+-----------------------------------------------------------------------+
| **DEPARTMENT OF HEALTH AND HUMAN SERVICES**                           |
|                                                                       |
| **ADMINISTRATION FOR CHILDREN AND FAMILIES**                          |
|                                                                       |
| **FEASIBILITY, ALTERNATIVES, AND**                                    |
|                                                                       |
| **COST / BENEFIT ANALYSIS**                                           |
|                                                                       |
| **GUIDE**                                                             |
|                                                                       |
| JULY 1993                                                             |
+-----------------------------------------------------------------------+

TABLE OF CONTENTS

1 INTRODUCTION [1-1](#introduction)

1.1 Background [1-1](#background)

1.2 Overview [1-1](#overview)

1.3 Objectives [1-2](#objectives)

1.4 Analysis In Perspective [1-2](#analysis-in-perspective)

1.5 How to Use this Guide [1-2](#how-to-use-this-guide)

2 FEASIBILITY STUDY AND ALTERNATIVES ANALYSIS
[2-1](#feasibility-study-and-alternatives-analysis)

2.1 Overview [2-1](#overview-1)

2.2 Describe the Status Quo [2-1](#describe-the-status-quo)

2.3 Define the Problems [2-1](#define-the-problems)

2.4 Convert Problems to System Objectives
[2-2](#convert-problems-to-system-objectives)

2.5 Identify System Constraints and Assumptions
[2-2](#identify-system-constraints-and-assumptions)

2.6 Develop Initial Functional and Technical Requirements
[2-5](#develop-initial-functional-and-technical-requirements)

2.7 Assess Project Feasibility [2-6](#assess-project-feasibility)

2.8 Identify Alternatives [2-6](#identify-alternatives)

2.9 Determine Risks and Effects [2-7](#determine-risks-and-effects)

2.10 Determine Risks and Effects [2-9](#determine-risks-and-effects-1)

2.11 Rank Alternatives [2-9](#rank-alternatives)

3 COST / BENEFIT ANALYSIS [3-1](#cost-benefit-analysis)

3.1 Overview [3-1](#overview-2)

3.2 Cost the Status Quo [3-1](#cost-the-status-quo)

3.3 Cost Alternatives to the Status Quo
[3-2](#cost-alternatives-to-the-status-quo)

3.4 Identify and Characterize All Costs
[3-2](#identify-and-characterize-all-costs)

3.5 Determine Whether to Use Constant or Current Dollars
[3-5](#determine-whether-to-use-constant-or-current-dollars)

3.6 Build each Cost Profile Year by Year
[3-7](#build-each-cost-profile-year-by-year)

3.7 Apply Present Value Factor [3-9](#apply-present-value-factor)

3.8 Prepare Systems Life Cost Profiles
[3-10](#prepare-systems-life-cost-profiles)

3.9 Identify and Characterize All Benefits
[3-11](#identify-and-characterize-all-benefits)

3.10 Identify and Characterize All Benefits
[3-14](#identify-and-characterize-all-benefits-1)

3.11 Apply Present Value Factors [3-19](#apply-present-value-factors)

3.12 Prepare Systems Life Benefits Profiles
[3-19](#prepare-systems-life-benefits-profiles)

3.13 Avoid Common Errors [3-22](#avoid-common-errors)

3.14 Identify Qualitative Benefits
[3-22](#identify-qualitative-benefits)

3.15 Verify Benefit Categories And Projections
[3-23](#verify-benefit-categories-and-projections)

3.16 Develop Cost/Benefit Profiles [3-23](#develop-costbenefit-profiles)

3.17 Compare Quantitative Factors [3-25](#compare-quantitative-factors)

3.18 Compare Alternatives: Quantitative and Qualitative
[3-29](#compare-alternatives-quantitative-and-qualitative)

3.19 Maintain perspective: quantitative and qualitative factors
[3-31](#maintain-perspective-quantitative-and-qualitative-factors)

3.20 Verify Analysis and Select Alternative
[3-32](#verify-analysis-and-select-alternative)

4 COST / BENEFIT ANALYSIS FOR INTEGRATED SYSTEMS
[4-1](#cost-benefit-analysis-for-integrated-systems)

4.1 Overview [4-1](#overview-3)

4.2 Basis for Approval [4-1](#basis-for-approval)

4.3 Allocating Costs [4-1](#allocating-costs)

4.4 Define Program Specific Benefits
[4-6](#define-program-specific-benefits)

4.5 Develop Program Specific Cost/Benefit Profiles
[4-6](#develop-program-specific-costbenefit-profiles)

5 MEASURING ACTUAL COSTS AND BENEFITS
[5-1](#measuring-actual-costs-and-benefits)

5.1 Overview [5-1](#overview-4)

5.2 Objectives [5-1](#objectives-1)

5.3 Management Tool [5-2](#management-tool)

5.4 Identify All Costs [5-2](#identify-all-costs)

5.5 Build the Cost Profile Year by Year
[5-2](#build-the-cost-profile-year-by-year)

5.6 Identify All Benefits [5-2](#identify-all-benefits)

5.7 Build the Benefit Profile Year by Year
[5-4](#build-the-benefit-profile-year-by-year)

5.8 Compare the Cost/Benefits Achieved to those Projected
[5-8](#compare-the-costbenefits-achieved-to-those-projected)

APPENDIX A: REFERENCES [1](#appendix-a-references)

APPENDIX B: GLOSSARY [1](#appendix-b-glossary)

APPENDIX C: EVALUATION, COMMENTS, AND SUGGESTIONS
[1](#appendix-c-evaluation-comments-and-suggestions)

LIST OF TABLES AND WORKSHEETS

Table 1‑1: Mission And Planning Phase Documentation
[1-3](#__RefHeading___Toc467917018)

Table 1‑2: Flowchart: Mission And Planning Phase
[1-6](#__RefHeading___Toc467917019)

Table 2‑1: Representative System Objectives
[2-4](#__RefHeading___Toc467917020)

Table 2‑2: Representative Alternatives
[2-8](#__RefHeading___Toc467917021)

Table 2‑3: Feasibility Study --- Suggested Outline
[2-11](#__RefHeading___Toc467917022)

Table 3‑1: Cost Categories: Non-Recurring
[3-3](#__RefHeading___Toc467917023)

Table 3‑2: Cost Categories: Recurring
[3-4](#__RefHeading___Toc467917024)

Table 3‑3: Cost Profile Worksheet [3-6](#__RefHeading___Toc467917025)

Table 3‑4: Annual Cost Worksheet [3-8](#__RefHeading___Toc467917026)

Table 3‑5: Present Value Calculations
[3-10](#__RefHeading___Toc467917027)

Table 3‑6: Systems Life Cost Profile
[3-13](#__RefHeading___Toc467917028)

Table 3‑7: Benefit Profile Worksheet
[3-15](#__RefHeading___Toc467917029)

Table 3‑8: Quantified Benefits Worksheet: Annual
[3-17](#__RefHeading___Toc467917030)

Table 3‑9: Quantified Benefits Worksheet: Systems Life
[3-18](#__RefHeading___Toc467917031)

Table 3‑10: Annual Benefits Worksheet
[3-20](#__RefHeading___Toc467917032)

Table 3‑11: Systems Life Benefits Profile
[3-21](#__RefHeading___Toc467917033)

Table 3‑12: Qualitative Benefits Worksheet
[3-24](#__RefHeading___Toc467917034)

Table 3‑13: Cost / Benefit Profile [3-26](#__RefHeading___Toc467917035)

Table 3‑14: Comparison Of Alternatives
[3-27](#__RefHeading___Toc467917036)

Table 3‑15: Graph: Systems Life Breakeven
[3-28](#__RefHeading___Toc467917037)

Table 4‑1: Cost Distribution Profile [4-3](#__RefHeading___Toc467917038)

Table 4‑2: Annual Cost Profile: by Program
[4-4](#__RefHeading___Toc467917039)

Table 4‑3: Systems Life Cost Profile: by Program
[4-5](#__RefHeading___Toc467917040)

Table 4‑4: Systems Life Cost Profile: by Program
[4-7](#__RefHeading___Toc467917041)

Table 4‑5: Systems Life Cost Profile: by Program
[4-9](#__RefHeading___Toc467917042)

Table 4‑6: Systems Life Cost Profile: by Program
[4-10](#__RefHeading___Toc467917043)

Table 4‑7: Systems Life Cost Profile: by Program
[4-11](#__RefHeading___Toc467917044)

Table 4‑8: Systems Life Cost Profile: by Program
[4-12](#__RefHeading___Toc467917045)

Table 4‑9: Systems Life Cost Profile: by Program
[4-14](#__RefHeading___Toc467917046)

Table 4‑10: Systems Life Cost Profile: by Program
[4-15](#__RefHeading___Toc467917047)

Table 5‑1: Cost Measurement Worksheet
[5-3](#__RefHeading___Toc467917048)

Table 5‑2: Annual Cost Measurement Worksheet
[5-5](#__RefHeading___Toc467917049)

Table 5‑3: Systems Life Cost Profile: by Program
[5-6](#__RefHeading___Toc467917050)

Table 5‑4: Benefit Profile Measurement Worksheet
[5-7](#__RefHeading___Toc467917051)

Table 5‑5: Quantified Benefits Measurement Annual Worksheet
[5-9](#__RefHeading___Toc467917052)

Table 5‑6: Quantified Benefits Measurement: Systems Life Worksheet
[5-10](#__RefHeading___Toc467917053)

Table 5‑7: Annual Benefits Measurement Worksheet
[5-11](#__RefHeading___Toc467917054)

Table 5‑8: Systems Life Benefits Measurement Profile
[5-12](#__RefHeading___Toc467917055)

Table 5‑9: Cost / Benefit Measurement Profile
[5-13](#__RefHeading___Toc467917056)

**PREFACE**

This optional guide was developed to support State and ACF professionals
in the development, review, and approval of feasibility studies,
alternatives analyses, and cost/benefit analyses.

Comments were requested and received from both ACF central and regional
office staff and were incorporated, wherever possible, in this guide.
Yet, the true test of any manual is how well it supports analysts in the
performance of their assigned tasks and whether it remains relevant and
useful. In this sense, the final test of this guide by the ultimate
users --- the States --- remains.

This guide seeks to establish a standard analytical approach, develop a
framework for analysis and documentation, and provide worksheets to
support the State during analysis and comparison of alternatives. Even
with these aids, we do not underestimate the difficulty of the analysis,
judgement, and determinations required of the individuals conducting
feasibility, alternatives, and cost/benefit analyses. However, this
guide does not attempt to provide a \"cookbook\" approach or a set of
solutions. Although use of this guide is encouraged --- to ease and
expedite Federal review and approval --- the guide is not mandatory.

ACF welcomes suggestions from those using this guide. An *Evaluation,
Comments, and Suggestions* form is included in Appendix C to this Guide.
This form or any other written comments may be sent to:

> Department of Health and Human Services
>
> Administration for Children and Families

Director, Office of State Systems

> 370 L\'Enfant Promenade, SW
>
> Washington, DC 20447-0001

\(202\) 401-6960

ACF has developed other resources for preparing cost/benefit studies.
For example, the *Companion* *Guide* provides examples of a cost/benefit
analysis and cost/benefit measurement report, prepared under the general
guidelines of this *Feasibility, Alternatives, and Cost/Benefit Analysis
Guide*. In addition, ACF offers a prototype set of spreadsheet templates
and macros (with brief instruction sheet) to automate the development
and production of cost/benefit analysis reports recommended by the
Guide. These templates are available in Lotus 1-2-3, Microsoft Excel,
and Borland Quattro-Pro formats. They are recommended only for
experienced users since ACF can provide only limited phone support. For
further information, call or write to ACF.

# INTRODUCTION

**The design, development, and implementation of an information system
is a complex and expensive undertaking. To make cost-effective
decisions, information system project managers rely on a series of
analyses and studies required by law and regulation:**

> **Feasibility Study,**
>
> **Alternatives Analysis, and**
>
> **Cost/Benefit Analysis.**

**This handbook provides guidance on conducting such studies.**

+---------------------+------------------------------------------------+
| ## Background       | The Department of Health and Human Services\'  |
|                     | (DHHS) Administration for Children and         |
|                     | Families (ACF) provides national leadership    |
|                     | and direction in planning, managing, and       |
|                     | coordinating the nationwide administration and |
|                     | financing of a broad range of comprehensive    |
|                     | and supportive programs for vulnerable         |
|                     | children and families. These programs are, in  |
|                     | large part, carried out by State and local     |
|                     | agencies and are designed to promote           |
|                     | stability, economic security, responsibility,  |
|                     | and self-sufficiency.                          |
|                     |                                                |
|                     | While the programs are carried out at the      |
|                     | state and local level, ACF retains             |
|                     | responsibility for approving and monitoring    |
|                     | systems development and implementation for     |
|                     | Federally-assisted benefits programs.          |
+---------------------+------------------------------------------------+
| ## Overview         | ACF gives approval to the States in accordance |
|                     | with regulations which require the submission  |
|                     | of Advance Planning Documents (APDs) and       |
|                     | supporting studies.                            |
|                     |                                                |
|                     | Although the regulations codified in 45 CFR    |
|                     | Part 95 require that a feasibility study,      |
|                     | alternatives analysis, and cost/benefit        |
|                     | analysis be conducted and submitted to ACF     |
|                     | with the Implementation APD, generic yet       |
|                     | comprehensive guidance broadly applicable to   |
|                     | all State benefit programs had not been        |
|                     | developed. States have had to determine the    |
|                     | details of how to conduct these crucial        |
|                     | studies on which Federal approval and funding  |
|                     | depend.                                        |
|                     |                                                |
|                     | The States\' submissions, therefore, have      |
|                     | varied widely in comprehensiveness and quality |
|                     | --- sometimes to the disadvantage of the       |
|                     | States and ACF. Efficient, effective, and      |
|                     | timely decision-making are hampered in such    |
|                     | cases.                                         |
|                     |                                                |
|                     | Yet guidance should not force a highly         |
|                     | standardized, checklist approach as might be   |
|                     | developed for clerks or assembly line workers. |
|                     | Instead, guidance for decision-making          |
|                     | professionals should:                          |
|                     |                                                |
|                     | -   Suggest how to approach the analysis;      |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Describe a broad range of considerations,  |
|                     |     which may or may not apply to the task at  |
|                     |     hand; and                                  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Provide a standardized framework for       |
|                     |     analysis and problem-solving.              |
|                     |                                                |
|                     | Although the studies called for in the         |
|                     | regulation are individually named as if they   |
|                     | stand on their own, they are, in fact, the     |
|                     | results of an analytical continuum. The        |
|                     | process is one of refinement, with             |
|                     | requirements, feasibility, alternatives, and   |
|                     | costs defined with increasing precision as the |
|                     | analysis continues. (See Table 1-1 on page     |
|                     | 1-4.)                                          |
|                     |                                                |
|                     | The process is also one in which the studies   |
|                     | are closely related and dependent upon each    |
|                     | other. For example, requirements directly      |
|                     | affect alternatives and costs. Costs may limit |
|                     | feasible alternatives.                         |
|                     |                                                |
|                     | As the process continues and needs and options |
|                     | are refined, earlier decisions may need        |
|                     | reassessment. Properly approached, the process |
|                     | is dynamic.                                    |
+---------------------+------------------------------------------------+
| ## Objectives       | By issuing guidance, ACF seeks to support the  |
|                     | practical application of feasibility,          |
|                     | alternatives, and cost/benefit analysis by the |
|                     | States. Since it is neither practical nor      |
|                     | possible to develop a \"cookbook\" approach to |
|                     | analysis, this guide has been developed for    |
|                     | use by the States\' senior analysts and        |
|                     | managers, for the thoughtful application of    |
|                     | analysis to decision-making.                   |
|                     |                                                |
|                     | The purpose of this document is to:            |
|                     |                                                |
|                     | -   Suggest a standard analytical approach for |
|                     |     conducting feasibility studies,            |
|                     |     alternatives analyses, and cost/benefit    |
|                     |     analyses;                                  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Develop a framework for analysis and       |
|                     |     documentation; and                         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Provide worksheets to support the State    |
|                     |     during analysis and comparison of          |
|                     |     alternatives.                              |
|                     |                                                |
|                     | Although use of this guide is encouraged ---   |
|                     | to ease and expedite Federal review and        |
|                     | approval --- the guide is not mandatory.       |
+---------------------+------------------------------------------------+
| ## Anal             | This guide is intended to be a decision-making |
| ysis In Perspective | tool, supporting managers and senior analysts  |
|                     | in methodically and comprehensively analyzing  |
|                     | a range of automation solutions.               |
|                     |                                                |
|                     | More complex, economical models for            |
|                     | cost/benefit analysis have been developed for  |
|                     | the business environment, employing concepts   |
|                     | such as probability distributions and utility  |
|                     | analysis. Such models are outside the scope of |
|                     | this effort, but may be employed by the States |
|                     | if their prior application has been            |
|                     | successful.                                    |
+---------------------+------------------------------------------------+
| ## Ho               | *[Who]{.underline}.* ACF developed this guide  |
| w to Use this Guide | for the manager, senior analyst, and project   |
|                     | members responsible for reviewing              |
|                     | alternatives, developing costs, assessing      |
|                     | benefits, and selecting a systems development  |
|                     | approach. This guide is optional for use by    |
|                     | State\'s in preparing or contracting for       |
|                     | feasibility studies, alternatives analyses,    |
|                     | and cost/benefit analyses. The guide will be   |
|                     | used by Federal personnel in evaluating        |
|                     | States\' submissions.                          |
+---------------------+------------------------------------------------+

  --------------------------------- --------------------------------------------------
  []{#__RefHeading___Toc467917018   
  .anchor}Table 1‑1: Mission And    
  Planning Phase Documentation      

  **Type of Document**              **Description of Document**

  Planning APD:                     A written plan of action which requests funding to
                                    determine the need for, feasibility, and cost
                                    factors of an ADP equipment or services
                                    acquisition. Includes a statement of the problem
                                    or need, project management plan, budget for
                                    project planning, and estimated total project
                                    cost. Commits to preparing the feasibility study,
                                    requirements (or needs) analysis, alternatives
                                    analysis, and cost/benefit analysis.

  Feasibility Study:                A preliminary study to determine whether it is
                                    sufficiently probable that effective and efficient
                                    use of ADP equipment or systems can be made to
                                    warrant the substantial investment of staff, time,
                                    and money being requested and whether the plan is
                                    capable of being accomplished successfully.
                                    Includes consideration of alternatives with
                                    associated cost/benefits.

  Alternatives Analysis:            An analysis which considers the alternatives
                                    available for automation, such as transferring
                                    another State\'s system or enhancing an existing
                                    system. Included as part of the feasibility study.

  Cost/Benefit Analysis:            Detailed evaluation of the costs and benefits of
                                    each alternative identified during the
                                    alternatives analysis. Includes costs of current
                                    and projected operations as a baseline for (1)
                                    determining which alternative to select for
                                    automation [and]{.underline} (2) measuring costs
                                    and benefits of the implemented and operational
                                    system over time. Can be included as part of the
                                    Feasibility Study or stand as a separate document.

  Requirements Analysis:            A detailed analysis of the information needs and
                                    the functional and technical requirements the
                                    proposed computerized system must meet. The
                                    requirements analysis usually builds on the
                                    initial functional and technical determination of
                                    need developed during the Feasibility Study.

  Implementation APD:               A written plan of action --- marking the
                                    transition from the mission and planning phase to
                                    the development and implementation phase --- which
                                    supports the plan to acquire the proposed ADP
                                    services or equipment. Includes the statement of
                                    needs and objectives, feasibility study,
                                    requirements analysis, alternatives analysis,
                                    cost/benefit analysis, personnel resource
                                    statements, project activities, schedule, proposed
                                    budget and prospective costs, and system life.
  --------------------------------- --------------------------------------------------

+---------------------+------------------------------------------------+
|                     | *[When]{.underline}.* This document can be     |
|                     | used when preparing for, conducting, and       |
|                     | reviewing feasibility, requirements,           |
|                     | alternatives, or costs and benefits. An        |
|                     | overview of the process is provided in the     |
|                     | flowchart on page 1-7.                         |
|                     |                                                |
|                     | *[Where]{.underline}.* The guide will be       |
|                     | disseminated to State officials and Federal    |
|                     | DHHS/ACF regional and headquarters personnel.  |
|                     | Copies will be made available to other Federal |
|                     | agencies upon request.                         |
|                     |                                                |
|                     | *[How]{.underline}.* This guidance may be used |
|                     | by State analysts in a manner fitting the      |
|                     | requirements --- providing, for example,       |
|                     | in-depth analysis for large dollar systems     |
|                     | projects or scaling down the analysis for low  |
|                     | dollar, limited alternative projects. The      |
|                     | document can be followed precisely, using      |
|                     | copies of the worksheets provided. Or, the     |
|                     | guide may serve as a suggested approach, with  |
|                     | States modifying or developing new worksheets  |
|                     | to meet their needs.                           |
|                     |                                                |
|                     | *In particular, there is no requirement that   |
|                     | States use an eight year system life: in fact, |
|                     | five years is more common. The determination   |
|                     | of system life is up to the State.*            |
|                     |                                                |
|                     | The worksheets are hierarchical; that is, each |
|                     | worksheet provides information which is        |
|                     | carried forward to ensuing worksheets as the   |
|                     | analysis progresses.                           |
|                     |                                                |
|                     | ACF will use the guide as a measure against    |
|                     | which to evaluate States\' efforts for         |
|                     | comprehensiveness of evaluation and to         |
|                     | consider the merits of the States\' proposed   |
|                     | solutions. ACF will consider:                  |
|                     |                                                |
|                     | > Has the State thoroughly described the       |
|                     | > status quo?                                  |
|                     | >                                              |
|                     | > Have a broad range of alternatives, varying  |
|                     | > technologically and by source, been          |
|                     | > considered?                                  |
|                     | >                                              |
|                     | > Have the options of modifying the existing   |
|                     | > system and transferring another State\'s     |
|                     | > system been evaluated?                       |
|                     | >                                              |
|                     | > Did the State apply cost/benefit analysis to |
|                     | > at least two --- but preferably three ---    |
|                     | > viable alternatives? Is the status quo one   |
|                     | > of the alternatives?                         |
|                     | >                                              |
|                     | > Were the status quo and all alternatives     |
|                     | > evaluated on a systems life basis?           |
|                     | >                                              |
|                     | > Was present value analysis used? Was a 7     |
|                     | > percent discount factor used?                |
|                     | >                                              |
|                     | > Is the State\'s presentation of costs and    |
|                     | > benefits thorough, detailed, and well        |
|                     | > documented throughout the systems life? Do   |
|                     | > the cost and benefit projections appear      |
|                     | > reasonable?                                  |
|                     | >                                              |
|                     | > Were net benefits or costs, benefit/cost     |
|                     | > ratios, and breakeven points calculated for  |
|                     | > the status quo and all alternatives?         |
|                     | >                                              |
|                     | > Is the selected alternative reasonable?      |
|                     | >                                              |
|                     | > Has the State set forth a clear set of       |
|                     | > projected benefits and costs against which   |
|                     | > actual costs and benefits can be measured?   |
|                     |                                                |
|                     | *[Why]{.underline}.* Requiring the submission  |
|                     | of certain documents, without providing        |
|                     | guidance, can hinder the ability of States to  |
|                     | provide the needed information and hinder      |
|                     | Federal reviewers in promptly determining the  |
|                     | merits of the States\' proposals. The guide    |
|                     | suggests a standard approach and analytical    |
|                     | framework for the States\' consideration.      |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917019 .anchor}Table 1‑2: Flowchart: Mission
And Planning Phase

  ----------------- ----------------- ------------------- -----------------
  **Process**       **Preparation**   **Documentation**   **Approval**

  ----------------- ----------------- ------------------- -----------------

# FEASIBILITY STUDY AND ALTERNATIVES ANALYSIS

**The Feasibility Study is the preliminary study that determines whether
a proposed systems project is technically, financially, and
operationally viable. The Alternatives Analysis, usually included as
part of the Feasibility Study, identifies viable alternatives for the
system design and development. Between them, the documents provide:**

-   **An analysis of the system objectives, functional requirements, and
    system design concepts;**

-   **A determination of the feasibility of applying automated systems
    to effectively, efficiently, and economically improve program
    operations;**

-   **An evaluation of alternative approaches for reasonably achieving
    the objectives and goals; and**

