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Home > Federal & State Reporting Systems > Federal Guidance > State Systems APD Guide

5: Measuring Actual Costs and Benefits

Once the State has approval to proceed with the selected alternative, measuring actual costs and benefits begins. The purpose of this requirement - in addition to complying with regulation - is to:

  • Determine if predicted costs and benefits are being realized;
  • Identify unanticipated costs and benefits;
  • Calculate the effect of the actual costs and benefits - whether predicted or not - on the cost-effectiveness of the system design, development, and implementation; and
  • Enable management to take appropriate action.
5.1 Overview

The purpose of the Cost/Benefit Analysis is to make a reasonable estimate of future events and provide a baseline against which to measure actual costs and benefits. Measurement provides the means to determine if the implementation remains cost-effective. Hence, the full value of the Cost/Benefit Analysis is not realized until the approach has been measured, monitored, and controlled by management and the solution is cost-effectively implemented.

5.2 Objectives

The purposes of monitoring actual costs and benefits are to:

  • Comply with Federal regulations;
  • Determine if actual costs and benefits are reasonably consistent with those predicted and if the system's projected savings are achieved;
  • Calculate the effect of the actual costs and benefits on the cost-effectiveness of the system design, development, implementation, and operations; and
  • Determine if corrective action is required.

      A comparison of the actual figures to the projections enables the manager to determine if there are variances from expectations which warrant investigation. If costs are higher or benefits are lower than expected, the manager may decide a change is required.

      This does not suggest that the State should consider scrapping the selected alternative in favor of another identified originally in the Cost/Benefit Analysis. After all, the circumstances would be quite different once system design had begun.

      However, the State may determine, for example, that an unanticipated benefit is resulting in significant cost savings and will result in an earlier breakeven. Or the State may determine that developmental costs are escalating rapidly and require closer monitoring.
5.3 Management Tool

Just as the Cost/Benefit Analysis is a management tool, so is the measurement and monitoring of costs and benefit values. The purpose is to assure that the goals and objectives of the project are achieved economically, efficiently, and effectively - and in general as projected.

To meet the monitoring requirements, costs and benefits - whether projected or unanticipated - need to be regularly evaluated. Yet, the purpose of identifying unanticipated or unrealized costs is not to level criticism at the original study or the analysts associated with it, but to develop for management a complete profile of actual costs. This enables management to take appropriate steps based on the circumstances of the day.

If necessary, corrective steps should be initiated by the State to keep the project on target, so that ACF is not required to intervene. The alternatives likely to arise from project reassessment include proceeding, stopping, downsizing, or redirecting.
5.4 Identify All Costs

As in the initial cost/benefit study, the first step is to identify all costs incurred (actuals) in the design, development, and implementation of the systems project and then to compare those cost categories to the costs projected for the project.

The Cost Measurement Worksheet on page 5-4 outlines the cost categories with columns for actual and projected. By this means, project managers and analysts can determine if any costs bear on the new system that were not anticipated and projected during the original analysis - or if any costs were projected that did not occur.

5.5 Build the Cost Profile Year by Year

Once all cost categories are identified, actual costs should be monitored and recorded. As in the cost/benefit analysis, worksheets are provided to record, total, and roll-up costs. Both the Annual Cost Measurement Worksheet (page 5-6) and the Systems Life Cost Measurement Profile worksheet (page 5-7) include spaces for recording:

  • Total (actual or realized) costs,
  • Total projected costs (from the Cost/Benefit Analysis), and
  • The difference between them.

If actual costs are higher than projected costs, a positive number will result - the implementation is costing more than projected. If actual costs are less than projected costs, a negative number will result - the implementation is costing less than projected.

Note that the Cost/Benefit Analysis document's present value figures are not used. Discounted costs - projected costs to which the present value factor has been applied - are of no use in monitoring actual costs.
5.1 Overview

5.6 Identify All Benefits Just as a reassessment is needed to list all incurred costs, each benefit being realized through the new system should also be identified. Then the accrued benefits should be compared against those projected for the project.

