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G I S

C O O K B O O K

F O R

L G U S

4.02.04 Cost-benefit Analysis of a (Municipal) GIS The major costs required for a GIS project is classified into the following three categories: 1. Cost for Hardware and Software PC-based GIS system will range from .Pesos for a PC, peripherals and software, as listed in 2. Cost for Establishment of Database Map digitization, scanning, error check, updating and database management are the most expensive, with a share of about 80 percent of the total cost. 3. Cost of Staff Skills Development, Maintenance and Daily Operations Personnel, supplies and materials, electricity, trainings, etc. are necessary. It is important to point out to the senior management decision makers the advantages and the cost savings to be gained from implementing GIS in the long run instead of the conventional analog system. The justification to promote the use of GIS project is to emphasize the following points: Better decision-making with the help provided by GIS, which will save unnecessary costs due to mismanagement; Higher productivity can be expected because of implementation of a more systematized and standardized management of geospatial data and information; Savings of personnel cost because the total productivity will be higher under a restructured scheme; Optimized use of databases by secondary users in and outside the organization, especially when used in other ways than originally aimed. However, as more users and clients get involved, series of new questions will be raised to the managers, such as the rules and prices for access to and use of information. When users emerge from new offices and organizations, this concern will be very important. The Figure below shows the benefits of a GIS compared with investment costs. GIS is a long term investment, which implies that the total cost will be compensated in about ten years.

04.02.04_CostBenefit

G I S

C O O K B O O K

F O R

L G U S

Financial Cheaper services Lower costs/task Large returns on investments

Strategic Competitive advantages Better marketing Better environment Better utilization of resources

Cooperating partners Cooperation between sectors New types of networks are created Stimulates multi-sector co-operation Facilitates parallel working processes

Goal & Strategy

Internal perspective More reliable information More effective working routines Better working environment More stimulating work More flexible work

Individuals & institutions More refined products Better service Greater participation Fewer misunderstandings

Renewal & development Better working methods Updates competence Facilitates work with new tasks

04.02.04_CostBenefit