-   **Identification of a proposed approach.**

+---------------------+-----------------------------------------------+---+
| ## Overview         | The Feasibility Study is a critical document  |   |
|                     | which defines the initial system concepts,    |   |
|                     | objectives, requirements, and alternatives.   |   |
|                     | The study also forms the framework for the    |   |
|                     | system development project and establishes a  |   |
|                     | baseline for further studies.                 |   |
+---------------------+-----------------------------------------------+---+
| ## Desc             | Following a general overview of the project,  |   |
| ribe the Status Quo | the Feasibility Study should establish the    |   |
|                     | \"status quo\" in the State\'s management of  |   |
|                     | benefit programs. The current environment may |   |
|                     | be a manual process, an automated process, or |   |
|                     | a combination of manual and automated         |   |
|                     | functions. The environment may be paper       |   |
|                     | intensive or dominated by electronic records. |   |
|                     | The environment may be centralized or         |   |
|                     | distributed. Regardless of attributes, the    |   |
|                     | current operating environment should be       |   |
|                     | described.                                    |   |
|                     |                                               |   |
|                     | Depending on the systems project being        |   |
|                     | analyzed, the following factors may be        |   |
|                     | addressed:                                    |   |
|                     |                                               |   |
|                     | -   Programmatic functions;                   |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Information architecture;                 |   |
|                     |                                               |   |
|                     | -   System architecture;                      |   |
|                     |                                               |   |
|                     | -   Hardware and software inventory;          |   |
|                     |                                               |   |
|                     | -   Interface and matching;                   |   |
|                     |                                               |   |
|                     | -   Processing and data flow diagrams;        |   |
|                     |                                               |   |
|                     | -   Storage and retrieval;                    |   |
|                     |                                               |   |
|                     | -   Inputs;                                   |   |
|                     |                                               |   |
|                     | -   Outputs;                                  |   |
|                     |                                               |   |
|                     | -   Workload,                                 |   |
|                     |                                               |   |
|                     | -   Validation / internal control;            |   |
|                     |                                               |   |
|                     | -   Security / Privacy;                       |   |
|                     |                                               |   |
|                     | -   Emergency response, back-up, and disaster |   |
|                     |     recovery;                                 |   |
|                     |                                               |   |
|                     | -   Personnel; and                            |   |
|                     |                                               |   |
|                     | -   Space and Environment.                    |   |
+---------------------+-----------------------------------------------+---+
| ## D                | Once the current operating environment has    |   |
| efine the Problems  | been described, the problems with the current |   |
|                     | system (previously stated in the Planning     |   |
|                     | APD) should be detailed. Problems may be      |   |
|                     | functional --- that is, the system may be     |   |
|                     | incomplete, not fulfilling all the program    |   |
|                     | requirements. Problems may be technical ---   |   |
|                     | for example, the system may be too slow,      |   |
|                     | sized too small, or be obsolete and           |   |
|                     | inefficient in terms of hardware or software. |   |
|                     | Problems may also relate to system cost or to |   |
|                     | access, limiting the ability of personnel to  |   |
|                     | use system information to full potential.     |   |
|                     |                                               |   |
|                     | This step should also include a determination |   |
|                     | of the seriousness of each problem and its    |   |
|                     | effects on factors such as program clients    |   |
|                     | and program financial considerations.         |   |
+---------------------+-----------------------------------------------+---+
| ##                  | Once the current operational problems are     |   |
|  Convert Problems t | identified, the State can develop specific    |   |
| o System Objectives | system objectives. For example, the system    |   |
|                     | may need to be redesigned to use the powerful |   |
|                     | attributes of database management software.   |   |
|                     | Or the system may need to be redesigned to    |   |
|                     | provide better service to clients or to       |   |
|                     | support the distributed use and processing of |   |
|                     | information. Or the system may need to be     |   |
|                     | re-engineered to simplify and streamline work |   |
|                     | processes for greater efficiency and economy. |   |
|                     |                                               |   |
|                     | In defining objectives, various elements must |   |
|                     | be considered: program needs, costs, level of |   |
|                     | effort, time schedules, allowable operational |   |
|                     | changes, ease of future modification and      |   |
|                     | expansion, and system security and            |   |
|                     | reliability. Whatever the element needing     |   |
|                     | improvement, objectives should be defined in  |   |
|                     | a clear, specific, and measurable manner and  |   |
|                     | in terms general enough to be met using       |   |
|                     | different automation strategies.              |   |
|                     |                                               |   |
|                     | System objectives are critical to ensuing     |   |
|                     | analysis --- whether conducted to support the |   |
|                     | Feasibility Study, requirements analysis, or  |   |
|                     | development of testing plans. In terms of the |   |
|                     | Feasibility Study, the objectives form the    |   |
|                     | framework for the formulation of the initial  |   |
|                     | system requirements, are used to ascertain    |   |
|                     | the acceptability of alternatives, and form   |   |
|                     | the basis for generating costs and benefits   |   |
|                     | during the ensuing Cost/Benefit Analysis. See |   |
|                     | Table 2-1 on the following page for examples  |   |
|                     | of system objectives.                         |   |
+---------------------+-----------------------------------------------+---+
| ## Ident            | Constraints are factors that lie outside ---  |   |
| ify System Constrai | but have a direct impact on --- the system    |   |
| nts and Assumptions | design effort. Constraints may be:            |   |
|                     |                                               |   |
|                     | -   Laws and regulations --- for example,     |   |
|                     |     State, Federal, or independent regulatory |   |
|                     |     agencies may require specific design      |   |
|                     |     approaches for new systems or mandate     |   |
|                     |     specific changes to existing systems.     |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Technological --- for example, new        |   |
|                     |     equipment must be compatible with         |   |
|                     |     existing equipment;                       |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Socio-political --- for example, the      |   |
|                     |     Governor mandates that all public         |   |
|                     |     assistance ADP functions be combined and  |   |
|                     |     managed by a common data base management  |   |
|                     |     system;                                   |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Financial --- for example, proposed       |   |
|                     |     development and implementation costs must |   |
|                     |     remain within a specified budget.         |   |
|                     |                                               |   |
|                     | -   Operational --- for example, space,       |   |
|                     |     staffing levels, skill mix, and           |   |
|                     |     capability and competence factors may     |   |
|                     |     limit system options.                     |   |
|                     |                                               |   |
|                     | However, system constraints should not be     |   |
|                     | used to artificially restrict or direct the   |   |
|                     | system. The objective is to plan the best     |   |
|                     | system for the problem to be solved, not to   |   |
|                     | fabricate and impose constraints that limit   |   |
|                     | the system alternatives.                      |   |
|                     |                                               |   |
|                     | As with objectives, system constraints are    |   |
|                     | critical to ensuing phases of the feasibility |   |
|                     | study. They can affect system requirements    |   |
|                     | and the acceptability of alternatives.        |   |
|                     |                                               |   |
|                     | Assumptions are factors predicted to apply to |   |
|                     | the program or systems project. For example,  |   |
|                     | the project\'s operational or *system life    |   |
|                     | --- the time required to plan, design,        |   |
|                     | acquire, and implement the system             |   |
|                     | [plus]{.underline} its operational life ---*  |   |
|                     | must be predicted and thus forms a critical   |   |
|                     | assumption during the Feasibility Study. This |   |
|                     | assumption directly affects the period of     |   |
|                     | time for comparison of costs and benefits of  |   |
|                     | system alternatives and --- for all practical |   |
|                     | purposes --- sets the range of time within    |   |
|                     | which the system development breakeven point  |   |
|                     | must occur.                                   |   |
|                     |                                               |   |
|                     | Four rules apply to making assumptions:       |   |
|                     |                                               |   |
|                     | -   Make assumptions when essential           |   |
|                     |     information cannot be determined          |   |
|                     |     [or]{.underline} where the analysis is    |   |
|                     |     critically dependent on certain factors,  |   |
|                     |     conditions, or future events;             |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   State assumptions realistically and in    |   |
|                     |     precise terms;                            |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Include only assumptions which will       |   |
|                     |     affect the analysis; and                  |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Document the logic underlying the         |   |
|                     |     assumption in the event its soundness     |   |
|                     |     needs to be reassessed.                   |   |
|                     |                                               |   |
|                     | In addition to systems life, other common     |   |
|                     | assumptions in cost/benefit analysis are      |   |
|                     | project development and implementation        |   |
|                     | schedule, estimated future workloads, and     |   |
|                     | projected costs and values. Assumptions can   |   |
|                     | be categorized as:                            |   |
|                     |                                               |   |
|                     | -   Cost/Resource,                            |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Functional/Programmatic,                  |   |
|                     |                                               |   |
|                     | ```{=html}                                    |   |
|                     | <!-- -->                                      |   |
|                     | ```                                           |   |
|                     | -   Technical, and                            |   |
|                     |                                               |   |
|                     | > Systems Life.                               |   |
+---------------------+-----------------------------------------------+---+

+-----------------------+-----------------------+-----------------------+
| []{#__RefH            |                       |                       |
| eading___Toc467917020 |                       |                       |
| .anchor}Table 2‑3:    |                       |                       |
| Representative System |                       |                       |
| Objectives            |                       |                       |
+-----------------------+-----------------------+-----------------------+
| **Cost/Resource**     | **Func                | **Technical**         |
|                       | tional/Programmatic** |                       |
+-----------------------+-----------------------+-----------------------+
| Reduced Costs         | Improved Services to  | Faster Record         |
|                       | Clients               | Retrieval             |
| -   by area           |                       |                       |
|                       | -   by area           | -   what records      |
| ```{=html}            |                       |                       |
| <!-- -->              | ```{=html}            | ```{=html}            |
| ```                   | <!-- -->              | <!-- -->              |
| -   by how much       | ```                   | ```                   |
|                       | -   in what manner    | -   by how much       |
| Controlled Costs      |                       |                       |
|                       | Reduced Error Rate    | More Timely Reporting |
| -   by area           |                       |                       |
|                       | -   by area           | -   what reports      |
| ```{=html}            |                       |                       |
| <!-- -->              | ```{=html}            | ```{=html}            |
| ```                   | <!-- -->              | <!-- -->              |
| -   in what manner    | ```                   | ```                   |
|                       | -   by how much       | -   by how much       |
| Streamlined Processes |                       |                       |
|                       | Increased Collections | Less Processing Time  |
| -   in what manner    |                       |                       |
|                       | -   by area           | -   by area           |
| ```{=html}            |                       |                       |
| <!-- -->              | ```{=html}            | ```{=html}            |
| ```                   | <!-- -->              | <!-- -->              |
| -   by what measure   | ```                   | ```                   |
|                       | -   by how much       | -   by how much       |
| Reduced Staffing      |                       |                       |
|                       | Improved Management   | Improved Access       |
| -   by area           | Information           |                       |
|                       |                       | -   by area           |
| ```{=html}            | -   by area           |                       |
| <!-- -->              |                       | ```{=html}            |
| ```                   | ```{=html}            | <!-- -->              |
| -   by how much       | <!-- -->              | ```                   |
|                       | ```                   | -   by how much       |
| Improved Staffing     | -   in what manner    |                       |
| Utilization           |                       | Improved Security     |
|                       | Improved Controls     |                       |
| -   in what manner    |                       | -   in what manner    |
|                       | -   by area           |                       |
| ```{=html}            |                       | ```{=html}            |
| <!-- -->              | ```{=html}            | <!-- -->              |
| ```                   | <!-- -->              | ```                   |
| -   by what measure   | ```                   | -   by what measure   |
|                       | -   by what measure   |                       |
| Increased             |                       | Increased Automation  |
| Productivity          | Interface / Matching  |                       |
|                       |                       | -   by function       |
| -   by area           | -   by area           |                       |
|                       |                       | ```{=html}            |
| ```{=html}            | ```{=html}            | <!-- -->              |
| <!-- -->              | <!-- -->              | ```                   |
| ```                   | ```                   | -   in what manner    |
| -   by how much       | -   in what manner    |                       |
|                       |                       | Improved Emergency    |
| Fewer Manual          | Less Data Redundancy  | Response, Back-up,    |
| Functions             |                       | and Recovery          |
|                       | -   by area           |                       |
| -   by area           |                       | -   by function       |
|                       | ```{=html}            |                       |
| ```{=html}            | <!-- -->              | ```{=html}            |
| <!-- -->              | ```                   | <!-- -->              |
| ```                   | -   in what manner    | ```                   |
| -   in what manner    |                       | -   in what manner    |
|                       | Compliance with       |                       |
| Increased Resources   | Federal Requirements  |                       |
|                       |                       |                       |
| -   by area           | -   by area           |                       |
|                       |                       |                       |
| ```{=html}            | ```{=html}            |                       |
| <!-- -->              | <!-- -->              |                       |
| ```                   | ```                   |                       |
| -   by how much       | -   in what manner    |                       |
+-----------------------+-----------------------+-----------------------+

+---------------------+------------------------------------------------+
| ## Develop Initial  | The Feasibility Study should include an        |
|  Functional and Tec | initial statement of the functional and        |
| hnical Requirements | technical requirements for the system. The     |
|                     | baseline requirements should relate to the     |
|                     | objectives and constraints discussed in the    |
|                     | previous sections, summarized as follows:      |
|                     |                                                |
|                     | -   Functional Objectives --- the requirements |
|                     |     should support mission and program needs.  |
|                     |     For example, the State may require that    |
|                     |     the new system improve service to the      |
|                     |     public and be compatible with and capable  |
|                     |     of accessing information in related State  |
|                     |     benefit systems.                           |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   System Objectives --- the requirements     |
|                     |     should be developed in a manner which will |
|                     |     support the objectives. For example, if a  |
|                     |     system objective is to allow processing at |
|                     |     the local level, the initial system        |
|                     |     requirements should reflect a distributed  |
|                     |     system and the need to analyze the new     |
|                     |     information architecture during the system |
|                     |     design phase.                              |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   System Constraints --- The functional and  |
|                     |     technical requirements should conform to,  |
|                     |     rather than oppose, the system             |
|                     |     constraints. For example, if the Governor  |
|                     |     has mandated a single, integrated data     |
|                     |     base, systems built of separate data bases |
|                     |     should not be considered.                  |
|                     |                                                |
|                     | An overview of the system requirements should  |
|                     | reflect a broad range of factors, for example: |
|                     |                                                |
|                     | -   Functional, programmatic requirements;     |
|                     |                                                |
|                     | -   Information needs;                         |
|                     |                                                |
|                     | -   System needs;                              |
|                     |                                                |
|                     | -   Interface and matching requirements;       |
|                     |                                                |
|                     | -   Processing and data flow needs;            |
|                     |                                                |
|                     | -   Storage and retrieval requirements;        |
|                     |                                                |
|                     | -   Inputs;                                    |
|                     |                                                |
|                     | -   Outputs;                                   |
|                     |                                                |
|                     | -   Workload, projected over time;             |
|                     |                                                |
|                     | -   Validation and internal control needs;     |
|                     |                                                |
|                     | -   Security / Privacy requirements;           |
|                     |                                                |
|                     | -   Emergency response, back-up, and disaster  |
|                     |     recovery;                                  |
|                     |                                                |
|                     | -   Accessibility requirements for the         |
|                     |     disabled; and/or                           |
|                     |                                                |
|                     | -   Space and Environment.                     |
|                     |                                                |
|                     | The requirements should be stated briefly and  |
|                     | in functional terms, to the extent possible.   |
|                     | Their development during the Feasibility Study |
|                     | supports the selection of suitable             |
|                     | alternatives. These functional and technical   |
|                     | needs are greatly expanded later in the        |
|                     | planning phase through the Requirements        |
|                     | Analysis.                                      |
+---------------------+------------------------------------------------+
| ## Assess           | Once the initial system requirements are       |
| Project Feasibility | defined, the State should verify the           |
|                     | technical, operational, and financial          |
|                     | feasibility of the project.                    |
|                     |                                                |
|                     | Technical feasibility refers to the capability |
|                     | of current technology and methods of operation |
|                     | in meeting user requirements. Technical        |
|                     | feasibility should include consideration of    |
|                     | the state of the technology --- for example,   |
|                     | is the technology \"leading edge\" (with       |
|                     | commensurate risk) or is the technology        |
|                     | \"mature\" (with associated industry standards |
|                     | and lesser risk).                              |
|                     |                                                |
|                     | Operational feasibility refers to the ability  |
|                     | of the enhanced system to fit the operational  |
|                     | pattern and resources of the organization.     |
|                     |                                                |
|                     | Financial feasibility refers to the ability of |
|                     | the State to fund (with Federal financial      |
|                     | participation) the costs of developing and     |
|                     | implementing the system.                       |
|                     |                                                |
|                     | Since limited resources --- especially human   |
|                     | and dollars --- may affect feasibility,        |
|                     | findings from the technical, operational, and  |
|                     | financial feasibility analysis may require     |
|                     | redefining or appending the system objectives  |
|                     | and constraints.                               |
+---------------------+------------------------------------------------+
| ## Id               | The first step in identifying alternatives is  |
| entify Alternatives | to survey the possibilities and to consider    |
|                     | the wide range of alternatives which may be    |
|                     | available. The first part of the process is    |
|                     | analytical and judgmental, resulting in        |
|                     | eliminating alternatives which are not         |
|                     | technically or operationally feasible.         |
|                     | Therefore, alternatives are measured against   |
|                     | considerations of project feasibility.         |
|                     |                                                |
|                     | States should consider more than one           |
|                     | technological design alternative when          |
|                     | considering an automation project. For         |
|                     | example, a system may be centralized, relying  |
|                     | on mainframes for the bulk of processing. Or a |
|                     | system may be distributed, relying on personal |
|                     | computers and minicomputers for the bulk of    |
|                     | entry and processing. Table 2-2 suggests       |
|                     | representative alternatives for different      |
|                     | types of requirements.                         |
|                     |                                                |
|                     | Regardless of technological approach, current  |
|                     | systems can frequently be modified --- *or*    |
|                     | another State\'s system may fulfill the        |
|                     | programmatic requirements of Federal benefit   |
|                     | programs and serve as a transfer model.        |
|                     |                                                |
|                     | States are required by regulation \[45 CFR     |
|                     | §95.605.1(vi)\] to consider transferring       |
|                     | systems developed in other States to meet the  |
|                     | requirements. This helps expedite system       |
|                     | development, minimize cost, and ensure project |
|                     | success.                                       |
|                     |                                                |
|                     | Whenever possible, several alternatives        |
|                     | reflecting different technological approaches  |
|                     | --- including the options of modifying current |
|                     | systems and transferring another State\'s      |
|                     | system --- should be analyzed. The             |
|                     | alternatives may represent opposing strategies |
|                     | and should be described in sufficient detail   |
|                     | to permit differentiation.                     |
|                     |                                                |
|                     | All alternatives should meet the established   |
|                     | objectives within the system constraints, and  |
|                     | depend on costs and benefits to determine the  |
|                     | most favorable alternative.                    |
+---------------------+------------------------------------------------+
| ## Determin         | For each alternative developed, the effects    |
| e Risks and Effects | and risks of the proposed alternative on the   |
|                     | current environment should be described:       |
|                     |                                                |
|                     | -   Program impacts --- determine how the new  |
|                     |     system initiative will affect current      |
|                     |     program operations and new program         |
|                     |     requirements;                              |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Equipment impacts --- determine how new    |
|                     |     equipment requirements will affect current |
|                     |     systems and whether technological risks,   |
|                     |     such as obsolescence, maintainability,     |
|                     |     availability, expandability, reliability,  |
|                     |     flexibility, and compatibility, are        |
|                     |     inherent;                                  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Software impacts --- describe what         |
|                     |     additions, conversions, or modifications   |
|                     |     are needed on existing applications and    |
|                     |     support software;                          |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Information impacts --- determine how      |
|                     |     information will be affected, including    |
|                     |     accessibility, conversion, reformatting    |
|                     |     into databases, and storage media;         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Organizational impacts --- describe        |
|                     |     organizational, schedule, accountability,  |
|                     |     personnel, and skill requirement risks and |
|                     |     changes;                                   |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Operational impacts --- set forth the      |
|                     |     effects on operations, such as user and    |
|                     |     operating center procedures; user /        |
|                     |     operator and other relationships; source   |
|                     |     data processing; data entry procedures;    |
|                     |     information storage, retention, and        |
|                     |     retrieval requirements; privacy; output    |
|                     |     reporting, media, and schedules; system    |
|                     |     failure and recovery procedures; and       |
|                     |     security and back-up requirements;         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Developmental impacts --- identify the     |
|                     |     effect of the development activity on      |
|                     |     current computing, staffing (including     |
|                     |     users), space, system security, and        |
|                     |     contractual support resources;             |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Space and facility impacts --- describe    |
|                     |     the effect on space, both in terms of      |
|                     |     square footage and necessary modifications |
|                     |     to facilities; and                         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Cost impacts --- set forth financial risks |
|                     |     and factors that may affect developmental  |
|                     |     or operational costs and influence the     |
|                     |     development, design, and operation of the  |
|                     |     proposed system.                           |
+---------------------+------------------------------------------------+

+-----------------------------------+-----------------------------------+
| []{#__RefHeading___Toc467917021   |                                   |
| .anchor}Table 2‑4: Representative |                                   |
| Alternatives                      |                                   |
+-----------------------------------+-----------------------------------+
| **Alternative Platforms/Capacity  | **Alternatives for Implementing   |
| Enhancement**                     | Applications**                    |
+-----------------------------------+-----------------------------------+
| Platform (or architecture)        | Alternatives range from modifying |
| alternatives range from           | current systems, transferring and |
| stand-alone solutions to          | modifying another State\'s        |
| mainframes to distributed         | system, incorporating             |
| processing networks. Requirements | off-the-shelf solutions, to       |
| for capacity increases may affect | initiating custom development     |
| platforms as well as other        | (when more cost-effective and     |
| options.                          | timely solutions do not exist).   |
+-----------------------------------+-----------------------------------+
| Architecture                      | Transferring/Modifying another    |
|                                   | State\'s System                   |
| -   Client/server LAN and micros  |                                   |
|                                   | -   Using In-house Services       |
| ```{=html}                        |                                   |
| <!-- -->                          | ```{=html}                        |
| ```                               | <!-- -->                          |
| -   Distributed                   | ```                               |
|                                   | -   Using Contract Services       |
| ```{=html}                        |                                   |
| <!-- -->                          | ```{=html}                        |
| ```                               | <!-- -->                          |
| -   Mainframe                     | ```                               |
|                                   | -   Using a Combination           |
| ```{=html}                        |                                   |
| <!-- -->                          | Off-the-shelf Software            |
| ```                               |                                   |
| -   Minicomputer                  | -   Generalized, such as DBMS     |
|                                   |                                   |
| ```{=html}                        | ```{=html}                        |
| <!-- -->                          | <!-- -->                          |
| ```                               | ```                               |
| -   Work station                  | -   Specialized, such as payroll  |
|                                   |                                   |
| ```{=html}                        | Modifying or Redesigning Current  |
| <!-- -->                          | Systems                           |
| ```                               |                                   |
| -   Microcomputer (stand-alone)   | -   Using In-house Resources      |
|                                   |                                   |
| Outsourcing (Contracting out)     | ```{=html}                        |
|                                   | <!-- -->                          |
| Acquire Services (other than      | ```                               |
| equipment)                        | -   Using Contract Services       |
|                                   |                                   |
| -   From other State agencies     | ```{=html}                        |
|                                   | <!-- -->                          |
| ```{=html}                        | ```                               |
| <!-- -->                          | -   Using a Combination           |
| ```                               |                                   |
| -   Commercially                  | Custom Development                |
|                                   |                                   |
| Reconfigure Existing Resources    | -   Using In-house Services       |
|                                   |                                   |
| Use of Non-automated Alternatives | ```{=html}                        |
|                                   | <!-- -->                          |
| -   Reallocating or increasing    | ```                               |
|     personnel                     | -   Using Contract Services       |
|                                   |                                   |
| ```{=html}                        | ```{=html}                        |
| <!-- -->                          | <!-- -->                          |
| ```                               | ```                               |
| -   Manual systems or work        | -   Using a Combination           |
|     processes                     |                                   |
+-----------------------------------+-----------------------------------+
| **Alternatives for Acquiring      | **Alternatives for Obtaining      |
| Services**                        | Support Services**                |
+-----------------------------------+-----------------------------------+
| Services include teleprocessing,  | Support Services include source   |
| computer time, electronic mail,   | data entry, training, custom      |
| voice mail, and cellular          | software development, systems     |
| telephone. Alternatives include   | analysis and design, software     |
| using both in-house and           | conversion, facilities            |
| contractual solutions, as well as | management, maintenance,          |
| sharing or borrowing resources.   | equipment operation, network      |
|                                   | management, studies, and          |
|                                   | evaluation.                       |
+-----------------------------------+-----------------------------------+
| Increase in In-House Resources    | Increase in Permanent Staffing    |
|                                   |                                   |
| In-house Development of Service   | In-house Development of Service   |
| Capability                        | Capability                        |
|                                   |                                   |
| Resources Sharing with other      | Resources Sharing with other      |
| State Agencies                    | State Agencies                    |
|                                   |                                   |
| Contractual Commercial Services   | Contractual Commercial Services   |
|                                   |                                   |
| Temporary Commercial Services     | -   Manpower Based                |
|                                   |                                   |
|                                   | ```{=html}                        |
|                                   | <!-- -->                          |
|                                   | ```                               |
|                                   | -   Project Based                 |
|                                   |                                   |
|                                   | ```{=html}                        |
|                                   | <!-- -->                          |
|                                   | ```                               |
|                                   | -   Full Service, Per Call, On    |
|                                   |     Call                          |
|                                   |                                   |
|                                   | Temporary Commercial Services     |
+-----------------------------------+-----------------------------------+

+---------------------+------------------------------------------------+
| ## Determin         | For each alternative developed, the effects    |
| e Risks and Effects | and risks of the proposed alternative on the   |
|                     | current environment should be described:       |
|                     |                                                |
|                     | -   Program impacts --- determine how the new  |
|                     |     system initiative will affect current      |
|                     |     program operations and new program         |
|                     |     requirements;                              |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Equipment impacts --- determine how new    |
|                     |     equipment requirements will affect current |
|                     |     systems and whether technological risks,   |
|                     |     such as obsolescence, maintainability,     |
|                     |     availability, expandability, reliability,  |
|                     |     flexibility, and compatibility, are        |
|                     |     inherent;                                  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Software impacts --- describe what         |
|                     |     additions, conversions, or modifications   |
|                     |     are needed on existing applications and    |
|                     |     support software;                          |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Information impacts --- determine how      |
|                     |     information will be affected, including    |
|                     |     accessibility, conversion, reformatting    |
|                     |     into databases, and storage media;         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Organizational impacts --- describe        |
|                     |     organizational, schedule, accountability,  |
|                     |     personnel, and skill requirement risks and |
|                     |     changes;                                   |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Operational impacts --- set forth the      |
|                     |     effects on operations, such as user and    |
|                     |     operating center procedures; user /        |
|                     |     operator and other relationships; source   |
|                     |     data processing; data entry procedures;    |
|                     |     information storage, retention, and        |
|                     |     retrieval requirements; privacy; output    |
|                     |     reporting, media, and schedules; system    |
|                     |     failure and recovery procedures; and       |
|                     |     security and back-up requirements;         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Developmental impacts --- identify the     |
|                     |     effect of the development activity on      |
|                     |     current computing, staffing (including     |
|                     |     users), space, system security, and        |
|                     |     contractual support resources;             |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Space and facility impacts --- describe    |
|                     |     the effect on space, both in terms of      |
|                     |     square footage and necessary modifications |
|                     |     to facilities; and                         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Cost impacts --- set forth financial risks |
|                     |     and factors that may affect developmental  |
|                     |     or operational costs and influence the     |
|                     |     development, design, and operation of the  |
|                     |     proposed system.                           |
+---------------------+------------------------------------------------+
| #                   | If more than three or four alternatives have   |
| # Rank Alternatives | been developed, the State should rank          |
|                     | alternatives so that only the most likely to   |
|                     | achieve the system objectives efficiently,     |
|                     | effectively, and economically are analyzed     |
|                     | during the cost/benefit analysis. Criteria for |
|                     | ranking the alternatives should be established |
|                     | and may include factors which:                 |
|                     |                                                |
|                     | -   Minimize personnel expenses over the       |
|                     |     system\'s operational life;                |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Require minimal physical facility changes; |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Assure high levels of availability,        |
|                     |     reliability, maintainability, or           |
|                     |     expandability;                             |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Meet requirements for ease of use and      |
|                     |     ready access to information;               |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Achieve desired distribution of processing |
|                     |     to minimize point-of-entry delays;         |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Achieve redundancy to guard against total  |
|                     |     system outages;                            |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Limit development time; or                 |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Retain a centralized information           |
|                     |     repository for reasons of security.        |
|                     |                                                |
|                     | Once the State has isolated no more than four  |
|                     | and no less than two viable alternatives ---   |
|                     | one of which is the status quo --- the         |
|                     | cost/benefit determination may proceed.        |
+---------------------+------------------------------------------------+

