EA-STD-01-07

PBGC Alternatives Analysis Standard

Purpose

This standard defines the approved process for identifying and recommending an 

information technology (IT) product or solution that is best overall fit for PBGC use. This 

standard also describes how to properly conduct and document the decision for input into 

the PBGC acquisition process. 

Use of this standard applies in two situations: 1) When a Business Needs Analysis (BNA)

target state recommendation identifies a specific business need, but not the solution and 

an alternatives analysis is required or 2) When a business requirement is identified, but a 

product solution does not exist on the Technical Reference Model (TRM) or in the IT 

environment as a business solution. 

Scope

The Alternatives Analysis Standard and Methodology applies to all PBGC employees and 

contractors whose organizations have a business need to evaluate and recommend a 

technology product or solution for use by PBGC. 

This standard applies to all types of IT products and solutions, including managed or shared 

services, cloud or non-cloud deployments. 

Note: Procurement activities for the product or solution will need to be properly 

coordinated with the Procurement Department (PD) after Technical Review Board (TRB) 

review and decision. 

Authority/ 

References

 Clinger-Cohen Act of 1996

 e-Government Act of 2001

 OMB Circular A-130

 OMB Circular A-11

 OMB Circular A-94

Approving 

Body Technical Review Board (TRB) and IT Portfolio Review Board (ITPRB)

Owner Enterprise Architecture Division (EAD)

Supersedes EA Standard 01-02 IT Product and Technology Selection Standard and Methodology

Collaborators

 Office of Information Technology

 Technical Review Board

 IT Portfolio Review Board (ITPRB)

 Procurement Department (PD)

 Office of General Counsel (OGC)
All PBGC Business Units, Office of Information Technology (OIT), Procurement Department, 

Implementers Technical review Board (TRB), and IT Portfolio Review Board (ITPRB) 

Standard Type Technical

Control EA-STD-01-07 Number

IT solutions and products recommended for use in the PBGC business IT environment must 

have an identified business need documented and adhere to the Alternatives Analysis 

Standard and Methodology. 

Prior to a technology product or solution being analyzed and selected, the business 

sponsor and the Enterprise Architecture Division (EAD) must confirm that the business 

need is not already fulfilled by an approved and existing PBGC solution or TRM standard. 

Use of a Restricted Standard requires TRB approval. 

If the business need warrants an IT product or technology that is not listed in the TRM, the 

Alternatives Analysis (AA) Integrated Project Team (IPT) will use the AA Methodology to 

determine the product or solution that is the overall best fit for PBGC. 

The following process steps are required when conducting an Alternatives Analysis: Standard 

1. Establish AA IPT

2. Define Business and Technical Requirements and Use Cases

3. Define Evaluation Criteria and Weightings

4. Identify Alternative Options and Conduct Market Research 

5. Conduct Initial Assessment, Score and Evaluate and eliminate options

6. Conduct Cost Benefits Analysis with Risk adjusted costs and eliminate options

7. Recommend Solution - Presentation for Pre-Acquisition Review - Viability and 

Technical Acceptance

8. IT & Business Project Managers Manage through Procurement Process

The recommendation shall be presented to the TRB and ITPRB for their approval prior to 

initiating activities with the Procurement Department to acquire the IT product or solution. 

Metrics Reserved for future use.

Owner John Larsen, Signature Chief Enterprise Architect

Approval John Larsen,

Signature Technical Review Board Chair
Alternatives Analysis Methodology

v1.0

Enterprise Architecture
PBGC Alternatives Analysis Methodology 

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Revision History

Document 

Version

Release

Date 

Description/Comments

1.0 April 2016 Initial version of Standard and Methodology

Approval

Signer/Title Signature Date

John Larsen

Chief Enterprise Architect 

Manager, Enterprise Architecture Division

John Larsen

Chair, Technology Review Board (TRB)
PBGC Alternatives Analysis Methodology 

ii

Contents

INTRODUCTION......................................................................................................................... 3

Purpose....................................................................................................................................... 3

Scope .......................................................................................................................................... 3

Federal Statutory and Regulatory Requirements....................................................................... 3

OMB Circular A-11 ................................................................................................................ 4

OMB Circular A-94 ................................................................................................................ 4

ALTERNATIVES ANALYSIS METHODOLOGY.................................................................. 5

ALTERNATIVES ANALYSIS PROCESS ................................................................................ 6

Phase I: Define............................................................................................................................ 7

Step 1: Establish Alternatives Analysis Integrated Project Team........................................ 7

Step 2: Develop Business and Technical Requirements and Use Cases.............................. 8

Step 3: Define Evaluation Criteria and Weightings ............................................................. 9

Phase II: Analyze....................................................................................................................... 13

Step 4: Identify Alternative Options and Conduct Market Research................................ 13

Step 5: Conduct Initial Assessment – Score, Evaluate, and Eliminate Options................. 15

Alternative Analysis Scoring Sheet..................................................................................... 15

Step 6: Conduct Cost Benefits Analysis with Risk-Adjusted Costs and Eliminate Options 17

Phase III: Present...................................................................................................................... 29

Step 7: Recommend Technology Product or Solution - Present Findings for Viability and 

Technical Acceptance ......................................................................................................... 29

Step 8. Hand-off for Acquisition to IT and Business Project Managers ............................. 30

CONCLUSION ........................................................................................................................... 30

Appendix I: Alternative Analysis Deliverable Outline............................................................... 31

Appendix II: Criteria Considerations for Managed and Shared Services -Cloud and Non-Cloud 

Deployments............................................................................................................................. 37
PBGC Alternatives Analysis Methodology 

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Introduction

Purpose

This document describes the methodology a comprehensive lifecycle approach to implement the 

Alternatives Analysis Standard used to identify, analyze and recommend an information technology 

solution or product for use in PBGC. This methodology defines the repeatable process that ensures the 

analysis of information technology is fact based, eliminates or mitigates individual and vendor bias and 

represents the most optimal solution for PBGC. This methodology shall be used by all PBGC employees 

and contractors when determining the technology product or solution that is best for PBGC overall. 

This methodology seeks to: 

 Determine the most appropriate information technology with a reasonable amount of effort;

 Encourage the identification and use of a limited number of criteria based on important 

business needs and technical requirements;

 Be easy to implement and cost-effective to use; and

 Support the capital and acquisition planning activities required by Federal statutes and policy 

including the Federal Acquisition Regulations (FAR).

Scope

The Alternatives Analysis Standard and Methodology is applicable to all PBGC employees and 

contractors that need to assess and select a business technology based solution or a technology 

component to meet business requirements or address a performance need. This methodology may be 

applied to any type of information technology product, component or solution. When applied to 

technology component selection significant tailoring is required. Please also refer to the TRB Processes 

and Procedures and TRB documents and templates when analyzing technology products to assist in the 

tailoring process. This standard and methodology applies only to new business-IT solution or technology 

products or components. It does not apply to the renewal of hardware or software maintenance. 

This methodology enables the Alternatives Analysis Integrated Project Team (AA IPT) to determine the 

best information technology available to meet the identified business need or performance gap. This

standard and methodology is applicable to technologies for internal PBGC infrastructure or other 

externally hosted environments, including the Federal Line of Business (LOB) shared services, and cloud 

and non-cloud managed and shared services deployed externally to PBGC’s business and technology 

environment.

Federal Statutory and Regulatory Requirements

Several statutes and policies focus on improving the efficiency and effectiveness of both Alternatives 

Analysis and Cost Benefit Analysis by Federal agencies. Four of the most applicable are:
PBGC Alternatives Analysis Methodology 

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 The Clinger-Cohen Act of 1996 requires agencies to use a disciplined capital planning and 

investment control (CPIC) process to acquire, use, maintain and dispose of information 

technology (IT);

 OMB Circular A-130, Management of Federal Information Resources is OMB’s policy for 

management of Federal information resources;

 Office of Management and Budget (OMB) Circular A-11, Part 7, Planning, Budgeting, 

Acquisition and Management of Capital Assets (updated annually) establishes policy for 

planning, budgeting, acquisition and management of Federal capital assets, and instructs on 

budget justification and reporting requirements for major IT investments; and

 OMB Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs

(October 29, 1992) provides guidance for conducting benefit-cost analyses.

OMB Circular A-11

The Office of Management and Budget (OMB) Circulars No. A-94 and A-11 form the primary basis for 

PBGC’s approach to conducting alternatives analyses. OMB Circular A-11, Part 7, Section 300, Exhibit 300, 

requires:

1. A narrative description of the performance gap that each major IT investment is expected to 

address;

2. A description of 4 viable alternatives along with risk-adjusted life cycle cost and benefits estimates;

3. A Cost-Benefit Analysis;

4. A summary of how investment risks are reflected in the lifecycle cost estimate; and

5. Identification of the alternative chosen and justification for selecting the alternative.

Business and IT Program Managers of all IT investments must address Exhibit 300 requirements in 

accordance with applicable guidance including OMB Circulars A-11, including OMB’s Capital Programming 

Guide (a supplement to OMB Circular A-11) and A-94, Guidelines and Discount Rates for Benefit-Cost 

Analysis of Federal Programs and PBGC guidance and governance. 

