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Published byMandy Chorley Modified about 1 year ago

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Cost Benefit Analysis Example

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Cost-Benefit Analysis Cost of Training Projected Savings

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

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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

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Costs of Instructors’ Time *Preparation time *Classroom time

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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

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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

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

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

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

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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

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

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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

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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

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

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

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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

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Estimated Cost Savings

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Benefits-to-Costs Ratios

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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)

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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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