+-----------------------------------+-----------------------------------+
| []{#__RefHeading___Toc467917022   |                                   |
| .anchor}Table 2‑5: Feasibility    |                                   |
| Study --- Suggested Outline       |                                   |
+-----------------------------------+-----------------------------------+
| Executive Summary                 | Initial Functional and Technical  |
|                                   | Requirements                      |
| Overview                          |                                   |
|                                   | -   Functional, programmatic      |
| -   Purpose and Scope             |     requirements                  |
|                                   |                                   |
| -   Study Methodology             | -   Information needs             |
|                                   |                                   |
| -   Points of Contact             | -   System needs                  |
|                                   |                                   |
| -   References (such as prior     | -   Interface and matching        |
|     APDs)                         |     requirements                  |
|                                   |                                   |
| Current Environment, generally:   | -   Processing and data flow      |
|                                   |     needs                         |
| -   Programmatic functions        |                                   |
|                                   | -   Storage and retrieval         |
| -   Information Architecture      |     requirements                  |
|                                   |                                   |
| -   System(s) Architecture        | -   Inputs                        |
|                                   |                                   |
| -   Hardware and Software         | -   Outputs                       |
|     Inventory                     |                                   |
|                                   | -   Workload, projected over time |
| -   Interface and matching        |                                   |
|                                   | -   Validation / internal control |
| -   Processing and data flow      |     needs                         |
|                                   |                                   |
| -   Storage and retrieval         | -   Security / Privacy            |
|                                   |     requirements                  |
| -   Inputs                        |                                   |
|                                   | -   Emergency response, back-up,  |
| -   Outputs                       |     and disaster recovery         |
|                                   |                                   |
| -   Workload                      | -   Accessibility for Disabled    |
|                                   |                                   |
| -   Validation / internal control | -   Space and Environment         |
|                                   |                                   |
| -   Security / Privacy            | Alternatives                      |
|                                   |                                   |
| -   Emergency response, back-up,  | -   Overview                      |
|     and disaster recovery         |                                   |
|                                   | -   Ranking Criteria, if used     |
| -   Personnel                     |                                   |
|                                   | -   Description of each           |
| -   Space and Environment         |     alternative, including:       |
|                                   |                                   |
| Current Problems                  | -   Program impacts               |
|                                   |                                   |
| -   Functional                    | -   Equipment impacts             |
|                                   |                                   |
| -   Technical                     | -   Software impacts              |
|                                   |                                   |
| -   Access                        | -   Information impacts           |
|                                   |                                   |
| -   Cost                          | -   Organizational impacts        |
|                                   |                                   |
| System Objectives                 | -   Operational impacts           |
|                                   |                                   |
| -   Cost/Resource                 | -   Developmental impacts         |
|                                   |                                   |
| -   Functional/Programmatic       | -   Space and facility impacts    |
|                                   |                                   |
| -   Technical                     | -   Cost impacts                  |
|                                   |                                   |
| System Constraints                | \[Cost/Benefit Analysis\]\*       |
|                                   |                                   |
| -   Laws and Regulations          | \[Comparison of Alternatives\]\*  |
|                                   |                                   |
| -   Technological                 | \[Recommended Alternative\]\*     |
|                                   |                                   |
| -   Socio-Political               | \* Addressed in the next chapter  |
|                                   |                                   |
| -   Financial                     |                                   |
|                                   |                                   |
| -   Operational                   |                                   |
|                                   |                                   |
| Assumptions                       |                                   |
|                                   |                                   |
| -   Cost/Resource                 |                                   |
|                                   |                                   |
| -   Functional/Programmatic       |                                   |
|                                   |                                   |
| -   Technical                     |                                   |
|                                   |                                   |
| -   Systems Life                  |                                   |
+-----------------------------------+-----------------------------------+

# COST / BENEFIT ANALYSIS

**For each viable alternative developed in the Feasibility Study, the
State must develop costs and benefits. The purpose of the cost/benefit
analysis is to:**

-   **Document estimated costs and benefits for feasible alternatives;**

```{=html}
<!-- -->
```
-   **Compare costs and benefits for each alternative; and**

```{=html}
<!-- -->
```
-   Determine which alternative is the most economical, providing the
    greatest benefits relative to its costs.

+---------------------+------------------------------------------------+
| ## Overview         | A comprehensive Cost/Benefit Analysis provides |
|                     | managers, users, and designers with the        |
|                     | information necessary to evaluate alternative  |
|                     | system development, enhancement, or            |
|                     | improvement approaches. The analysis provides  |
|                     | the estimated costs of developing and          |
|                     | operating each feasible alternative and the    |
|                     | benefits to be derived from each.              |
|                     |                                                |
|                     | Therefore, Cost/Benefit Analysis is not simply |
|                     | a method of determining the least cost         |
|                     | alternative, but a means of determining the    |
|                     | most cost effective alternative.               |
+---------------------+------------------------------------------------+
| ##                  | Each Cost/Benefit Analysis must begin with the |
| Cost the Status Quo | determination of the operational costs of the  |
|                     | installed system --- the \"status quo\"        |
|                     | alternative. This critical step sets the stage |
|                     | for comparing alternatives against baseline    |
|                     | costs.                                         |
+---------------------+------------------------------------------------+
|                     | Costs for the current environment are          |
|                     | expressed in terms of total system operational |
|                     | costs, including State costs, *projected over  |
|                     | the systems life* in accordance with the       |
|                     | approved State plan and previously approved    |
|                     | APDs, if applicable. This requires that States |
|                     | measure current costs and project anticipated  |
|                     | costs over a period of time matching the       |
|                     | systems life of the project.                   |
+---------------------+------------------------------------------------+
|                     | Most \"status quo\" cost worksheets will       |
|                     | reflect primarily recurring costs, such as     |
|                     | systems support personnel and monthly lease    |
|                     | expenses.                                      |
+---------------------+------------------------------------------------+
|                     | However, non-recurring costs may also apply.   |
|                     | For example, the State may have approval for   |
|                     | contract support services to meet special      |
|                     | year-end processing demands.                   |
|                     |                                                |
|                     | Special problems arise when the status quo is  |
|                     | no longer a satisfactory solution. For         |
|                     | example, if the State does not redesign the    |
|                     | current system for distributed processing,     |
|                     | current processing workload growth will        |
|                     | require a major systems augmentation           |
|                     | (non-recurring capital expenditure for         |
|                     | equipment purchase) and new systems facility   |
|                     | (either a non-recurring capital expenditure or |
|                     | recurring site lease expenses, or both) ---    |
|                     | and may still fail to meet Federal program     |
|                     | requirements.                                  |
|                     |                                                |
|                     | In such instances, the status quo reinforces   |
|                     | the need to develop new systems. By costing in |
|                     | the capital expenditure on the status quo      |
|                     | alternative, the true systems life cost of the |
|                     | status quo is revealed. By claiming the \"cost |
|                     | avoidance\" as a benefit of the alternatives,  |
|                     | achievement of the cost avoidance will later   |
|                     | be measured, as the State compares actual to   |
|                     | projected costs and benefits.                  |
|                     |                                                |
|                     | A State may at times be required to determine  |
|                     | whether to characterize an element as a cost   |
|                     | or a benefit. If so, the State should consider |
|                     | the following. If a \"benefit\" can be         |
|                     | depicted as directly affecting a cost element  |
|                     | of the status quo [and]{.underline} can be     |
|                     | predicted with virtual certainty to occur,     |
|                     | then it should be factored into the cost side  |
|                     | of the analysis. An example would be higher    |
|                     | staff costs when a reduced personnel ceiling   |
|                     | has been approved for the new system.          |
|                     |                                                |
|                     | On the other hand, cost elements to be         |
|                     | characterized as benefits are normally costs   |
|                     | or savings which are more indirect or hidden,  |
|                     | which may or may not accrue, and which must be |
|                     | monitored. Benefits can derive from elements   |
|                     | such as greater productivity, reduced training |
|                     | costs, less overtime, and reduced staffing not |
|                     | planned and approved at the time of the        |
|                     | cost/benefit analysis.                         |
+---------------------+------------------------------------------------+
| ## Cost Alternative | Following baseline costing, total systems life |
| s to the Status Quo | costs, including State costs, are defined for  |
|                     | each alternative of the two to four found      |
|                     | viable in the Feasibility Study\'s             |
|                     | alternatives analysis.                         |
|                     |                                                |
|                     | For each alternative approach, costs are       |
|                     | calculated for both the system developmental   |
|                     | and operational stages. Non-recurring costs    |
|                     | will dominate the early months and years of    |
|                     | the developmental process. However, as the     |
|                     | alternative is tested and moves into           |
|                     | implementation, recurring costs will again     |
|                     | predominate the cost profile.                  |
+---------------------+------------------------------------------------+
| ## Identify and Cha | In order to develop cost profiles, States must |
| racterize All Costs | first identify all categories of costs that    |
|                     | apply to the *status quo and each alternative* |
|                     | in each stage of the development and           |
|                     | operational cycles. Cost categories include    |
|                     | such diverse expenses as those for equipment,  |
|                     | personnel, travel, training, utilities,        |
|                     | supplies, conversion, site preparation, space, |
|                     | and overhead.                                  |
|                     |                                                |
|                     | Next, those costs must be identified as either |
|                     | *recurring or non-recurring costs.*            |
|                     |                                                |
|                     | Recurring costs are those which apply over a   |
|                     | range of time --- either months or throughout  |
|                     | the systems life. Recurring costs will         |
|                     | predominate in the \"status quo\" alternative  |
|                     | and in the later years of alternatives as the  |
|                     | solutions are implemented.                     |
|                     |                                                |
|                     | Non-recurring costs are one-time costs,        |
|                     | frequently capital expenditures, expected to   |
|                     | occur at a point in the future. Non-recurring  |
|                     | costs may be overlooked if future workload     |
|                     | growth is not considered. States should be     |
|                     | especially careful to consider the effects of  |
|                     | rising caseloads and peak transaction volumes  |
|                     | on equipment and software capacities, by       |
|                     | providing for scheduled upgrades or            |
|                     | enhancements to the operational system if      |
|                     | required.                                      |
|                     |                                                |
|                     | (See Tables 3-1 and 3-2 on pages 3-4 and 3-5   |
|                     | for descriptions of recurring and              |
|                     | non-recurring costs.)                          |
+---------------------+------------------------------------------------+

+-------------------+--------------------------------------------------+
| []{#__RefHeadi    |                                                  |
| ng___Toc467917023 |                                                  |
| .anchor}Table     |                                                  |
| 3‑6: Cost         |                                                  |
| Categories:       |                                                  |
| Non-Recurring     |                                                  |
+-------------------+--------------------------------------------------+
| Cost Category     | Description                                      |
+-------------------+--------------------------------------------------+
| Site and Facility | Includes the costs of construction of computer   |
|                   | rooms, auxiliary spaces, office space, and       |
|                   | storage rooms; site preparation; and purchase of |
|                   | office equipment and furniture.                  |
+-------------------+--------------------------------------------------+
| Equipment         | Includes the purchase of all types of            |
| Purchase / One    | information processing and related equipment,    |
| Time Fees         | including computer systems and peripherals,      |
|                   | auxiliary equipment, data and voice              |
|                   | communications equipment, environmental          |
|                   | conditioning equipment, security and safety      |
|                   | detection equipment. Also includes the costs of  |
|                   | bundled software, maintenance, and fees. Covers  |
|                   | the costs of any equipment furnished to          |
|                   | contractors for use on the project.              |
+-------------------+--------------------------------------------------+
| Shipping          | Covers costs of transporting equipment or other  |
|                   | materials, including shipping, delivery charges, |
|                   | rigging and drayage, packing, unpacking, and     |
|                   | moving.                                          |
+-------------------+--------------------------------------------------+
| Installation      | Includes the installation and set up of          |
|                   | equipment, software, furniture, and materials.   |
+-------------------+--------------------------------------------------+
| Software Purchase | Includes the purchase or one-time licensing of   |
| /                 | all types of information processing software,    |
|                   | including systems programs, operational          |
| One Time Fees     | software, utilities, applications programs, and  |
|                   | other commercial software for ADP and            |
|                   | telecommunications equipment.                    |
+-------------------+--------------------------------------------------+
| System Testing    | Includes all costs over and above normal         |
|                   | operational costs expended to test newly         |
|                   | installed equipment, including temporary         |
|                   | installations of test equipment and parallel     |
|                   | operations.                                      |
+-------------------+--------------------------------------------------+
| Conversion        | Includes one-time costs related to \"clean up\"  |
|                   | and conversion of software, data, information,   |
|                   | and media. Includes costs involved in the        |
|                   | preparation for conversion, not charged to other |
|                   | categories (such as personnel).                  |
+-------------------+--------------------------------------------------+
| Studies           | Covers the cost of one-time studies conducted    |
|                   | during the systems design, development, and      |
|                   | implementation. \[Note that studies may also be  |
|                   | costed under personnel expense or project        |
|                   | overhead, but should not be costed in more than  |
|                   | one place (double counting).\]                   |
+-------------------+--------------------------------------------------+
| Procurement       | Includes the cost of planning for and conducting |
|                   | procurements. \[Note that procurement costs may  |
|                   | also be costed under personnel expense or        |
|                   | project overhead, but should not be costed in    |
|                   | more than one place (double counting).\]         |
+-------------------+--------------------------------------------------+
| Database          | Covers the cost of preparing information for     |
| Preparation       | database management systems. \[Avoid double      |
|                   | counting which can occur by listing the same     |
|                   | costs as expenses under personnel, contractor,   |
|                   | or project overhead.\]                           |
+-------------------+--------------------------------------------------+
| Personnel         | Includes apportioned costs of --- personnel on   |
|                   | staff (salaries, overtime, and benefits) devoted |
|                   | to special projects; non-recurring contract      |
|                   | support services staff costs (labor hour,        |
|                   | contract G&A costs, and profit) dedicated in     |
|                   | full or part to the project; or extraordinary    |
|                   | personnel costs such as expenses arising from    |
|                   | early retirement, displacement, or relocation.   |
+-------------------+--------------------------------------------------+
| Travel            | Includes one-time travel costs related to        |
|                   | in-house personnel or contractors.               |
+-------------------+--------------------------------------------------+
| Training          | Includes one-time costs to train staff on new    |
|                   | equipment, software, testing procedures, or      |
|                   | operational processes. Includes the cost of      |
|                   | developing coursework and training trainers.     |
|                   | Also includes study aids, training manuals,      |
|                   | workbooks, audiovisual aids, and software        |
|                   | products. May include travel, per diem, and lost |
|                   | productivity costs.                              |
+-------------------+--------------------------------------------------+
| Overhead /        | Includes project overhead, management overhead,  |
|                   | and contract overhead such as G&A costs and      |
| Indirect Costs    | profit. May include lost productivity during     |
|                   | transition. \[Avoid double counting.\]           |
+-------------------+--------------------------------------------------+

+-------------------+--------------------------------------------------+
| []{#__RefHeadi    |                                                  |
| ng___Toc467917024 |                                                  |
| .anchor}Table     |                                                  |
| 3‑7: Cost         |                                                  |
| Categories:       |                                                  |
| Recurring         |                                                  |
+-------------------+--------------------------------------------------+
| Cost Category     | Description                                      |
+-------------------+--------------------------------------------------+
| Site and Facility | Includes the lease or rental of buildings and    |
|                   | space within buildings. May also include         |
|                   | recurring fees for building maintenance or       |
|                   | services.                                        |
+-------------------+--------------------------------------------------+
| Equipment Lease / | Includes lease, rental, maintenance, and         |
| Maintenance       | recurring fees --- including central data        |
|                   | processing costs --- related to all types of     |
|                   | information processing and related equipment,    |
|                   | including computer systems and peripherals,      |
|                   | auxiliary equipment, data and voice              |
|                   | communications equipment, telecommunications     |
|                   | lines, environmental conditioning equipment,     |
|                   | security and safety detection equipment. Also    |
|                   | includes the costs of bundled software,          |
|                   | maintenance, and similar fees. Covers the        |
|                   | recurring costs of any equipment furnished to    |
|                   | contractors for use on the project. Includes     |
|                   | costs for routine \"full service\" maintenance   |
|                   | charges, as well as estimated monthly            |
|                   | allocations to cover per-call charges and        |
|                   | maintenance parts                                |
+-------------------+--------------------------------------------------+
| Software Lease /  | Entails lease, rental, maintenance, and          |
| Maintenance       | recurring licensing fees for any type of         |
|                   | software including systems programs, operational |
|                   | software, utilities, applications programs, and  |
|                   | other commercial software for ADP and            |
|                   | telecommunications equipment.                    |
+-------------------+--------------------------------------------------+
| Personnel         | Includes costs of personnel on staff (salaries,  |
|                   | overtime, and benefits) devoted in full or in    |
|                   | part to the system. Includes personnel outside   |
|                   | of the data processing facility who are involved |
|                   | in the functional application of the system, to  |
|                   | the extent that costs or benefits may relate to  |
|                   | their work.                                      |
+-------------------+--------------------------------------------------+
| Direct Support    | Includes costs of personnel detailed in support  |
| Services          | of the system\'s operation as well as contract   |
|                   | support services staff costs (labor hour,        |
|                   | contract G&A costs, and profit) dedicated in     |
|                   | full or part to the project or system.           |
+-------------------+--------------------------------------------------+
| Travel            | Includes recurring travel costs or monthly       |
|                   | travel allocations for in-house personnel or     |
|                   | contractors.                                     |
+-------------------+--------------------------------------------------+
| Training          | Includes regularly scheduled training related to |
|                   | equipment, software, testing, and operational    |
|                   | processes, whether initial or refresher. Also    |
|                   | includes study aids, training manuals,           |
|                   | workbooks, audiovisual aids, and software        |
|                   | products. May include travel, per diem, and lost |
|                   | productivity costs. May apply to trainees and    |
|                   | trainers.                                        |
+-------------------+--------------------------------------------------+
| Supplies          | Includes monthly allocations to cover costs of   |
|                   | supplies.                                        |
+-------------------+--------------------------------------------------+
| Utilities         | Includes recurring fees related to heating, air  |
|                   | conditioning, water, power equipment, and        |
|                   | utility usage costs.                             |
+-------------------+--------------------------------------------------+
| Security          | Covers recurring fees related to security, such  |
|                   | as monthly monitoring fees. Can include costs    |
|                   | related to security staff, if not included under |
|                   | personnel costs (double counting). Applies to    |
|                   | primary and back-up facilities, including the    |
|                   | costs of contracting for and regularly testing   |
|                   | disaster recovery sites.                         |
+-------------------+--------------------------------------------------+
| Overhead /        | Includes recurring costs for overhead such as    |
|                   | management overhead and contract overhead.       |
| Indirect Costs    | \[Avoid double counting.\]                       |
+-------------------+--------------------------------------------------+

+---------------------+------------------------------------------------+
|                     | Finally, to aid in the development of the      |
|                     | recurring cost figures, each cost category     |
|                     | should be identified as either a *fixed,       |
|                     | adjusted, or variable cost factor.* Adjusted   |
|                     | cost factors are those which increase over     |
|                     | time, tied (for example) to contractual        |
|                     | obligations. Variable factors are those which  |
|                     | are volume sensitive.                          |
+---------------------+------------------------------------------------+
|                     | The Cost Profile Worksheet (page 3-7) can be   |
|                     | used to determine cost categories, types, and  |
|                     | factors applicable to both the status quo and  |
|                     | each feasible alternative. Representative cost |
|                     | categories are included in the worksheet.      |
+---------------------+------------------------------------------------+
|                     | Each alternative should be evaluated from the  |
|                     | point of view of its *developmental and        |
|                     | operational costs*, and separate worksheets    |
|                     | prepared.                                      |
+---------------------+------------------------------------------------+
| ## Determine Whet   | In projecting future costs, States should      |
| her to Use Constant | determine whether the analysis will be based   |
|  or Current Dollars | on constant (real) dollars or current          |
|                     | (nominal) dollars.                             |
|                     |                                                |
|                     | Constant dollar costs and benefits are costs   |
|                     | and benefits which reflect the prices of the   |
|                     | base year of the systems life. *Constant       |
|                     | dollars do not consider the effect of          |
|                     | inflation, are normally used in cost/benefit   |
|                     | analyses, and do not require justification to  |
|                     | ACF.* Constant dollars are then adjusted by    |
|                     | present value discounting, described in a      |
|                     | following section.                             |
|                     |                                                |
|                     | Current dollar costs and benefits are costs    |
|                     | and benefits which have been adjusted to       |
|                     | reflect the effect of inflation on prices.     |
|                     | Current dollars are normally used in budget    |
|                     | projections.                                   |
|                     |                                                |
|                     | The forecasting of future benefits and costs   |
|                     | becomes complicated when there has been an     |
|                     | appreciable and persistent rise in inflation,  |
|                     | significant enough to affect investment        |
|                     | considerations. If current dollars are used, a |
|                     | three-step (rather than two-step) approach is  |
|                     | required:                                      |
|                     |                                                |
|                     | -   Projecting constant dollar costs and       |
|                     |     benefits;                                  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Converting constant dollars to current     |
|                     |     dollars by factoring in inflation based on |
|                     |     price indices, such as the Consumer Price  |
|                     |     Index or the Producer Price Index; and     |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Applying present value to convert future   |
|                     |     dollars to today\'s dollars.               |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917025 .anchor}Table 3‑8: Cost Profile
Worksheet

<table style="width:100%;">
<colgroup>
<col style="width: 36%" />
<col style="width: 4%" />
<col style="width: 0%" />
<col style="width: 2%" />
<col style="width: 2%" />
<col style="width: 4%" />
<col style="width: 0%" />
<col style="width: 34%" />
<col style="width: 4%" />
<col style="width: 0%" />
<col style="width: 4%" />
<col style="width: 5%" />
<col style="width: 0%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="4">Status Quo</td>
<td colspan="9"><p>Alternative <em>n:</em></p>
<p>Developmental</p>
<p>Operational</p></td>
</tr>
<tr class="even">
<td colspan="13">Non-Recurring Costs</td>
</tr>
<tr class="odd">
<td colspan="2">Cost Categories</td>
<td colspan="4">Fxd</td>
<td colspan="4">Cost Categories</td>
<td colspan="2">Fxd</td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"><p>Site and Facility</p>
<ul>
<li><p>Purchase</p></li>
</ul>
<ul>
<li><p>Site Preparation/Modification</p></li>
</ul>
<ul>
<li><p>Other</p></li>
</ul>
<p>Equipment Purchase/One Time Fees</p>
<ul>
<li><p>ADP</p></li>
</ul>
<ul>
<li><p>Data Communications</p></li>
</ul>
<ul>
<li><p>Environ. Conditioning</p></li>
</ul>
<ul>
<li><p>Security</p></li>
</ul>
<ul>
<li><p>Other</p></li>
</ul>
<p>Shipping</p>
<p>Installation</p>
<p>Software Purchase/One Time Fees</p>
<ul>
<li><p>Operating System</p></li>
</ul>
<ul>
<li><p>Applications</p></li>
</ul>
<ul>
<li><p>Utilities</p></li>
</ul>
<ul>
<li><p>Other</p></li>
</ul>
<p>System Testing</p>
<p>Conversion</p>
<ul>
<li><p>Data</p></li>
</ul>
<ul>
<li><p>Software</p></li>
<li><p>Services</p></li>
</ul></td>
<td colspan="4"></td>
<td colspan="4"><p>Studies</p>
<p>Procurement</p>
<ul>
<li><p>Cost of Planning</p></li>
</ul>
<ul>
<li><p>Cost of Conducting</p></li>
</ul>
<p>Database Preparation</p>
<p>Personnel</p>
<ul>
<li><p>Salaries</p></li>
</ul>
<ul>
<li><p>Benefits</p></li>
</ul>
<ul>
<li><p>Contract Support Services</p></li>
</ul>
<ul>
<li><p>Extraordinary Personnel Costs</p></li>
</ul>
<p>Travel</p>
<p>Training</p>
<ul>
<li><p>Development</p></li>
</ul>
<ul>
<li><p>Trainee Expenses</p></li>
</ul>
<ul>
<li><p>Trainer Expenses</p></li>
</ul>
<p>Overhead / Indirect Costs</p>
<ul>
<li><p>Project and Technical</p></li>
</ul>
<ul>
<li><p>Management</p></li>
</ul>
<ul>
<li><p>Incremental</p></li>
</ul>
<ul>
<li><p>Lost Productivity</p></li>
</ul></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="13">Recurring Costs</td>
</tr>
<tr class="even">
<td>Cost Categories</td>
<td colspan="2">Var</td>
<td colspan="2">Adj</td>
<td colspan="2">Fxd</td>
<td>Cost Categories</td>
<td>Var</td>
<td colspan="2">Adj</td>
<td colspan="2">Fxd</td>
</tr>
<tr class="odd">
<td><p>Site and Facility</p>
<ul>
<li><p>Lease</p></li>
</ul>
<ul>
<li><p>Maintenance Fees</p></li>
</ul>
<ul>
<li><p>Other</p></li>
</ul>
<p>Equipment Lease / Maintenance</p>
<ul>
<li><p>ADP</p></li>
</ul>
<ul>
<li><p>Data Communications</p></li>
</ul>
<ul>
<li><p>Environ. Conditioning</p></li>
</ul>
<ul>
<li><p>Security</p></li>
</ul>
<ul>
<li><p>Other</p></li>
</ul>
<p>Software Lease / Maintenance</p>
<ul>
<li><p>Operating System</p></li>
</ul>
<ul>
<li><p>Applications</p></li>
</ul>
<ul>
<li><p>Utilities</p></li>
</ul>
<ul>
<li><p>Other</p></li>
</ul></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td><p>Personnel</p>
<ul>
<li><p>Salaries</p></li>
</ul>
<ul>
<li><p>Benefits</p></li>
</ul>
<p>Direct Support Services</p>
<ul>
<li><p>Contract</p></li>
</ul>
<ul>
<li><p>Detailed/Tasked</p></li>
</ul>
<blockquote>
<p>Travel</p>
<p>Training</p>
<p>Supplies</p>
<p>Utilities</p>
<p>Security</p>
</blockquote>
<ul>
<li><p>Primary Facilities</p></li>
</ul>
<ul>
<li><p>Back-up Facilities</p></li>
</ul>
<p>Overhead / Indirect Costs</p></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
</tbody>
</table>