A-11 requires agencies to identify and consider at least 4 viable alternatives. For IT investments, agencies 

should use the Federal Enterprise Architecture (FEA) to identify potential alternatives for partnering, or 

joint solutions that may be used to close the identified performance gap. As one of the Exhibit 300 

sections that are scored by OMB, the AA section is an important component of the overall IT Program. 

The evaluation criteria include verification that at least 4 viable alternatives were considered, costs and 

benefits in all the alternatives were compared consistently and assumptions are well-supported and 

documented.

OMB Circular A-94

A-94 “provides general guidance for conducting benefit-cost and cost-effectiveness analyses. It also 

provides specific guidance on the discount rates to be used in evaluating Federal programs whose benefits 

and costs are distributed over time. The general guidance will serve as a checklist of whether an agency 
PBGC Alternatives Analysis Methodology 

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has considered and properly dealt with all the elements for sound benefit-cost and cost-effectiveness 

analyses.”

As part of the capital planning process, A-94 guidelines must be followed in all analyses submitted to 

OMB in support of legislative and budget programs in compliance with OMB Circular A-11. The guidelines 

in the A-94 apply “to any analysis used to support Government decisions to initiate, renew, or expand 

programs or projects which would result in a series of measurable benefits or costs extending for three 

or more years into the future. This Circular applies specifically to: (1) Benefit-cost or cost-effectiveness 

analysis of Federal programs or policies, (2) Regulatory impact analysis, (3) Analysis of decisions whether 

to lease or purchase, and (4) Asset valuation and sale analysis.”

Alternatives Analysis Methodology

An Alternatives Analysis (AA) is the process that PBGC business units us to identify, compare and assess 

viable information technology alternatives to address a given business need or performance gap, 

determine and recommend the best alternative, and document the associated rationale. A sound 

Alternatives Analysis that incorporates a cost benefit analysis is required by OMB and facilitates and 

documents a sound decision-making process. An Alternatives Analysis also helps the agency perform 

acquisition planning and market research during procurements.

A Cost Benefit Analysis (CBA) is generally used to analyze the quantitative financial aspects of the 

investments. While financial factors play a significant role in AA, the alternative selected might not 

generate the most financial benefits or cost the least amount. AAs should distinguish the option that 

generates the most benefits to the organization as a whole. Non-financial benefits may include qualitative 

factors such as risk considerations, mandated standards and integration of business unit processes, as 

well as quantitative factors such as improved productivity or improved service performance.

The AA must include an analysis of potential costs, benefits (quantitative and qualitative), technical 

feasibility, and an architectural assessment to ensure alignment and fit with the PBGC technology 

environment. Each Alternatives Analysis is unique and must be tailored to fit the unique circumstances.

While traditionally this may include reducing the scope, depth and breadth of the alternatives analysis 

based on budget or process complexity, tailoring may also mean that additional iterations, progressive 

elaborations of evaluation and elimination of alternatives and options may be required prior to conducting 

the cost-benefit analysis. 

As defined in the Business Needs Analyses standard, BNAs are required to identify target state 

recommendations. BNA recommendations are required to be prioritized with the business sponsor and 

it must identify which recommendations require an AA. The Target State recommendations from a BNA 

may require an AA in order to determine the best alternative and plan for follow on acquisition activities. 

As a result, most of the process steps conducted during the AA are necessary prerequisites to any type of 

procurement action. The AA helps business units determine their business and technical requirements, 

establish evaluation criteria and the relative weights of those criteria, and develop market research to 

learn and discover alternatives that the business unit may not be aware of prior to an acquisition. These 

processes and documentation all feed directly into the acquisition process.
PBGC Alternatives Analysis Methodology 

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After a PBGC business unit completes a BNA, the business unit may either plan for the AA in the next ITPRB 

prioritization meeting or re-program existing funds to conduct the AA immediately. The AA should be 

planned to be conducted to coincide with solution implementation funding when possible. Having the AA 

and solution implementation (i.e., project) planned sequentially will prevent the need for an update to 

the AA and delay in implementation and the resolution of an identified PBGC business need or 

performance gap.

Tailoring 

This guidance applies to a wide range of situations each with unique circumstances. When applying this 

guidance to a technology component or product that will be presented to the TRB, follow all the steps as 

closely as possible, but tailor the process to fit each requirement. Occasionally, the cash flow statement 

comparison may not be as detailed as presented in this methodology. Project Managers should review 

the TRB Processes and Procedures and TRB Standard templates for additional information. 

Alternatives Analysis Process

Figure 1: Alternatives Analysis Process
PBGC Alternatives Analysis Methodology 

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Phase I: Define

Step 1: Establish Alternatives Analysis Integrated 

Project Team

Before starting any alternative analysis, the sponsoring business unit and 

the assigned Enterprise Architect should confirm that the request to 

identify analyze and recommend an information technology product or 

solution is derived from a Business Needs Analysis (BNA). Once this 

evaluation is completed, key stakeholders and decision-makers who will 

conduct the analysis and recommendation of the IT product or solution 

are identified and form the AA IPT. An AA is unnecessary if the Technical 

Reference Model (TRM) contains a technology that meets the business 

need. 

The AA IPT is composed of members from the units listed in the Table 1, 

to ensure that all aspects of PBGC are represented. While contractors 

may participate on the AA team, any decision-making and voting must be 

deferred to the Federal employee they are representing. 

ROLE RESPONSIBILITY

Executive or Functional 

Sponsor

The sponsor is the person in the functional area that is 

requesting the identification of alternatives to fulfill a business 

need. The sponsor is responsible for ensuring that the AA and 

all required backup materials are prepared. The sponsor is also 

responsible for ensuring that the AA is conducted in accordance 

with this standard and methodology and all applicable Federal 

policy and PBGC directives. 

Federal IT Project 

Manager (PM)

Ensures information technology conforms to AA standard

requirements and facilitates the AA IPT. This person is typically 

the project manager that will lead the selected alternative 

through execution to deployment. Provides guidance on the 

tailoring of the Alternatives Analysis approach. 

Business users and 

representatives

Ensure information technology meets business requirements 

and the needs of the end user in a straightforward manner. 

This includes representatives from all business units that may 

benefit from or use the selected alternative.

EA Representative Ensures information technology conforms to the EA Target 

Architecture, standards, and meets enterprise needs. Provides 

input on the tailoring of the Alternatives Analysis approach. 

ITIOD Representative Ensures information technology elements and components 

aligns with PBGC infrastructure. Provides subject matter

expertise on all aspects related to IT infrastructure.
PBGC Alternatives Analysis Methodology 

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ROLE RESPONSIBILITY

ECD Representative Ensures information technology adheres to PBGC security 

controls. Provides subject matter expertise on all aspects 

related to cyber-security.

Procurement 

Representative

Ensures information technology selection activities conform to 

the Federal Acquisition Regulation (FAR) principles and PBGC 

procurement directives and processes.

Other stakeholders such 

as Privacy and Records 

Management

Ensure information technology meets the requirements as 

identified for the stakeholders’ area of interest and expertise.

Table 1: Alternatives Analysis AA IPT Roles and Responsibilities

When the AA IPT members are identified, a kickoff meeting is held to describe the roles and 

responsibilities of each team member. The AA IPT should discuss the business need or performance gap 

the team is seeking to solve, the scope, the process, the deliverables, the necessary resources, the 

project timeframe and other criteria and inputs that need to be reviewed prior to conducting the 

alternative analysis. The Federal project manager will facilitate the development of the preliminary 

schedule of activities.

Other stakeholder representatives may opt-out from participating in the technology selection effort if 

the technology does not affect and/or is not of interest to the group they are representing. A formal 

withdrawal will be communicated to the Federal project manager.

Sponsors, business and IT program and project managers should exercise caution when using a contract 

vendor to conduct the alternatives analysis when it is anticipated the same vendor is or will be 

supporting the end solution that is procured. Having an independent third party conduct the alternatives

analysis provides removes any potential bias that an implementation vendor may use in their favor. 

Approval to use the same vendor for analysis and implementation requires consultation with the 

Procurement Department and the Office of General Counsel to ensure there is no organizational conflict 

of interest. 

In this step, the AA IPT performs the following activities:

1. Documents events, time schedule, and costs in schedule tool such as MS Project

2. Initiates the analysis and tracks the AA IPT progress against the schedule

3. Keeps track of all the meetings/proceedings/agreements and decisions for audit purposes

4. Identifies location and method to store and retrieve evaluation matrix

5. Defines the scope, deliverables timeframe and assignments of the AA IPT members

Step 2: Develop Business and Technical Requirements and Use Cases

Based on the documented performance gap, the AA IPT shall work with the business and technical 

stakeholders to identify business functional requirements, technical requirements and use cases as 
PBGC Alternatives Analysis Methodology 

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needed. In addition to business functional requirements a number of other inputs are necessary to 

evaluate an information technology solution or product. They include:

 Document the performance gap(s)

 Business process requirements – identify and document upstream and downstream processes

 Document As-Is and To-Be business processes and the technology impacts

 Identify and document existing and desired internal controls

 Document impact to existing application architecture

 Data requirements, migration requirements, data entry and output requirements

 Security requirements - Federal guidelines1 such as NIST security requirements

 EA requirements (Strategy, Performance, Business, Data, Information, Application, 

Infrastructure, Security)

 Infrastructure requirements (hardware, network, and operating system)

 Task constraints, such as schedule, staff, and cost2

If the business process (es) are not analyzed as part of a BNA, they must be analyzed before or as part 

of the alternatives analysis.

