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7/31/2019 Final Tand d Ppt
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By
Priyanka Bhagwat
SY MMS (HR)
Roll No :- 01
COST BENEFIT ANALYSISAND ROI
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COSTBENEFIT ANALYSIS
Cost-Benefit Analysis (CBA) estimates and
totals up the equivalent money value of the
benefits and costs to the community of projects
to establish whether they are worthwhile.
Benefit-cost ratio (BCR) analysis allows decision
makers to determine the financial return on a
training/education program by comparing
benefits and costs.
BCR is calculated by taking the programbenefits and dividing those benefits by the
program cost.
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PRINCIPLESOF CBA
There Must Be a Common Unit of Measurement
CBA Valuations Should Represent Consumers or
Producers Valuations As Revealed by Their Actual
Behavior
Benefits Are Usually Measured by Market Choices
The Analysis of a Project Should Involve a With
Versus WithoutComparison
Cost Benefit Analysis Involves a Particular StudyArea
Double Counting of Benefits or Costs Must be
Avoided
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BENEFIT-COST RATIO FORMULA
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Program Benefits can be one or more of thefollowing financial gains for training/education:
Time savings,
Increased productivity,
Improved quality of output, and/or
Enhanced personnel performance.
Program Costs can include the followingexpenses related to training/educationofferings:
Course development or purchase,
Instructional materials,
Equipment and/or facilities, Salaries of instructors and staff, and/or
Lost productivity due to training attendance.
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DETERMINING COSTSFORA COST-
BENEFIT ANALYSIS:
Development
Costs
Overhead
Costs
Compensationfor
Trainees
Direct Costs Indirect Costs
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DETERMINING COSTSFORA COST BENEFIT
ANALYSIS
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EXAMPLESOFBENEFIT-COSTRATIO
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BENEFIT-COSTRATIOANALYSIS PROCESS
Step One: Benefit Analysis1. Time Savings
2. Increased Productivity
3. Improved Quality of Output
4. Enhanced Personnel Performance
Step Two: Cost Analysis
1. Course Development or Selection
2. Instructional Materials
3. Equipment
4. Facilities
5. Off-Site Expenses
6. Salaries
7. Lost Productivity
Step Three: Benefit-Cost Ratio
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RETURNON INVESTMENT (ROI)
Return on Investment (ROI) analysis allows decision
makers to determine the financial return from training by
comparing net program benefits--benefits minus costs--
to costs.
ROI is calculated by taking the net benefits of training,dividing by training/education costs, and then multiplying
the product by 100.
ROI is a measure of the monetary benefits obtained by
an organization over a specified amount of time for a
given investment in a training program.
ROI can be used both to justify a planned investment
and to evaluate the extent to which the desired return
was achieved.
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RETURNON INVESTMENT FORMULA
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Program Benefits can be one or more of thefollowing financial gains for training/education:
Time savings,
Increased productivity,
Improved quality of output, and/or
Enhanced personnel performance.
Program Costs can include the followingexpenses for training/education offerings:
Course development or purchase,
Instructional materials,
Equipment and/or facilities, Salaries of instructors and staff, and/or
Lost productivity due to training attendance.
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ROI PROCESS
Step One: Benefit Analysis1. Time Savings
2. Increased Productivity
3. Improved Quality of Output
4. Enhanced Personnel Performance
Step Two: Cost Analysis
1. Course Development or Selection
2. Instructional Materials
3. Equipment
4. Facilities
5. Off-Site Expenses6. Salaries
7. Lost Productivity
Step Three: Return on Investment
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WORKSHEET : RETURNON INVESTMENT ANALYSIS
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ROI CALCULATORFORCORPORATETRAINING
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