+---------------------+------------------------------------------------+
|                     | If a State decides to use current dollars, the |
|                     | decision and the proposed inflation factor     |
|                     | should be described and justified in           |
|                     | submissions to ACF.                            |
|                     |                                                |
|                     | The use of present value analysis, which       |
|                     | involves the discounting of cash flows, should |
|                     | not be confused with the treatment of the      |
|                     | estimated effects of inflation. Present value  |
|                     | considers the effect of *interest* on money    |
|                     | over time --- not the effect of *inflation* on |
|                     | money over time. Present value is used in      |
|                     | cost/benefit analysis, against both constant   |
|                     | and current dollars.                           |
+---------------------+------------------------------------------------+
| #                   | Once costs have been identified and            |
| # Build each Cost P | characterized, the challenge is to quantify    |
| rofile Year by Year | the factors. Four methods, or a combination,   |
|                     | are typically used:                            |
|                     |                                                |
|                     | -   Estimation --- sometimes referred to as    |
|                     |     the bottom-up method, in which each        |
|                     |     organization involved in system            |
|                     |     development, operation, and use estimates, |
|                     |     averages, and projects its costs;          |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Comparison --- in which current costs on   |
|                     |     comparable systems are used as a baseline  |
|                     |     for the new system;                        |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Simulation --- in which the process is     |
|                     |     analyzed and simulated to obtain costs;    |
|                     |     and/or                                     |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Observation --- in which processes are     |
|                     |     measured and recorded to provide           |
|                     |     estimates.                                 |
|                     |                                                |
|                     | If there is a secret to successfully           |
|                     | developing costs, it is to rationally and      |
|                     | reasonably identify, apply, and project the    |
|                     | costs for each alternative. Not all costs will |
|                     | apply --- or apply the same way --- to each    |
|                     | alternative.                                   |
|                     |                                                |
|                     | For each alternative (including the status     |
|                     | quo) and for each year, costs should be        |
|                     | developed using a format such as the Annual    |
|                     | Cost Worksheet on page 3-9.                    |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917026 .anchor}Table 3‑9: Annual Cost Worksheet

<table style="width:100%;">
<colgroup>
<col style="width: 5%" />
<col style="width: 18%" />
<col style="width: 5%" />
<col style="width: 3%" />
<col style="width: 2%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 1%" />
<col style="width: 4%" />
<col style="width: 5%" />
<col style="width: 3%" />
<col style="width: 2%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="4">Status Quo</td>
<td colspan="8"></td>
<td colspan="6">Year _____</td>
</tr>
<tr class="even">
<td colspan="9">Alternative <em>n</em> Developmental or Operational</td>
<td colspan="9">Constant Dollars or Current Dollars</td>
</tr>
<tr class="odd">
<td colspan="2">Cost Category</td>
<td>Jan</td>
<td colspan="2">Feb</td>
<td>Mar</td>
<td>Apr</td>
<td>May</td>
<td colspan="2">Jun</td>
<td>Jul</td>
<td colspan="2">Aug</td>
<td>Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
<td>Total</td>
</tr>
<tr class="even">
<td rowspan="14">Non-Recurring Costs:</td>
<td><blockquote>
<p>Site and Facility</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Equipment Purchase &amp; Fees</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Shipping</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Installation</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Software Purchase</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>System Testing</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Conversion</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Studies</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Procurement</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Database Preparation</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Personnel</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Travel</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Training</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Overhead</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td rowspan="11">Recurring Costs:</td>
<td><blockquote>
<p>Site and Facility</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Equip. Lease &amp; Maintenance</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Software Lease &amp; Maintenance</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Personnel Salaries/Benefits</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Direct Support Services</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Travel</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Training</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Supplies</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Utilities</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><blockquote>
<p>Security (incl. Back-up)</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><blockquote>
<p>Overhead</p>
</blockquote></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2">TOTAL PROJECTED COSTS</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2">PRESENT VALUE FACTOR</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2">TOTAL PRESENT VALUE COST</td>
<td>N/A</td>
<td colspan="2"></td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td></td>
</tr>
<tr class="even">
<td colspan="2">CUM TOTAL PROJ COSTS / PRIOR YEAR</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2">CUMULATIVE TOTAL PROJECTED COSTS</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>N/A</td>
</tr>
</tbody>
</table>

+---------------------+------------------------------------------------+
|                     | The top of the worksheet identifies the        |
|                     | alternative, whether the costs are             |
|                     | developmental or operational, whether dollars  |
|                     | are constant or current, and the year of the   |
|                     | cost estimates.                                |
+---------------------+------------------------------------------------+
|                     | Separate areas in the worksheet provide space  |
|                     | for both recurring and non-recurring costs, by |
|                     | month and for the year.                        |
+---------------------+------------------------------------------------+
| ## Apply P          | The costs (and later the benefits) of each     |
| resent Value Factor | alternative should be expressed in terms of    |
|                     | their \"present value.\" This allows the       |
|                     | conversion of benefits and costs occurring at  |
|                     | different times in the future to their current |
|                     | (that is, present) value, reflecting the       |
|                     | time-value of money. *Present value            |
|                     | calculations equalize the comparison of        |
|                     | alternatives when expenses are distributed     |
|                     | unequally over time.*                          |
|                     |                                                |
|                     | Present value calculations deal not with       |
|                     | inflation, but with *interest.* Present value  |
|                     | discounting is the inverse of compounding      |
|                     | interest; it shrinks tomorrow\'s dollars to    |
|                     | today\'s dollars by the difference of the      |
|                     | compounded interest. Present value reflects    |
|                     | the opportunity cost of money.                 |
|                     |                                                |
|                     | Present value analysis is based on two         |
|                     | principals:                                    |
|                     |                                                |
|                     | -   Benefits accruing in the future are worth  |
|                     |     less than the same level of benefits that  |
|                     |     accrue now; and                            |
|                     |                                                |
|                     | -   Costs that occur in the future are less    |
|                     |     burdensome than costs that occur now.      |
|                     |                                                |
|                     | The current year establishes the time          |
|                     | reference point for present value              |
|                     | calculations.                                  |
|                     |                                                |
|                     | Present value is calculated by multiplying     |
|                     | costs by a predetermined factor (called        |
|                     | discounting) based on the established discount |
|                     | rate and time period. The discount rates are   |
|                     | published in tables, which factor in the       |
|                     | amount of interest earned by the dollar        |
|                     | invested today until the future dollar is      |
|                     | spent.                                         |
|                     |                                                |
|                     | For example, if we assume a 7 percent interest |
|                     | rate, \$107 in estimated costs or projected    |
|                     | benefits for next year would be worth \$100    |
|                     | today --- the present value.                   |
|                     |                                                |
|                     | Therefore, present value calculations discount |
|                     | --- that is, reduce --- costs or benefits      |
|                     | projected to occur in future years to a common |
|                     | point in time so they can be compared.         |
|                     |                                                |
|                     | For consistency in the Federal review and      |
|                     | approval processes, ACF requires States to use |
|                     | a 7% present value factor in their             |
|                     | submissions.                                   |
+---------------------+------------------------------------------------+

+----------------------------+-----------------+----------+----------+
|                            | [               |          |          |
|                            | ]{#__RefHeading |          |          |
|                            | ___Toc467917027 |          |          |
|                            | .anchor}Table   |          |          |
|                            | 3‑10: Present   |          |          |
|                            | Value           |          |          |
|                            | Calculations    |          |          |
+----------------------------+-----------------+----------+----------+
|                            | **Years Since** | **       |          |
|                            |                 | Discount |          |
|                            | **Initiation**  | Factor** |          |
+----------------------------+-----------------+----------+----------+
|                            |                 | **Ye     | **Mi     |
|                            |                 | ar-End** | d-Year** |
+----------------------------+-----------------+----------+----------+
|                            | 1               | .9346    | .9667    |
+----------------------------+-----------------+----------+----------+
|                            | 2               | .8734    | .9035    |
+----------------------------+-----------------+----------+----------+
|                            | 3               | .8163    | .8444    |
+----------------------------+-----------------+----------+----------+
|                            | 4               | .7629    | .7891    |
+----------------------------+-----------------+----------+----------+
|                            | 5               | .7130    | .7375    |
+----------------------------+-----------------+----------+----------+
|                            | 6               | .6663    | .6893    |
+----------------------------+-----------------+----------+----------+
|                            | 7               | .6227    | .6442    |
+----------------------------+-----------------+----------+----------+
|                            | 8               | .5820    | .6020    |
+----------------------------+-----------------+----------+----------+

+----------------------------+-----------------------------------------+
|                            | The year-end discount factors presented |
|                            | in the table assume end-of-year, lump   |
|                            | sum costs and returns. When costs and   |
|                            | returns occur in a steady stream,       |
|                            | applying the mid-year discount factors  |
|                            | may be more appropriate.                |
+----------------------------+-----------------------------------------+
| ## Prepare                 | Once the annual costs for each          |
| Systems Life Cost Profiles | alternative are identified, totaled,    |
|                            | and discounted for present value, the   |
|                            | systems life cost profiles (page 3-12)  |
|                            | can be prepared.                        |
|                            |                                         |
|                            | These system life cost profiles are     |
|                            | built from the totals calculated on     |
|                            | each yearly cost worksheet. Present     |
|                            | value totals are inserted: no           |
|                            | recalculation is required.              |
+----------------------------+-----------------------------------------+
| ## Identify and            | Once the cost profiles have been        |
|  Characterize All Benefits | developed, the State must identify the  |
|                            | categories of benefits that apply to    |
|                            | the *status quo and each feasible       |
|                            | alternative over the systems life*. In  |
|                            | addition, the State should verify that  |
|                            | the benefits are properly categorized   |
|                            | and are not, in fact, better described  |
|                            | as costs.                               |
|                            |                                         |
|                            | Benefits should relate directly to the  |
|                            | system objectives defined during the    |
|                            | Feasibility Study, such as:             |
|                            |                                         |
|                            | -   Reduced Error Rates,                |
|                            |                                         |
|                            | ```{=html}                              |
|                            | <!-- -->                                |
|                            | ```                                     |
|                            | -   Increased Collections,              |
|                            |                                         |
|                            | ```{=html}                              |
|                            | <!-- -->                                |
|                            | ```                                     |
|                            | -   Reduced Costs,                      |
|                            |                                         |
|                            | -   Reduced Staffing,                   |
|                            |                                         |
|                            | -   Improved Security, and              |
|                            |                                         |
|                            | -   Improved Access or Interface.       |
+----------------------------+-----------------------------------------+

[]{#__RefHeading___Toc467917028 .anchor}Table 3‑11: Systems Life Cost
Profile

  -------------------- ------ ------ -------------- ------ ------ ------ ---------- ------ ------ ------ ----------
  Status Quo or                      Years                               Constant                        
  Alternative n                      \_\_\_\_\_ -                        Dollars or                      
                                     \_\_\_\_\_                          Current                         
                                                                         Dollars                         

  Cost Category        Year 1 Year 2                Year 3 Year 4 Year 5            Year 6 Year 7 Year 8 System
                                                                                                         Life Total

  Non-Recurring Costs:                                                                                   

  Site and Facility                                                                                      

  Equipment Purchase &                                                                                   
  Fees                                                                                                   

  Shipping                                                                                               

  Installation                                                                                           

  Software Purchase                                                                                      

  System Testing                                                                                         

  Conversion                                                                                             

  Studies                                                                                                

  Procurement                                                                                            

  Database Preparation                                                                                   

  Personnel                                                                                              

  Travel                                                                                                 

  Training                                                                                               

  Overhead                                                                                               

  Subtotal                                                                                               

  Recurring Costs                                                                                        

  Site and Facility                                                                                      

  Equip. Lease &                                                                                         
  Maintenance                                                                                            

  Software Lease &                                                                                       
  Maintenance                                                                                            

  Personnel                                                                                              
  Salaries/Benefits                                                                                      

  Direct Support                                                                                         
  Services                                                                                               

  Travel                                                                                                 

  Training                                                                                               

  Supplies                                                                                               

  Utilities                                                                                              

  Security (incl.                                                                                        
  Back-up)                                                                                               

  Overhead                                                                                               

  Subtotal                                                                                               

  TOTAL PROJECTED                                                                                        
  COSTS                                                                                                  

  TOTAL PRESENT VALUE                                                                                    
  COSTS                                                                                                  

  CUMULATIVE TOTAL                                                                                       N/A
  PROJECTED COSTS                                                                                        
  -------------------- ------ ------ -------------- ------ ------ ------ ---------- ------ ------ ------ ----------

+----------------------------+-----------------------------------------+
|                            | Examples of system objectives are       |
|                            | listed in the table on page 2-4.        |
|                            |                                         |
|                            | Benefits, listed for the status quo and |
|                            | for each alternative, should be         |
|                            | categorized as either *quantitative or  |
|                            | qualitative benefits.* The Benefit      |
|                            | Profile Worksheet on page 3-14 may be   |
|                            | used. Note that some benefit            |
|                            | categories, such as \"more timely       |
|                            | reporting\" are listed under both       |
|                            | quantitative and qualitative benefits,  |
|                            | both or either of which might apply to  |
|                            | a given situation.                      |
+----------------------------+-----------------------------------------+

+----------------------------+-----------------------------------------+
| ## Identify and            | Once the cost profiles have been        |
|  Characterize All Benefits | developed, the State must identify the  |
|                            | categories of benefits that apply to    |
|                            | the *status quo and each feasible       |
|                            | alternative over the systems life*. In  |
|                            | addition, the State should verify that  |
|                            | the benefits are properly categorized   |
|                            | and are not, in fact, better described  |
|                            | as costs.                               |
|                            |                                         |
|                            | Benefits should relate directly to the  |
|                            | system objectives defined during the    |
|                            | Feasibility Study, such as:             |
|                            |                                         |
|                            | -   Reduced Error Rates,                |
|                            |                                         |
|                            | ```{=html}                              |
|                            | <!-- -->                                |
|                            | ```                                     |
|                            | -   Increased Collections,              |
|                            |                                         |
|                            | ```{=html}                              |
|                            | <!-- -->                                |
|                            | ```                                     |
|                            | -   Reduced Costs,                      |
|                            |                                         |
|                            | -   Reduced Staffing,                   |
|                            |                                         |
|                            | -   Improved Security, and              |
|                            |                                         |
|                            | -   Improved Access or Interface.       |
|                            |                                         |
|                            | Examples of system objectives are       |
|                            | listed in the table on page 2-4.        |
|                            |                                         |
|                            | Benefits, listed for the status quo and |
|                            | for each alternative, should be         |
|                            | categorized as either *quantitative or  |
|                            | qualitative benefits.* The Benefit      |
|                            | Profile Worksheet on page 3-14 may be   |
|                            | used. Note that some benefit            |
|                            | categories, such as \"more timely       |
|                            | reporting\" are listed under both       |
|                            | quantitative and qualitative benefits,  |
|                            | both or either of which might apply to  |
|                            | a given situation.                      |
+----------------------------+-----------------------------------------+
| Quantify Benefits          | Quantitative benefits are those for     |
|                            | which a reasonable valuation may be     |
|                            | predicted and projected. For example,   |
|                            | the State should be able to calculate   |
|                            | the value of reduced staffing or        |
|                            | increased collections.                  |
|                            |                                         |
|                            | The objective of the benefit valuation  |
|                            | process is to document the State\'s     |
|                            | experience (the status quo), develop    |
|                            | assumptions (such as average            |
|                            | overpayment), and present a reasoned    |
|                            | prediction of the value of the benefit  |
|                            | to the State and Federal governments.   |
+----------------------------+-----------------------------------------+

[]{#__RefHeading___Toc467917029 .anchor}Table 3‑12: Benefit Profile
Worksheet

+-------------------------------+---+---+-------------------------------+
| Status Quo                    |   | A |                               |
|                               |   | l |                               |
|                               |   | t |                               |
|                               |   | e |                               |
|                               |   | r |                               |
|                               |   | n |                               |
|                               |   | a |                               |
|                               |   | t |                               |
|                               |   | i |                               |
|                               |   | v |                               |
|                               |   | e |                               |
|                               |   | * |                               |
|                               |   | n |                               |
|                               |   | * |                               |
+-------------------------------+---+---+-------------------------------+
| **QUANTITATIVE**              |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| Category                      |   |   | Description                   |
+-------------------------------+---+---+-------------------------------+
| COST / RESOURCE               |   |   |                               |
|                               |   |   |                               |
| -   Reduced Costs             |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Controlled Costs          |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Reduced Staffing          |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Staffing         |   |   |                               |
|     Utilization               |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Increased Productivity    |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Fewer Manual Functions    |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Increased Resources       |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Other                     |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| FUNCTIONAL/PROGRAMMATIC       |   |   |                               |
|                               |   |   |                               |
| -   Reduced Error Rate        |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Increased Caseload        |   |   |                               |
|     Capacity                  |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Increased Collections     |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Management       |   |   |                               |
|     Information               |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Controls         |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Interface / Matching      |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Less Data Redundancy      |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Other                     |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| TECHNICAL                     |   |   |                               |
|                               |   |   |                               |
| -   Faster Record Retrieval   |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   More Timely Reporting     |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Less Processing Time      |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Access           |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Security         |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Increased Automation      |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Other                     |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| **QUALITATIVE**               |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| Category                      |   |   | Description                   |
+-------------------------------+---+---+-------------------------------+
| LEGISLATIVE                   |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| SOCIO-POLITICAL               |   |   |                               |
|                               |   |   |                               |
| -   Integrated Benefits       |   |   |                               |
|     Automation                |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Public           |   |   |                               |
|     Assistance                |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Increased Worker          |   |   |                               |
|     Satisfaction              |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Other                     |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| FUNCTIONAL/PROGRAMMATIC       |   |   |                               |
|                               |   |   |                               |
| -   Improved Management       |   |   |                               |
|     Information               |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Controls         |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Interface / Matching      |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Other                     |   |   |                               |
+-------------------------------+---+---+-------------------------------+
| TECHNICAL                     |   |   |                               |
|                               |   |   |                               |
| -   More Timely Reporting     |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Expanded Capability /     |   |   |                               |
|     Flexibility               |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Access           |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Improved Security         |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Increased Automation      |   |   |                               |
|                               |   |   |                               |
| ```{=html}                    |   |   |                               |
| <!-- -->                      |   |   |                               |
| ```                           |   |   |                               |
| -   Other                     |   |   |                               |
+-------------------------------+---+---+-------------------------------+

+----------------------+-----------------------------------------------+
|                      | *The standard of analysis and documentation   |
|                      | should be to analyze, develop, substantiate,  |
|                      | and present a logical argument supporting the |
|                      | apparent validity of the predicted value of   |
|                      | the benefit --- sufficient so that the        |
|                      | worksheets would be capable of convincing a   |
|                      | third party that the prediction is justified  |
|                      | and meritorious.*                             |
|                      |                                               |
|                      | Quantifying benefits is usually more          |
|                      | difficult than estimating and predicting      |
|                      | costs. Four methods, or a combination, are    |
|                      | typically used:                               |
|                      |                                               |
|                      | -   Estimation --- in which each organization |
|                      |     involved in system development,           |
|                      |     operation, and use estimates and projects |
|                      |     the value of benefits, using averaging to |
|                      |     reduce the potential for error;           |
|                      |                                               |
|                      | ```{=html}                                    |
|                      | <!-- -->                                      |
|                      | ```                                           |
|                      | -   Comparison --- in which current benefit   |
|                      |     values on comparable systems are used as  |
|                      |     a baseline;                               |
|                      |                                               |
|                      | ```{=html}                                    |
|                      | <!-- -->                                      |
|                      | ```                                           |
|                      | -   Simulation --- in which the anticipated   |
|                      |     benefit is analyzed and simulated to      |
|                      |     obtain costs and values; and/or           |
|                      |                                               |
|                      | ```{=html}                                    |
|                      | <!-- -->                                      |
|                      | ```                                           |
|                      | -   Observation --- in which benefit          |
|                      |     processes are measured and recorded to    |
|                      |     provide estimates.                        |
|                      |                                               |
|                      | If there is a secret to valuing benefits, it  |
|                      | is to rationally and reasonably identify,     |
|                      | breakdown, apply, and project the costs and   |
|                      | values for each alternative. Not all costs    |
|                      | and values will apply --- or apply the same   |
|                      | way --- to each alternative.                  |
|                      |                                               |
|                      | *States will make their most effective        |
|                      | arguments for Federal funding through         |
|                      | quantified costs and benefits.*               |
|                      |                                               |
|                      | The Annual and Systems Life Quantified        |
|                      | Benefits Worksheets on page 3-16 and 3-17 may |
|                      | be used to document the value of quantifiable |
|                      | benefits. Note that space has been allotted   |
|                      | on the worksheets for the results of three    |
|                      | critical determinations:                      |
|                      |                                               |
|                      | -   Assumptions --- on which the numbers and  |
|                      |     predictions are based;                    |
+----------------------+-----------------------------------------------+

[]{#__RefHeading___Toc467917030 .anchor}Table 3‑13: Quantified Benefits
Worksheet: Annual

  ------------------- ----- ----- ----- ----------- ----------- ----- ----- ----- ---------- ----- ------------ ----- ------------ ----- ----- -----
  Constant Dollars or                                                             Year                                                         
  Current Dollars                                                                 \_\_\_\_                                                     

  **BENEFIT CATEGORY                                                                                                                           
  / DESCRIPTION**                                                                                                                              

  **Benefit Number:**                                                                                                                          

  **Description:**                                                                                                                             

  **STATUS QUO                                                                                                                                 
  BENEFIT VALUE**                                                                                                                              

  **Assumptions:**                                                                                                                             

  **Numbers**                                       **Basis**                                                         **Source**               

  Current                                                                                                                                      
  Measure/Volume:                                                                                                                              

  Projected                                                                                                                                    
  Increase/Decrease                                                                                                                            
  Over Time:                                                                                                                                   

  Current Value:                                                                                                                               

  **Annual Benefits                                                                                                                            
  Profile: Status                                                                                                                              
  Quo**                                                                                                                                        

  Jan                 Feb   Mar   Apr                           May   Jun   Jul              Aug                Sep                Oct   Nov   Dec

                                                                                                                                               

  **ALTERNATIVE *n*                                                                                                                            
  BENEFIT VALUE**                                                                                                                              

  **Assumptions:**                                                                                                                             

  **Numbers**                           **Basis**                                                  **Source**                                  

  Measure/Volume at                                                                                                                            
  Implementation:                                                                                                                              

  Projected                                                                                                                                    
  Increase/Decrease                                                                                                                            
  Over Time:                                                                                                                                   

  Initial Value at                                                                                                                             
  Implementation:                                                                                                                              

  **Annual Benefits                                                                                                                            
  Profile:                                                                                                                                     
  Alternative *n***                                                                                                                            

  Jan                 Feb   Mar   Apr                           May   Jun   Jul              Aug                Sep                Oct   Nov   Dec

                                                                                                                                               
  ------------------- ----- ----- ----- ----------- ----------- ----- ----- ----- ---------- ----- ------------ ----- ------------ ----- ----- -----

[]{#__RefHeading___Toc467917031 .anchor}Table 3‑14: Quantified Benefits
Worksheet: Systems Life

Constant Dollars or Current Dollars

  ------------------- ------- ------ ----------- ------- ------- ------- ------------ ------- ------- -------
  **BENEFIT CATEGORY                                                                                  
  / DESCRIPTION**                                                                                     

  **Benefit Number:**                                                                                 

  **Description:**                                                                                    

  **STATUS QUO                                                                                        
  BENEFIT VALUE**                                                                                     

  **Assumptions:**                                                                                    

  **Numbers**                        **Basis**                           **Source**                   

  Current                                                                                             
  Measure/Volume:                                                                                     

  Projected                                                                                           
  Increase/Decrease                                                                                   
  Over Time:                                                                                          

  Current Value:                                                                                      

  **System Life                                                                                       
  Benefits Profile:                                                                                   
  Status Quo**                                                                                        

  Year 1              Year 2  Year 3             Year 4  Year 5  Year 6               Year 7  Year 8  Total

                                                                                                      

  **ALTERNATIVE *n*                                                                                   
  BENEFIT VALUE**                                                                                     

  **Assumptions:**                                                                                    

  **Numbers**                        **Basis**                           **Source**                   

  Measure/Volume at                                                                                   
  Implementation:                                                                                     

  Projected                                                                                           
  Increase/Decrease                                                                                   
  Over Time:                                                                                          

  Initial Value at                                                                                    
  Implementation:                                                                                     

  **Systems Life                                                                                      
  Benefits Profile:                                                                                   
  Alternative *n***                                                                                   

  Year 1              Year 2  Year 3             Year 4  Year 5  Year 6               Year 7  Year 8  Total

                                                                                                      
  ------------------- ------- ------ ----------- ------- ------- ------- ------------ ------- ------- -------

+---------------------+------------------------------------------------+
|                     | -   Basis for numbers --- such as average      |
|                     |     value of overpayments during the last      |
|                     |     complete fiscal year; and                  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Source for numbers --- which specifies the |
|                     |     documents (and their locations) from which |
|                     |     numbers or predicted increases or          |
|                     |     decreases were pulled or calculated.       |
|                     |                                                |
|                     | In most cases, addendum sheets should be       |
|                     | attached with narrative and numbers explaining |
|                     | in more detail the origin, derivation, and     |
|                     | calculation of the actual and predicted        |
|                     | values. In addition, critical documents on     |
|                     | which the numbers and predictions are based    |
|                     | should be attached to the State\'s master copy |
|                     | of the Cost/Benefit Analysis.                  |
|                     |                                                |
|                     | Since the State is now required by regulation  |
|                     | to accrue actual costs and benefits over time  |
|                     | and since ACF will oversee cost/benefit        |
|                     | actuals, care should be taken to document the  |
|                     | process in full. The documentation should be   |
|                     | sufficiently detailed so that personnel        |
|                     | changes will not affect the State\'s ability   |
|                     | to accrue, measure, and explain costs and      |
|                     | benefits.                                      |
|                     |                                                |
|                     | Once the State has prepared a set of benefit   |
|                     | worksheets, the calculated benefits for the    |
|                     | status quo and each alternative can be listed  |
|                     | on the Annual Benefits Worksheet (see page     |
|                     | 3-19).                                         |
+---------------------+------------------------------------------------+

+---------------------+------------------------------------------------+
| ## Apply Pr         | As with costs, benefits of each alternative    |
| esent Value Factors | should be expressed in terms of their present  |
|                     | value. Present value is calculated by          |
|                     | multiplying the benefit values by a factor     |
|                     | based on the established discount rate and     |
|                     | time period. (See page 3-11 for a discount     |
|                     | factor table based on 7%.)                     |
+---------------------+------------------------------------------------+
| ##                  | Once the annual benefit values for each        |
| Prepare Systems Lif | alternative are identified, totaled, and       |
| e Benefits Profiles | discounted for present value, the system life  |
|                     | benefit profiles can be prepared. (See page    |
|                     | 3-20.) These benefits profiles are built from  |
|                     | the totals calculated on each yearly benefit   |
|                     | worksheet. Present value totals are inserted:  |
|                     | recalculation is not required.                 |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917032 .anchor}Table 3‑15: Annual Benefits
Worksheet

