Systems Analysis Course

• Home
• 1.What is a System
  • Introduction
  • Parts of a System
• 2.System Lifecycle
  • Project Management
  • Project Lifecycle
  • Check Understanding
  • SDLC Comparison
  • Exercise
• 3.Feasibility Study
  • Sections
  • Exercise
• 4.CostBenefit Analysis
• 5.System Investigation
  • Introduction
  • Methods
  • Identify method
  • Exercise
• 6.Data Flow Diagrams
  • Introduction
  • Video
  • Definitions
  • Steps to create
  • Exercises
• 7.Relational Diagrams
  • Terminology
  • Examples
  • Exercise
  • Using a DFD level1
• 8.Data Dictionary
• 9.Design Specification
• 10.Creating a Test Plan

 

 

Lesson 4 - Cost Benefit Analysis

If you remember in Lesson 3 we looked at what is involved in creating a Feasibility study and how to examine the current system and decide on a possible solution to the problem. The final section of the feasibility study requires you to consider the cost and benefit of each solution and draw up a conclusion recommending the best way forward for the company. This is called COST BENEFIT ANALYSIS.

In this section you need to include the following:

Section 5 - Costs and benefits of the development (for each possible solution)

1. An opening paragraph explaining

• What is the budget for this development?
• What are the timescales involved in the development?

2. Explain the possible benefits for the solution. You COULD take into account the following types of benefit.

• Job may be performed more quickly
• Fewer people may be needed in certain departments
• Smaller offices/premises may be needed
• Increased security of information
• Customers/clients might be more satisfied with service – fewer complaints
• Management information provided (eg comparison of sales figures over number of months)
• More accurate management information

3. Explain the possible costs for the solution. You need to work possible costs by working out hours taken to do tasks, average hourly rates and rough estimates on hardware costs etc. You are not working out exact costs at this stage just giving an educated guess. You MIGHT need to consider the following types of cost depending on the solution.

• Creating new working environment (cost of new offices, buildings etc)
• Staffing – take on new staff with new expertise or a reduction in staff required (leading to reduction in salaries or increase in salaries)
• Training (how may people need training x cost per person)
• Development costs – involved in developing a new system (including Systems Analyst).
• Transfer of manual information to computer files (hours required to transfer the data x hourly rate)
• Hardware/software, including storage media (initial costs)
• Running costs – consumables, data transmission costs ( a weekly running cost x 52)

  Present your possible costs in a table format for the first year and then calculate the total cost for implementing the new system.

  For Example:

Item	Calculation	Yearly Cost
Training Costs	5 days x £200 per day = £1000	£1000
		Total Cost = £

4. Conclusion and recommendations

• A comparison of cost-benefits for the solution.
• What is possible within the time plan and budget?
• What is the best way forward for developing the new system (which solution has been chosen and why)

Copyright JK Nichols 2009