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Management Concepts

Cost-Benefit Analysis Using Microsoft Excel

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Next dates

Jun 12—14
3 days
Washington, District of Columbia, United States
USD 889
USD 296 per day
Aug 19—21
3 days
Washington, District of Columbia, United States
USD 889
USD 296 per day
Nov 13—15
3 days
Washington, District of Columbia, United States
USD 889
USD 296 per day
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Description

Optimal decision-making requires trade-off analysis; justification of the allocation of scarce financial resources to attain performance goals; and evaluation of policies for organizational benefit. This process can be daunting if your actions aren’t rooted in empirical evidence. Cost-benefit analysis provides a model for organizing facts, assumptions, estimates, and findings to align your decisions with your organization’s goals and mission. You will learn to conduct accurate cost-benefit analyses using fundamental principles, best practices, and powerful tools.

Learning Objectives

  • Select measurement(s) and measure all cost-benefit elements
  • Forecast cost and benefits over a relevant time period
  • Convert all costs and benefits into a common currency
  • Apply a discount rate
  • Calculate net present value of project net benefits
  • Perform sensitivity analysis
  • Evaluate alternatives and select the best value option based on costs and benefits
  • Incorporate risk (uncertainty) in calculating costs and benefits
  • Utilize Microsoft Excel tools to facilitate compilation and analysis of cost-benefit elements
  • Reference applicable OMB guidance and Executive Orders

Course Topics

Cost-Benefit Analysis Fundamentals

  • Cost-Benefit Analysis Defined
  • Critical Concepts for Cost-Benefit Analysis
  • Uses for Cost-Benefit Analysis
  • What Documents Provide Guidance for Federal Programs?
  • Presidential Executive Orders
  • Cost Benefit Analysis Essentials
  • Basic CBA Decision Criteria Measures
  • Conflicting Measures
  • The Need for More than One Measure
  • Distinguishing Negative Benefits from Costs
  • Cost Effectiveness Principle
  • Lesson Wrap-Up

Costs

  • Relevant and Non-relevant Costs
  • Opportunity Costs versus Outlays
  • Sunk Costs versus Future Costs
  • Fixed Versus Variable Costs
  • Total Costs
  • Mixed Costs
  • Depreciation
  • Direct versus Indirect Costs
  • Personnel and Overhead Costs
  • Lesson Wrap-Up

Benefits

  • Guidance for Quantifying Benefits
  • Creating Models for Benefits to the Public Without Price Data
  • Weighing and Scoring Benefits
  • Calculating Benefits of Regulatory Action
  • Computing Benefits Where Price Data Is Available
  • Lesson Wrap-Up

Time Value of Money

  • Concept of the Time Value of Money
  • Simple Interest
  • Compound Interest
  • Future Value
  • Present Value
  • Present and Future Value Using Excel Functions

Time-Based Decision Criteria Measures Used in Cost Benefit Analysis

  • The Timing of Costs and Benefits and the Cash Flow Diagram
  • The Payback Period
  • The Net Present Value
  • The Principle of Equivalence
  • Calculating the Net Present Value
  • Excel’s =NPV function
  • Discount Rate
  • Internal Rate of Return (IRR)

Sensitivity Analysis

  • Uncertainty Versus Risk
  • Expected Value with Uncertainty
  • Sensitivity Analysis
  • Sensitivity Analysis in Excel
  • Performing a Sensitivity Analysis Using Excel's Data Table Feature
  • Performing Sensitivity Analysis Using Excel's Data Tables

Who should attend

This course is designed for individuals who want to understand and apply cost-benefit analysis to support decision-making in their organizations.

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