<table style="width:100%;">
<colgroup>
<col style="width: 24%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 1%" />
<col style="width: 4%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="7">Status Quo</td>
<td colspan="8">Year _____</td>
</tr>
<tr class="even">
<td colspan="7">Alternative <em>n</em></td>
<td colspan="8">Constant Dollars or Current Dollars</td>
</tr>
<tr class="odd">
<td><p>Benefit Number and</p>
<p>Description</p></td>
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td>Apr</td>
<td>May</td>
<td colspan="2">Jun</td>
<td>Jul</td>
<td>Aug</td>
<td>Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
<td>Total</td>
</tr>
<tr class="even">
<td>Benefit 1: Short Description</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Benefit 2: Short Description</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Benefit 3: Short Description</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>etc.</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>TOTAL PROJECTED BENEFITS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>PRESENT VALUE FACTOR</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td></td>
</tr>
<tr class="even">
<td>TOTAL PRESENT VALUE BENEFITS</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td></td>
</tr>
<tr class="odd">
<td>CUM. TOTAL PROJ. BENEFITS / PRIOR YEAR</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td></td>
</tr>
<tr class="even">
<td>CUMULATIVE TOTAL PROJECTED BENEFITS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>N/A</td>
</tr>
</tbody>
</table>

[]{#__RefHeading___Toc467917033 .anchor}Table 3‑16: Systems Life
Benefits Profile

<table style="width:100%;">
<colgroup>
<col style="width: 29%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 3%" />
<col style="width: 3%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="5">Status Quo</td>
<td colspan="6">Year _____</td>
</tr>
<tr class="even">
<td colspan="5">Alternative <em>n</em></td>
<td colspan="6">Constant Dollars or Current Dollars</td>
</tr>
<tr class="odd">
<td><p>Benefit Number and</p>
<p>Description</p></td>
<td>Year 1</td>
<td>Year 2</td>
<td>Year 3</td>
<td colspan="2">Year 4</td>
<td>Year 5</td>
<td>Year 6</td>
<td>Year 7</td>
<td>Year 8</td>
<td>Total</td>
</tr>
<tr class="even">
<td>Benefit 1: Short Description</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Benefit 2: Short Description</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Benefit 3: Short Description</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>etc.</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>TOTAL PROJECTED BENEFITS</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><p>TOTAL PRESENT VALUE</p>
<p>BENEFITS</p></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>CUMULATIVE TOTAL PROJECTED BENEFITS</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>N/A</td>
</tr>
</tbody>
</table>

+---+-----------------+---------------------------------------------+---+
|   | ## Avoi         | Errors commonly made in analyzing benefits  |   |
|   | d Common Errors | and costs include double counting, counting |   |
|   |                 | sunk costs, omitting costs, and applying    |   |
|   |                 | cost categories unevenly.                   |   |
|   |                 |                                             |   |
|   |                 | Double counting occurs when the same        |   |
|   |                 | expense is charged to more than one         |   |
|   |                 | category. This could occur, for example, if |   |
|   |                 | the same or overlapping expenses to \"clean |   |
|   |                 | up\" and convert information and software   |   |
|   |                 | were charged to the categories of           |   |
|   |                 | conversion, studies, and in-house and       |   |
|   |                 | contract personnel.                         |   |
|   |                 |                                             |   |
|   |                 | Including sunk costs is also an error in    |   |
|   |                 | calculating cost/benefits. \"Sunk costs\"   |   |
|   |                 | represent money already spent and such      |   |
|   |                 | costs have no bearing on the analysis.      |   |
|   |                 | Cost/benefit analysis addresses current and |   |
|   |                 | future costs, not past expenditures.        |   |
|   |                 |                                             |   |
|   |                 | Omitting costs is a common error which can  |   |
|   |                 | occur from overlooking overhead costs or    |   |
|   |                 | hidden costs. Overhead costs may include    |   |
|   |                 | charges for space, electricity, personnel   |   |
|   |                 | benefits, and project or management         |   |
|   |                 | overhead. Hidden costs are usually indirect |   |
|   |                 | costs or support activities existing        |   |
|   |                 | elsewhere in the organization and sometimes |   |
|   |                 | charged at a standard rate by an internal   |   |
|   |                 | billing system.                             |   |
|   |                 |                                             |   |
|   |                 | The error of uneven application of cost     |   |
|   |                 | categories occurs when costs are applied to |   |
|   |                 | one alternative and not another to which it |   |
|   |                 | applies. For example, if an upgrade to      |   |
|   |                 | accommodate workload growth is applied to   |   |
|   |                 | the status quo --- but not to the           |   |
|   |                 | alternatives also needing additional future |   |
|   |                 | capacity --- an error has been made.        |   |
+---+-----------------+---------------------------------------------+---+
| # |                 | Despite the preponderant weight given       |   |
| # |                 | quantified benefits, qualitative benefits   |   |
|   |                 | are also important in the evaluation of     |   |
| I |                 | alternatives, gaining weight as the cost    |   |
| d |                 | differential between alternatives narrows.  |   |
| e |                 |                                             |   |
| n |                 | Contrasted to the ease of valuing such      |   |
| t |                 | benefits as reduced staffing, assigning     |   |
| i |                 | values to the benefits of improved security |   |
| f |                 | against unauthorized access or improved     |   |
| y |                 | access to system information may lead to    |   |
|   |                 | numbers which are far from unassailable.    |   |
| Q |                 |                                             |   |
| u |                 | *If numbers cannot be reasonably defended,  |   |
| a |                 | they should not be set forth as quantified  |   |
| l |                 | benefit values. Instead, the State should   |   |
| i |                 | acknowledge the benefits as qualitative --- |   |
| t |                 | sometimes called intangible --- benefits.*  |   |
| a |                 |                                             |   |
| t |                 | Qualitative benefits are linked to factors  |   |
| i |                 | other than numbers. For example,            |   |
| v |                 | qualitative benefits may be coupled with    |   |
| e |                 | legislative mandates, socio-political       |   |
|   |                 | edicts, or technical, functional, or        |   |
| B |                 | programmatic considerations.                |   |
| e |                 |                                             |   |
| n |                 | Benefits associated with legislative        |   |
| e |                 | mandates are the most powerful. For         |   |
| f |                 | example, an alternative which would modify  |   |
| i |                 | a child support management information      |   |
| t |                 | system to achieve enhanced \"compatibility  |   |
| s |                 | among the systems of different              |   |
|   |                 | jurisdictions to permit periodic            |   |
|   |                 | screening\" would support the objectives of |   |
|   |                 | Public Law 96-265, which amended the Social |   |
|   |                 | Security Act with respect to provisions     |   |
|   |                 | related to AFDC and Child Support programs. |   |
|   |                 |                                             |   |
|   |                 | Qualitative benefits, identified previously |   |
|   |                 | on Benefit Profile Worksheets (see page     |   |
|   |                 | 3-14) for each alternative and the status   |   |
|   |                 | quo, should now be:                         |   |
|   |                 |                                             |   |
|   |                 | -   Listed in order of their relative       |   |
|   |                 |     importance,                             |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Linked to system objectives, and        |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Assessed as to the measure of           |   |
|   |                 |     effectiveness of the benefit in meeting |   |
|   |                 |     the system objective.                   |   |
|   |                 |                                             |   |
|   |                 | For example, the benefit of PC-based        |   |
|   |                 | distributed systems might fulfill the       |   |
|   |                 | \"access to information\" system            |   |
|   |                 | development objective more effectively than |   |
|   |                 |                                             |   |
|   |                 | a terminal-to-mainframe link. Note that in  |   |
|   |                 | this example the State might derive         |   |
|   |                 | quantitative benefits, based on access and  |   |
|   |                 | wait times. However, qualitative benefits   |   |
|   |                 | --- such as increased worker satisfaction   |   |
|   |                 | and enhanced access --- may apply as well.  |   |
|   |                 |                                             |   |
|   |                 | The State may use the Qualitative Benefits  |   |
|   |                 | Worksheet on page 3-24 to develop the       |   |
|   |                 | intangible benefits profile for the status  |   |
|   |                 | quo and each alternative.                   |   |
|   |                 |                                             |   |
|   |                 | Four levels of effectiveness are included   |   |
|   |                 | on the worksheet: very effective,           |   |
|   |                 | effective, minimally effective, and not     |   |
|   |                 | effective.                                  |   |
|   |                 |                                             |   |
|   |                 | The latter is included so that the State    |   |
|   |                 | has the option of pairing benefits and      |   |
|   |                 | objectives in standard sets against which   |   |
|   |                 | the alternatives can be measured. For       |   |
|   |                 | example, the status quo might be rated      |   |
|   |                 | \"not effective\" in the benefit/objective  |   |
|   |                 | combination of work satisfaction/access to  |   |
|   |                 | information.                                |   |
+---+-----------------+---------------------------------------------+---+
| # |                 | Since the State\'s actual benefits will be  |   |
| # |                 | monitored and measured against projected    |   |
|   |                 | benefits, it is critical:                   |   |
| V |                 |                                             |   |
| e |                 | -   Ed???? prediction of benefits\' values. |   |
| r |                 |                                             |   |
| i |                 | After the initial cost/benefit profiles     |   |
| f |                 | have been developed, the State should       |   |
| y |                 | assign an independent team of reviewers to  |   |
|   |                 | critique the profiles and to propose        |   |
| B |                 | measurement and monitoring strategies.      |   |
| e |                 |                                             |   |
| n |                 |                                             |   |
| e |                 |                                             |   |
| f |                 |                                             |   |
| i |                 |                                             |   |
| t |                 |                                             |   |
|   |                 |                                             |   |
| C |                 |                                             |   |
| a |                 |                                             |   |
| t |                 |                                             |   |
| e |                 |                                             |   |
| g |                 |                                             |   |
| o |                 |                                             |   |
| r |                 |                                             |   |
| i |                 |                                             |   |
| e |                 |                                             |   |
| s |                 |                                             |   |
|   |                 |                                             |   |
| A |                 |                                             |   |
| n |                 |                                             |   |
| d |                 |                                             |   |
|   |                 |                                             |   |
| P |                 |                                             |   |
| r |                 |                                             |   |
| o |                 |                                             |   |
| j |                 |                                             |   |
| e |                 |                                             |   |
| c |                 |                                             |   |
| t |                 |                                             |   |
| i |                 |                                             |   |
| o |                 |                                             |   |
| n |                 |                                             |   |
| s |                 |                                             |   |
|   |                 |                                             |   |
+---+-----------------+---------------------------------------------+---+
| # |                 | The first step in comparing alternatives is |   |
| # |                 | to develop a Cost/Benefit Profile (see page |   |
|   |                 | 3-26) for the status quo and each           |   |
| D |                 | alternative. The profile builds on          |   |
| e |                 | information already developed during the    |   |
| v |                 | analysis, including sections for:           |   |
| e |                 |                                             |   |
| l |                 | -   System Life Cost Profile,               |   |
| o |                 |                                             |   |
| p |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
| C |                 | ```                                         |   |
| o |                 | -   System Life (Quantitative) Benefits     |   |
| s |                 |     Profile,                                |   |
| t |                 |                                             |   |
| / |                 | ```{=html}                                  |   |
| B |                 | <!-- -->                                    |   |
| e |                 | ```                                         |   |
| n |                 | -   Cumulative Costs and Benefits, and      |   |
| e |                 |                                             |   |
| f |                 | ```{=html}                                  |   |
| i |                 | <!-- -->                                    |   |
| t |                 | ```                                         |   |
|   |                 | -   Qualitative Benefits.                   |   |
| P |                 |                                             |   |
| r |                 |                                             |   |
| o |                 |                                             |   |
| f |                 |                                             |   |
| i |                 |                                             |   |
| l |                 |                                             |   |
| e |                 |                                             |   |
| s |                 |                                             |   |
+---+-----------------+---------------------------------------------+---+

[]{#__RefHeading___Toc467917034 .anchor}Table 3‑17: Qualitative Benefits
Worksheet

+---------------------+-------------+------+-----+-----+-----+-----+
| Status Quo          |             | Alt  |     |     |     |     |
|                     |             | erna |     |     |     |     |
|                     |             | tive |     |     |     |     |
|                     |             | *n*  |     |     |     |     |
+---------------------+-------------+------+-----+-----+-----+-----+
| **BENEFITS\***      | **RELATED   |      | **M |     |     |     |
|                     | SYSTEM      |      | EAS |     |     |     |
|                     | O           |      | URE |     |     |     |
|                     | BJECTIVES** |      | OF  |     |     |     |
|                     |             |      | EFF |     |     |     |
|                     |             |      | ECT |     |     |     |
|                     |             |      | IVE |     |     |     |
|                     |             |      | NES |     |     |     |
|                     |             |      | S** |     |     |     |
+---------------------+-------------+------+-----+-----+-----+-----+
|                     |             |      | V   | Eff | Min | Not |
|                     |             |      | ery | ect | ima |     |
|                     |             |      |     | ive | lly | Eff |
|                     |             |      | Eff |     |     | ect |
|                     |             |      | ect |     | Eff | ive |
|                     |             |      | ive |     | ect |     |
|                     |             |      |     |     | ive |     |
+---------------------+-------------+------+-----+-----+-----+-----+
|                     |             |      |     |     |     |     |
+---------------------+-------------+------+-----+-----+-----+-----+

\*Ranked in Descending Order of Importance

+---+----------------+---------------------------------------------+---+
|   |                | The profile aggregates information on       |   |
|   |                | systems life and cumulative costs and       |   |
|   |                | benefits used in the next stage of analysis |   |
|   |                | --- the comparison of alternatives. The     |   |
|   |                | system life and cumulative costs and        |   |
|   |                | benefits derive from the systems life       |   |
|   |                | profile worksheets (pages 3-12 and 3-20),   |   |
|   |                | while the qualitative benefits derive from  |   |
|   |                | the Qualitative Benefits Worksheet (page    |   |
|   |                | 3-24).                                      |   |
|   |                |                                             |   |
|   |                | The Cost/Benefit Profile provides on a      |   |
|   |                | single sheet the most essential data        |   |
|   |                | pertinent to that alternative.              |   |
+---+----------------+---------------------------------------------+---+
| # |                | The State is now ready to compare the       |   |
| # |                | systems life cost and benefit values for    |   |
|   |                | the status quo and each alternative,        |   |
| C |                | transferring the key information from each  |   |
| o |                | Cost/Benefit Profile (page 3-26) to the     |   |
| m |                | Comparison of Alternatives worksheet (page  |   |
| p |                | 3-27).                                      |   |
| a |                |                                             |   |
| r |                | Three methods are typically used by the     |   |
| e |                | States to compare alternatives:             |   |
|   |                |                                             |   |
| Q |                | -   Net Benefit (Cost),                     |   |
| u |                |                                             |   |
| a |                | ```{=html}                                  |   |
| n |                | <!-- -->                                    |   |
| t |                | ```                                         |   |
| i |                | -   Benefit/Cost Ratio, and                 |   |
| t |                |                                             |   |
| a |                | ```{=html}                                  |   |
| t |                | <!-- -->                                    |   |
| i |                | ```                                         |   |
| v |                | -   Breakeven or Payback.                   |   |
| e |                |                                             |   |
|   |                | [Net Benefit (Cost]{.underline}) is         |   |
| F |                | calculated for the status quo and each      |   |
| a |                | alternative by subtracting the total        |   |
| c |                | present value costs from the total present  |   |
| t |                | value benefits. Where benefits exceed       |   |
| o |                | costs, the result will be a positive        |   |
| r |                | number, which is, of course, preferable.    |   |
| s |                | However, for the status quo and perhaps     |   |
|   |                | some alternatives, costs may exceed         |   |
|   |                | benefits and result in a negative number,   |   |
|   |                | suggesting no (quantifiable) payback on the |   |
|   |                | alternative.                                |   |
|   |                |                                             |   |
|   |                | Net Benefit (Cost), sometimes referred to   |   |
|   |                | as Net Present Value, is the most           |   |
|   |                | straightforward comparison, showing which   |   |
|   |                | alternative is the most economical based on |   |
|   |                | present value dollars.                      |   |
+---+----------------+---------------------------------------------+---+

[]{#__RefHeading___Toc467917035 .anchor}Table 3‑18: Cost / Benefit
Profile

<table style="width:100%;">
<colgroup>
<col style="width: 28%" />
<col style="width: 7%" />
<col style="width: 1%" />
<col style="width: 6%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 5%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 7%" />
<col style="width: 0%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="3">Status Quo</td>
<td colspan="6">Constant Dollars or Current Dollars</td>
<td colspan="4">Alternative <em>n</em></td>
</tr>
<tr class="even">
<td colspan="12"><strong>SYSTEM LIFE COST PROFILE</strong></td>
<td></td>
</tr>
<tr class="odd">
<td>Description</td>
<td>Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td>Year 6</td>
<td colspan="2">Year 7</td>
<td>Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="even">
<td>Non-Recurring Costs</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>Recurring Costs</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td>Total Projected Costs</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>Total Present Value Costs</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td colspan="12"><strong>SYSTEM LIFE BENEFITS PROFILE</strong></td>
<td></td>
</tr>
<tr class="odd">
<td>Description</td>
<td>Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td>Year 6</td>
<td colspan="2">Year 7</td>
<td>Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="even">
<td>Total Projected Benefits</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>Total Present Value Benefits</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td colspan="12"><strong>CUMULATIVE BENEFIT / COST PROFILE</strong></td>
<td></td>
</tr>
<tr class="odd">
<td>Description</td>
<td>Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td>Year 6</td>
<td colspan="2">Year 7</td>
<td>Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="even">
<td>Cumulative Total Projected Benefits</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2">N/A</td>
</tr>
<tr class="odd">
<td>Cumulative Total Projected Costs</td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2">N/A</td>
</tr>
<tr class="even">
<td colspan="12"><strong>QUALITATIVE BENEFITS</strong></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2"><strong>Benefits</strong></td>
<td colspan="5"><strong>Related System Objectives</strong></td>
<td colspan="5"><strong>Measure of Effectiveness</strong></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"></td>
<td colspan="5"></td>
<td><p>Very</p>
<p>Effective</p></td>
<td colspan="2">Effective</td>
<td><p>Minimally</p>
<p>Effective</p></td>
<td colspan="2"><p>Not</p>
<p>Effective</p></td>
</tr>
<tr class="odd">
<td colspan="2"></td>
<td colspan="5"></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
</tr>
</tbody>
</table>

[]{#__RefHeading___Toc467917036 .anchor}Table 3‑19: Comparison Of
Alternatives

Constant Dollars or Current Dollars

  ----------------------------- ---------- --------------- --------------- ---------------
  **QUANTITATIVE FACTORS**                                                 

  **Description**               **Status   **Alternative   **Alternative   **Alternative
                                Quo**      1**             2**             3**

  Total Present Value Benefits                                             

  Less Total Present Value                                                 
  Costs                                                                    

  Net Benefit (Cost)                                                       

  Benefit/Cost Ratio                                                       

  Breakeven (Months)                                                       

  **QUALITATIVE FACTORS**                                                  

  Description:                                                             
  ----------------------------- ---------- --------------- --------------- ---------------