In some situations, PBGC may decide to simply use the processes embedded in a technology solution. 

The decision to not analyze a business process prior to an AA must be documented and approved by 

the executive sponsor. The decision must state that PBGC will use the process embedded in a 

commercial product.

The risk of using a vendor’s embedded process is that PBGC stakeholders may require significant 

enhancements to make a commercial product conform to PBGC processes, potentially customizing 

poorly designed processes in custom code that may make upgrades to new versions of the commercial 

product more complex, costly and time consuming.

Step 2 Output: Business And Technical Requirements and Use Cases

As business and technical requirements are being developed, the IPT should consider this step as a means 

to complete a draft of Section C of any future solicitation that may be required. This is a means to 

become more agile in achieving a desired business solution.

Step 3: Define Evaluation Criteria and Weightings

This section discusses the development of evaluation criteria for use in an AA. As in many AA process 

steps, establishing evaluation criteria is part of the acquisition planning process, and as such is a 

reusable process step that may help speed the competitive procurement process upon the AA

completion and approval.

The AA IPT must identifies evaluation criteria and relative weightings are established. Criteria should go 

beyond basic feature and functionality as because many vendors offer mirrored capabilities in these 

 1 Federal guidelines include guidance/solution recommendations from OMB, NIST, GSA and other authoritative Federal sources. 2 Market research shall serve as a source for cost information that will form the basis for an Independent Government Cost Estimate (IGCE).

Note: Only the Procurement Department may request formal quotes from vendors.
PBGC Alternatives Analysis Methodology 

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areas. Things to consider include “ease of use, ability to deliver and support the solution, platform 

infrastructure, support of open standards, application integration, implementation processes and 

resources, training and knowledge transfer approaches, and support for going live.” The AA IPT will 

determine which criteria may be more important than others and set weightings as appropriate. The AA 

IPT performs the following activities for each functional component in the architectural design that may 

be satisfied through acquisition:

1. Defines the selection criteria for each functional component 

2. Defines the ‘Weight’ values for each selection criteria 

3. Defines scoring algorithms to determine the percent satisfaction for each selection criteria (See, 

Score (%) column). 

4. Identifies initial, high level acquisition, implementation and on-going support cost drivers 

applicable to this specific technology or service (See IT Cost Comparison). 

5. When selected technology solutions for comparisons include managed service solutions (cloud 

or non-cloud).

6. Documents the selection scoring method in an evaluation matrix form. 

The AA IPT shall negotiate and obtain stakeholder concurrence on the selection scoring method defined 

for evaluation criteria. 

Having too many criteria and assigning all criteria the same weight may have the effect of hiding 

important differentiators among technologies or solutions. The team must take the time to determine 

which criteria are relevant and to what degree the criteria are necessary to fulfill the business need. The 

weights of the criteria will be different depending on the type of business need or performance gap to 

be solved. This step is especially important when multiple stakeholders have disparate needs, and

vigorous discussion leading to well-understood criteria and weights should be encouraged.

At the end of this step all AA IPT members must come to a consensus on the set of criteria and their 

weights before proceeding to the next step. Any changes to the criteria or weights after this point will 

require concurrence of all stakeholders.

Background 

The purpose of the AA evaluation process is to provide a mechanism to determine which alternative 

best meets the PBGC’s needs. Because the AA recommendation is based on this evaluation, it is 

important that the evaluation criteria clearly reflect the PBGC's need. The evaluation criteria should 

facilitate an accurate evaluation of the alternatives; represent key areas of importance and emphasis to 

be considered in the analysis and evaluation process; and support meaningful discrimination and 

comparison between and among competing alternatives.

Establishing Evaluation Criteria

The evaluation criteria used to assess alternatives consist of the factors that reflect the areas of 

importance to PBGC in its alternatives recommendation. Through the evaluation factors, the PBGC is 

able to assess the similarities and differences and strengths and weaknesses of competing alternatives
PBGC Alternatives Analysis Methodology 

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and, ultimately, use that assessment in making a sound recommendation. A well-integrated evaluation 

scheme provides consistency, discipline, and rationality to the analysis process.

The AA must define the relative importance of the criteria to all of the other evaluation criteria. In doing 

so, alternatives will be evaluated and recommended based on which one best meets PBGC’s needs. This 

step ensures that:

 Evaluation criteria should be tailored to each alternatives analysis and include only those factors 

which will have an impact on meeting PBGC’s business needs

 The nature and types of evaluation criteria to be used for an AA are within the broad discretion 

of the AA IPT

Non-Cost Factors - Non-cost factors address the evaluation areas associated with technical and 

business management aspects of the proposal. Examples of non-cost factors include technical and 

business factors. Examples available for IPT tailoring are provided below. 

Cost and Past Successes - When considering cost or past successes in the Federal or private sector, 

seek the advice of the Procurement Department representative on the AA IPT. 

Evaluation Criteria Thresholds - The development and use of thresholds are key to uniform 

application of evaluation criteria. Thresholds establish the minimum level of acceptability for a 

requirement and provide the basis on which the ratings above and below the minimum level are set. 

Stated another way, a standard is the measurement baseline that will be used by the AA IPT to 

determine whether an alternative meets, exceeds, or fails to meet an evaluation requirement. 

Thresholds provide a consistent and uniform measurement target and promote an objective evaluation 

of alternatives. Thresholds may be quantitative or qualitative in nature. Cost may have a threshold to 

ensure the recommended alternative does not exceed budget allocations. Cost information is 

requested early in the evaluation process to avoid additional time and expense associated with 

alternatives that clearly exceed the budget available. Regardless of whether a threshold is quantitative 

or qualitative in nature, the threshold should be:

 Structured to specify the minimum acceptable level and the ratings levels that can be assigned

 Developed using precise language that is clearly and easily understood by the AA IPT members

 Structured to evaluate substance, not form

 Consistent with the minimum requirements to meet the business need, performance gap and 

the business and technical requirements

Relative Importance of Evaluation Criteria

After determining the evaluation criteria, their relative importance must be established. The relative 

importance of the factors that comprise the evaluation criteria must be consistent with the alternatives 

analysis objectives and requirements. There are several methods that may be used to establish the 

relative importance of the evaluation criteria. 
PBGC Alternatives Analysis Methodology 

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Rating Mechanisms

There is no one best approach for rating alternatives. Accordingly, AA IPTs are free to design rating 

plans which best meet their needs in light of the facts, circumstances, and requirements of a business 

need or set of alternatives. Typically, numerical, adjectival, or color coding rating schemes have been 

relied on for proposal evaluations. The key in using a rating system is consistent application by the 

AAIPT members. Regardless of the approach selected, AA IPT members must come to a consensus on 

the definitions of the evaluation criteria, thresholds, weighting and other factors. 

Evaluation Criteria Guiding Principles

 Evaluation criteria must represent the key areas of importance

 More important criteria should be weighted greater than less important criteria

Sample Technology Evaluation Criteria

 508 Compliance – Mandatory

- Simply requesting a Voluntary Product Accessibility Template (VPAT) may not be 

sufficient to comply with the Americans with Disabilities Act statues, Section 508. See 

the 508 User and Reference Guide as well as the Design and Development standards for 

additional information about 508 Accessibility.

 Security (utilize existing security groups/rights and ensure FISMA and NIST compliance) 

 Architectural compatibility (in line with the PBGC segment architectures, TRM, EA principles, 

Enterprise Architecture Standards or use of open standards)

 Records Management in accordance with PBGC Directive IM 15-1 

 Performance suitability (throughput, disk requirements, memory requirements)

 Scalability and Availability

 Interoperability (Avoid proprietary aspects that lead to vendor lock-in), 

 Transparency (documentation, internal specifications – interfaces and organization of the PBGC 

information, means to obtain PBGC information, selectively or in its entirety)

 Maintainability (What is the effort required to move to new versions? What monitoring 

mechanisms are available?)

 Update Cycle (How often is there a new release of the Information Technology?)

 Maturity (How long has the technology been on the market? The size of the technology’s 

customer base)

 Flexibility (Easy to change to meet new business requirements)

 Maintenance costs/fees (Annual license cost per unit and total annual license cost covering 

PBGC needs)

 Ease of Use (How easy is the technology to use by users/Administrators/DBA support/SA 

support) 

 Programming languages (JAVA, .NET, those that fit within the existing TRM and PBGC)

 Technology Deployment Model (internal, Federal Shared Service, external managed service, 

cloud service provider)
PBGC Alternatives Analysis Methodology 

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Sample Vendor Selection Criteria

 Competitive standing in the industry market space

 Technical support (scope and responsiveness)

 Training support 

 Periodic vendor release dates and calendar to accommodate target systems delivery dates

 References from Federal Government agencies and commercial customers

 Availability of vendor technology vision, evolution plans

Stakeholder Acceptability Selection Criteria

 Business unit openness to new technology offered by an alternative

 Training requirement to develop Alternative expertise 

 Amount of currently unsupported technology introduced by the technology in PBGC 

environments

Step 3 Output: List of Evaluation Criteria and Relative Weightings. 

