DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families
and
Health Care Finance Administration

Feasibility, Alternatives, And Cost/Benefit Analysis Guide

July 1993

Table of Contents

PREFACE

1 INTRODUCTION

1.1 Background
1.2 Overview
1.3 Objectives
1.4 Analysis In Perspective
1.5 How to Use this Guide

Table 1 1: Mission And Planning Phase Documentation
Table 1 2: Flowchart: Mission And Planning Phase

2 FEASIBILITY STUDY AND ALTERNATIVES ANALYSIS

2.1 Overview
2.2 Describe the Status Quo
2.3 Define the Problems
2.4 Convert Problems to System Objectives
2.5 Identify System Constraints and Assumptions
2.6 Develop Initial Functional and Technical Requirements
2.7 Assess Project Feasibility
2.8 Identify Alternatives
2.9 Determine Risks and Effects
2.10 Determine Risks and Effects
2.11 Rank Alternatives

Table 2 1: Representative System Objectives
Table 2 2: Representative Alternatives
Table 2 3: Feasibility Study - Suggested Outline

3 COST / BENEFIT ANALYSIS

3.1 Overview
3.2 Cost the Status Quo
3.3 Cost Alternatives to the Status Quo
3.4 Identify and Characterize All Costs
3.5 Determine Whether to Use Constant or Current Dollars
3.6 Build each Cost Profile Year by Year
3.7 Apply Present Value Factor
3.8 Prepare Systems Life Cost Profiles
3.9 Identify and Characterize All Benefits
3.10 Identify and Characterize All Benefits
3.11 Apply Present Value Factors
3.12 Prepare Systems Life Benefits Profiles
3.13 Avoid Common Errors
3.14 Identify Qualitative Benefits
3.15 Verify Benefit Categories And Projections
3.16 Develop Cost/Benefit Profiles
3.17 Compare Quantitative Factors
3.18 Compare Alternatives: Quantitative and Qualitative
3.19 Maintain perspective: quantitative and qualitative factors
3.20 Verify Analysis and Select Alternative

Table 3 1: Cost Categories: Non-Recurring
Table 3 2: Cost Categories: Recurring
Table 3 3: Cost Profile Worksheet
Table 3 4: Annual Cost Worksheet
Table 3 5: Present Value Calculations
Table 3 6: Systems Life Cost Profile
Table 3 7: Benefit Profile Worksheet
Table 3 8: Quantified Benefits Worksheet: Annual
Table 3 9: Quantified Benefits Worksheet: Systems Life
Table 3 10: Annual Benefits Worksheet
Table 3 11: Systems Life Benefits Profile
Table 3 12: Qualitative Benefits Worksheet
Table 3 13: Cost / Benefit Profile
Table 3 14: Comparison Of Alternatives
Table 3 15: Graph: Systems Life Breakeven

4 COST / BENEFIT ANALYSIS FOR INTEGRATED SYSTEMS

4.1 Overview
4.2 Basis for Approval
4.3 Allocating Costs
4.4 Define Program Specific Benefits
4.5 Develop Program Specific Cost/Benefit Profiles

Table 4 1: Cost Distribution Profile
Table 4 2: Annual Cost Profile: by Program
Table 4 3: Systems Life Cost Profile: by Program
Table 4 4: Systems Life Cost Profile: by Program
Table 4 5: Systems Life Cost Profile: by Program
Table 4 6: Systems Life Cost Profile: by Program
Table 4 7: Systems Life Cost Profile: by Program
Table 4 8: Systems Life Cost Profile: by Program
Table 4 9: Systems Life Cost Profile: by Program
Table 4 10: Systems Life Cost Profile: by Program

5 MEASURING ACTUAL COSTS AND BENEFITS

5.1 Overview
5.2 Objectives
5.3 Management Tool
5.4 Identify All Costs
5.5 Build the Cost Profile Year by Year
5.6 Identify All Benefits
5.7 Build the Benefit Profile Year by Year
5.8 Compare the Cost/Benefits Achieved to those Projected

Table 5 1: Cost Measurement Worksheet
Table 5 2: Annual Cost Measurement Worksheet
Table 5 3: Systems Life Cost Profile: by Program
Table 5 4: Benefit Profile Measurement Worksheet
Table 5 5: Quantified Benefits Measurement Annual Worksheet
Table 5 6: Quantified Benefits Measurement: Systems Life Worksheet
Table 5 7: Annual Benefits Measurement Worksheet
Table 5 8: Systems Life Benefits Measurement Profile
Table 5 9: Cost / Benefit Measurement Profile

APPENDIX A: REFERENCES

APPENDIX B: GLOSSARY

APPENDIX C: EVALUATION, COMMENTS, AND SUGGESTIONS

Table C 1: Feasibility, Alternatives, and Cost/Benefit Analysis Evaluation, Comments, and Suggestions