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SDM Cost Benefit Analysis Feb 2007

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DOIT
System Development
Methodology
Cost Benefit Analysis
February 2007
1
System Development Methodology
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March 2007
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Begin roll out of SDM – overview
April – November
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Explain purpose of each phase
Steps
Deliverables
Instructions
Tools
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System Development Methodology
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April 2007 – Cost Benefit Analysis
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Provides cost and benefit information to:
Analyze and evaluate alternative solutions to
business problems
пЃ® Make decisions about initiating, as well as
continuing the development of IT systems
пЃ® Clearly indicate cost to conform to architecture
standards
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SDLC & Cost-Benefit Analysis
Cust. Defines
IT Participates
Define Problem
IT Manages
Cust. Participates
Define Business
Specification
Go / No Go
Go / No Go
Initial Cost/Benefit
Assessment
Construct
System
Design System
Go / No Go
Cust. Manages
IT Participates
IT & Customer
Co-manage
Testing
Go / No Go
Implementation
Post
Implementation
Audit
Realization of
Benefits
Go / No Go
Cost/Benefit is
Reconfirmed
Reference: Diane Wallace, CIO, DOIT
Prepared By: Willy Isaac, PMP (DOIT)
4
DOIT Cost-Benefit Analysis Flow Chart
Process
Preparation
Documentation
Define System
Needs
Approval
No
Develop Project
Management
Plan
Estimate
Planning Costs
and Project
Budget
Prepare Planning
Business
Approval
Planning
Estimate
Planning Costs
and Project
Budget
Define System
Objectives
Yes
Define Initial
Technical and
Functional
Requirements
Establish Current
Operational
Costs
Assess Technical
and Operational
Feasibility
Begin Feasibility
Study
Feasibility Study
Identify / Define
Alternatives
Prepare
Alternatives
Analysis
Alternatives
Analysis
Determine Costs
and Benefits
Document
Quantifiable Cost
& Benefits
Compare
Alternatives
Document NonQuantifiable
Benefits
Select
Alternatives
Estimate Cost of
Alternatives
Version: 1.01
Date: Jan-08-2006
Cost Benefit
Analysis
Prepared By Willy Isaac PMP
Department of Information Technology
5
System Development Methodology
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CBA + feasibility study
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Confirms that the defined IT system concept
is significant enough to warrant an IT project
with life cycle management activities
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System Development Methodology
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CBA Purpose:
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Confirm that projected benefits of the
proposed IT project justify the projected
resources required
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Challenges of CBA
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Knowing what data to gather – costs & benefits
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Developing comprehensive comparison for alternatives
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Presenting analysis in business and fiscal terms
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Projecting and measuring results
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Relating actual cost benefits to funding and budget
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Key steps in the Cost-Benefit Analysis Process
Determine scope and
objectives
Identify the constraints
List feasible alternatives
Specify costs and benefits
Quantify costs and
benefits
Calculate NPV
Sensitivity test for
uncertainty
Report
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CBA team
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Lois Bryant
Willy Isaac
Chuck Hoadley
Karen Marcolini
Fred Massa
Len Smith
Lee Verrone
14
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