Template Alternatives by yyg12908

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									Project XXX Analysis of Alternatives Template


Analysis of Alternatives (Template)

This spreadsheet supports the business case analysis by analyzing alternative solutions.
It is expected that each individually identified alternative has an independent cost-benefit analysis created using the business case spreadsheet
template.
Guidance for use of that template and for overall development of a business case is provided in separate documents.


Steps to perform analysis of alternatives:

            1 Complete individual alternative analyses.
            2 Identify key alternatives that are worth comparing.
            3 Identify comparison metrics. The Summary Data sheet uses NPV, IRR, and cumulative cash flow. Consider using additional metrics as
              appropriate.
            4 Link or copy summary metric data for each alternative into the Summary Data sheet.
            5 Produce table that compares the key metrics for alternatives under consideration.
            6 Select finalist alternatives.
            7 Determine whether sensitivity / simulation analysis is warranted due to differences in uncertainty across alternatives.
            8 If so, perform analysis and present results. The Uncertainty Analysis spreadsheet demonstrates a Monte Carlo simulation.
            9 Determine weighting for non-financial evaluation criteria. Use Eval Matrix as template for performing this analysis and presentation.
           10 Present recommendations capturing results in the Business Case Document Template.


EITK0304




EI Toolkit Template                                                                                                                                 Page 1 of 6
Project XXX Analysis of Alternatives Template


                                                                             Period
Alternative A                                       0         1         2             3         4         5         Total
Benefits                                                0.5       3.0       3.0           3.0       2.0       2.0     13.5

Costs                                                (5.0)     (2.0)     (0.5)        (0.5)     (0.5)     (0.5)       (9.0)
Net Cash Flow                                        (4.5)      1.0       2.5          2.5       1.5       1.5         4.5
Cumulative Net Cash Flow                             (4.5)     (3.5)     (1.0)         1.5       3.0       4.5

                                                                             Period
Alternative B                                       0         1         2             3         4         5         Total
Benefits                                              0.5       3.0       3.0          3.0       2.0       2.0        13.5
Costs                                                (3.0)     (2.0)     (0.5)        (0.5)     (0.5)     (0.5)        (7.0)
Net Cash Flow                                        (2.5)      1.0       2.5          2.5       1.5       1.5          6.5
Cumulative Net Cash Flow                             (2.5)     (1.5)      1.0          3.5       5.0       6.5

                                                                             Period
Alternative C                                       0         1         2             3         4         5         Total
Benefits                                              0.5       2.5       3.8          5.0       5.0       5.0        21.8
Costs                                                (2.5)     (5.0)     (1.3)        (1.3)     (1.3)     (1.3)      (12.5)
Net Cash Flow                                        (2.0)     (2.5)      2.5          3.8       3.8       3.8         9.3
Cumulative Net Cash Flow                             (2.0)     (4.5)     (2.0)         1.8       5.5       9.3

EITK0304


                                                Alternative
Key Metric                                                A         B         C
Net Present Value                                    1.3        3.0       3.6
Internal Rate of Return                            27.9%      62.3%     46.8%
Cumulative Net Cash Flow                             4.5        6.5       9.3

Discount Rate                                        15%




EI Toolkit Template                                                                                                            Page 2 of 6
Project XXX Analysis of Alternatives Template




Perform additional Monte Carlo Simulation Analysis on Alternatives B and C

In this model we analyze the situation where Alternative B has considerably greater variance than Alternative C


                                                             Period
Alternative B                        0        1       2         3         4           5         Total
Benefits                              0.5     3.2     2.4         3.5         2.0       2.9       14.5
Costs                                (2.3)   (1.8)   (0.5)       (0.4)       (0.4)     (0.6)       (6.1)
Net Cash Flow                        (1.8)    1.4     1.8         3.1         1.6       2.3         8.4
Cumulative Net Cash Flow             (1.8)   (0.4)    1.4         4.5         6.1       8.4
Standard Deviation %                 25%

