Life-Cycle Cost Estimation & Analysis

How much capital should an agency budget to fund the development, acquisition, implementation and sustainment (Total Cost of Ownership) of a new investment in technology or program over its life-cycle? Are there aspects of the new investment that can be scaled down to make it more affordable while still meeting functional requirements? What are the major cost drivers of the investment? These are some of the questions our Life-Cycle Cost Estimation and Analysis services can answer for an organization.

 

ROI Strategies has over 14 years experience executing Life-Cycle Cost Estimation and Analysis for government agencies. We construct financial models of a technology or program's life-cycle costs to equip agencies with confidence to pinpoint the amount of capital annually required to execute from cradle to grave. This also provides agencies with a spend plan roadmap to avoid cost creep. Our financial models are developed based on the program's technical and business requirements and are presented within the framework of a Work Breakdown Structure. Additionally, our analysis provides financial insights such as major cost drivers and year-over-year trends in program cost behavior.

When evaluating a request for new capital investment in technology, funding decisions-makers within government agencies often ask the question: "Why would this be a good capital investment and what financial and operational value will the new technology add to my agency?" Consequently, it is critical program managers have resources to develop analysis capturing the economic value of a proposed technology acquisition or program and effectively communicate its value proposition to successfully influence funding decision-makers. ROI Strategies business case analysis (BCA) services, commonly referred to in industry as Return on Investment or Cost-Benefit analysis, delivers these capabilities to program offices. Providing them the robust analysis and detailed reports to answer these and other critical questions.

 

What insights will agencies receive from our Business Case Analysis services? First, the business problem (capability gap) and its associated metrics will be researched and captured for all stakeholders to establish a clear understanding of the qualitative and quantitative nature of the need for investment. Then, for each feasible alternative available to solve the business problem, the life-cycle costs and benefits will be estimated and captured, along with their risks, technical requirements and program schedule. The key investment metrics of Return on Investment (ROI), Benefit-Cost ratio, Net Present Value and Payback Period will also be calculated and presented for each alternative. Finally, our output concludes with the identification of a recommended alternative and the analysis supporting that selection.  

Government agencies should periodically ask themselves: Where are our opportunities to improve operationally and financially? What are our true business needs and capability gaps? What impacts are these unmet business needs and capability gaps having on agency performance? How much are they costing my agency annually? ROI Strategies has the experience and skills to provide government agencies with answers to these introspective enqueries.

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ROI Strategies shortfall analysis service analyzes an agencies current business processes, technology architecture and their alignment to agency goals to discover opportunities for cost savings, gains in operational efficiency and strategic realignment. This analysis walks agencies through steps to research and organically identify business needs and capability gaps that have potential to yield a significant Return on Investment (ROI) if a viable solution is funded and implemented. Our analysis also captures metrics quantifying the amount of capital being wasting annually due to the business need or gaps. Eliminating capital waste can provide opportunities for that same capital to be used elsewhere in an agencies budget. Ultimately, our capability gap analysis helps an agency identify "business opportunities" where they should consider directing their capital investments in order realize a significant return on investment.

 

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