savings."— Presentation transcript:

1

2 Cost Benefit Analysis Example

3 Cost-Benefit Analysis  Cost of Training  Projected Savings

4 Cost of Training  Costs of supervisors’ time  Costs of instructors’ time  Costs of teaching materials  Costs of classroom-use

5 Costs of Supervisors’ Time - $1,296,000  600 supervisors  18 hours training per supervisor  Average supervisor costing rate is $120/hour  600 x 18 x 120 = $1,296,000

6 Costs of Instructors’ Time *Preparation time *Classroom time

7 Cost of Instructors’ Preparation Time- $10, 800  3 hours preparation per hour of instruction  18 hours of instruction  Average costing rate per hour per instructor = $200  Calculations: 3 x 18 x 200 = $10, 800

8 Cost of Instructors’ Classroom Time - $72,000  600 supervisors divided by 30 supervisors/session = 20 sessions to teach  18 hours/session  Costing rate of $200/ hour/instructor  Calculations: 20 x 18 x $200 = $72,000

9 *$ 10,800 Preparation time *$ 72,000 Classroom time $ 82,800 Total Total Costs of Instructors’ Time $82,800

10 Total time Costs - $1,378,800  $1,296,000 Supervisors’ time cost  $ 82,800 Instructors’ time costs  $1,378,800 Total

11 Direct Costs  Cost of teaching materials  Off-site training costs –Classroom Rental –Meals, break items.

12 Costs of Teaching Materials - $  Handouts:  50 copies/supervisor  600 supervisors  $0.03 per copy  Calculations: 50 x 600 x $0.03 = $900  Other materials (Pens, notepad) = $1200 Total $2100

13 Off-site Training Costs  Classroom Rental  Meals, soft drinks, and snacks.

14 Cost of Off-site Classes- Classroom Rental = $  Classroom Rental Cost  20 2 days per session = 40 days  Classroom rental is $100/day  Calculations: 40 x $100 = $ 4000

15 Cost of Meals, etc. - $18,600  $15.00 per lunch includes cost of break items (coffee, soft drinks, snacks)  600 supervisors  2 lunches per supervisor  Calculations: $15 x 600 x 2 = $18,000  Instructors’ lunches 40 x $15= $600 Total $18,600

16 Off-site Training Costs- $22,600  $ 4,000 Classroom Rental  $18,600 Meals, soft drinks, and snacks.  $22,600 Total

17 Total Direct Costs = $24, $ 2, Total cost of teaching materials $22, Total off-site costs $24, Total direct training costs

18 Total Costs - $1,401,400  $1,296,000 Total supervisors’ time costs  $82,800 Total instructors’ time  $24,700 Total direct costs  $1,402,500 Total cost of training

19 Estimated Cost Savings

20 Benefits-to-Costs Ratios

21 An Investment of $1.82 Million in the First Four Years Yields $41.9 Million Return  Benefit-Cost Ratio= 23 to 1 ($41.9 M/$1.82M)

22 Objective of Proposal Request authorization for:  $ 24,700 in direct costs  $1,378,800 in time costs  $1,403,500 total cost


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