Evaluation criteria developed here will help in potential follow on procurement activities and help to 

inform Section M of a solicitation.

Phase II: Analyze

Step 4: Identify Alternative Options and Conduct 

Market Research

Market research is defined as collecting and analyzing information on the 

market for a government requirement (refer to FAR 2.101). It is an 

essential element in acquiring commercial items and provides 

information to the procurement activity in understanding the 

requirement and what is available in the commercial marketplace.

To perform effective market research, the AA IPT must first identify the 

various alternative options of technology products, solutions and 

suppliers, then collect and analyze information about the capabilities 

within the market to satisfy the agency’s need. The results of market 

research will determine the availability of the different types of solutions 

in the marketplace and potential acquisition strategies and approaches.

Identifying Alternative Options

In Circular A-11, Project managers must identify and consider at least four viable alternatives. According 

to OMB Circular A-94, AAs should consider alternative means of achieving program objectives by 

examining different program scales, different methods of provision, and different degrees of Government 

involvement.
PBGC Alternatives Analysis Methodology 

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Alternatives may be identified by researching the market for solutions that will help the program achieve 

its objectives. This may include issuing Requests for Information (RFIs) and/or Requests for Comments 

(RFCs). In evaluating alternatives, the analysis should generally consider: (i) doing nothing (Status Quo);

(ii) direct purchase (COTS); (iii) upgrading, renovating, sharing, or converting existing government 

property; or (iv) leasing or contracting for services (Managed or Federal Shared Services). 

For example, when looking for a solution for a new business need, the program may evaluate Build vs. 

Buy options. If a legacy system is currently servicing the business need, Expand vs. Replace options may 

be evaluated. The alternatives may be related to different technical options or different vendor solutions 

that can address a given business need. A program must select the alternatives that are most appropriate 

for them. Below are five acceptable generic alternatives the AA IPT may consider: 

1. Maintain the Status Quo - The Status Quo should always be described, like any other 

alternative. It is not sufficient to reference Status Quo without describing it further.

2. Managed Service Provider -- The AA PM finds it advantageous to fully contract out services 

to contractors. Deployment options may be cloud or non-cloud in nature. 

3. Federal Shared Services Provider – In this alternative, PBGC pays a separate federal agency 

as a service provider in order to leverage existing services possessed by this other 

Government entity. Deployment options may be cloud or non-cloud in nature. 

4. Enhance or Upgrade – In this alternative, the AA IPT chooses to enhance or replace an 

existing system as a method of achieving the same results and strategic goals.

5. Commercial-Off-the-Shelf – This alternative is about procuring a commercially (or 

potentially government (GOTS) off the shelf software package for internal use, potentially 

with customizations. Hosting may be internally or externally; cloud or non-cloud.

6. Complete all Work In-House – In this alternative it, may be more effective and economical 

to custom develop a solution and build/maintain exclusively by the PBGC. 

7. Open Source Software – In accordance with OMB M16-21, the AA IPT should consider 

whether open source code or open source software is a viable candidate for consideration. 

It is not sufficient to use these generic alternatives verbatim. When employing one or more of these 

generic alternatives, the alternative title and accompanying description must be investment-specific.

Market Research

Once various alternative options of service delivery are identified, the IPT may continue with market 

research into these specific delivery options. The Federal Acquisition Regulation prescribes policies and 

procedures for federal procurement activities and in conducting market research (in Part 10) to arrive at 

the most suitable approach to acquiring, distributing, and supporting supplies and services. Part 10 

implements the requirements of 41 U.S.C. 3306(a)(1),41 U.S.C 3307, 10 U.S.C. 2377, and 6 U.S.C. 796. 

The FAR policy in section 10.001 (excerpted) states that agencies must:

“(1) Ensure that legitimate needs are identified and trade-offs evaluated to acquire items that 

meet those needs;

(2) Conduct market research appropriate to the circumstances --
PBGC Alternatives Analysis Methodology 

15

(i) Before developing new requirements documents for an acquisition by that agency;

(ii) Before soliciting offers for acquisitions with an estimated value in excess of the 

simplified acquisition threshold.

Step 4 Output: Market Research report listing market space providers. 

Market research is required by the Procurement Department. 

Step 5: Conduct Initial Assessment – Score, Evaluate, and Eliminate Options 

Once the AA IPT has identified business and technical requirements, evaluation criteria and weightings 

and has conducted market research, the AA IPT conducts an evaluation. This assessment consists of 

applying the information gathered during the market research activity to the evaluation criteria and 

scoring model. During this step in the process, the AA IPT performs the following activities:

 Organize the information on each alternatives option and enter it into the evaluation matrix

 Perform analysis and develop a total composite score for each alternative

 Determine the identified solutions’ applicability to the identified evaluation criteria

 Produce a composite report of the results, ranking the alternatives 

Please Note: Business and Technical requirements must be evaluated concurrently by the entire IPT. 

All members of the IPT must be involved during the identification and evaluation of business and 

technical requirements. 

Alternative Analysis Scoring Sheet

The table below is provided as an example to be used to develop composite scores for each alternative. 

The ‘Weight’ field would contain an integer value assigned by the AA IPT during their analysis in Step 3. 

As an example, the weight may be from 1 to 100 and a score may be from 1 to 5 (Deming Scale) or 1 to 

10; with 5 or 10 as the highest score. The ‘Score’ field would indicate degree of satisfaction achieved by 

the alternative. A composite value for each selection criteria is calculated (Alt. X Score = ‘Weight’ x 

Alternative’s ‘Score (%)’). For example, if a criteria is judged to have a ‘Weight’ of 50 and the 

alternative’s ‘Score (%)’ was evaluated as “8” then the ‘Composite’ value for criteria is 400. The total for 

each category is then multiplied by the Category weight to obtain a fully weighted evaluation criteria for 

each alternative.

SAMPLE CRITERIA

Weight

(W)

1-10, 1-100

Status 

Quo

Result (R) 

& Score (A)

Alt. 1 

Score

Result (R) 

& Score (B)

Alt. 2 

Score

Result (R) 

& Score (C)

Alt. 3 

Score

Result (R) 

& Score (D)

Category: Technology

Performance W WxR =A WxR =B WxR C WxR D

Reliability W WxR =A WxR =B WxR C WxR D

Transparency W WxR =A WxR =B WxR C WxR D

Maintainability W WxR =A WxR =B WxR C WxR D
PBGC Alternatives Analysis Methodology 

16

Privacy W WxR =A WxR =B WxR C WxR D 

Scalability W WxR =A WxR =B WxR C WxR D 

Availability W WxR =A WxR =B WxR C WxR D 

Flexibility W WxR =A WxR =B WxR C WxR D 

Interoperability W WxR =A WxR =B WxR C WxR D 

Ease of Use W WxR =A WxR =B WxR C WxR D 

Programming languages W WxR =A WxR =B WxR C WxR D 

508 Compliance W WxR =A WxR =B WxR C WxR D 

Information Security W WxR =A WxR =B WxR C WxR D 

Deployment Mode W WxR =A WxR =B WxR C WxR D 

Records Management W WxR =A WxR =B WxR C WxR D 

Category: Business 

Functionality

The AA IPT identifies the required 

business and functional requirements 

below

W WxR =A Wx

R 

=B WxR C WxR D

W WxR =A Wx

R 

=B WxR C WxR D

W WxR =A Wx

R 

=B WxR C WxR D

Category: Vendor

Technical support / Help desk W WxR

Training capabilities/support W WxR =A WxR =B WxR C WxR D

Competitive standing W WxR =A WxR =B WxR C WxR D

References (Federal Govt/Commercial) W WxR =A WxR =B WxR C WxR D

Technology vision & roadmap W WxR =A WxR =B WxR C WxR D

Category: Stakeholder 

Acceptability

Acceptance of new technology W WxR =A WxR =B WxR C WxR D

Training requirements W WxR =A WxR =B WxR C WxR D

Amount of currently unsupported 

technology

W WxR =A WxR =B WxR C WxR D

 Category: Cost

Cost of Technology or Solution 

Initial Acquisition and Licensing Costs

Ongoing Maintenance Costs 

Hardware and Software Costs and Maintenance

Implementation Costs 
PBGC Alternatives Analysis Methodology 

17

 

 

Support and Enhancement Costs

Total:

Table 2: Example Alternatives Analysis Scoring Sheet

Based on the initial scoring on business and technical requirements, solutions are removed from 

consideration or eliminated. This reduction of alternatives by elimination is essentially to ensure only the 

best alternatives are more completely analyzed in Step 6. 

