How do you incorporate qualitative factors or intangible benefits in sensitivity analysis?

1 Use a scoring system

One way to include qualitative or intangible factors in your sensitivity analysis is to assign them a score based on their importance, impact, and uncertainty. For example, you can use a scale of 1 to 5, where 1 means low and 5 means high. Then, you can multiply the score by a weight that reflects the relative significance of each factor for your business case. For example, you can use a percentage or a ranking. This way, you can convert the qualitative or intangible factors into numerical values that you can use in your sensitivity analysis.

2 Use scenarios or ranges

Another way to include qualitative or intangible factors in your sensitivity analysis is to use scenarios or ranges that reflect different levels of performance, quality, or satisfaction. For example, you can use a best-case, base-case, and worst-case scenario for each factor, or you can use a minimum, average, and maximum range. Then, you can estimate the impact of each scenario or range on your business case outcome, such as the net present value, the return on investment, or the payback period. This way, you can capture the variability and uncertainty of the qualitative or intangible factors in your sensitivity analysis.

3 Use proxies or indicators

A third way to include qualitative or intangible factors in your sensitivity analysis is to use proxies or indicators that are related to or influenced by them. For example, you can use customer retention, loyalty, or referrals as proxies for customer satisfaction, or you can use employee turnover, engagement, or productivity as indicators for employee morale. Then, you can collect data or research on how these proxies or indicators affect your business case outcome, such as the revenue, cost, or profit. This way, you can measure the value or benefit of the qualitative or intangible factors in your sensitivity analysis.

4 Use expert judgment or feedback

A fourth way to include qualitative or intangible factors in your sensitivity analysis is to use expert judgment or feedback from stakeholders, customers, employees, or other sources. For example, you can conduct surveys, interviews, focus groups, or workshops to gather opinions, insights, or preferences on the qualitative or intangible factors. Then, you can analyze the results and use them to adjust your assumptions, estimates, or calculations for your business case outcome. This way, you can incorporate the perspectives and expectations of the qualitative or intangible factors in your sensitivity analysis.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?