U.S. Army Cost Benefit Analysis Guide

U.S. Army Cost Benefit Analysis Guide

3rd Edition

(V3.3) Updated as of:

23 FEB 2018

Prepared by Office of the Deputy Assistant Secretary of the Army (Cost and Economics) Version 3.3

The goal of this Guide is to make the CBA process as clear and user-friendly as possible. OASA (FM&C) will review and update the CBA Guide as necessary. Questions concerning the CBA process and formulation can be found on the Army Cost Management (ACM) portal Knowledge Center Cost Benefit Analysis Information page:

dge Center/Cost Benefit Analysis Information

Comments from users are encouraged and should be submitted to:

usarmy.pentagon.hqda-asa-fm.mbx.army-cost-benefitanalysis@mail.mil

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Updates and Changes to Version 3.2 dated 26 October 2016

Updated the `How to Develop Selection Criteria' portion of `STEP 6 ? Define Alternative Selection Criteria'.

Updates and Changes to Version 3.1 dated 24 April 2013

Updated embedded links for access to the Army Cost Management (ACM) portal.

Updates and Changes to Version 3.0 dated 1 February 2013

Moved the CBA mailbox contact information to Page 2 from the Introduction to give it greater visibility.

Provided additional guidance on developing the Objective Statement Reorganized all the appendices. Added additional acronyms to (New) Appendix B Revised (New) Appendix C Continued to correct typos, spelling errors, and usage/word choice.

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Table of Contents Purpose ...................................................................................................................................... 10 Introduction ................................................................................................................................ 11

Documenting a CBA................................................................................................................12 The CBA Guide Online.............................................................................................................13 What Is a Cost Benefit Analysis? ..............................................................................................13 Who Can Perform a Cost Benefit Analysis?................................................................................14 When Should a Cost Benefit Analysis Be Performed?..................................................................14 Identify Stakeholders (a.k.a the Customers)...............................................................................14 Cost Benefit Analysis and Teamwork ........................................................................................14 Work Schedule ......................................................................................................................15 Cost Benefit Analysis and Value Proposition ..............................................................................15 Cost Benefit Analysis and the Military Decision Making Process (MDMP) ......................................15 CBA vs. the MDMP .................................................................................................................17 Pre-Cost Benefit Analysis Considerations...................................................................................17 Quick Review.........................................................................................................................18 Cost Benefit Analysis Steps ? A Short Summary ...............................................................................19 STEP 1 ? Define the Problem/Opportunity; Describe the Background .................................................22 Problem or Opportunity Statement..........................................................................................22 Objective ..............................................................................................................................23 The Voice of the Stakeholder (Customer) and Decision Criteria....................................................24 Background ........................................................................................................................... 25 Quick Review.........................................................................................................................25 STEP 2 ? Define Scope; Formulate Facts and Assumptions.................................................................26 Scope ...................................................................................................................................26 Formulate Facts and Assumptions............................................................................................26 Quick Review.........................................................................................................................27 STEP 3 ? Define Alternatives..........................................................................................................28 Introduction ..........................................................................................................................28 Define the Status Quo ............................................................................................................28 The Status Quo as a Baseline ...................................................................................................29 Documenting the Status Quo...................................................................................................29 Define Alternatives / Courses of Action (COA)............................................................................30

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