Step 5 Output: Initial results of scoring and elimination of some alternatives

Step 6: Conduct Cost Benefits Analysis with Risk-Adjusted Costs and Eliminate

Options

AAs are required to demonstrate that viable alternatives were examined and the most optimal alternative 

was chosen after examining the costs and benefits associated with each alternative. As with previous 

sections of the Alternatives Analysis standard and methodology being applicable to future procurement 

activities, the cash flow helps to define and populate the Internal Government Cost Estimate required in 

the Advanced Procurement Plan. 

The Clinger-Cohen Act addresses Cost-Benefit Analysis (CBA) as a key component of IT management in 

Section 5122, CPIC (under Executive Agencies Responsibilities). Furthermore, the Office of Management 

and Budget (OMB) Circular A-130 requires agencies to prepare a cost-benefit analysis for all information 

systems at a level of detail appropriate to the size of the investment. A-11 also requires an Alternatives 

Analysis to be part of the IT Program Plan submission.

The CBA is used to identify the most economically beneficial resolution to a business need or 

performance gap; that is, to identify the alternative that will result in resolving the business issue with 

either the highest return on investment (ROI), net present value (NPV), lowest costs, or greatest cost 

avoidance or savings, and to determine the financial impact of the alternatives. The financial analysis 

may also be used to determine the priority among projects across multiple IT Programs competing for 

limited funds. CBAs are required when the five year total cost of ownership exceeds $1 million. 

Tailoring of the CBA will be required consistent with the TCO value and complexity of the alternatives 

analysis. Waiver of this requirement requires the approval of the ITPRB. While a CBA is not required for 

a TCO value under $1 million over the initial 5 year period, a less rigorous analysis should still be used to 

determining the financial impact of those proposed alternatives acquisitions. 

Definitions 

 Cost Benefits Analysis — A tool for making an alternatives recommendation decision based on a 

comparison (in current dollars) of the economic costs and benefits of two or more alternatives to a 

given business need or performance gap. 

 Time value of money — Time, or the timing of an investment, is an important consideration in any 

economic or financial decision. The purchasing power of a dollar changes over time because of 
PBGC Alternatives Analysis Methodology 

18

inflation. At the same time, money that is invested grows according to the laws of compound 

interest.

 Future value — The compound interest rate determines the future value of invested dollars (e.g., 

$100 invested today at a 10 percent interest rate will grow to $121 in 2 years).

 Present value discounting — A mathematical process for determining the value today of future 

costs and benefits. It uses the reciprocal of the compound interest rate to discount, in terms of 

present value, sums of money to be spent or benefits to be realized at a future date. It provides a 

method for evaluating the tradeoff between current dollar outlays (investments) and future benefits 

(cash inflows) over a period of time. This concept is integral to the evaluation of alternatives. 

 Cash flow — A timeline that shows the anticipated flow of required funding, costs, and savings for a 

given alternative, and also calculates mathematical measurements such as return on investment 

(ROI), net present value (NPV) for the alternative.

Discounted Cash Flow Method

PBGC uses the discounted cash flow method of financial analysis to identify the most economically 

beneficial solution to a business need. This is accomplished by discounting the anticipated costs and 

benefits of alternative solutions and calculating the various alternative investment measures (NPV and 

ROI). These alternative investment measures are used to compare the expected results of each 

alternative and also bring into focus additional factors affecting the decision (e.g., the time value of 

money, qualitative factors) that cannot otherwise be expressed quantitatively.

Because a financial evaluation is only as good as the assumptions and input data, the assumptions and 

data must be as accurate and realistic as possible. To achieve the most reliable results, AA IPT members 

should obtain input from all available resources (including internal specialists, external consultants, and 

other subject matter experts) regarding the selection of options and use of resources. Final 

responsibility for an assumption or estimate rests with the sponsoring business unit. The AA IPT 

members and governing bodies are expected to apply common sense judgment. All cash flow costs and 

benefits in the analysis must be supported by the source of the estimates. A separate cash flow analysis 

must be developed for each alternative considered. The cash flow analysis for the recommended 

alternative is included in the AA, while the other cash flows are included in the AA backup 

documentation.

Determining Baseline Costs

The baseline, or existing situation, provides a uniform reference point for defining the operational and 

economic impacts of each alternative. In order to determine the present value of an alternative, a 

schedule of cash flows is constructed in which the anticipated investments and operating savings and

costs of alternatives are compared to the baseline over the economic life of the project. This requires 

that the costs of the existing situation be analyzed. 

Current baseline costs are escalated into the future through the end of the analysis period (usually the 

service life of the asset but not more than 10 years following move-in or final deployment) using the 

escalation rates in OMB A-94.
PBGC Alternatives Analysis Methodology 

19

According to OMB Circular A-11, the cost of a capital asset is its full lifecycle costs, including all direct and 

indirect costs for planning, procurement, operations and maintenance, including service contracts, and 

disposal.

All costs, recurring or one-time, including Government and contractor costs, related to the investment 

must be captured in the Alternatives Analysis, since this feeds the Summary of Spending table in the IT 

Program Plan.

Lifecycle Cost Formulation

Lifecycle costs are the overall estimated costs from all funding sources for both Government and 

Contractor, for a particular alternative over the time period corresponding to the life of the alternative. 

They include direct and indirect initial costs plus any periodic or continuing costs of operation and 

maintenance.

PBGC has established an IT budget programming process that links mission needs and financial resources

in an effective and efficient manner. Effective capital programming requires long-range planning and a 

disciplined budget decision-making process as the basis for managing a portfolio of assets to achieve 

performance goals and objectives with minimal risk, lowest lifecycle costs, and greatest benefits to PBGC. 

OMB Circular A-11 states that new investments must be justified based on the need to fill a gap in the 

agency's ability to meet strategic goals and objectives with the least lifecycle costs of all the various 

possible solutions and provide risk-adjusted cost and schedule goals and measurable performance 

benefits. Investments that are still in the planning or acquisition stages must demonstrate satisfactory 

progress toward achieving baseline cost, schedule and performance goals. Assets that are in operation 

(steady state) must demonstrate how close actual annual operating and maintenance costs are to the 

original lifecycle cost estimates and whether the level or quality of performance/capability meets the 

original performance goals and continues to meet agency and user needs.

The following are rules to be followed for lifecycle cost formulation:

 Lifecycle costs must include Government and Contractor costs for each of the alternatives 

analyzed. See Table 3 for a list of potential costs to consider.

 The costs must be comprehensive and include both one-time and recurring expenses anticipated 

for each alternative. PBGC requires all costs to be expressed as nominal values.

 The costs must be broken out into the different cost types for each alternative. The “Other” cost 

category may not be used. Sufficient description and definition of cost categories must be 

provided.

 Security costs should include ISSO contractors which may address an initial Controls Assessment 

and the cost to develop Authority to Operate (ATO) and on-going security costs such as 

Continuous Diagnostic Monitoring.

 Lifecycle costs for each alternative must be risk-adjusted. Risk-adjusted lifecycle costs refer to the 

overall estimated cost for a particular investment alternative over the time period corresponding 

to the life of the investment. It includes direct and indirect initial costs plus any periodic or 

continuing costs of operation and maintenance that has been adjusted to accommodate any risk 
PBGC Alternatives Analysis Methodology 

20

identified in the risk management plan. If alternative funding is to be requested for specific 

phases, segments or modules of the alternative, each of these parts must be risk adjusted for its 

individual lifecycle.

 If the investment changes its level of funding as a result of OMB, or Congressional adjustments 

during the budget cycle, the lifecycle costs must be adjusted and financial metrics recalculated. 

 AA IPTs are encouraged to use the techniques described in the GAO Cost Estimating and 

Assessment Guide (GAO-09-3SP) 

Develop the Sustaining Baseline

 In rare circumstances, the sustaining baseline situation is used to quantify measures that a 

reasonable manager would take to sustain PBGC operations during the analysis period in the 

event the proposed alternative is not approved. It is based on a continuation of present 

operations, including all the resources (e.g., labor, space) required to sustain existing operations 

from concept proposal development through the analysis period. In general, capital funds are 

not used when developing a sustaining baseline. When use of a sustaining baseline is warranted, 

it becomes the basis for computing the incremental rate of return (IRR) and Net Present Value 

(NPV) between the alternatives.

 When selecting a technology to fulfill a business need, the AA IPT should develop a cost 

comparison that discusses the estimated costs associated with planning, implementing, 

operating, and maintaining the information technology. 

 When the AA IPT assesses the financial differences between on-premise hosting and cloud 

alternatives, a comparative cash flow analysis helps to define the financial costs and benefits. 

IPTs should estimate the costs to provide the solution internally for the selected application or 

services. Cost savings will be a significant driver but not the only factor in the alternatives 

recommendation decision. Other factors that may be considered, including the quality of service, 

the redirection of resources to core mission activities, additional functionality and capabilities, 

more efficient processes, and improvement of information management and decision-making 

capabilities. If actual data is not available, the AA IPT should use the best possible estimates. 