 

 

Table 5 1: Cost Measurement Worksheet

Non-Recurring Costs
Cost Categories Actl Proj Cost Categories Actl Proj
Site and Facility
  • Purchase
  • Site Preparation/Modification
  • Other
Equipment Purchase/One Time Fees
  • ADP
  • Data Communications
  • Environ. Conditioning
  • Security
  • Other
Shipping
Installation
Software Purchase/One Time Fees
  • Operating System
  • Applications
  • Utilities
  • Other
System Testing
Conversion
  • Data
  • Software
  • Services
 blank cell blank cell Studies Procurement
  • Cost of Planning
  • Cost of Conducting
Database Preparation
Personnel
  • Salaries
  • Benefits
  • Contract Support Services
  • Extraordinary Personnel Costs
Travel
Training
  • Development
  • Trainee Expenses
  • Trainer Expenses
Overhead / Indirect Costs
  • Project and Technical
  • Management
  • Incremental
  • Lost Productivity
 blank cell blank cell
Cost Categories Actl Proj Cost Categories Actl Proj
Site and Facility
  • Lease
  • Maintenance Fees
  • Other
Equipment Lease / Maintenance
  • ADP
  • Data Communications
  • Environ. Conditioning
  • Security
  • Other
Software Lease / Maintenance
  • Operating System
  • Applications
  • Utilities
  • Other
 blank cell blank cell Personnel
  • Salaries
  • Benefits
Direct Support Services
  • Contract
  • Detailed/Tasked
Travel
Training
Supplies
Utilities
Security
  • Primary Facilities
  • Back-up Facilities
Overhead / Indirect Costs 		blank cell blank cell

 

 

[5.6 contd.]

The Benefit Profile Measurement Worksheet on page 5-8 outlines the benefit categories with columns for actual and projected. Project managers and analysts can determine if any benefits bear on the new system that were not anticipated and projected during the original analysis - or if benefits which were anticipated did not develop.

Again, the purpose of identifying unanticipated factors is not to level criticism at the original study or the analysts associated with it, but to develop for management a complete profile of actual benefits. It could be that unanticipated benefits will result in a quicker breakeven or that unrealized benefits may require management action to attain them.

Although the purpose of the measurement and monitoring is directed primarily at quantitative factors, unanticipated intangible benefits may have developed that affect the management of the system. The more relevant data is available to management, the more effective management can be.
5.7 Build each Cost Profile Year by Year

Once all benefit categories are identified, actual benefit values should be monitored and recorded. As in the cost analysis, worksheets are provided to record, total, and roll-up values. For example, the Quantified Benefits Measurement Worksheets (pages 5-10 and 5-11) provide space to record the projected values for a benefit and the actual or revised values.

Note that these worksheets can be used anytime during design, development, or implementation. It may be that an assumption is proven wrong or circumstances change, affecting the actual or probable value to be derived from the benefit. The change can be recorded, the effect on the projected benefit value analyzed, and new calculations derived.

Both the Annual Benefits Measurement Worksheet and the Systems Life Benefits Measurement Profile (pages 5-12 and 5-13) include spaces for recording:

  • Total (actual or realized) benefit values,
  • Total projected benefits (from the Cost/Benefit Analysis), and
  • The difference between them.

 

 

Table 5 2: Annual Cost Measurement Worksheet

Check Box Constant Dollars or Check Box Current Dollars Year ____
Cost Category Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Non-Recurring Costs: blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equipment Purchase & Fees blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Shipping blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Installation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Purchase blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
System Testing blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Conversion blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Studies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Procurement blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Database Preparation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Subtotal blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Recurring Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equip. Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel Salaries/Benefits blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Direct Support Services blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Supplies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Utilities blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Security (incl. Back-up) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL COSTS (Actuals) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PROJECTED COSTS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
DIFFERENCE blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
CUM. TOTAL COSTS / PRIOR YEAR N/A N/AN/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A blank cell
CUMULATIVE TOTAL COSTS (Actuals) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell N/A

* Specify other programs, such as Child Care, Foster Care, Child Welfare Services, Refuge Resettlement

 

 

Table 5 3: Systems Life Cost Profile: by Program Years ______ - ______
Cost Category Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 System Life Total
Non-Recurring Costs: blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equipment Purchase & Fees blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Shipping blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Installation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Purchase blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
System Testing blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Conversion blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Studies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Procurement blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Database Preparation blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Subtotal blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Recurring Costs blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Site and Facility blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Equip. Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Software Lease & Maintenance blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Personnel Salaries/Benefits blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Direct Support Services blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Travel blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Training blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Supplies blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Utilities blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Security (incl. Back-up) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Overhead blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL COSTS (Actuals) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PROJECTED COSTS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
DIFFERENCE blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell

 

 

