What techniques can you use to estimate costs and benefits in a business case?

2 Benefit estimation techniques

Benefit estimation is the process of predicting the positive outcomes or value that a project or activity will generate for the organization or stakeholders. To do so, you can use various techniques depending on the type, nature, and measurability of the benefits. For instance, financial analysis employs quantitative methods to estimate financial benefits, such as revenue and profit. Non-financial analysis uses qualitative methods to estimate non-monetary benefits, such as customer satisfaction. Risk analysis relies on probabilistic methods to estimate potential benefits in terms of reducing risks and their negative impacts. All three techniques are useful in different contexts, as they allow you to show the financial viability, strategic alignment, and risk mitigation of a project.

4 Sensitivity analysis

Sensitivity analysis is the process of testing the impact of changes in the assumptions, parameters, or variables of your cost-benefit analysis on the results or outcomes of your project. It helps you measure the robustness or reliability of your analysis, and identify the key drivers or factors that influence the value or return of your project. To do this, you need to identify and select the most critical or uncertain assumptions, parameters, or variables of your cost-benefit analysis. Then, you should vary their values or ranges using different scenarios and methods such as simulation, optimization, or regression. After that, recalculate the total costs and benefits of the project and compare them using the same indicators or ratios as in your cost-benefit analysis for each scenario or method. Finally, analyze the results and observe any changes or differences to determine the sensitivity or elasticity of your project to changes in assumptions, parameters, or variables. Report and explain your findings and conclusions using appropriate formats such as sensitivity tables, charts, or graphs. Make sure to highlight any main sources or causes of variation or uncertainty in your project.

5 Stakeholder analysis

Stakeholder analysis is the process of understanding the interests, expectations, and influence of people or groups who are affected by or involved in your project. It helps you engage and communicate with stakeholders effectively, and manage their needs and concerns efficiently. To conduct a stakeholder analysis, you need to identify and list all relevant stakeholders, both internal and external, and classify them into primary or secondary, and positive or negative. Assess and rank the stakeholders based on their power, interest, attitude, and impact on your project with tools like stakeholder mapping, matrix, or grid. Develop a stakeholder management strategy based on the assessment and ranking, including objectives, actions, and responsibilities for each stakeholder group or individual. Monitor the strategy’s performance with surveys, interviews, or reports. Review the stakeholder analysis and management strategy regularly to address any changes or issues that arise during the project. Maintain a positive relationship with stakeholders by updating the strategy as needed.

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?