Both IT and business unit costs should be included. IPTs should include the human resources 

costs (e.g., for Federal employees and contractors) that exist in both the business and IT 

organizations if those costs are a significant cost driver. 

 PBGC requiresthat analysis be conducted either in constant dollars or in terms of nominal values.

Nominal vs. Real – Costs and Benefits

PBGC requires the cost-benefit numbers to be reflected in nominal terms rather than real or constant 

dollars. The difference between these terms is described below

 Real or constant-dollar values measure benefits and costs in units of stable purchasing power. 

The inflation impact on costs and benefits is not considered.

 Nominal values measure benefits and costs in terms of the future purchasing power of the dollar.

Logical consistency requires that nominal and real values not be combined in the same analysis. 
PBGC Alternatives Analysis Methodology 

21

Benefits

Quantitative (also referred to as tangible benefits) and qualitative (also referred to as Intangible Benefits) 

benefits must be considered for each Alternative.

Quantitative Benefits are expressed in dollar terms and should be included in the calculation of the 

financial metrics for the Cost-Benefit Analysis. Benefits that result in an increase of cash inflow to the 

organization or a reduction in cash outflow are considered “hard” savings.

Qualitative benefits are intangible benefits that cannot be quantified, but play an important role in the 

selection of one alternative over another. These benefits are expressed in terms of improved mission 

performance, improved decision making, or more reliable or usable information. These benefits may be 

quantifiable, but cannot be expressed in dollar values. Though qualitative benefits are difficult to quantify 

reliably, the intangible benefits may be vital to understanding the total outcome of implementing a 

particular IT system. Such benefits, like reduced risk, better strategic fit or improved technical feasibility 

must be considered as a part of the Alternatives Analysis. Such benefits must be captured, but are not 

included in the CBA calculations.

Determining the Analysis Period

Once the viable alternatives have been determined, a schedule of costs (or cash flow) for each 

alternative is developed. The schedule reflects the anticipated investments and future operating costs 

or benefits compared to the baseline during the analysis period. The analysis period is typically the 

investment period plus 5 or 10 years following final deployment.

Determining the Number of Years

The useful life of the recommended alternative normally determines the time period for the economic 

evaluation of all the alternatives. For IT Solutions, the analysis period begins with the first year of 

expenditures and ends in the last year of life of the alternative after final deployment (normally not to 

exceed 10 years). However, a longer analysis period may be required under certain circumstances. 

Selecting the Zero Point

The cash flow begins with the first significant investment. Thus the zero point of a cash flow is not 

necessarily the current year. The same zero point must be used for all alternatives under consideration. 

Costs and benefits are calculated on an annual fiscal year basis to reflect the budget process.

Comparing Alternatives with Different Investment Periods

When two or more alternatives being evaluated have different investment periods (reflecting 

differences in lead time, construction time, or availability), the recommended alternative determines 

the cash flow time line. Since the evaluation period must be the same for all alternatives (i.e., the zero 

point for each alternative is the same actual point in time), the evaluation period may have to be 

adjusted for the non-recommended alternatives. 

Example: If Alternative B (the recommended alternative) has 5 investment years and Alternative A has 2 

investment years and the anticipated useful life of 10 years for each alternative, then both cash flows 

will have an analysis period of 15 years. Alternative B will show 5 years of investment followed by 10 
PBGC Alternatives Analysis Methodology 

22

years of ongoing operational support costs (O&M), while Alternative A will show 2 years of investments 

followed by 13 years of ongoing operational support costs (O&M). (Alternatively, when the cash flow for 

Alternative A may show 3 years of “lag” time followed by 2 years of investments and 10 years of ongoing 

operational support costs (O&M)) If, on the other hand, Alternative A were the recommended 

alternative, the cash flow would show 12 years (2 investment years and 10 operating years for 

Alternative A, and 5 investment years and 7 operating years for Alternative B).

Comparing Alternatives with Different Useful Lives

When an economic evaluation compares two alternative assets with different periods of useful life, the 

cash flows are based on the useful life of the asset in the recommended alternative:

 If the recommended alternative has a shorter life than another alternative being analyzed, the 

evaluation period for the asset that is not being recommended is cut short and the residual 

value of this asset is credited to the last year of the evaluation period.

Calculating Investment Costs

The investment expenditures that are itemized in the cash flow include the planning, initial costs, and 

other direct costs of the alternative, plus all related expenditures, both Development Maintenance and 

Enhancement (DME) and Operating and Maintenance costs that are necessary to complete the AA. 

Discounting the Cash Flow and Calculating Financial Metrics

Once the cash flow has been developed (i.e., the investment amounts and s from baseline have been 

determined), the next step is to determine the present value of each alternative. This is accomplished 

by discounting the cash flow.

In a typical cash flow, an alternative at the beginning of the evaluation period may result in a stream of 

benefits (versus the baseline situation) during the remaining years of the analysis period. The annual 

benefits totals are multiplied by decreasing discount factors related to the time of the benefit, which 

greatly reduces their present value. Because most investments occur early in the analysis period, 

discounting has a significantly greater impact on benefits than on investments. Since the effect of 

discounting also increases with higher discount rates, benefits decrease faster than the investment as a 

cash flow is discounted at successively higher rates. The discount rate that the PBGC uses is published 

periodically by OMB in Circular A-94. It reflects the rate of return required from proposed investments 

to meet the established investment objectives. The risk in capital investments relates to uncertainty 

about future inflation, changing technology, uncertainty concerning the life of an asset, interest rate 

volatility, and uncertainty in economic forecasting.

Financial Metrics

Three economic indexes — NPV, ROI, and a NPV comparison — are calculated and used to compare 

alternatives analyzed. These are used to measure the relative financial impact and cost efficiency of 

proposed alternatives by converting the anticipated economic results of each alternative to a common 

financial basis.

Net Present Value
PBGC Alternatives Analysis Methodology 

23

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value 

of cash outflows. NPV is used in capital planning to analyze the financial impact of an alternative, 

investment or project. Present value discounts the value of a dollar in the future as compared with the 

value of a dollar today, taking inflation and potential alternative returns (opportunity cost) into account. 

If the NPV of a prospective alternative is positive, it is a good investment from a financial perspective. 

However, if NPV is negative, the alternative should probably be rejected because cash flows will also be 

negative. However, in the federal space qualitative benefits or legislative mandates may require investing 

in an alternative with negative NPV. In such a case, this reasoning should be provided as justification for 

selecting an alternative with a negative NPV. If all the alternatives being considered have a positive NPV, 

the alternative with the highest NPV is considered better than the others from a financial perspective.

Return on Investment (ROI)

The ROI (technically known as the internal rate of return) is the discount rate corresponding to a zero 

net present value — that is, when the NPV of all benefits equals the NPV of all investments. The ROI 

calculations have a different purpose than the NPV measurements, and the alternative with the highest 

ROI may not be the most cost-beneficial choice. If the economic measures provide conflicting pictures, 

the alternative with the highest NPV should become the recommended alternative unless there are 

overriding non-economic considerations in favor of a different alternative.

Return on Investment (ROI) is the net benefits for the period being analyzed divided by total cost incurred 

during the same period. This is expressed as a percentage. If all the alternatives being considered have a 

positive Rate of return, the alternative with the highest Rate of Return is considered better than the others 

from a financial perspective.

Payback Period is the length of time required to recover the cost of an investment. All other things being 

equal, the better investment is the one with the shorter payback period. This is an optional financial 

metric that may be used by the AA IPT.

Note: A NPV comparison is only required when the alternatives being analyzed do not have a positive 

ROI. 

Discount Rates

The discount rate is the value used to determine the present value of future cash flows arising from an 

implemented alternative. 

The proper discount rate to use depends on whether the benefits and costs are measured in Real or 

Nominal terms. A real discount rate that has been adjusted to eliminate the effect of expected inflation 

should be used to discount constant-dollar or real benefits and costs. A real discount rate can be 

approximated by subtracting expected inflation from a nominal interest rate. A nominal discount rate 

that reflects expected inflation should be used to discount nominal benefits and costs. Market interest 

rates are nominal interest rates in this sense.

Since Cost-Benefit numbers are to be reported as nominal values, the 5-year nominal discount rate 

published in Appendix C to the Circular A-94 – Discount Rates for Cost-Effectiveness, Lease Purchase, and 

Related Analyses should be used for the Cost-Benefit Analysis.
PBGC Alternatives Analysis Methodology 

24

Developing Assumptions

Assumptions document the foundation that the Alternatives Analysis (AA) and Cost Benefit Analysis (CBA) 

are built and are necessary to bridge any informational gaps in the alternative analysis. The most accurate 

forecast possible of an investment’s expected costs and benefits must be used in developing the AA/CBA.

The AA IPT must carefully develop and document all assumptions so reviewers understand how the costs 

and benefits of the alternatives identified in the CBA were developed. Assumptions must clearly define 

any internal or external factors that will have an impact on the alternative schedule or cost, as well as 

address any political, organizational, business, or technical factors driving or affecting the CBA.

