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Cost / Benefit Analysis
Posted on June 6, 2013 by jackbassteam
This is from my draft for a new book ” Managing 24/7
– your feedback would be very welcome
Propose A Solution And Determine The Costs And Benefits
At this point the process improvement team has completed the analysis and is ready to propose solutions. The proposed solutions must address how existing processes can be modified to meet desired outcomes- often defined as customer requirements . The cost and benefit analysis must be convincing to the company in order to win the appropriate resources for implementation and to justify the disruptions change invariably causes.
Criteria For Solution Selection
1) Does the solution address all of the problem
– Sometimes a partial solution is the correct answer based on urgency and cost relative to the difficulty of the problem
3) Financial savings
4) Implementation time
One method of analysis is The Pareto Chart based on the concept know as the 80/20 Rule or Pareto Principle – i.e. in many situations 20 5 of the actions will result in solving 805 of the problem.