how to quantify benefits

A guide to measuring benefits effectively

• Step one: identify your objectives and outcomes. What are the goals of your project? For example, let’s say you’re...
• Step two: identify tangible and intangible benefits. What do you get from achieving your objectives? These benefits...
• Step three: document your benefits. Write down your benefits and identify the priorities,...

Full Answer

How do I calculate my benefits?

Because some of your benefits may vary from year to year (like bonuses), it can be helpful to calculate your benefits twice - once with best case and once with worst case. This one should be pretty straightforward. Plug in your total gross salary (before any deductions are taken).

Do you take benefits measurement and realisation seriously?

A lot of professionals do not necessarily take benefits measurement and realisation seriously. In my organisation, we had a meeting a few months ago on this topic, which turned out to be surprisingly popular.

How will your benefit measurements turn into performance evaluation criteria?

These measurements will turn into performance evaluation criteria through a definition of the desired performance level. Our benefit measurement evaluation needs to be benchmarked in order to provide additional validity and context.

How do you confirm the benefit outcome is truly due to?

Confirm the benefit outcome is truly due to the action. To show convincingly that an outcome truly follows from an action, the analyst may use cause cause-and-effect reasoning, anecdotal evidence, or examples of historical precedent. Whatever the approach, the result must score high in credibility.

How do you measure a benefit?

Here's a list of best practice when it comes to measuring benefits.Step one: identify your objectives and outcomes. ... Step two: identify tangible and intangible benefits. ... Step three: document your benefits. ... Step four: capture your baseline measurements. ... Step five: realise your benefits. ... Step six: monitor your benefits.

How do you quantify intangible benefits?

In some cases, businesses can use the process of elimination to assign quantitative values to intangible benefits after they're achieved. This is done by measuring gains and subtracting the gains that come from tangible benefits, with the difference representing the value of the intangible benefits.

What is easier to quantify and why the costs or the benefits?

Costs can be more readily quantified than benefits because they normally have dollar amounts attached. Benefits are difficult because they often tend to have more intangibles. In analyses, benefits should be as important as costs and deserve to be brought to the attention of decision makers.

How can you compare the benefits to the costs?

How to Conduct a Cost-Benefit AnalysisEstablish a Framework for Your Analysis. ... Identify Your Costs and Benefits. ... Assign a Dollar Amount or Value to Each Cost and Benefit. ... Tally the Total Value of Benefits and Costs and Compare.

How do you quantify intangibles?

Most intangibles are based on attitudes and perceptions and are measured in several ways. One way is to list the intangible item and have the respondents disagree or agree on a five-point scale. The mid-point then becomes the neutral. Others define various levels of the intangible.

What is the difference between tangible and intangible benefits?

What's the difference between tangible and intangible benefits? Tangible benefits are those that can be measured in financial terms, while intangible benefits cannot be quantified directly in economic terms, but still have a very significant business impact.

What is a quantifiable benefit?

Quantifiable benefits are “benefits that can be assigned a numeric value, such as dollars, physical count of tangible items, or percentage change” (US Army Cost and Economic Analysis Center, 2001).

What are the 5 steps of cost-benefit analysis?

The major steps in a cost-benefit analysisStep 1: Specify the set of options. ... Step 2: Decide whose costs and benefits count. ... Step 3: Identify the impacts and select measurement indicators. ... Step 4: Predict the impacts over the life of the proposed regulation. ... Step 5: Monetise (place dollar values on) impacts.More items...

How do you calculate benefit of a project?

A systematic process for calculating and comparing benefits and costs of a project. Measure calculated by dividing the incremental monetized benefits related to a project by the incremental costs of that project. May either be expressed as a ratio (2:1) or a resultant value (2).

How is benefit-cost ratio calculated?

The benefit cost ratio is calculated by dividing the present value of benefits by that of costs and investments.

How do I do a cost-benefit analysis in Excel?

A typical cost benefit analysis involves these steps:Gather all the necessary data.Calculate costs. Fixed or one time costs. Variable costs.Calculate the benefits.Compare costs & benefits over a period of time.Decide which option is best for chosen time period.Optional: Provide what-if analysis.

How costs and benefits can be weighed up to make a choice?

When making a choice, people weigh the costs and benefits of that choice. If the benefit of a particular alternative is greater than its opportunity cost (the benefit from the next best alternative) then people will chose it as opposed to the next best one.

Take a picture

If you make a delicious meal, if you set a new high score in a video game, or if you stumble across an incredibly inspiring quote, take a picture.

Write down your wins

I started doing this at the beginning of my writing journey a few months ago. Whenever a potential client emailed me back, or I got my first paid assignment, I wrote:

Share encouraging moments with a group so someone can remind you when things get tough

This is one of the best ways to create a living memory. Tell your friends and family about good things. Share your big news with your Facebook group, or put it on Medium.

How to calculate time off?

To calculate the value of your time off, divide your salary by 260 to calculate your average pay per day. Then, multiply this value by the number of days off you receive per year.

What is education reimbursement?

Education reimbursement. ​. Factor in the value of any company paid/repaid classes you may take, typically classes that are used or could be used toward a degree. Education reimbursement normally comes with some expectation of you staying with a company for a certain period of time after you use it.

What insurances do employers offer?

Insurances - health, life, disability. Many employers offer one or multiple types of insurances. For health insurance - add in the amount paid by your employer towards the cost of coverage. If your employer contributes to a Flexible Savings Account (FSA) or Health Savings Account (HSA), add this amount in as well.