Assumption generation is an on-going activity that extends throughout the entire alternative analysis 

process. Early in the investment analysis, the PM will only be able to identify general (or global) 

assumptions. These general assumptions will be applied to all alternatives addressed in the CBA equally. 

Later in the CBA analysis, it is not unusual to add, change or delete some assumptions as more information 

is gathered. As the AA IPT refines the CBA, alternative–specific assumptions must be developed, providing 

a more comprehensive understanding of the investment environment.

The CBA must explicitly state all assumptions about alternative dependencies and constraints for each 

alternative. Some examples of the assumptions that must be documented include:

 Recommended Alternative’s dependency upon other projects/investments

 Recommended Alternative’s dependency on specific infrastructure and an acknowledgement of 

whether or not this infrastructure is included in the Business Area’s Enterprise Architecture plan

 Recommended Alternative’s dependency on data derived from another source

 Identification regarding other systems that play an integral role in the Recommended Alternative 

that are not currently accessible or available

When developing assumptions, the following guidelines apply:

 Assumptions must be made only when there is a need to bridge informational gaps.

 Assumptions must be realistic and validated as such.

 If a conclusion would be valid if one of the assumptions did not hold, it should be eliminated as 

the assumption is not relevant to the analysis.

 Assumptions may differ for each alternative.

The following table provides an example Cost Comparison for an Alternatives across the determined 

number of cash flow years. Not all of the criteria may be applicable to every AA IPT.
PBGC Alternatives Analysis Methodology 

25

Table 3: Example Cost Comparison Sheet

The recommendation of the best alternative (product or solution) is guided by, among other criteria, a 

comparison of internal legacy status quo costs to those of the potential alternatives and the 

performance and quality they deliver to end users. In the transition year, typically costs will be higher. 

However, in the out-years, cost savings may accumulate. Additional cash flows are developed for other 

alternative options including managed (external) services, Federal shared services, COTS or custom 

developed solutions. 

The resulting cost comparison forms the financial basis of an alternatives analysis to inform the IPT and 

executive sponsor leadership team whether or not to proceed with a particular alternative. Other 

aspects of the alternatives analysis include strategic alignment, qualitative value such as cost avoidance, 

improved management information, quality of service and risk analysis. Ultimately, the alternative that

PBGC implements is based upon our own unique business model, culture, and risk tolerance. 
PBGC Alternatives Analysis Methodology 

26

Risk

This section addresses the process to be used to identify, analyze, prioritize and quantify, and control 

risk as part of the alternatives analysis process. Risk is a measure of the probability and consequence of 

not achieving a desired business outcome. The term risk is used to define the class of factors that (1) 

have a measurable probability of occurring, (2) have an associated cost or effect on the an alternatives’

outcome.

Risk Management

Risk management includes the process associated with identifying, analyzing, prioritizing and 

controlling, and mitigating investment risk. There are four major processes involved in the risk 

management process:

1. Risk identification — determining which risks are likely to each alternatives and 

documenting the characteristics of each risk.

2. Risk prioritization and quantification — Defining opportunities and response to 

potential threats and rank them in the various alternatives. 

3. Risk analysis — Evaluating risks and risk interactions to assess the range of possible 

alternatives options.

4. Risk response control — Responding to change in risk over the course of the alternative 

analysis options and recommended alternative. 

Risk identification, prioritization and quantification, and analysis, fit easily into the alternative analysis 

process. Risk response control is a process that involves more than agreement with assumptions and 

their accompanying calculations. An integrated multifunctional approach for responding to and 

controlling risk provides for the overall mitigation of alternatives’ risks and will influence the extent with 

which senior management may favorably view an alternative. A process that identifies and mitigates 

known risks combined with identified strategies that may be implemented when the magnitude and 

range of risks become known may make alternatives with relatively higher than average risk potential 

become viable and suitable for recommendation. For example, if a new technology adoption is 

identified as a risk, then actions that describe how adoption will be addressed may contribute to the 

eventual approval of the investment, even when a specific risk has been identified.

Risk Identification Process

The suggested method for identifying and quantifying risk is to use a process that involves the 

appropriate subject matter experts (SMEs) to identify and quantify the risk elements into the following 

three categories:

1. Technological

2. Operational

3. Integration

Risk Quantification — Element Ranking
PBGC Alternatives Analysis Methodology 

27

There are many ways to quantify risk ranging from models that employ complex Monte Carlo 

simulations that can be used to project the likelihood of a particular risk component or simulate many 

interrelated risk components simultaneously.

However, simple processes that rely on the AA IPT members available (i.e., subject matter experts) to 

project the potential impacts of identified risk elements are among the most often used methodologies 

during an alternative analysis process. The process and calculations used to determine the alternative’s 

risk level (i.e., high, medium, low) must be included in the AA backup documentation.

Risk Analysis

Some degree of risk always exists in alternative analysis recommendation. Procurement, project 

management, technical, testing, deployment, and on-going operational support areas may present risks 

to the selected alternatives. Alternative risks also include funding, accuracy and completeness of 

requirements, and political risks. Technical risks may involve the risk of meeting a performance 

requirement, but it may also involve risks in the feasibility of a design concept or the risks associated 

with using state-of-the art technology. The understanding of these risks evolves over time. The 

methods for identifying risk are numerous and any source of information that allows recognition of a 

potential problem can be used for risk identification.

Risk Analysis — Using the Risk Analysis Matrix

After the SMEs have categorized the selected risk elements, the rating of each risk element must be 

determined based upon the potential programmatic impact. This process is repeated until all the risk 

elements selected have been evaluated. The rating of the risk element is an estimate of the likelihood 

of the risk element actually happening and impact of the risk element being evaluated would have on 

the project if the risk was to materialize. After the risk elements in each of the three categories are 

evaluated, a composite rating is determined (i.e., low, medium, high). This activity is repeated until all 

the elements within the three risk categories (i.e., operational, technical, and integration) are examined. 

A Risk Analysis Matrix is a required element in the AA backup documentation.

Risk Adjusted Cash Flows - Sensitivity Analysis

Performing a sensitivity analysis is a component of risk analysis. Most of the basic inputs in a financial 

analysis are estimated or a forecast, resulting in a degree of uncertainty. These elements include all the 

major assumptions that are contained in the AA backup. This uncertainty may be reduced by assessing 

the sensitivity of the results to changes in key variables. Often a sensitivity analysis is included in the AA

backup documentation for alternatives analysis that may result in a large financial commitment from 

PBGC. The number of sensitivity analyses should be consistent with the importance of the alternative 

being evaluated. The effect of changes in costs, savings, and other factors on an alternative that is 

economically justified may be calculated to establish the sensitivity of the expected returns to varying 

conditions. Sensitivity analyses are particularly helpful when benefits from an alternative may vary 

significantly based on assumptions or other factors.

Discount Rate
PBGC Alternatives Analysis Methodology 

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The discount rate includes the cost of borrowing and a risk factor, which varies with the type of AA

project. The risk in capital investment relates to uncertainty about future inflation, obsolesce of 

technology due to changing technology, uncertainty concerning the life of the asset, interest rate 

volatility, and uncertainty in inflation and economic forecasting. 

Risk may be reflected in the cash flow with a positive correlation, that is, the higher the risk the higher 

the discount rate. 

Risk Response Control and developing options and fallback positions to permit lower-risk alternatives. 

To avoid risk is to avoid the potential failure consequence and/or its probability. There is no risk control 

if there are no provisions for handling the identified and quantified risk. The AA IPT must use 

established PBGC risk processes throughout various phases of projects, including the alternative analysis 

process, to reduce or control risks. As an example, risk avoidance may be reflected the alternative 

recommended. 

Lessons Learned

After an alternative is recommended and deployment of a solution is complete, the IPT conducts a 

lessons learned analysis. Alternatively, the time to deployment may be elongated and the IPT may elect 

to conduct a lessons learned session upon the completion of the alternatives analysis. At a minimum, 

the lessons learned should cover what went well, what could have been conducted better and how the 

process, and standard can be improved. Project Managers should consider reviewing the accuracy of 

the cost estimates, benefits achievement, and identification of risks from the AA in comparison to actual 

events. The use of this information by new and future project managers and the institutionalization of 

successful risk mitigation solutions is often an undocumented activity, and its importance should not be 

discounted.

Performance Metrics

It is the responsibility of the sponsoring organization to establish with the AA IPT metrics (indicators and 

methods for data capture and reporting) that will be used to evaluate the recommended alternatives 

performance prior to and after solution implementation. Metrics belong to the sponsor, who is 

responsible for ensuring the collection of appropriate data and reporting of metrics to the appropriate 

governing authorities. The metrics answer the following questions for the sponsor:

 How well is the selected alternative performing versus planned AA expectations? 

 Do actions need to be taken to ensure mid-course corrections to ensure benefits attainment?

The purpose of this is to establish recommended alternative relevant measurements that enable 

management to identify lessons learned and take corrective actions (as appropriate) in the preliminary 

implementation phase of selected alternative while determining the likelihood of achieving the savings 

or other benefits (i.e., customer satisfaction, improved productivity, etc.) identified in the AA. The 

metric(s) may also be used in after cost studies in conjunction with other traditional financial related 

indicators to evaluate the success of the project. 