+---+-----------------+---------------------------------------------+---+
|   |                 | [Benefit/Cost Ratio]{.underline} is         |   |
|   |                 | calculated for the status quo and each      |   |
|   |                 | alternative by dividing the total present   |   |
|   |                 | value benefits by the total present value   |   |
|   |                 | costs. Where benefits equal costs, the      |   |
|   |                 | ratio will be 1. For benefits exceeding     |   |
|   |                 | costs, the ratio will be more than 1, again |   |
|   |                 | preferable. In fact, the larger the number  |   |
|   |                 | (within reason), the more attractive the    |   |
|   |                 | alternative. On the other hand, where costs |   |
|   |                 | exceed benefits, the ratio will be less     |   |
|   |                 | than 1. Breakeven will not be reached.      |   |
|   |                 |                                             |   |
|   |                 | The Benefit/Cost Ratio provides a relative  |   |
|   |                 | measure of an alternative\'s value --- that |   |
|   |                 | is, a measure of the benefits obtained per  |   |
|   |                 | dollar spent. If the ratio calculated for   |   |
|   |                 | an alternative is 1.08, then for each       |   |
|   |                 | dollar spent, the State estimates a return  |   |
|   |                 | of \$1.08 in benefits.                      |   |
|   |                 |                                             |   |
|   |                 | Therefore, the Benefit/Cost Ratio shows     |   |
|   |                 | which alternative provides the largest      |   |
|   |                 | return relative to the costs --- as does    |   |
|   |                 | the Net Benefit factor.                     |   |
|   |                 |                                             |   |
|   |                 | [Breakeven or Payback]{.underline} is the   |   |
|   |                 | calculation of how many months it will take |   |
|   |                 | for cumulative benefits to equal (then      |   |
|   |                 | exceed) cumulative costs. These may be      |   |
|   |                 | presented in two ways, numerically and      |   |
|   |                 | graphically.                                |   |
|   |                 |                                             |   |
|   |                 | In the mathematical calculation, cumulative |   |
|   |                 | total costs are compared against cumulative |   |
|   |                 | total benefits to determine the month of    |   |
|   |                 | breakeven or payback. Note that projected,  |   |
|   |                 | cumulative numbers --- not present value    |   |
|   |                 | numbers --- are used.                       |   |
|   |                 |                                             |   |
|   |                 | The breakeven point can be determined from  |   |
|   |                 | the worksheets by a two-step process.       |   |
|   |                 | First, the year of breakeven is determined  |   |
|   |                 | by comparing the cumulative total projected |   |
|   |                 | costs and benefits on the system life       |   |
|   |                 | worksheets. Then, the month of breakeven is |   |
|   |                 | established by comparing the cumulative     |   |
|   |                 | total projected costs and benefits on the   |   |
|   |                 | annual worksheets of the breakeven year.    |   |
|   |                 |                                             |   |
|   |                 | []{#__RefHeading___Toc467917037             |   |
|   |                 | .anchor}Table 3‑20: Graph: Systems Life     |   |
|   |                 | Breakeven                                   |   |
|   |                 |                                             |   |
|   |                 | > ![](med                                   |   |
|   |                 | ia/image1.wmf){width="3.5680555555555555in" |   |
|   |                 | > height="2.704861111111111in"}             |   |
|   |                 |                                             |   |
|   |                 | In the graph above, the cumulative benefits |   |
|   |                 | breakeven at \$5,000,000 each in the fourth |   |
|   |                 | year. This is readily apparent from the     |   |
|   |                 | chart. When cumulative costs are equal to   |   |
|   |                 | cumulative benefits, the lines intersect    |   |
|   |                 | --- the more cumulative benefits exceed     |   |
|   |                 | cumulative costs, the wider the gap after   |   |
|   |                 | intersection.                               |   |
|   |                 |                                             |   |
|   |                 | In some cases, it may be important to       |   |
|   |                 | recover the initial costs of a project as   |   |
|   |                 | quickly as possible. In those instances,    |   |
|   |                 | the breakeven calculation may become the    |   |
|   |                 | most important. Note, however, that         |   |
|   |                 | alternatives which deliver the earliest     |   |
|   |                 | breakeven may not have the most favorable   |   |
|   |                 | benefit/cost ratio and net present value    |   |
|   |                 | benefit.                                    |   |
|   |                 |                                             |   |
|   |                 | The Comparison of Alternatives worksheet    |   |
|   |                 | (page 3-27) is used to set the numbers      |   |
|   |                 | side-by-side for the status quo and each    |   |
|   |                 | alternative. Space is provided for:         |   |
|   |                 |                                             |   |
|   |                 | -   Total present value benefits,           |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Total present value costs,              |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Net benefit (cost),                     |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Benefit / Cost ratio, and               |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Breakeven.                              |   |
|   |                 |                                             |   |
|   |                 | Breakeven should be stated in terms of      |   |
|   |                 | months, as discussed above, based on the    |   |
|   |                 | cumulative figures from the Annual Cost     |   |
|   |                 | Worksheet (page 3-9) and the Annual         |   |
|   |                 | Benefits Worksheet (page 3-19). *Note that  |   |
|   |                 | breakeven is based on projected costs ---   |   |
|   |                 | not present value costs.*                   |   |
+---+-----------------+---------------------------------------------+---+
| # |                 | Now that all quantitative facts about each  |   |
| # |                 | alternative are side-by-side, the art of    |   |
|   |                 | cost/benefit analysis comes into play. The  |   |
| C |                 | term \"art\" is used because *cost/benefit  |   |
| o |                 | analysis is not simply a mathematical       |   |
| m |                 | formula which dictates a decision, but a    |   |
| p |                 | managerial decision-making tool.*           |   |
| a |                 |                                             |   |
| r |                 | Therefore, the decision should not be       |   |
| e |                 | limited to an exercise of dividing or       |   |
|   |                 | subtracting to determine which alternative  |   |
| A |                 | has the highest net benefit, largest        |   |
| l |                 | benefit/cost ratio, or the shortest         |   |
| t |                 | breakeven period. In fact, an analysis      |   |
| e |                 | which results in an unusually low breakeven |   |
| r |                 | should be cause for concern rather than     |   |
| n |                 | excitement. Such a payback would be         |   |
| a |                 | unlikely to occur, and payback must be      |   |
| t |                 | monitored by the State.                     |   |
| i |                 |                                             |   |
| v |                 | Therefore, the first step in comparing      |   |
| e |                 | alternatives should be assessing the range  |   |
| s |                 | in the numbers among the alternatives. The  |   |
| : |                 | manager / analyst should consider such      |   |
|   |                 | questions as:                               |   |
| Q |                 |                                             |   |
| u |                 | -   How close are the numbers? Do they make |   |
| a |                 |     sense?                                  |   |
| n |                 |                                             |   |
| t |                 | ```{=html}                                  |   |
| i |                 | <!-- -->                                    |   |
| t |                 | ```                                         |   |
| a |                 | -   Is there an apparent winner? Does it    |   |
| t |                 |     seem a sensible selection?              |   |
| i |                 |                                             |   |
| v |                 | ```{=html}                                  |   |
| e |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
| a |                 | -   Do the results suggest that the         |   |
| n |                 |     assumptions and projections are         |   |
| d |                 |     reasonable?                             |   |
|   |                 |                                             |   |
| Q |                 | ```{=html}                                  |   |
| u |                 | <!-- -->                                    |   |
| a |                 | ```                                         |   |
| l |                 | -   If the numbers are close, should the    |   |
| i |                 |     assumptions be reassessed and the       |   |
| t |                 |     numbers checked for validity?           |   |
| a |                 |                                             |   |
| t |                 | ```{=html}                                  |   |
| i |                 | <!-- -->                                    |   |
| v |                 | ```                                         |   |
| e |                 | -   If the range is wide, should the        |   |
|   |                 |     assumptions be reassessed and the       |   |
|   |                 |     numbers checked for validity?           |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Do I believe this payback will occur?   |   |
|   |                 |                                             |   |
|   |                 | Next, the numbers --- or quantitative part  |   |
|   |                 | of the analysis --- should be checked       |   |
|   |                 | against the qualitative or intangible       |   |
|   |                 | benefits. The Cost/Benefit Profiles should  |   |
|   |                 | be placed side-by-side. For the qualitative |   |
|   |                 | part of the analysis, the manager / analyst |   |
|   |                 | should consider similar questions:          |   |
|   |                 |                                             |   |
|   |                 | -   How close are the benefit profiles? Are |   |
|   |                 |     there appreciable differences among     |   |
|   |                 |     them?                                   |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Is there an apparent winner, based on   |   |
|   |                 |     qualitative factors? Does it also win   |   |
|   |                 |     in numbers?                             |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   If the benefits are close, should the   |   |
|   |                 |     assumptions be reassessed?              |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   If the benefits vary widely, should the |   |
|   |                 |     assumptions be reassessed?              |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Do I believe these benefits will occur? |   |
|   |                 |                                             |   |
|   |                 | Significant differences in qualitative      |   |
|   |                 | benefits, which require consideration in    |   |
|   |                 | the final analysis, should be noted on the  |   |
|   |                 | Comparison of Alternatives worksheet. In    |   |
|   |                 | fact, the manager can develop an evaluation |   |
|   |                 | scheme for the qualitative factors to aid   |   |
|   |                 | in the analysis. Techniques include:        |   |
|   |                 |                                             |   |
|   |                 | -   Ranking --- which involves ranking      |   |
|   |                 |     benefits by their relative importance   |   |
|   |                 |     [and]{.underline} determining the       |   |
|   |                 |     degree to which each alternative        |   |
|   |                 |     achieves the benefits, and              |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Weighting --- which involves scoring    |   |
|   |                 |     each alternative on the extent of       |   |
|   |                 |     benefits projected or assigning values  |   |
|   |                 |     to benefits.                            |   |
|   |                 |                                             |   |
|   |                 | With these methods, numbers are assigned in |   |
|   |                 | the form of ranks or scores. *Although this |   |
|   |                 | lends the appearance of a quantified        |   |
|   |                 | process, the determinations are, by their   |   |
|   |                 | nature, subjective.*                        |   |
|   |                 |                                             |   |
|   |                 | Once this is done, the State should \"step  |   |
|   |                 | back and look at the big picture.\" This    |   |
|   |                 | process should test the validity of the     |   |
|   |                 | numerical results in light of the benefits. |   |
|   |                 | For example, if there is a very low cost    |   |
|   |                 | differential between two alternatives,      |   |
|   |                 | offset by a very large intangible benefits  |   |
|   |                 | differential, then the alternatives         |   |
|   |                 | certainly deserve a closer examination.     |   |
|   |                 | Questions to be asked include:              |   |
|   |                 |                                             |   |
|   |                 | -   Would I select the same alternative     |   |
|   |                 |     considering quantitative and            |   |
|   |                 |     qualitative factors separately?         |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Can I attach a value to a benefit that  |   |
|   |                 |     I was unable to cost before?            |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   If I am unable to quantify the benefit, |   |
|   |                 |     can I prepare a reasonable              |   |
|   |                 |     justification that the superior benefit |   |
|   |                 |     is worth the expense?                   |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Can I apply probability analysis to     |   |
|   |                 |     refine my determination?                |   |
|   |                 |                                             |   |
|   |                 | If serious questions arise, the cost and    |   |
|   |                 | benefit worksheets, beginning with the      |   |
|   |                 | assumptions and including all ensuing       |   |
|   |                 | calculations, should be redone.             |   |
|   |                 |                                             |   |
|   |                 | The reconsideration of assumptions is       |   |
|   |                 | sometimes referred to as \"sensitivity      |   |
|   |                 | analysis\" --- that is, testing the         |   |
|   |                 | sensitivity of the results to changes in    |   |
|   |                 | the assumptions. Such analysis considers    |   |
|   |                 | how vulnerable the results are to a change  |   |
|   |                 | in assumptions.                             |   |
|   |                 |                                             |   |
|   |                 | Generally, sensitivity analysis centers on  |   |
|   |                 | the factors expected to have the most       |   |
|   |                 | effect on the net present value             |   |
|   |                 | determination. Such factors can include:    |   |
|   |                 |                                             |   |
|   |                 | -   Cost estimates,                         |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Workload projections,                   |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Project implementation schedule, or     |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Offsetting benefit values.              |   |
|   |                 |                                             |   |
|   |                 | There are four steps in testing the         |   |
|   |                 | sensitivity of a factor and its effect on   |   |
|   |                 | the cost/benefit determination:             |   |
|   |                 |                                             |   |
|   |                 | -   Select the factor to be tested;         |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Hold all other factors in the analysis  |   |
|   |                 |     constant;                               |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Rework the analysis, varying the        |   |
|   |                 |     estimates for the factor under          |   |
|   |                 |     consideration; and                      |   |
|   |                 |                                             |   |
|   |                 | ```{=html}                                  |   |
|   |                 | <!-- -->                                    |   |
|   |                 | ```                                         |   |
|   |                 | -   Check the results to see if the ranking |   |
|   |                 |     of alternatives is materially affected. |   |
+---+-----------------+---------------------------------------------+---+
| # |                 | Qualitative benefits are subjective         |   |
| # |                 | determinations and balance the objective    |   |
|   |                 | determinations related to quantified        |   |
| M |                 | benefits. Both objective and subjective     |   |
| a |                 | determinations contribute to effective      |   |
| i |                 | decision-making.                            |   |
| n |                 |                                             |   |
| t |                 | *Simply because a benefit is listed as a    |   |
| a |                 | qualitative factor does not mean that it    |   |
| i |                 | lacks cost implications. It simply means a  |   |
| n |                 | different logical approach is needed,       |   |
|   |                 | because the value is either unpredictable   |   |
| p |                 | or difficult to establish and defend.*      |   |
| e |                 |                                             |   |
| r |                 | For example, suppose in comparing two       |   |
| s |                 | alternatives, a manager determines that a   |   |
| p |                 | \$10,000 cost differential separates two    |   |
| e |                 | alternatives. But the more costly           |   |
| c |                 | alternative delivers enhanced compatibility |   |
| t |                 | between State benefits systems, improved    |   |
| i |                 | public assistance, improved management      |   |
| v |                 | information, and improved security.         |   |
| e |                 | Although the manager could not directly     |   |
| : |                 | apply values to those benefits earlier in   |   |
|   |                 | the analysis, the manager may now be in a   |   |
| q |                 | position to argue that the \$10,000 cost    |   |
| u |                 | differential is worth the increased         |   |
| a |                 | benefits. In fact, at this point, some      |   |
| n |                 | calculations and assumptions might be made  |   |
| t |                 | to support the decision.                    |   |
| i |                 |                                             |   |
| t |                 | *The point is --- qualitative benefits have |   |
| a |                 | values, but they cannot be analyzed in the  |   |
| t |                 | same manner as quantified benefits.*        |   |
| i |                 |                                             |   |
| v |                 | Nonetheless, States should keep in mind --- |   |
| e |                 | the more objective (quantified) the         |   |
|   |                 | profile, the easier the decisions for       |   |
| a |                 | States in selecting systems alternatives    |   |
| n |                 | and for ACF in approving Federal funding    |   |
| d |                 | support.                                    |   |
|   |                 |                                             |   |
| q |                 |                                             |   |
| u |                 |                                             |   |
| a |                 |                                             |   |
| l |                 |                                             |   |
| i |                 |                                             |   |
| t |                 |                                             |   |
| a |                 |                                             |   |
| t |                 |                                             |   |
| i |                 |                                             |   |
| v |                 |                                             |   |
| e |                 |                                             |   |
|   |                 |                                             |   |
| f |                 |                                             |   |
| a |                 |                                             |   |
| c |                 |                                             |   |
| t |                 |                                             |   |
| o |                 |                                             |   |
| r |                 |                                             |   |
| s |                 |                                             |   |
+---+-----------------+---------------------------------------------+---+
| # |                 | After analyzing both the quantitative and   |   |
| # |                 | qualitative factors, the results of the     |   |
|   |                 | analysis should be formally verified, and   |   |
| V |                 | the best alternative selected. Finally, the |   |
| e |                 | decision-making process --- especially the  |   |
| r |                 | basis for selection of the chosen           |   |
| i |                 | alternative --- should be thoroughly        |   |
| f |                 | described and documented.                   |   |
| y |                 |                                             |   |
|   |                 |                                             |   |
| A |                 |                                             |   |
| n |                 |                                             |   |
| a |                 |                                             |   |
| l |                 |                                             |   |
| y |                 |                                             |   |
| s |                 |                                             |   |
| i |                 |                                             |   |
| s |                 |                                             |   |
|   |                 |                                             |   |
| a |                 |                                             |   |
| n |                 |                                             |   |
| d |                 |                                             |   |
|   |                 |                                             |   |
| S |                 |                                             |   |
| e |                 |                                             |   |
| l |                 |                                             |   |
| e |                 |                                             |   |
| c |                 |                                             |   |
| t |                 |                                             |   |
|   |                 |                                             |   |
| A |                 |                                             |   |
| l |                 |                                             |   |
| t |                 |                                             |   |
| e |                 |                                             |   |
| r |                 |                                             |   |
| n |                 |                                             |   |
| a |                 |                                             |   |
| t |                 |                                             |   |
| i |                 |                                             |   |
| v |                 |                                             |   |
| e |                 |                                             |   |
+---+-----------------+---------------------------------------------+---+

# COST / BENEFIT ANALYSIS FOR INTEGRATED SYSTEMS

**If the State is seeking approval for integrated benefits systems which
will be approved and funded by more than one Federal benefit program,
the cost/benefit information must be shown for each program. This will
require that the State**

-   **Distribute costs among the funding entities;**

```{=html}
<!-- -->
```
-   **Identify benefits associated with *each* Federal benefit program;
    and**

```{=html}
<!-- -->
```
-   **Develop cost/benefit profiles and measures for each Federal
    benefit program and for the integrated benefits system as a whole.**

**Although these determinations and calculations will be highly
dependent on each State\'s proposed approach, this chapter suggests some
considerations and provides examples of worksheets that may be of
assistance.**

+---------------------+------------------------------------------------+
| ## Overview         | When the State is proposing the development    |
|                     | and implementation of an integrated            |
|                     | information system which requires approval     |
|                     | from more than one Federal benefit program,    |
|                     | extra steps must be taken during the           |
|                     | Cost/Benefit Analysis.                         |
+---------------------+------------------------------------------------+

+---------------------+------------------------------------------------+
| ##                  | Before Federal approval can be granted, States |
|  Basis for Approval | must demonstrate that the proposed system      |
|                     | project is:                                    |
|                     |                                                |
|                     | -   Cost beneficial overall on the merits of   |
|                     |     the integrated information system, and     |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Cost beneficial from the perspective of    |
|                     |     each approving Federal program.            |
|                     |                                                |
|                     | This requires the State to break each system   |
|                     | down into costs and benefits attributable to   |
|                     | each program.                                  |
+---------------------+------------------------------------------------+

+---------------------+------------------------------------------------+
| ## Allocating Costs | Costs are usually developed and projected by   |
|                     | the States for the integrated system as a      |
|                     | whole, following processes such as those set   |
|                     | forth in Chapter 3. Yet at the same time the   |
|                     | overall costs are developed, the State must    |
|                     | consider how to distribute costs.              |
|                     |                                                |
|                     | Specifically, States are required to develop   |
|                     | their Cost/Benefit Analysis prior to           |
|                     | submission of the Implementation APD.          |
|                     | Concurrently, States are also preparing the    |
|                     | estimates of prospective cost allocation to    |
|                     | the various State and Federal funding sources. |
|                     |                                                |
|                     | Just as actual costs must be allocated to      |
|                     | Federal programs for system design and         |
|                     | implementation, projected costs and benefits   |
|                     | must be \"allocated\" or distributed to        |
|                     | programs in the Cost/Benefit Analysis. The     |
|                     | former is linked to payments, the latter to    |
|                     | paper documentation required for Federal       |
|                     | approval.                                      |
+---------------------+------------------------------------------------+
| ##  {#s             | The cost distribution used in the Cost/Benefit |
| ection .unnumbered} | Analysis should:                               |
|                     |                                                |
|                     | -   Conform with the State\'s prospective cost |
|                     |     allocation plans for development and       |
|                     |     operation, and                             |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Be explained in the Cost/Benefit Analysis. |
|                     |                                                |
|                     | States should keep in mind, however, that the  |
|                     | Cost/Benefit Analysis and the Cost Allocation  |
|                     | Plan are separate documents with separate      |
|                     | purposes and approval processes. They are      |
|                     | linked only in that the State should be        |
|                     | consistent in the approach to cost             |
|                     | distribution presented in the Cost/Benefit     |
|                     | Analysis and the Cost Allocation Plan.         |
|                     |                                                |
|                     | Normally, costs will be distributed for the    |
|                     | purposes of the Cost/Benefit Analysis based on |
|                     | a measure such as program-specific costs or    |
|                     | workloads and be calculated in terms of a      |
|                     | percentage of the whole. The Cost Distribution |
|                     | Profile worksheet on page 4-3 can be used to   |
|                     | calculate the proposed cost distribution for   |
|                     | the Cost/Benefit Analysis.                     |
|                     |                                                |
|                     | Once percentages are derived, they can be      |
|                     | applied to the costs developed for the         |
|                     | integrated system during the analysis          |
|                     | described in Chapter 3. Specifically, data     |
|                     | developed in the worksheets for the integrated |
|                     | system are distributed to the specific         |
|                     | programs. The worksheets on pages 4-4 and 4-5  |
|                     | suggest how this might be done. Note that      |
|                     | percentages are applied against projected ---  |
|                     | not present value --- costs.                   |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917038 .anchor}Table 4‑21: Cost Distribution
Profile

  --------------------- ------------------------ ------------------------
  Cost / Benefit                                 
  Analysis: Cost                                 
  Distribution                                   

  Basis:                                         

  Federal Program       Distribution             

                        Measure                  Percentage

  AFDC                  *n*                      *n%*

  Child Support         *n*                      *n%*

  JOBS                  *n*                      *n%*

  Child Care            *n*                      *n%*

  Foster Care           *n*                      *n%*

  Child Welfare         *n*                      *n%*
  Services                                       

  Refuge Resettlement   *n*                      *n%*

  Medicaid              *n*                      *n%*

  Food Stamps           *n*                      *n%*

  Subtotal              *n*                      *n%*

  State Program         Distribution             

                        Measure                  Percentage

  General Assistance    *n*                      *n%*

  Other:                *n*                      *n%*

  Subtotal              *n*                      *n%*

  GRAND TOTAL           *n*                      100%
  --------------------- ------------------------ ------------------------

[]{#__RefHeading___Toc467917039 .anchor}Table 4‑22: Annual Cost Profile:
by Program

  ------------------- ------ --------- ------ ---------- ---------- -------- --------- --------- --------
  Constant Dollars or                         Year                                               
  Current Dollars                             \_\_\_\_                                           

  Cost Category       AFDC   Child     JOBS              Medicaid   Food     Other\*   General   Totals
                             Support                                Stamps             Assist    

  Non-Recurring                                                                                  
  Costs:                                                                                         

  Site and Facility                                                                              

  Equipment Purchase                                                                             
  & Fees                                                                                         

  Shipping                                                                                       

  Installation                                                                                   

  Software Purchase                                                                              

  System Testing                                                                                 

  Conversion                                                                                     

  Studies                                                                                        

  Procurement                                                                                    

  Database                                                                                       
  Preparation                                                                                    

  Personnel                                                                                      

  Travel                                                                                         

  Training                                                                                       

  Overhead                                                                                       

  Subtotal                                                                                       

  Recurring Costs                                                                                

  Site and Facility                                                                              

  Equip. Lease &                                                                                 
  Maintenance                                                                                    

  Software Lease &                                                                               
  Maintenance                                                                                    

  Personnel                                                                                      
  Salaries/Benefits                                                                              

  Direct Support                                                                                 
  Services                                                                                       

  Travel                                                                                         

  Training                                                                                       

  Supplies                                                                                       

  Utilities                                                                                      

  Security (incl.                                                                                
  Back-up)                                                                                       

  Overhead                                                                                       

  Subtotal                                                                                       

  TOTAL PROJECTED                                                                                
  ANNUAL COSTS                                                                                   
  ------------------- ------ --------- ------ ---------- ---------- -------- --------- --------- --------

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

[]{#__RefHeading___Toc467917040 .anchor}Table 4‑23: Systems Life Cost
Profile: by Program

Constant Dollars or Current Dollars

  -------------------- ------ --------- ------ ---------- -------- --------- ------------ --------
  Cost Category        AFDC   Child     JOBS   Medicaid   Food     Other\*   Gen          System
                              Support                     Stamps             Assistance   Life

  Non-Recurring Costs:                                                                    

  Site and Facility                                                                       

  Equipment Purchase &                                                                    
  Fees                                                                                    

  Shipping                                                                                

  Installation                                                                            

  Software Purchase                                                                       

  System Testing                                                                          

  Conversion                                                                              

  Studies                                                                                 

  Procurement                                                                             

  Database Preparation                                                                    

  Personnel                                                                               

  Travel                                                                                  

  Training                                                                                

  Overhead                                                                                

  Subtotal                                                                                

  Recurring Costs                                                                         

  Site and Facility                                                                       

  Equip. Lease &                                                                          
  Maintenance                                                                             

  Software Lease &                                                                        
  Maintenance                                                                             

  Personnel                                                                               
  Salaries/Benefits                                                                       

  Direct Support                                                                          
  Services                                                                                

  Travel                                                                                  

  Training                                                                                

  Supplies                                                                                

  Utilities                                                                               

  Security (incl.                                                                         
  Back-up)                                                                                

  Overhead                                                                                

  Subtotal                                                                                

  TOTAL PROJECTED                                                                         
  SYSTEM LIFE COSTS                                                                       
  -------------------- ------ --------- ------ ---------- -------- --------- ------------ --------

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

+-------------------+--------------------------------------------------+
| #                 | Unlike costs which can be broken down from a     |
| # Define Program  | total, most benefits must be developed           |
| Specific Benefits | separately for each program --- that is, built   |
|                   | up to a total. Costs are normally calculated     |
|                   | top-down, benefits bottom-up.                    |
|                   |                                                  |
|                   | Benefits vary between programs in terms of both  |
|                   | type and extent. For this reason, most benefits  |
|                   | should be developed on program specific          |
|                   | worksheets.                                      |
|                   |                                                  |
|                   | Modified worksheets --- identical to those in    |
|                   | Chapter 3 except that space is provided to       |
|                   | identify the program --- can be used. The same   |
|                   | process would be followed, namely:               |
|                   |                                                  |
|                   | -   Identify benefits by program for the status  |
|                   |     quo and each viable alternative (Benefit     |
|                   |     Profile Worksheet: Program *X)*(page 4-8);   |
|                   |                                                  |
|                   | ```{=html}                                       |
|                   | <!-- -->                                         |
|                   | ```                                              |
|                   | -   Quantify benefits by program for the status  |
|                   |     quo and each viable alternative (Quantified  |
|                   |     Benefits Worksheets: Program *X)*(pages 4-9  |
|                   |     and 4-10);                                   |
|                   |                                                  |
|                   | ```{=html}                                       |
|                   | <!-- -->                                         |
|                   | ```                                              |
|                   | -   Project annual benefits by program for the   |
|                   |     status quo and each viable alternative       |
|                   |     (Annual Benefits Worksheet: Program          |
|                   |     *X)*(page 4-11); and                         |
|                   |                                                  |
|                   | ```{=html}                                       |
|                   | <!-- -->                                         |
|                   | ```                                              |
|                   | -   Develop systems life benefits by program for |
|                   |     the status quo and each viable alternative   |
|                   |     (Systems Life Benefits Profile: Program *X)* |
|                   |     (page 4-12).                                 |
|                   |                                                  |
|                   | For benefits which will be shared by all         |
|                   | programs --- that is, common benefits --- States |
|                   | may distribute benefits in essentially the same  |
|                   | manner as costs, using a top-down approach. The  |
|                   | distribution scheme may be the same as the cost  |
|                   | distribution (page 4-3) used in the Cost/Benefit |
|                   | Analysis or be based on other reasonable         |
|                   | measures developed and justified by the State.   |
|                   | The Benefits Distribution Profile worksheet on   |
|                   | page 4-13 may be used.                           |
+-------------------+--------------------------------------------------+
| ## Develop Prog   | Once costs and benefits have been developed for  |
| ram Specific Cost | each program in the integrated system, as well   |
| /Benefit Profiles | as for the system as a whole, cost/benefit       |
|                   | profiles can be developed. Program specific      |
|                   | Cost/Benefit Profiles for the integrated system  |
|                   | (page 4-14) can be developed using essentially   |
|                   | the same process as that presented in Chapter 3. |
|                   |                                                  |
|                   | *Finally, once the program-specific and          |
|                   | integrated profiles are developed, the           |
|                   | alternatives can be compared. Alternatives are   |
|                   | only compared, for the purpose of selection, on  |
|                   | the basis of the integrated system profile ---   |
|                   | so that the best solution overall may be chosen  |
|                   | and funded.*                                     |
|                   |                                                  |
|                   | Choice of an alternative should not be dominated |
|                   | by a single program\'s costs; however, each      |
|                   | program must have a net benefit. From the        |
|                   | State\'s perspective in analysis, selection of   |
|                   | an alternative should be based on lowest overall |
|                   | system costs.                                    |
|                   |                                                  |
|                   | *States will [not]{.underline} be required to    |
|                   | submit program-specific costs and benefits for   |
|                   | [all]{.underline} alternatives --- just for the  |
|                   | status quo and selected alternative.*            |
+-------------------+--------------------------------------------------+

[]{#__RefHeading___Toc467917041 .anchor}Table 4‑24: Systems Life Cost
Profile: by Program

+---------------------------------+---+---+---------------------------------+
| Status Quo                      |   | A |                                 |
|                                 |   | l |                                 |
|                                 |   | t |                                 |
|                                 |   | e |                                 |
|                                 |   | r |                                 |
|                                 |   | n |                                 |
|                                 |   | a |                                 |
|                                 |   | t |                                 |
|                                 |   | i |                                 |
|                                 |   | v |                                 |
|                                 |   | e |                                 |
|                                 |   | * |                                 |
|                                 |   | n |                                 |
|                                 |   | * |                                 |
+---------------------------------+---+---+---------------------------------+
| **QUANTITATIVE**                |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| Category                        |   |   | Description                     |
+---------------------------------+---+---+---------------------------------+
| COST / RESOURCE                 |   |   |                                 |
|                                 |   |   |                                 |
| -   Reduced Costs               |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Controlled Costs            |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Reduced Staffing            |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Staffing           |   |   |                                 |
|     Utilization                 |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Increased Productivity      |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Fewer Manual Functions      |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Increased Resources         |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Other                       |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| FUNCTIONAL/PROGRAMMATIC         |   |   |                                 |
|                                 |   |   |                                 |
| -   Reduced Error Rate          |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Increased Caseload Capacity |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Increased Collections       |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Management         |   |   |                                 |
|     Information                 |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Controls           |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Interface / Matching        |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Less Data Redundancy        |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Other                       |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| TECHNICAL                       |   |   |                                 |
|                                 |   |   |                                 |
| -   Faster Record Retrieval     |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   More Timely Reporting       |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Less Processing Time        |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Access             |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Security           |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Increased Automation        |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Other                       |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| **QUALITATIVE**                 |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| Category                        |   |   | Description                     |
+---------------------------------+---+---+---------------------------------+
| LEGISLATIVE                     |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| SOCIO-POLITICAL                 |   |   |                                 |
|                                 |   |   |                                 |
| -   Integrated Benefits         |   |   |                                 |
|     Automation                  |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Public Assistance  |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Increased Worker            |   |   |                                 |
|     Satisfaction                |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Other                       |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| FUNCTIONAL/PROGRAMMATIC         |   |   |                                 |
|                                 |   |   |                                 |
| -   Improved Management         |   |   |                                 |
|     Information                 |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Controls           |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Interface / Matching        |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Other                       |   |   |                                 |
+---------------------------------+---+---+---------------------------------+
| TECHNICAL                       |   |   |                                 |
|                                 |   |   |                                 |
| -   More Timely Reporting       |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Expanded Capability /       |   |   |                                 |
|     Flexibility                 |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Access             |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Improved Security           |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Increased Automation        |   |   |                                 |
|                                 |   |   |                                 |
| ```{=html}                      |   |   |                                 |
| <!-- -->                        |   |   |                                 |
| ```                             |   |   |                                 |
| -   Other                       |   |   |                                 |
+---------------------------------+---+---+---------------------------------+

[]{#__RefHeading___Toc467917042 .anchor}Table 4‑25: Systems Life Cost
Profile: by Program

<table>
<colgroup>
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="7">Constant Dollars or Current Dollars</td>
<td colspan="6">Year ____</td>
</tr>
<tr class="even">
<td colspan="13"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="odd">
<td colspan="13"><p><strong>Benefit Number:</strong></p>
<p><strong>Description:</strong></p></td>
</tr>
<tr class="even">
<td colspan="13"><strong>STATUS QUO BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="13"><strong>Assumptions:</strong></td>
</tr>
<tr class="even">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="5"><strong>Basis</strong></td>
<td colspan="4"><strong>Source</strong></td>
</tr>
<tr class="odd">
<td colspan="4">Current Measure/Volume:</td>
<td colspan="5"></td>
<td colspan="4"></td>
</tr>
<tr class="even">
<td colspan="4">Projected Increase/Decrease Over Time:</td>
<td colspan="5"></td>
<td colspan="4"></td>
</tr>
<tr class="odd">
<td colspan="4">Current Value:</td>
<td colspan="5"></td>
<td colspan="4" rowspan="2"></td>
</tr>
<tr class="even">
<td colspan="9"><strong>Annual Benefits Profile: Status
Quo</strong></td>
</tr>
<tr class="odd">
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td>Apr</td>
<td>May</td>
<td>Jun</td>
<td colspan="2">Jul</td>
<td>Aug</td>
<td>Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="13"><strong>ALTERNATIVE <em>n</em> BENEFIT
VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="13"><strong>Assumptions:</strong></td>
</tr>
<tr class="odd">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="5"><strong>Basis</strong></td>
<td colspan="4"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="4"><p>Measure/Volume</p>
<p>at Implementation:</p></td>
<td colspan="5"></td>
<td colspan="4"></td>
</tr>
<tr class="odd">
<td colspan="4">Projected Increase/Decrease Over Time:</td>
<td colspan="5"></td>
<td colspan="4"></td>
</tr>
<tr class="even">
<td colspan="4">Initial Value at Implementation:</td>
<td colspan="5"></td>
<td colspan="4" rowspan="2"></td>
</tr>
<tr class="odd">
<td colspan="9"><strong>Annual Benefits Profile: Alternative
<em>n</em></strong></td>
</tr>
<tr class="even">
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td>Apr</td>
<td>May</td>
<td>Jun</td>
<td colspan="2">Jul</td>
<td>Aug</td>
<td>Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