Do you include the value of your benefits?

If you are not likely to utilize a benefit, do not include the value. Because some of your benefits may vary from year to year (like bonuses), it can be helpful to calculate your benefits twice - once with best case and once with worst case.

Is it easy to quantify benefits?

While the majority of benefits are easy to put a value on, there are others which do bring value to your life, but are not as easy to quantify. They tend to result in a time savings or added flexibility.

Is there more to total compensation than salary?

There is a lot more to your total compensation than just your salary. When calculating the total value of your compensation, you should also incorporate all the benefits you use or are likely to use. Your benefits may be clearly financial (bonuses, retirement contributions, etc.) or they may offer time savings or flexibility.

How to confirm benefit outcome?

Confirm the benefit outcome contributes to meeting the business objective. In Step 1, the analyst links a business objective to an action and tangible outcomes from the action. Step 2 is the process of showing in convincing terms that the outcome truly follows from the action.

What is the central task in cost/benefit studies?

Predicting future costs and benefits this way is, in fact, the central task in cost/benefit studies and business case analysis. Approaching this task, some see benefits merely as "good" outcomes and costs only as "bad" outcomes. To others, cost means "funds flowing out," and benefit means "funds flowing in.".

What are the positive financial outcomes?

Most business readily accept positive financial outcomes as business benefits . These are easy to measure in terms of cost savings, revenue growth, cash inflows, or profits. Many , however, are uncertain about how to measure or value contributions to business objectives they define in nonfinancial terms.

What is the objective of keeping profits as retained earnings?

Secondly, keeping profits as retained earnings, thereby increasing owners equity. Most other objectives in private industry exist—at least in principle—to support the high-level profit objective. As a result, any action outcome that arguably contributes to the profit objective qualifies as a business benefit.

What are high value non-financial benefits?

High-Value Non-Financial Benefits. Department stores that sell prestige designer brands must compete with other stores that carry the same brands. With high-end products, typically, stores do not compete on price. Instead they try to win customer business with strong store-branding and excellent customer service. Improvements in these areas are high-value nonfinancial benefits. [Photo: Shopping on Oxford Street, London, December 1937]

How do companies use profits?

In any case, companies can use profits in only two ways. Firstly , paying profits directly to owners as dividends. Secondly, keeping profits as retained earnings, thereby increasing owners equity.

Is soft benefit better than hard benefit?

These terms inevitably position the "soft" benefits as second-class outcomes in the eyes of many. automatically credit so-called soft benefits with less weight or importance than hard benefits. It is better to avoid the terms "hard" and "soft" altogether. Instead, classify outcomes as being either financial benefits or nonfinancial benefits.

What is the disincentive to stating benefits?

Benefits Are Goals, Not Predictions. One of the disincentives to stating benefits is that they are normally treated as predictions.

What is an IT project benefit?

IT project benefits that are expressed as goals are properly part of the project's implementation plan. That plan typically addresses such issues as training, pilot and parallel testing, rollout, and phasing out of existing systems.

What are the four fundamental requirements for project justification?

In my experience, most statements of project justification ignore four fundamental requirements: benefits must be financial; benefits should be stated as goals, not predictions; benefits are different from effects; and benefits cannot be intangible. Benefits Must Be Financial.

What are the benefits of infrastructure projects?

The real benefits of justified infrastructure projects are increases to efficiency and quality, which lead, respectively, to lower costs and higher sales . The fact that it is hard to put precise dollar figures on these benefits does not obviate the need to do so.

What happens if an employee's job is eliminated?

If an employee's job is eliminated, the company has committed to find that person another job within the company. Hence the payroll cannot actually be reduced.

Is workload an effect or a benefit?

In this example, the savings in workload are effects. Reducing someone's workload by an hour a day is an effect, but it has no financial impact on the organization. In order to be a benefit, there must be a real dollar savings. Too many project justifications are based on effects, not benefits.

Is a non-financial benefit measurable?

Furthermore, most nonfinancial “benefits” are not measurable, meaning that there is no way to tell whether or not the project actually delivered the expected results. This point of view is not widely held; there are several nonfinancial sources of benefit that are routinely offered.

What is cost benefit analysis?

Perform a cost-benefit analysis to evaluate the justification of benefits. Perform a cost-benefit analysis for the sustainment of benefits. Make sure the analysis and results of the evaluation are not taken out of context. Always look for new ways to evaluate or opportunities to make adjustments to the evaluation process.

What is the balancing act between over spending to the tune of the law of diminishing returns?

It is a balancing act between over spending to the tune of the law of diminishing returns, and sufficient spending to ensure doing it right, and getting some value from the evaluation. Arguably, a successful evaluation of the program will be paid off by the growth, efficiencies, and improvements it will lead to.

How to perform a program evaluation?

How to Perform a Program Measurement Evaluation. To make it easier to benchmark and compare programs in the organization, over different time periods or against programs in other organizations, a systematic approach should facilitate structure and consistency in the data collection, analysis, and interpretation.

Why is a business case evaluated?

The business case needs to be evaluated thoroughly to ensure that it is focused on and maximizes delivery or achievement of strategic goals.

Is program benefit measurement and evaluation overlooked?

Introduction. For the most part, program benefit measurement and evaluation are overlooked. It is often not performed properly or even at all and when there is an attempt to do it, many organizations do not know where to begin, how to do it, or what to benchmark it against. There are those who see it as a rather useless activity ...