                                                             Period
Alternative C                        0        1       2         3         4           5         Total
Benefits                              0.5     2.6     4.3         4.2         5.6       4.8       22.0
Costs                                (2.5)   (4.2)   (1.3)       (1.1)       (1.4)     (1.1)     (11.7)
Net Cash Flow                        (2.0)   (1.7)    3.1         3.1         4.2       3.6       10.3
Cumulative Net Cash Flow             (2.0)   (3.7)   (0.6)        2.5         6.7      10.3
Standard Deviation %                 10%

EITK0304


    Simulation Analysis of Alternatives B and C
Key Metric                             B      C
Net Present Value                      4.2     4.4
Internal Rate of Return              95.1% 57.8%
Cumulative Net Cash Flow               8.4   10.3




EI Toolkit Template                                                                                               Page 3 of 6
Project XXX Analysis of Alternatives Template



                                                    Compare NPV of Alternatives
                       6.0
                       5.0
                       4.0
                       3.0
                       2.0
                       1.0
                        -
                               0       10     20     30         40        50      60          70   80   90


                                             Compare Cum Cash Flows of Alternatives

                       14.0
                       12.0
                       10.0
                        8.0
                        6.0
                        4.0
                        2.0
                         -
                               0       10     20      30        40        50      60          70   80   90



                                                    Compare IRR of Alternatives
                      350.0%
                      300.0%
                      250.0%
                      200.0%
                      150.0%
                      100.0%
                      50.0%
                       0.0%
                                   0    10     20     30         40       50      60          70   80   90
                                                           IRR of Alt B        IRR of Alt C




EI Toolkit Template                                                                                          Page 4 of 6
Project XXX Analysis of Alternatives Template




Alternatives Analysis                                                  Raw Rating Raw Rating Raw Rating Raw Rating                               Score         Score         Score
                                       Evaluation Criteria             Alternative 1 Alternative 2 Alternative 3 Alternative 4   Weighting   Alternative 1 Alternative 2 Alternative 3
Steps:                                 Technology
1). Establish selection criteria                          Feature Fit                                                                  25                0             0             0
     in column B.                                          Modularity                                                                   2                0             0             0
2). Gain consensus from key                 Performance/Scalability                                                                     5                0             0             0
    stakeholders on weightings               Extensibility/Openness                                                                    10                0             0             0
    (relative importance).                                 Reliability                                                                  3                0             0             0
3). Perform research and provide                             Security                                                                   5                0             0             0
     raw rating per alternative                                                                                                                          0             0             0
    (scale: 1 to 10, 10 being best). Financial
4). Use total scores at bottom right                     5 Year NPV                                                                    20                0             0             0
      to select preferred alternative.                    5 Year IRR                                                                    5                0             0             0
                                                   Capital Required                                                                    10                0             0             0
                                           Low Variance/Sensitivity                                                                     5                0             0             0
                                                                                                                                                         0             0             0
                                     Strategic/Non-Quant.
                                                Core Competence                                                                         5                0             0             0
                                          Flexibility of Outsourced                                                                     3                0             0             0
                                                   Addit'l Synergies                                                                    2                0             0             0
EITK0304                                                                                                                                                 0             0             0
                                                                                                                                                         0             0             0
                                                                                                                                                         0             0             0
                                                                                                                                                         0             0             0

                                                                                Weightings total to the right should be = 100         100                0               0            0
                                                                                                                                             Preferred Alternative will have the highest score above.




EI Toolkit Template                                                                                                                                                                 Page 5 of 6
               Project XXX Analysis of Alternatives Template




                    Score
                Alternative 4

                            0
                            0
                            0
                            0
                            0
                            0
                            0

                            0
                            0
                            0
                            0
                            0

                            0
                            0
                            0
                            0
                            0
                            0
                            0

                            0
ave the highest score above.




               EI Toolkit Template                             Page 6 of 6

								
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