4.27 Elementary Method "Benefit Analysis" (BA)

#### 1 Identification/Definition of the Method

/Daenzer, 1988/ pp. 107-117

#### 2 Brief Characteristic of the Method

Objective and Purpose

The Benefit Analysis (BA), also referred to as multi-factor method, is a static and non-monetary evaluation procedure from the area of cost-benefit calculation, used to prepare a selection between several alternatives. With the help of BA it is attempted to make both the evaluation and the decision transparent.

Operational Sequence

The individual alternatives are evaluated with regard to the specified subgoals. Usually, a marking scale is used for the evaluation. Based on its different importance, the subgoals are differently weighted. The benefit value (the overall goal performance) is the sum of the weighted subgoal performances per alternative, i. e. a weighted average, and represents the decision criterion.

In case the application criteria of the method are met (compare section 3) and if no cost-related decision has to be made, the procedure is as follows:

1. definition of knock-out criteria
2. collection of suitable alternatives (market analysis)
3. rejection of alternatives meeting one of the knock-out criteria
4. defining and weighting goal criteria
5. evaluating the subgoal performance per alternative (= goal yield matrix)
6. calculating the weighted subgoal performance ( = goal value matrix) and the overall goal performance (= total benefit) per alternative
7. selection of the best alternative
8. in case of only minor differences: realization of sensibility analysis and thus backing up or possibly changing the decision. The sensibility analysis is to define how the result of the evaluation changes if within an acceptable range the allocation of weights or the evaluation of subgoals for the alternatives are varied.

Steps 1-3 are used to prepare the benefit analysis (steps 4-8).

#### 3 Limits of the Methods Application

When applying the method it must be taken into consideration that no subgoals are defined that depend on each other. The weighting sum that must not even be changed if a new subgoal is entered should be limited first. When distributing the weights a hierarchical definition of goals is very practical. To evaluate the goals performance for the alternatives the objectivity should be as high as possible.

Application criteria for the benefit analysis:

• comparability of the alternatives
• consideration of several subgoals relevant for the decision
• measuring the subgoal performance with different scales is required

Furthermore, the application of method BA is only practical, if

• a complex decision situation exists and if
• the decision is not based on external factors (i. e. factors beyond the evaluation criteria).

#### 4 Specification of the Methods Allocation

No. Activity Description
4.1 SD2.3 - Investigation of Feasibility The benefit analysis offers decision support within the scope of the investigations of the system software and the usability of off-the-shelf products.

Subproduct System Architecture.Feasibility Studies is not completely covered by the benefit analysis. The BA merely supports the selection for several possibilities of realization, not the correspondingly required technical investigations, though.

4.2 PM2 - Placement/ Procurement Method BA is used in activity PM2 to evaluate and compare available offers. This is a classical application for the Benefit Analysis.

Subproduct Offer Evaluation.Evaluation of the Offers is covered by method BA.

4.3 PM5 - Cost/Benefit Analysis Method BA can assist in the generation of the product Cost/Benefit Analysis.
4.4 PM8 - Project Control In PM8, the BA is used to make a selection of possible measures to discover, compensate, and prevent faulty plans. This is based on the results of method FMEA - Failure Mode Effect Analysis; the results are stored in the reporting documents.

#### 5 Interfaces

- not applicable -

#### 6 Further Literature

/BUND, 1986/ Planungslehrmappe der Fortbildungsinstitutionen des Bundes
/Daenzer, 1988/ Systems Engineering - Leitfaden zur methodischen Durchführung umfangreicher Planungsvorhaben
/Zangemeister, 1972/ Nutzwertanalyse

 GDPA Online Last Updated 01.Jan.2002 Updated by Webmaster Last Revised 01.Jan.2002 Revised by Webmaster