[]{#__RefHeading___Toc467917043 .anchor}Table 4‑26: Systems Life Cost
Profile: by Program

Constant Dollars or Current Dollars

+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| **BE  |       |       |       |       |       |       |       |       |
| NEFIT |       |       |       |       |       |       |       |       |
| CAT   |       |       |       |       |       |       |       |       |
| EGORY |       |       |       |       |       |       |       |       |
| /     |       |       |       |       |       |       |       |       |
| DES   |       |       |       |       |       |       |       |       |
| CRIPT |       |       |       |       |       |       |       |       |
| ION** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| **Be  |       |       |       |       |       |       |       |       |
| nefit |       |       |       |       |       |       |       |       |
| Numb  |       |       |       |       |       |       |       |       |
| er:** |       |       |       |       |       |       |       |       |
|       |       |       |       |       |       |       |       |       |
| *     |       |       |       |       |       |       |       |       |
| *Desc |       |       |       |       |       |       |       |       |
| ripti |       |       |       |       |       |       |       |       |
| on:** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| **S   |       |       |       |       |       |       |       |       |
| TATUS |       |       |       |       |       |       |       |       |
| QUO   |       |       |       |       |       |       |       |       |
| BE    |       |       |       |       |       |       |       |       |
| NEFIT |       |       |       |       |       |       |       |       |
| VA    |       |       |       |       |       |       |       |       |
| LUE** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| *     |       |       |       |       |       |       |       |       |
| *Assu |       |       |       |       |       |       |       |       |
| mptio |       |       |       |       |       |       |       |       |
| ns:** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| *     |       |       | **Ba  |       |       | **Sou |       |       |
| *Numb |       |       | sis** |       |       | rce** |       |       |
| ers** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| Cu    |       |       |       |       |       |       |       |       |
| rrent |       |       |       |       |       |       |       |       |
| Measu |       |       |       |       |       |       |       |       |
| re/Vo |       |       |       |       |       |       |       |       |
| lume: |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| Proj  |       |       |       |       |       |       |       |       |
| ected |       |       |       |       |       |       |       |       |
| In    |       |       |       |       |       |       |       |       |
| creas |       |       |       |       |       |       |       |       |
| e/Dec |       |       |       |       |       |       |       |       |
| rease |       |       |       |       |       |       |       |       |
| Over  |       |       |       |       |       |       |       |       |
| Time: |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| Cu    |       |       |       |       |       |       |       |       |
| rrent |       |       |       |       |       |       |       |       |
| V     |       |       |       |       |       |       |       |       |
| alue: |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| **S   |       |       |       |       |       |       |       |       |
| ystem |       |       |       |       |       |       |       |       |
| Life  |       |       |       |       |       |       |       |       |
| Ben   |       |       |       |       |       |       |       |       |
| efits |       |       |       |       |       |       |       |       |
| Pro   |       |       |       |       |       |       |       |       |
| file: |       |       |       |       |       |       |       |       |
| S     |       |       |       |       |       |       |       |       |
| tatus |       |       |       |       |       |       |       |       |
| Quo** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| Year  | Year  | Year  | Year  | Year  | Year  | Year  | Year  | Total |
| 1     | 2     | 3     | 4     | 5     | 6     | 7     | 8     |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
|       |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| **A   |       |       |       |       |       |       |       |       |
| LTERN |       |       |       |       |       |       |       |       |
| ATIVE |       |       |       |       |       |       |       |       |
| *n*   |       |       |       |       |       |       |       |       |
| BE    |       |       |       |       |       |       |       |       |
| NEFIT |       |       |       |       |       |       |       |       |
| VA    |       |       |       |       |       |       |       |       |
| LUE** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| *     |       |       |       |       |       |       |       |       |
| *Assu |       |       |       |       |       |       |       |       |
| mptio |       |       |       |       |       |       |       |       |
| ns:** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| *     |       |       | **Ba  |       |       | **Sou |       |       |
| *Numb |       |       | sis** |       |       | rce** |       |       |
| ers** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| Meas  |       |       |       |       |       |       |       |       |
| ure/V |       |       |       |       |       |       |       |       |
| olume |       |       |       |       |       |       |       |       |
|       |       |       |       |       |       |       |       |       |
| at    |       |       |       |       |       |       |       |       |
| Imple |       |       |       |       |       |       |       |       |
| menta |       |       |       |       |       |       |       |       |
| tion: |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| Proj  |       |       |       |       |       |       |       |       |
| ected |       |       |       |       |       |       |       |       |
| In    |       |       |       |       |       |       |       |       |
| creas |       |       |       |       |       |       |       |       |
| e/Dec |       |       |       |       |       |       |       |       |
| rease |       |       |       |       |       |       |       |       |
| Over  |       |       |       |       |       |       |       |       |
| Time: |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| In    |       |       |       |       |       |       |       |       |
| itial |       |       |       |       |       |       |       |       |
| Value |       |       |       |       |       |       |       |       |
| at    |       |       |       |       |       |       |       |       |
| Imple |       |       |       |       |       |       |       |       |
| menta |       |       |       |       |       |       |       |       |
| tion: |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| **Sy  |       |       |       |       |       |       |       |       |
| stems |       |       |       |       |       |       |       |       |
| Life  |       |       |       |       |       |       |       |       |
| Ben   |       |       |       |       |       |       |       |       |
| efits |       |       |       |       |       |       |       |       |
| Pro   |       |       |       |       |       |       |       |       |
| file: |       |       |       |       |       |       |       |       |
| A     |       |       |       |       |       |       |       |       |
| ltern |       |       |       |       |       |       |       |       |
| ative |       |       |       |       |       |       |       |       |
| *n*** |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
| Year  | Year  | Year  | Year  | Year  | Year  | Year  | Year  | Total |
| 1     | 2     | 3     | 4     | 5     | 6     | 7     | 8     |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+
|       |       |       |       |       |       |       |       |       |
+-------+-------+-------+-------+-------+-------+-------+-------+-------+

[]{#__RefHeading___Toc467917044 .anchor}*Table 4‑27: Systems Life Cost
Profile: by Program*

  ----------------- ----- ----- ----- ----- ----- ----- ------------ ----- ----- ----- ----- ----- ----- -------
  Status Quo                                            Year                                             
                                                        \_\_\_\_\_                                       

  Alternative *n*                                       Constant                                         
                                                        Dollars or                                       
                                                        Current                                          
                                                        Dollars                                          

  Benefit Number    Jan   Feb   Mar   Apr   May   Jun                Jul   Aug   Sep   Oct   Nov   Dec   Total
  and Description                                                                                        

  Benefit 1: Short                                                                                       
  Description                                                                                            

  Benefit 2: Short                                                                                       
  Description                                                                                            

  Benefit 3: Short                                                                                       
  Description                                                                                            

  etc.                                                                                                   

                                                                                                         

                                                                                                         

                                                                                                         

                                                                                                         

                                                                                                         

  TOTAL PROJECTED                                                                                        
  BENEFITS                                                                                               

  PRESENT VALUE     N/A   N/A   N/A   N/A   N/A   N/A                N/A   N/A   N/A   N/A   N/A   N/A   
  FACTOR                                                                                                 

  TOTAL PRESENT     N/A   N/A   N/A   N/A   N/A   N/A                N/A   N/A   N/A   N/A   N/A   N/A   
  VALUE BENEFITS                                                                                         

  CUM. TOTAL PROJ.  N/A   N/A   N/A   N/A   N/A   N/A                N/A   N/A   N/A   N/A   N/A   N/A   
  BENEFITS / PRIOR                                                                                       
  YEAR                                                                                                   

  CUMULATIVE TOTAL                                                                                       N/A
  PROJECTED                                                                                              
  BENEFITS                                                                                               
  ----------------- ----- ----- ----- ----- ----- ----- ------------ ----- ----- ----- ----- ----- ----- -------

[]{#__RefHeading___Toc467917045 .anchor}Table 4‑28: Systems Life Cost
Profile: by Program

  --------------------- ------ ------ ------ ------ -------------- ------ ------ ------ ------ -------
  Status Quo                                        Years                                      
                                                    \_\_\_\_\_ -                               
                                                    \_\_\_\_\_                                 

  Alternative *n*                                   Constant                                   
                                                    Dollars or                                 
                                                    Current                                    
                                                    Dollars                                    

  Benefit Number and    Year 1 Year 2 Year 3 Year 4                Year 5 Year 6 Year 7 Year 8 Total
  Description                                                                                  

  Benefit 1: Short                                                                             
  Description                                                                                  

  Benefit 2: Short                                                                             
  Description                                                                                  

  Benefit 3: Short                                                                             
  Description                                                                                  

  etc.                                                                                         

                                                                                               

                                                                                               

                                                                                               

                                                                                               

                                                                                               

                                                                                               

                                                                                               

  TOTAL PROJECTED                                                                              
  BENEFITS                                                                                     

  TOTAL PRESENT                                                                                
  VALUEBENEFITS                                                                                

  CUMULATIVE TOTAL                                                                             N/A
  PROJECTED BENEFITS                                                                           
  --------------------- ------ ------ ------ ------ -------------- ------ ------ ------ ------ -------

[]{#__RefHeading___Toc467917046 .anchor}Table 4‑29: Systems Life Cost
Profile: by Program

  --------------------- ------------------------ ------------------------
  Cost / Benefit                                 
  Analysis: Common                               
  Benefits Distribution                          

  Basis:                                         

  Federal Program       Distribution             

                        Measure                  Percentage

  AFDC                  *n*                      *n%*

  Child Support         *n*                      *n%*

  JOBS                  *n*                      *n%*

  Child Care            *n*                      *n%*

  Foster Care           *n*                      *n%*

  Child Welfare         *n*                      *n%*
  Services                                       

  Refuge Resettlement   *n*                      *n%*

  Medicaid              *n*                      *n%*

  Food Stamps           *n*                      *n%*

  Subtotal              *n*                      *n%*

  State Program         Distribution             

                        Measure                  Percentage

  General Assistance    *n*                      *n%*

  Other                 *n*                      *n%*

  Subtotal              *n*                      *n%*

  GRAND TOTAL           *n*                      100%
  --------------------- ------------------------ ------------------------

[]{#__RefHeading___Toc467917047 .anchor}*Table 4‑30: Systems Life Cost
Profile: by Program*

  --------------------- ------ ------------ ---------- ------ ------ ------ ------ --------------- ------ ----------- ------------- ------ ----------- ------ ----------- ------- --
  Status Quo                                Constant                                                                  Alternative                                                 
                                            Dollars or                                                                *n*                                                         
                                            Current                                                                                                                               
                                            Dollars                                                                                                                               

  **SYSTEM LIFE COST                                                                                                                                                              
  PROFILE**                                                                                                                                                                       

  Description           Year 1                         Year 2 Year 3 Year 4 Year 5                 Year 6                           Year 7             Year 8             Total   

  Non-Recurring Costs                                                                                                                                                             

  Recurring Costs                                                                                                                                                                 

  Total Projected Costs                                                                                                                                                           

  Total Present Value                                                                                                                                                             
  Costs                                                                                                                                                                           

  **SYSTEM LIFE                                                                                                                                                                   
  BENEFITS PROFILE**                                                                                                                                                              

  Description           Year 1                         Year 2 Year 3 Year 4 Year 5                 Year 6                           Year 7             Year 8             Total   

  Total Projected                                                                                                                                                                 
  Benefits                                                                                                                                                                        

  Total Present Value                                                                                                                                                             
  Benefits                                                                                                                                                                        

  **CUMULATIVE BENEFIT                                                                                                                                                            
  / COST PROFILE**                                                                                                                                                                

  Description           Year 1                         Year 2 Year 3 Year 4 Year 5                 Year 6                           Year 7             Year 8             Total   

  Cumulative Total                                                                                                                                                        N/A     
  Projected Benefits                                                                                                                                                              

  Cumulative Total                                                                                                                                                        N/A     
  Projected Costs                                                                                                                                                                 

  **QUALITATIVE                                                                                                                                                                   
  BENEFITS**                                                                                                                                                                      

  Benefits                     Related                                             Measure of                                                                                     
                               System                                              Effectiveness                                                                                  
                               Objectives                                                                                                                                         

                                                                                   Very Effective         Effective                        Minimally          Not                 
                                                                                                                                           Effective          Effective           

                                                                                                                                                                                  
  --------------------- ------ ------------ ---------- ------ ------ ------ ------ --------------- ------ ----------- ------------- ------ ----------- ------ ----------- ------- --

# 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.**

+---------------------+------------------------------------------------+
| ## 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.                  |
+---------------------+------------------------------------------------+
| ## Objectives       | The purposes of monitoring actual costs and    |
|                     | benefits are to:                               |
|                     |                                                |
|                     | -   Comply with Federal regulations;           |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Determine if actual costs and benefits are |
|                     |     reasonably consistent with those predicted |
|                     |     and if the system\'s projected savings are |
|                     |     achieved;                                  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Calculate the effect of the actual costs   |
|                     |     and benefits on the cost-effectiveness of  |
|                     |     the system design, development,            |
|                     |     implementation, and operations; and        |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   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.         |
+---------------------+------------------------------------------------+
| ## 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.          |
+---------------------+------------------------------------------------+
| ##                  | As in the initial cost/benefit study, the      |
|  Identify All Costs | 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.                            |
+---------------------+------------------------------------------------+
| ## Build the Cost P | Once all cost categories are identified,       |
| rofile Year by Year | 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,          |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Total projected costs (from the            |
|                     |     Cost/Benefit Analysis), and                |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   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]{.underline} used. Discounted costs ---   |
|                     | projected costs to which the present value     |
|                     | factor has been applied --- are of no use in   |
|                     | monitoring actual costs.*                      |
+---------------------+------------------------------------------------+
| ## Id               | Just as a reassessment is needed to list all   |
| entify All Benefits | 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.                                       |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917048 .anchor}Table 5‑31: Cost Measurement
Worksheet

+--------------------------+---+---+--------------------------+---+---+---+
| Non-Recurring Costs      |   |   |                          |   |   |   |
+--------------------------+---+---+--------------------------+---+---+---+
| Cost Categories          | A | P | Cost Categories          | A | P |   |
|                          | c | r |                          | c | r |   |
|                          | t | o |                          | t | o |   |
|                          | l | j |                          | l | j |   |
+--------------------------+---+---+--------------------------+---+---+---+
| Site and Facility        |   |   | Studies                  |   |   |   |
|                          |   |   |                          |   |   |   |
| -   Purchase             |   |   | Procurement              |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | -   Cost of Planning     |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   | ```{=html}               |   |   |   |
| -   Site                 |   |   | <!-- -->                 |   |   |   |
|                          |   |   | ```                      |   |   |   |
| Preparation/Modification |   |   | -   Cost of Conducting   |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | Database Preparation     |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   | Personnel                |   |   |   |
| -   Other                |   |   |                          |   |   |   |
|                          |   |   | -   Salaries             |   |   |   |
| Equipment Purchase/One   |   |   |                          |   |   |   |
| Time Fees                |   |   | ```{=html}               |   |   |   |
|                          |   |   | <!-- -->                 |   |   |   |
| -   ADP                  |   |   | ```                      |   |   |   |
|                          |   |   | -   Benefits             |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   | ```{=html}               |   |   |   |
| ```                      |   |   | <!-- -->                 |   |   |   |
| -   Data Communications  |   |   | ```                      |   |   |   |
|                          |   |   | -   Contract Support     |   |   |   |
| ```{=html}               |   |   |     Services             |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   | ```{=html}               |   |   |   |
| -   Environ.             |   |   | <!-- -->                 |   |   |   |
|     Conditioning         |   |   | ```                      |   |   |   |
|                          |   |   | -   Extraordinary        |   |   |   |
| ```{=html}               |   |   |     Personnel Costs      |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   | Travel                   |   |   |   |
| -   Security             |   |   |                          |   |   |   |
|                          |   |   | Training                 |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   | -   Development          |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Other                |   |   | ```{=html}               |   |   |   |
|                          |   |   | <!-- -->                 |   |   |   |
| Shipping                 |   |   | ```                      |   |   |   |
|                          |   |   | -   Trainee Expenses     |   |   |   |
| Installation             |   |   |                          |   |   |   |
|                          |   |   | ```{=html}               |   |   |   |
| Software Purchase/One    |   |   | <!-- -->                 |   |   |   |
| Time Fees                |   |   | ```                      |   |   |   |
|                          |   |   | -   Trainer Expenses     |   |   |   |
| -   Operating System     |   |   |                          |   |   |   |
|                          |   |   | Overhead / Indirect      |   |   |   |
| ```{=html}               |   |   | Costs                    |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   | -   Project and          |   |   |   |
| -   Applications         |   |   |     Technical            |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | ```{=html}               |   |   |   |
| <!-- -->                 |   |   | <!-- -->                 |   |   |   |
| ```                      |   |   | ```                      |   |   |   |
| -   Utilities            |   |   | -   Management           |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | ```{=html}               |   |   |   |
| <!-- -->                 |   |   | <!-- -->                 |   |   |   |
| ```                      |   |   | ```                      |   |   |   |
| -   Other                |   |   | -   Incremental          |   |   |   |
|                          |   |   |                          |   |   |   |
| System Testing           |   |   | ```{=html}               |   |   |   |
|                          |   |   | <!-- -->                 |   |   |   |
| Conversion               |   |   | ```                      |   |   |   |
|                          |   |   | -   Lost Productivity    |   |   |   |
| -   Data                 |   |   |                          |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Software             |   |   |                          |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Services             |   |   |                          |   |   |   |
+--------------------------+---+---+--------------------------+---+---+---+
| Recurring Costs          |   |   |                          |   |   |   |
+--------------------------+---+---+--------------------------+---+---+---+
| Cost Categories          | A | P | Cost Categories          | A | P |   |
|                          | c | r |                          | c | r |   |
|                          | t | o |                          | t | o |   |
|                          | l | j |                          | l | j |   |
+--------------------------+---+---+--------------------------+---+---+---+
| Site and Facility        |   |   | Personnel                |   |   |   |
|                          |   |   |                          |   |   |   |
| -   Lease                |   |   | -   Salaries             |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | ```{=html}               |   |   |   |
| <!-- -->                 |   |   | <!-- -->                 |   |   |   |
| ```                      |   |   | ```                      |   |   |   |
| -   Maintenance Fees     |   |   | -   Benefits             |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | Direct Support Services  |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   | -   Contract             |   |   |   |
| -   Other                |   |   |                          |   |   |   |
|                          |   |   | ```{=html}               |   |   |   |
| Equipment Lease /        |   |   | <!-- -->                 |   |   |   |
| Maintenance              |   |   | ```                      |   |   |   |
|                          |   |   | -   Detailed/Tasked      |   |   |   |
| -   ADP                  |   |   |                          |   |   |   |
|                          |   |   | Travel                   |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   | Training                 |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Data Communications  |   |   | Supplies                 |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | Utilities                |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   | Security                 |   |   |   |
| -   Environ.             |   |   |                          |   |   |   |
|     Conditioning         |   |   | -   Primary Facilities   |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | ```{=html}               |   |   |   |
| <!-- -->                 |   |   | <!-- -->                 |   |   |   |
| ```                      |   |   | ```                      |   |   |   |
| -   Security             |   |   | -   Back-up Facilities   |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   | Overhead / Indirect      |   |   |   |
| <!-- -->                 |   |   | costs                    |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Other                |   |   |                          |   |   |   |
|                          |   |   |                          |   |   |   |
| Software Lease /         |   |   |                          |   |   |   |
| Maintenance              |   |   |                          |   |   |   |
|                          |   |   |                          |   |   |   |
| -   Operating System     |   |   |                          |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Applications         |   |   |                          |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Utilities            |   |   |                          |   |   |   |
|                          |   |   |                          |   |   |   |
| ```{=html}               |   |   |                          |   |   |   |
| <!-- -->                 |   |   |                          |   |   |   |
| ```                      |   |   |                          |   |   |   |
| -   Other                |   |   |                          |   |   |   |
+--------------------------+---+---+--------------------------+---+---+---+

+---------------------+------------------------------------------------+
|                     | 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.                   |
+---------------------+------------------------------------------------+
| ##                  | Once all benefit categories are identified,    |
| Build the Benefit P | actual benefit values should be monitored and  |
| rofile Year by Year | 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, |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Total projected benefits (from the         |
|                     |     Cost/Benefit Analysis), and                |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   The difference between them.               |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917049 .anchor}Table 5‑32: Annual Cost
Measurement Worksheet

  ------------------- ----- -------- ----- ----- ----- ----- ------------ ----- ----- ----- ----- ----- ----- -------
  Developmental or                                           Year                                             
  Operational                                                \_\_\_\_\_                                       

  Cost Category       Jan   Feb      Mar   Apr   May   Jun                Jul   Aug   Sep   Oct   Nov   Dec   Total

  Non-Recurring                                                                                               
  Costs:                                                                                                      

  Site and Facility                                                                                           

  Equipment Purchase                                                                                          
  & Fees                                                                                                      

  Shipping                                                                                                    

  Installation                                                                                                

  Software Purchase                                                                                           

  System Testing                                                                                              

  Conversion                                                                                                  

  Studies                                                                                                     

  Procurement                                                                                                 

  Database                                                                                                    
  Preparation                                                                                                 

  Personnel                                                                                                   

  Travel                                                                                                      

  Training                                                                                                    

  Overhead                                                                                                    

  Recurring Costs                                                                                             

  Site and Facility                                                                                           

  Equip. Lease &                                                                                              
  Maintenance                                                                                                 

  Software Lease &                                                                                            
  Maintenance                                                                                                 

  Personnel                                                                                                   
  Salaries/Benefits                                                                                           

  Direct Support                                                                                              
  Services                                                                                                    

  Travel                                                                                                      

  Training                                                                                                    

  Supplies                                                                                                    

  Utilities                                                                                                   

  Security (incl.                                                                                             
  Back-up)                                                                                                    

  Overhead                                                                                                    

  TOTAL COSTS                                                                                                 
  (Actuals)                                                                                                   

  TOTAL PROJECTED                                                                                             
  COSTS                                                                                                       

  DIFFERENCE                                                                                                  

  CUM. TOTAL COSTS /  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   
  PRIOR YEAR                                                                                                  

  CUMULATIVE TOTAL                                                                                            N/A
  COSTS (Actuals)                                                                                             
  ------------------- ----- -------- ----- ----- ----- ----- ------------ ----- ----- ----- ----- ----- ----- -------

  --------------------------------- ------ ------ ------ ------ ---------------- ------ ------ ------ ------ ----------
  []{#__RefHeading___Toc467917050                               Years                                        
  .anchor}Table 5‑33: Systems Life                              \_\_\_\_\_\_ -                               
  Cost Profile: by Program                                      \_\_\_\_\_\_                                 

  Cost Category                     Year 1 Year 2 Year 3 Year 4                  Year 5 Year 6 Year 7 Year 8 System
                                                                                                             Life Total

  Non-Recurring Costs:                                                                                       

  Site and Facility                                                                                          

  Equipment Purchase & Fees                                                                                  

  Shipping                                                                                                   

  Installation                                                                                               

  Software Purchase                                                                                          

  System Testing                                                                                             

  Conversion                                                                                                 

  Studies                                                                                                    

  Procurement                                                                                                

  Database Preparation                                                                                       

  Personnel                                                                                                  

  Travel                                                                                                     

  Training                                                                                                   

  Overhead                                                                                                   

  Subtotal                                                                                                   

  Recurring Costs                                                                                            

  Site and Facility                                                                                          

  Equip. Lease & Maintenance                                                                                 

  Software Lease & Maintenance                                                                               

  Personnel Salaries/Benefits                                                                                

  Direct Support Services                                                                                    

  Travel                                                                                                     

  Training                                                                                                   

  Supplies                                                                                                   

  Utilities                                                                                                  

  Security (incl. Back-up)                                                                                   

  Overhead                                                                                                   

  Subtotal                                                                                                   

  TOTAL COSTS (Actuals)                                                                                      

  TOTAL PROJECTED COSTS                                                                                      

  DIFFERENCE                                                                                                 
  --------------------------------- ------ ------ ------ ------ ---------------- ------ ------ ------ ------ ----------

[]{#__RefHeading___Toc467917051 .anchor}Table 5‑34: Benefit Profile
Measurement Worksheet

+-------------------------------+-----+------+-------------------------+
| **QUANTITATIVE**              |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| Category                      | Act | P    | Description             |
|                               | ual | roje |                         |
|                               |     | cted |                         |
+-------------------------------+-----+------+-------------------------+
| COST / RESOURCE               |     |      |                         |
|                               |     |      |                         |
| -   Reduced Costs             |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Controlled Costs          |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Reduced Staffing          |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Staffing         |     |      |                         |
|     Utilization               |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Increased Productivity    |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Fewer Manual Functions    |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Increased Resources       |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Other                     |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| FUNCTIONAL/PROGRAMMATIC       |     |      |                         |
|                               |     |      |                         |
| -   Reduced Error Rate        |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Increased Collections     |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Management       |     |      |                         |
|     Information               |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Controls         |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Interface / Matching      |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Less Data Redundancy      |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Other                     |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| TECHNICAL                     |     |      |                         |
|                               |     |      |                         |
| -   Faster Record Retrieval   |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   More Timely Reporting     |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Less Processing Time      |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Access           |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Security         |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Increased Automation      |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Other                     |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| **QUALITATIVE**               |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| Category                      | Act | P    | Description             |
|                               | ual | roje |                         |
|                               |     | cted |                         |
+-------------------------------+-----+------+-------------------------+
| LEGISLATIVE                   |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| SOCIO-POLITICAL               |     |      |                         |
|                               |     |      |                         |
| -   Integrated Benefits       |     |      |                         |
|     Automation                |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Public           |     |      |                         |
|     Assistance                |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Increased Worker          |     |      |                         |
|     Satisfaction              |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Other                     |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| FUNCTIONAL/PROGRAMMATIC       |     |      |                         |
|                               |     |      |                         |
| -   Improved Management       |     |      |                         |
|     Information               |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Controls         |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Interface / Matching      |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Other                     |     |      |                         |
+-------------------------------+-----+------+-------------------------+
| TECHNICAL                     |     |      |                         |
|                               |     |      |                         |
| -   More Timely Reporting     |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Expanded Capacity /       |     |      |                         |
|     Flexibility               |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Access           |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Improved Security         |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Increased Automation      |     |      |                         |
|                               |     |      |                         |
| ```{=html}                    |     |      |                         |
| <!-- -->                      |     |      |                         |
| ```                           |     |      |                         |
| -   Other                     |     |      |                         |
+-------------------------------+-----+------+-------------------------+