Table 5 4: Benefit Profile Measurement Worksheet

QUANTITATIVE
Category Actual Projected Description
COST / RESOURCE
  • Reduced Costs
  • Controlled Costs
  • Reduced Staffing
  • Improved Staffing Utilization
  • Increased Productivity
  • Fewer Manual Functions
  • Increased Resources
  • Other
 blank cell blank cell blank cell
Reduced Error Rate
  • Increased Caseload Capacity
  • Increased Collections
  • Improved Management Information
  • Improved Controls
  • Interface / Matching
  • Less Data Redundancy
  • Other
 blank cell blank cell blank cell
TECHNICAL
  • Faster Record Retrieval
  • More Timely Reporting
  • Less Processing Time
  • Improved Access
  • Improved Security
  • Increased Automation
  • Other
 blank cell blank cell blank cell
QUALITATIVE
Category Actual Projected Description
LEGISLATIVE blank cell blank cell blank cell
SOCIO-POLITICAL
  • Integrated Benefits Automation
  • Improved Public Assistance
  • Increased Worker Satisfaction
  • Other
 blank cell blank cell blank cell
Improved Management Information
  • Improved Controls
  • Interface / Matching
  • Other
 blank cell blank cell blank cell
TECHNICAL
  • More Timely Reporting
  • Expanded Capability / Flexibility
  • Improved Access
  • Improved Security
  • Increased Automation
  • Other
 blank cell blank cell blank cell

 

 

[5.7 contd.]

If actual benefits are higher than projected benefits, a positive number will result - the implementation is delivering more value than projected. If actual benefits are less than projected benefits, a negative number will result - the implementation is delivering less value than projected.

As before, the Cost/Benefit Analysis document's un-discounted, projected values are used. Present value figures are not used - discounted benefits are of no use in monitoring actual benefits.
5.8 Compare the Cost/Benefits Achieved to those Projected

The final worksheet, the Cost/Benefit Measurement Profile (page 5-14), has space for all relevant measures applying to the new system. It includes:

  • System Life Cost Profile - which includes total non-recurring and recurring costs, total system life costs (actuals), total projected costs, and the difference between the actual and projected figures;
  • System Life Benefits Profile - which includes total system life benefit values (actuals), total projected benefit values, and the difference between them;
  • Cumulative Benefit / Cost Profiles - which accumulates the actual benefits and costs over the systems life; and
  • Quantitative Measurement Profile - which includes the actual measures for net benefit (cost), benefit/cost ratio, and breakeven - and includes the projected measures for benefit/cost ratio and breakeven.

[Note that the Cost/Benefit Analysis study's projected net benefit is not used because it is based on present value factors, not comparable to actual measures.]

 

 

Table 5 5: Quantified Benefits Measurement Annual Worksheet

Annual Worksheet Year ____
BENEFIT CATEGORY / DESCRIPTION
Benefit Number:
Description:
PROJECTED BENEFIT VALUE
Assumptions:
Numbers Basis Source
Projected Measure/Volume At Implementation: blank cell blank cell
Projected Increase/Decrease Over Time: blank cell blank cell
Projected Value at Implementation: blank cell blank cell
Projected Annual Benefits Profile
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
ACTUAL OR REVISED BENEFIT VALUE
Assumptions or Conditions:
Numbers Basis Source
Actual Measure/Volume at Implementation: blank cell blank cell
Actual or Revised Increase/Decrease blank cell blank cell
Initial Value at Implementation: blank cell blank cell
Annual Benefits Profile: Actual or Revised Projected
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell

 

 

Table 5 6: Quantified Benefits Measurement: Systems Life Worksheet

BENEFIT CATEGORY / DESCRIPTION
Benefit Number:
Description:
PROJECTED BENEFIT VALUE
Assumptions:
Numbers Basis Source
Projected Measure/Volume At Implementation: blank cell blank cell
Projected Increase/Decrease Over Time: blank cell blank cell
Projected Value at Implementation: blank cell blank cell
Projected System Life Benefits Profile
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
ACTUAL OR REVISED BENEFIT VALUE
Assumptions:
Numbers Basis Source
Actual Measure/Volume at Implementation: blank cell blank cell
Actual or Revised Increase/Decrease: blank cell blank cell
Initial Value at Implementation: blank cell blank cell
Systems Life Benefits Profile: Actual or Revised Projected
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Total
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell

 

 

Table 5 7: Annual Benefits Measurement Worksheet Year _____
Benefit Number and Description Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Benefit 1: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Benefit 2: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
Benefit 3: Short Description blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
etc. blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL BENEFIT VALUE (Actuals) blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
TOTAL PROJECTED BENEFITS blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
DIFFERENCE blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell blank cell
CUM. TOTAL BENEFITS / PRIOR YEAR N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A blank cell
CUMULATIVE TOTAL PROJECTED BENEFITS blank cell blank cell blank cell blank cell blank cell</