Professional Documents
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Benefits Analysis
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Contents
Why benefits analysis is needed?
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Identifying the benefits
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How are benefits identified…
• The sponsor of the project is the best person to identify the
benefits. The sponsor owns the benefits.
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Examples of tangible benefits
Reduce clerical labour costs
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Examples of intangible benefits
Improve customer service
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Bayesian Analysis
A technique
that quantifies
intangible
benefits.
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The basis of Bayesian analysis
Assumes that out of several identified
possible events, one will certainly occur.
Uses expert opinion to identify what events
are likely to occur and the probability of each.
The sum of these probabilities must equal 1.
Hence a value can be assigned based on the
value of each possible event and the
likelihood of it occurring.
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The Bayesian method
For each benefit:
Identify the most appropriate expert(s)
Identify each value outcome that can result from the intangible
benefit
For each value outcome, the expert(s) identify each of the possible
scenarios (events) that are likely to occur as a result of the
intangible benefit
The expert(s) quantify for each event the probability (a number
between zero and 1) that it will happen
The probabilities are refined until the sum of these is equal to one.
A dollar value is assigned to each event.
Multiply the probability of each event by the dollar value of the event
and sum the result to produce the Bayesian benefit value.
Repeat the process for each year the benefit is being
evaluated for.
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Example of Bayesian Analysis
Project: Advertising campaign
Intangible benefit: improved brand awareness
Value outcome: increased sales
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The Bayesian estimate
Project: Advertising campaign
Intangible benefit: improved brand awareness
Value outcome: increased sales
0% $0 0.10 $0
1% $750,000 0.50 $375,000
3% $2,250,000 0.25 $562,500
5% $3,750,000 0.15 $562,500
1.00 $1,500,000
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The next steps
The values assigned to the benefits are recorded
in the business case and entered into the benefits
section of the financial calculator for financial
analysis.
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