+---------------------+------------------------------------------------+
|                     | 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]{.underline} used --- discounted benefits |
|                     | are of no use in monitoring actual benefits.*  |
+---------------------+------------------------------------------------+
| ## Compare the Cos  | The final worksheet, the Cost/Benefit          |
| t/Benefits Achieved | Measurement Profile (page 5-14), has space for |
|  to those Projected | 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;  |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   System Life Benefits Profile --- which     |
|                     |     includes total system life benefit values  |
|                     |     (actuals), total projected benefit values, |
|                     |     and the difference between them;           |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   Cumulative Benefit / Cost Profiles ---     |
|                     |     which accumulates the actual benefits and  |
|                     |     costs over the systems life; and           |
|                     |                                                |
|                     | ```{=html}                                     |
|                     | <!-- -->                                       |
|                     | ```                                            |
|                     | -   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.                                 |
|                     |                                                |
|                     | *\[Note that the Cost/Benefit Analysis         |
|                     | study\'s projected net benefit is not used     |
|                     | because it is based on present value factors,  |
|                     | not comparable to actual measures.\]*          |
+---------------------+------------------------------------------------+

[]{#__RefHeading___Toc467917052 .anchor}Table 5‑35: Quantified Benefits
Measurement Annual Worksheet

<table>
<colgroup>
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 4%" />
<col style="width: 3%" />
<col style="width: 0%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 0%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="5"></td>
<td colspan="7">Annual Worksheet</td>
<td colspan="4">Year ____</td>
</tr>
<tr class="even">
<td colspan="16"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="odd">
<td colspan="16"><p><strong>Benefit Number:</strong></p>
<p><strong>Description:</strong></p></td>
</tr>
<tr class="even">
<td colspan="16"><strong>PROJECTED BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="16"><strong>Assumptions:</strong></td>
</tr>
<tr class="even">
<td colspan="6"><strong>Numbers</strong></td>
<td colspan="5"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="odd">
<td colspan="6">Projected Measure/Volume At Implementation:</td>
<td colspan="5"></td>
<td colspan="5"></td>
</tr>
<tr class="even">
<td colspan="6">Projected Increase/Decrease Over Time:</td>
<td colspan="5"></td>
<td colspan="5"></td>
</tr>
<tr class="odd">
<td colspan="6">Projected Value at Implementation:</td>
<td colspan="5"></td>
<td colspan="5" rowspan="2"></td>
</tr>
<tr class="even">
<td colspan="11"><strong>Projected Annual Benefits Profile</strong></td>
</tr>
<tr class="odd">
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td colspan="3">Apr</td>
<td>May</td>
<td>Jun</td>
<td>Jul</td>
<td colspan="2">Aug</td>
<td colspan="2">Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="16"><strong>ACTUAL OR REVISED BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="16"><strong>Assumptions or Conditions:</strong></td>
</tr>
<tr class="odd">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="6"><strong>Basis</strong></td>
<td colspan="6"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="4">Actual Measure/Volume At Implementation:</td>
<td colspan="6"></td>
<td colspan="6"></td>
</tr>
<tr class="odd">
<td colspan="4">Actual or Revised Increase/Decrease:</td>
<td colspan="6"></td>
<td colspan="6"></td>
</tr>
<tr class="even">
<td colspan="4">Initial Value at Implementation:</td>
<td colspan="6"></td>
<td colspan="6"></td>
</tr>
<tr class="odd">
<td colspan="16"><strong>Annual Benefits Profile: Actual or Revised
Projected</strong></td>
</tr>
<tr class="even">
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td colspan="3">Apr</td>
<td>May</td>
<td>Jun</td>
<td>Jul</td>
<td colspan="2">Aug</td>
<td colspan="2">Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td colspan="3"></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

[]{#__RefHeading___Toc467917053 .anchor}Table 5‑36: Quantified Benefits
Measurement: Systems Life Worksheet

<table>
<colgroup>
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 7%" />
<col style="width: 3%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 8%" />
<col style="width: 2%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="11"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="even">
<td colspan="11"><p><strong>Benefit Number:</strong></p>
<p><strong>Description:</strong></p></td>
</tr>
<tr class="odd">
<td colspan="11"><strong>PROJECTED BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="11"><strong>Assumptions:</strong></td>
</tr>
<tr class="odd">
<td colspan="3"><strong>Numbers</strong></td>
<td colspan="4" rowspan="4"><strong>Basis</strong></td>
<td colspan="4"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="3"><p>Projected Measure/Volume</p>
<p>At Implementation:</p></td>
<td colspan="4"></td>
</tr>
<tr class="odd">
<td colspan="3">Projected Increase/Decrease Over Time:</td>
<td colspan="4"></td>
</tr>
<tr class="even">
<td colspan="3"><p>Projected Value at</p>
<p>Implementation:</p></td>
<td colspan="4"></td>
</tr>
<tr class="odd">
<td colspan="11"><strong>Projected System Life Benefits
Profile</strong></td>
</tr>
<tr class="even">
<td>Year 1</td>
<td>Year 2</td>
<td colspan="2">Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td>Year 7</td>
<td>Year 8</td>
<td>Total</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="11"><strong>ACTUAL OR REVISED BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="11"><strong>Assumptions or Conditions:</strong></td>
</tr>
<tr class="even">
<td colspan="3"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="4"><strong>Source</strong></td>
</tr>
<tr class="odd">
<td colspan="3"><p>Actual Measure/Volume</p>
<p>At Implementation:</p></td>
<td colspan="4"></td>
<td colspan="4"></td>
</tr>
<tr class="even">
<td colspan="3">Actual or Revised Increase/Decrease:</td>
<td colspan="4"></td>
<td colspan="4"></td>
</tr>
<tr class="odd">
<td colspan="3">Initial Value at Implementation:</td>
<td colspan="4"></td>
<td colspan="4" rowspan="2"></td>
</tr>
<tr class="even">
<td colspan="7"><strong>Systems Life Benefits Profile: Actual or Revised
Projected</strong></td>
</tr>
<tr class="odd">
<td>Year 1</td>
<td>Year 2</td>
<td colspan="2">Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td>Year 7</td>
<td>Year 8</td>
<td>Total</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 24%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 3%" />
<col style="width: 2%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 5%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="6"><span id="__RefHeading___Toc467917054"
class="anchor"></span>Table 5‑37: Annual Benefits Measurement
Worksheet</td>
<td colspan="9">Year _____</td>
</tr>
<tr class="even">
<td><p>Benefit Number and</p>
<p>Description</p></td>
<td>Jan</td>
<td>Feb</td>
<td>Mar</td>
<td>Apr</td>
<td colspan="2">May</td>
<td>Jun</td>
<td>Jul</td>
<td>Aug</td>
<td>Sep</td>
<td>Oct</td>
<td>Nov</td>
<td>Dec</td>
<td>Total</td>
</tr>
<tr class="odd">
<td>Benefit 1: Short Description</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Benefit 2: Short Description</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Benefit 3: Short Description</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>etc.</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>TOTAL BENEFIT VALUE (Actuals)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>TOTAL PROJECTED BENEFITS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>DIFFERENCE</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>CUM. TOTAL BENEFITS / PRIOR YEAR</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td colspan="2">N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td>N/A</td>
<td></td>
</tr>
<tr class="odd">
<td>CUMULATIVE TOTAL BENEFITS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td>N/A</td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 29%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 4%" />
<col style="width: 3%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="5"><span id="__RefHeading___Toc467917055"
class="anchor"></span>Table 5‑38: Systems Life Benefits Measurement
Profile</td>
<td colspan="6">Years ____ ____</td>
</tr>
<tr class="even">
<td><p>Benefit Number and</p>
<p>Description</p></td>
<td><p>Year</p>
<p>1</p></td>
<td><p>Year</p>
<p>2</p></td>
<td><p>Year</p>
<p>3</p></td>
<td colspan="2"><p>Year</p>
<p>4</p></td>
<td><p>Year</p>
<p>5</p></td>
<td><p>Year</p>
<p>6</p></td>
<td><p>Year</p>
<p>7</p></td>
<td><p>Year</p>
<p>8</p></td>
<td>Total</td>
</tr>
<tr class="odd">
<td><p>Benefit 1:</p>
<p>Short Description</p></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><p>Benefit 2:</p>
<p>Short Description</p></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><p>Benefit 3:</p>
<p>Short Description</p></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Etc.</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>TOTAL SYSTEM LIFE BENEFITS (Actuals)</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>TOTAL PROJECTED BENEFITS</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>DIFFERENCE</td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

[]{#__RefHeading___Toc467917056 .anchor}Table 5‑39: Cost / Benefit
Measurement Profile

  -------------------- ------ -------- ------ ------ ------ ----------- ------ ------ -------
  **SYSTEM LIFE COST                                                                  
  PROFILE**                                                                           

  Description          Year 1 Year 2   Year 3 Year 4 Year 5 Year 6      Year 7 Year 8 Total

  Non-Recurring Costs                                                                 
  \*                                                                                  

  Recurring Costs \*                                                                  

  Total System Life                                                                   
  Costs \*                                                                            

  Total Projected                                                                     
  Costs                                                                               

  Difference                                                                          

  **SYSTEM LIFE                                                                       
  BENEFITS PROFILE**                                                                  

  Description          Year 1 Year 2   Year 3 Year 4 Year 5 Year 6      Year 7 Year 8 Total

  Total Benefit Values                                                                
  \*                                                                                  

  Total Projected                                                                     
  Benefits                                                                            

  Difference                                                                          

  **CUMULATIVE BENEFIT                                                                
  / COST PROFILE**                                                                    

  Description          Year 1 Year 2   Year 3 Year 4 Year 5 Year 6      Year 7 Year 8 Total

  Cumulative Benefit                                                                  N/A
  Values \*                                                                           

  Cumulative Costs \*                                                                 N/A

  **QUANTITATIVE                                                                      
  MEASUREMENT                                                                         
  PROFILE**                                                                           

  Description                 Actual                        Projected                 

  Total Benefits \*                                         N/A                       

  Less Total Costs \*                                       N/A                       

  Net Benefit (Cost)                                        N/A                       
  \*                                                                                  

  Benefit/Cost Ratio                                                                  

  Breakeven                                                                           
  -------------------- ------ -------- ------ ------ ------ ----------- ------ ------ -------

\* Actuals

# APPENDIX A: REFERENCES {#appendix-a-references .unnumbered}

A Guide for Requirements Analysis and Analysis of Alternatives. U.S.
General Services Administration, Information Resources Management
Service. January 1990.

A Project Manager\'s Guide to Benefit/Cost Analysis of Information
Technology Investments. U.S. Department of the Interior, Office of
Information Resources Management. January 1989.

AAPIRS Guide: Title IV-A Statewide Automated Application Processing and
Information Retrieval System Guide. U.S. Department of Health and Human
Services / Social Security Administration. Revised July 1, 1983.

Analysis of Benefits and Costs (ABC\'s) Guideline: Volume 1: A
Manager\'s Guide to Analysis of Benefits and Costs. U.S. Department of
Energy, Office of the Assistant Secretary for Management and
Administration. June 1988.

Analysis of Benefits and Costs (ABC\'s) Guideline: Volume 2: An
Analyst\'s Handbook for Analysis of Benefits and Costs. U.S. Department
of Energy, Office of the Assistant Secretary for Management and
Administration. June 1988.

Automated Systems for Child Support Enforcement: A Guide for States
Seeking Enhanced Funding. U.S. Department of Health and Human Services,
Office of Child Support Enforcement. Revised July 1987.

Benefits/Cost Analysis Guideline: A Manager\'s Guide to Benefit/Cost
Analysis. U.S. Department of Commerce, Office of the Secretary.
September 1991.

DHHS Information Systems Life Cycle Management Guidance. U.S. Department
of Health and Human Services. (Draft prepared by Synectics for
Management Decisions, Inc., March 1991.)

Guidelines for Documentation of Computer Programs and Automated Data
Systems for the Initiation Phase. U.S. Department of Commerce, National
Bureau of Standards, FIPS PUB 64. August 1, 1979.

Information Systems Review Guide. U.S. Department of Health and Human
Services, Administration for Children and Families. (Draft prepared by
Synectics for Management Decisions, Inc., November 1991.)

Requirements Analysis and Analysis of Alternatives for Acquisition of
FIP Resources. U.S. Department of Health and Human Services, Office of
Information Resources Management. June 1991.

#  {#section-1 .unnumbered}

# APPENDIX B: GLOSSARY {#appendix-b-glossary .unnumbered}

**Adjusted costs** --- Costs that increase over time, tied (for example)
to contractual obligations or to approved cost-of-living adjustments.

**Alternatives** --- The different courses of action, means, or methods
by which objectives may be attained.

**Alternatives analysis** --- An analysis which considers the
alternatives available for automation, such as transferring another
State\'s system or enhancing an existing system. Sometimes included as
part of the feasibility study.

**Assumptions** --- Judgements concerning unknown factors and the future
which are made in analyzing alternative courses of action. Assumptions
are made to support and reasonably limit the scope of the analysis.

**Base Year** --- The time period used to determine the base for dollar
calculations --- normally the first year of the analysis.

**Baseline** --- A term used to describe (1) use of status quo costs and
benefits as a basis for developing costs and benefits for alternatives
during the cost/benefit analysis and, *more importantly, (2) use of
costs and benefits projected for the selected alternative during the
cost/benefit analysis as a basis for comparing actual costs and benefits
during cost/benefit measurement.* When using the term \"baseline,\" ACF
normally means the selected alternative\'s projected costs and benefits
used in cost/benefit measurement.

**Benefits** --- Quantitative and qualitative improvements expected or
resulting from a systems investment.

**Benefit/cost ratio** --- An economic indicator of cost-effectiveness,
computed by dividing present value benefits by present value costs.
Indicates the amount of benefits returned for each dollar invested.

**Breakeven analysis** --- A procedure for evaluating alternatives to
determine when cumulative benefits will equal cumulative costs.
(Projected, not present value, costs are used.)

**Breakeven point** --- The point in time at which non-discounted,
cumulative costs and non-discounted, cumulative benefits are equal.

**Comparison** --- A method of quantifying costs or benefits in which
current costs or benefits on comparable systems are used as a baseline
for the new system.

**Constant Dollars** --- Dollars which reflect the prices of the base
year of the systems life. Constant dollars do not consider the effect of
inflation and are normally used in cost/benefit analysis. Constant
dollars are always associated with a base year --- such as, Fiscal Year
1994 constant dollars --- normally the first year of the analysis.
(Constant dollars are sometimes referred to as *real dollars.*)

**Constraints** --- Constraints are factors that lie outside --- but
have a direct impact on --- the system design effort. Constraints may
relate to laws and regulations or technological, socio-political,
financial, or operational factors.

**Cost Avoidance** --- Benefits realized by avoiding a relatively
certain future expenditure, although the projected expenditure has not
been budgeted or obligated. Cost avoidance is more speculative than cost
savings and requires more rigorous justification.

**Cost Savings** --- Benefits realized by eliminating a planned
expenditure, such as a budgeted or contractual expense.

**Cost-beneficial** and **Cost-effective** --- Descriptors for
alternatives that effectively balance costs and benefits, delivering
maximum benefits for the investment costs.

**Cost/Benefit Analysis** --- Detailed evaluation of the costs and
benefits of selected alternatives identified during the alternatives
analysis. Includes costs of current and projected operations as a
baseline for (1) determining which alternative to select for automation
*and* (2) measuring costs and benefits of the implemented and
operational system over time. Costs are normally expressed in dollars,
but benefits may be expressed in dollars or in other quantitative (such
as time reduction) or qualitative (such as improved security) measures.
Cost/benefit analysis determines the most cost-effective solution, not
simply the least cost solution. Can be included as part of the
Feasibility Study or Alternatives Analysis --- or stand as a separate
document.

**Cost/Benefit Measurement** --- Measurement of costs and benefits of
the implemented and operational system over time *and comparison of
actuals to those projected for the chosen alternative during the
cost/benefit analysis.*

**Current Dollars** --- Dollars which have been adjusted to reflect the
effect of inflation on prices. Current dollars are normally used in
budget projections. (Current dollars are sometimes referred to as
*nominal dollars.*)

**Discount Factor** --- The multiplication factor that converts a
projected cost or benefit in a future year into its present value.
Discount factors are computed based on the selected discount rate.
Mathematically, a discount factor is equal to *1/(1 + r)^n^,* where *r*
is the discount rate and *n* is the number of years since the base year.

**Discount Rate** --- A rate used to relate present and future dollars.
Discount rates are expressed as a percentage and are used to reduce the
value of future dollars in relation to present dollars. This equalizes
varying streams of costs and benefits, so that different alternatives
can be compared. Discount rates reflect the time value of money.

**Discounted Costs or Benefits** --- Future years\' costs or benefits
that have been multiplied by a discount factor to convert them to their
present value --- also called present value costs or benefits.

**Double Counting** --- An error which occurs when costs or benefits are
counted twice.

**Estimation** --- A method of quantifying costs or benefits, in which
each organization involved in system development, operation, and use
estimates, averages, and projects its costs. Sometimes referred to as
the bottom-up method.

**Feasibility Study** --- A preliminary study to determine (1) whether
it is sufficiently probable that effective and efficient use of ADP
equipment or systems can be made to warrant the substantial investment
of staff, time, and money being requested and (2) whether the plan is
capable of being accomplished successfully.

**Fixed cost** --- Costs that do not vary over time.

**Inflation** --- A persistent rise in the general level of prices over
time.

**Investment** --- An expenditure of funds to acquire a new capability
or capacity.

**Life Cycle** --- The time from the beginning of the systems project to
the replacement of the system. This includes the time that the system
will be operational as well as the time needed to develop and implement
the system.

**Life Cycle Cost** --- The total cost of acquisition and ownership of a
system over its full life, including the cost of planning, development,
acquisition, operation, support, and disposal.

**Net Benefit or Cost** --- The result of subtracting the total present
value costs from the total present value benefits. Where benefits exceed
costs, the result is a positive number, referred to as a net benefit.
Where costs exceed benefits, the result is a negative number, referred
to as a net cost. See also *net present value.*

**Net Present Value** --- The result of subtracting the total present
value costs from the total present value benefits. Also referred to as
net benefit or net cost.

**Nominal Dollars** --- A synonym for *current dollars.*

**Non-recurring Costs** --- Costs that occur on a one-time basis ---
distinguished from recurring costs. Non-recurring costs are often
capital expenditures.

**Objectives** --- Goals, results, or program improvements that the
decision-maker wants to attain. Objectives should be independent of the
solution and stated in a manner that does not preclude alternative
approaches.

**Observation** --- A method of quantifying costs or benefits in which
processes are measured and recorded to provide estimates.

**Present Value** --- The estimated current worth of future benefits or
costs --- derived by discounting the future values using a selected
discount rate and factor.

**Real Dollars** --- A synonym for *constant dollars.*

**Realized Benefits** --- A benefit that has occurred. If benefits
resulted prior to the new project, they are *not* considered in the
cost/benefit analysis. (See also *Sunk Costs*.) Benefits realized
*after* new project implementation *are* counted during cost/benefit
measurement.

**Recurring Costs** --- Those costs which are continuing costs based on
the operation of a present or proposed system. Recurring costs apply
over a range of time --- either months or throughout the systems life.

**Sensitivity Analysis** --- A technique of assessing the extent to
which changes in assumptions or input variables will affect the ranking
of alternatives.

**Simulation** --- A method of quantifying costs or benefits in which
the process is analyzed and simulated to obtain costs.

**Sunk Costs** --- A non-recoverable cost expended prior to the start of
the project. Because sunk costs have been irrevocably expended or
committed, they are not considered in the cost/benefit analysis. (See
also *Realized Benefits*.)

**Systems Life** --- The time required to plan, design, acquire, and
implement the system *plus* its operational life.

**Time Value of Money** --- A name given to the notion that the use of
money costs money. A dollar today is worth more than a dollar tomorrow
because of interest costs.

**Undiscounted Costs or Benefits** --- Future years\' costs or benefits
that have ***not*** been multiplied by a discount factor to convert them
to their present value --- in other words, projected costs or benefits.

**Variable Costs** --- Costs that are volume sensitive: for example,
charges for computer services are often volume sensitive.

# APPENDIX C: EVALUATION, COMMENTS, AND SUGGESTIONS {#appendix-c-evaluation-comments-and-suggestions .unnumbered}

**Evaluation, Comments, and Suggestions**

This Appendix contains a form to use when evaluating, commenting on, and
making suggestions about this guide.

This optional guide was developed to support State and ACF professionals
in the development, review, and approval of feasibility studies,
alternatives analyses, and cost/benefit analyses.

Comments were requested and received from both ACF central and regional
office staff and were incorporated, wherever possible, in this guide.
Yet, the true test of any manual is how well it supports analysts in the
performance of their assigned tasks and whether it remains relevant and
useful. In this sense, the final test of this guide by the ultimate
users --- the States --- remains.

This guide seeks to establish a standard analytical approach, develop a
framework for analysis and documentation, and provide worksheets to
support the State during analysis and comparison of alternatives. Even
with these aids, we do not underestimate the difficulty of the analysis,
judgement, and determinations required of the individuals conducting
feasibility, alternatives, and cost/benefit analyses. However, this
guide does not attempt to provide a \"cookbook\" approach or a set of
solutions. Although use of this guide is encouraged --- to ease and
expedite Federal review and approval --- the guide is not mandatory.

ACF welcomes suggestions from those using this guide. An *Evaluation,
Comments, and Suggestions* form is included at the right. This form or
any other written comments may be sent to:

> Department of Health and Human Services
>
> Administration for Children and Families
>
> Director, Office of Information Systems Management
>
> 370 L\'Enfant Promenade, SW
>
> Washington, DC 20447-0001

**Feasibility, Alternatives, and Cost/Benefit Analysis**

**Evaluation, Comments, and Suggestions**

+-----------------------------+---------+---------+---------+---------+
| Questions                   | Ex      | Very    | Good    | Poor    |
|                             | cellent |         |         |         |
|                             |         | Good    |         |         |
+-----------------------------+---------+---------+---------+---------+
| How do you rate this Guide  |         |         |         |         |
| overall?                    |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| In terms of clarity?        |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| Organization?               |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| Usability?                  |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| Contents?                   |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| Length?                     |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| How can this Guide be       |         |         |         |         |
| improved?                   |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| What should be added?       |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+
| What should be deleted?     |         |         |         |         |
+-----------------------------+---------+---------+---------+---------+

**INDEX**

Adjusted cost, 3-4

Adjusted costs, 1

Advance Planning Documents, 1-1

alternatives, 1-1

constraints, 2-5

identifying, 2-6

Alternatives, 1-3, 1-1, 1-3, 2-1, 2-6, 2-8, 2-9, 2-11, 3-2, 3-25, 3-27,
4-6, 1, 2

Alternatives analysis, 1

Annual Benefits Measurement Worksheet, 5-4, 5-11

Annual Benefits Worksheet, 3-17, 3-18, 3-27, 4-6

Annual Cost Measurement Worksheet, 5-2, 5-5

Annual Cost Worksheet, 3-7, 3-8, 3-27

APD, 1-1

Baseline, 1

Benefit Profile Measurement Worksheet, 5-4, 5-7

Benefit Profile Worksheet, 3-12, 3-13, 3-21, 4-6

Benefit/cost ratio, 1

Benefits Distribution Profile, 4-6

Common Errors, 3-20

comparing, 3-1

Comparison, 2-11, 3-7, 3-14, 3-23, 3-25, 3-27, 3-28, 1

Comparison of Alternatives, 2-11, 3-23, 3-27, 3-28

Constraints, 2-2, 2-5, 2-11, 1

Cost avoidance, 2

Cost Distribution Profile, 4-2, 4-3

Cost Measurement Worksheet, 5-2, 5-3

Cost Profile Worksheet, 3-5, 3-6

Cost/benefit analysis, 3-20, 2

Cost/Benefit Measurement Profile, 5-8

Cost/Benefit Profile, 3-21, 3-23, 3-28, 4-6

Cumulative, 3-21, 3-24, 4-15, 5-8, 5-13

Current dollars, 3-5, 2

Discount rate, 2

Double counting, 3-20

Estimation, 3-7, 3-14, 2

Feasibility, 1-3, 1-1, 1-3, 2-1, 2-2, 2-3, 2-5, 2-6, 2-6, 2-11, 3-1,
3-2, 3-10, 3-12, 2

Fixed cost, 2

Implementation APD, 1-1, 1-3, 4-1

Inflation, 2

Measurement, 5-1, 5-2, 5-4, 5-8, 5-9, 5-10, 5-13, 2

Non-recurring costs, 3-2, 3

Observation, 3-7, 3-14, 3

Payback, 3-23, 3-26

Planning APD, 1-3, 2-2

Present value, 3-7, 3-9, 3-10, 3-17, 5-8

Qualitative Benefits Worksheet, 3-21, 3-22, 3-23

Quantified Benefits Worksheet, 3-14, 3-15, 3-16, 4-6

Quantitative, 3-12, 3-21, 3-23, 3-27, 5-8, 1

Ranking, 2-11, 3-28

Recurring costs, 3-2, 3

Simulation, 3-7, 3-14, 3

Sunk costs, 3-20

Systems Life Benefits Measurement Profile, 5-4, 5-12

Systems Life Benefits Profile, 3-16, 3-17, 3-19, 4-6, 4-10, 5-10

Systems Life Cost Measurement Profile, 3-10, 3-11, 4-5, 4-7, 4-9, 4-10,
4-11, 4-12, 4-14, 4-15, 5-6

Viable alternative(s), 3-28

Weighting, 3-28

#  {#section-2 .unnumbered}