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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