Process
PBGC Alternatives Analysis Methodology 

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The process for developing metrics consists of six steps:

1. Identify the source(s) of benefits in the AA

2. Select and develop metrics that have a direct relationship with the source of the 

benefits and/or other indicators related to assumptions contained in the AA (e.g., 

workhours, training costs, productivity)

3. Gain consensus from applicable AA IPT stakeholders 

4. Identify the data collection activity that will be required

5. Identify the database and systems where the metrics will be retained (if applicable) —

for report generation

6. Incorporate the metrics into the AA

7. Establish measurements at intervals that allow useful judgments. Those intervals may 

include at 10 percent completion, 30 percent completion, and 70 percent completion, 

and solution implementation (i.e., deployment phases of the program). Consider 

statistical sampling or surveys if existing systems cannot provide the required metrics.

8. Describe how the measurement is made.

9. Identify the source of the data and the systems used to capture and generate reports.

Incorporation of Metrics into Alternatives Analysis

It is necessary to incorporate the appropriate metric(s) into the AA. Issues raised by stakeholders in the 

review and concurrence process must be resolved. Validation of the draft AA by the ITPRB will ensure 

that the proposed metrics are sufficient to provide corporate oversight of the program throughout 

implementation and post-deployment. 

Step 6 Output: Comparative Cash Flow Statements and recommendation for deserted

alternative(s)

Phase III: Present

Step 7: Recommend Technology Product or Solution -

Present Findings for Viability and Technical 

Acceptance 

The AA IPT presents their business need, criteria, requirements, analysis, 

and recommendation to the TRB for technical review and the ITPRB for 

capital planning and financial validation. The AA IPT follows the TRB 

Processes and Procedures to obtain TRB review and decisions. The 

outputs from this approach that are presented to the TRB are:

 Market Research and Identified and Analyzed IT product(s) or 

solution(s) 

 Documented evaluation criteria and the resultant evaluation 

matrices
PBGC Alternatives Analysis Methodology 

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 Evaluation report documenting the methodology and the results of the approach

 Known weaknesses of each of the evaluated information technology

The AA IPT also presents the AA to the IT Portfolio Review Board. The ITPRB reviews the AA for accuracy 

and completeness (i.e. financial, cost estimate, research, and weightings accuracy and completeness), 

ensuring the analysis was objective and free of bias and meets the requirements set forth in the 

Alternatives Analysis Standard and Methodology. Once approved by the ITPRB, the alternative may be 

reviewed by the executive sponsor for approval. The recommended alternative may then be added to 

the IT Program Plan and be considered during the annual prioritization process and BPIT 

recommendations. If appropriate, it may be considered for re-programming of existing funds. 

Step 7 Output: Technical Viability approval from TRB and financial approval from ITPRB

Step 8. Hand-off for Acquisition to IT and Business Project Managers

The AA IPT identifies the recommended technology solution based on an evaluation of each 

Alternative’s ability to meet functional, technical and cost requirements identified in the Composite 

Scoring Sheet. Prior to the presentation to the TRB, the associated IT Program Manager or IT Service 

Division Manager must approve the presentation by sending an email to AskTRB email address. This is 

to ensure that the TRB is reviewing a management approved recommendations. 

If the AA IPT identifies and recommends a single or multiple solutions or products, the results shall be 

presented to the TRB prior to engaging with the Procurement Department on acquisition activities. If 

multiple products or solutions are presented, the TRB has the authority to remove a product or solution 

from the final recommendation or deny the approval of any product or solution recommended. 

The final acquisition approach is decided by the Procurement Department in consultation with IT, the 

business customer and the Office of General Counsel. It is recommended that the requirements and 

criteria developed during the Alternatives Analysis process be used by the Procurement Department 

during a subsequent competitive procurement. If the competitive acquisition process reveals a better

solution that was not previously identified by the AA IPT, that product does not need to be presented to 

the TRB as long as the evaluation was based on established evaluation criteria and the Technical 

Evaluation Panel (TEP) includes members from EA, ECD and ITIOD. Simply having TRB members or their 

representatives on the TEP as TEP advisors is not sufficient. 

Conclusion

The 8-step Alternatives Analysis approach guides the identification, analysis and recommendation of 

information technology products or solutions for PBGC. The procedures described in this document 

helps the acquisition process become more efficient and consistent in a manner that meets 

procurement and investment mandates. This Alternatives Analysis Standard and Methodology provides 

a consistent approach to ensure all stakeholders objectively determine the best possible alternative, 

approach, and cost of technology to fulfill PBGC’s business needs.
PBGC Alternatives Analysis Methodology 

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Appendix I: Alternative Analysis Deliverable Outline

As part of required reporting, the investment must include the minimum criteria to be applied in 

considering whether to undertake a particular investment, including criteria related to the quantitatively 

expressed projected net, risk-adjusted return on investment, and specific quantitative and qualitative 

criteria for comparing and prioritizing alternative investments. IT investments should use the Federal 

Enterprise Architecture (FEA) to identify potential alternatives for partnering or joint solutions that may 

be used to close the identified performance gap. The following details must have been considered:

 A narrative description of the performance gap that each major IT investment is expected to 

address

 A description of the viable alternatives along with risk-adjusted life cycle cost and benefits 

estimates

 A Cost-Benefit Analysis

 A summary of how investment risks are reflected in the lifecycle cost estimate

 Identification of the alternative chosen and justification for selecting the alternative

 Description of the alternative solutions considered for accomplishing the agency or Business 

Areas strategic goals or for closing the performance gap that the investment is expected to 

address

 Summary of the results of the feasibility/performance/benefits analysis, with comparisons of the 

returns/benefits (financial and other) for each alternative

 Identification of risks that affect cost/benefit calculations

 Summary of the market research that was conducted to identify innovative solutions for this 

investment (e.g., used an RFI to obtain four different solutions to evaluate, held open meetings 

with contractors to discuss investment scope, etc.)

 Assumptions used to make estimates such as, past or current contract prices for similar work, 

(e.g., contractor provided estimates from RFIs or meetings, general market publications, etc.)

An AA is composed of a narrative section, exhibits, and required backup documentation. The complexity 

and projected investment amount of the alternatives determines the level of detail required. The AA 

must be concise, direct, and detailed enough to enable the reviewing and approving authorities to 

adequately assess the alternatives and recommendation. The following are brief descriptions of each 

required component of the AA in the order they should appear in the document:

Cover Page

The cover page includes the PBGC logo, the words ALTERNATIVE ANALYSIS, the name of the business 

need or solution, the preparation date and unit that is authoring the AA. The AA should be marked –

PROCUREMENT SENSITIVE INFORMATION - to ensure confidentiality.

Signature Page

Signing the Alternatives Analysis document indicates agreement with the recommendation, concepts, 

assumptions, and operational and budgetary impacts. Signatures of acting managers for reviewing and 

approving officials are not accepted except in cases of long-term absence or for details that have 
PBGC Alternatives Analysis Methodology 

32

documented temporary change in authority. The signature page should conform to the following 

format:

PREPARED BY: <Signature and date signed>

<Typed name, title, and organization> Date

REVIEWED BY: <Signature and date signed>

<Typed name, title, and organization> Date

APPROVED BY: <Signature and date signed>

<Typed name, title, and organization> Date

In most cases the executive sponsor signs the APPROVED BY block. When a recommended alternative 

affects multiple approval levels or multiple functional areas, additional APPROVED BY signature blocks 

may be added. In some situations, an additional SPONSORED BY block may be necessary if more than 

one C-level business unit is sponsoring the recommended alternative.

Table of Contents

The table of contents lists each main heading and exhibit title and the beginning page number.

Executive Summary or Introduction

The AA for a solution or product determination begins with an executive summary or introduction that 

briefly highlights each major section of the AA. The executive summary or introduction must be 

detailed enough to convey an accurate understanding of the project. An executive summary usually 

runs 1 to 2 pages. If the AA narrative is less than 10 pages, a brief introduction may suffice.

Follow these guidelines when preparing the executive summary or introduction:

 Write this section after completing the rest of the AA.

 Avoid using technical terminology. Explain any terms that may be unfamiliar to the management 

or technical staff.

 Do not include any information that is not discussed in more detail elsewhere in the AA.

Background

The background section describes the business need, performance gap, problem or opportunity that 

requires the alternatives analysis. The background includes information needed to understand the 

business and technical issues, such as relevant history, what prompted the need for the analysis, the 

function(s) to be performed, and how the investment fits into the PBGC mission, strategy and IT 

strategic plans. Some of the following factors often cited are:

 Corporate strategies, goals, and objectives

 Efficiency or productivity improvements

 Service improvements

 Customer service enhancements

 Technological advances
PBGC Alternatives Analysis Methodology 

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 Solution obsolescence

 Elimination of support for an existing system

 Costs to maintain or upgrade an existing system

 Process re-engineering efforts

 Demographics (changes impacting revenue and volume growth)

 Safety, health, and environmental issues

 Capacity issues

 Avoidance of catastrophic failures

 Future or next phases

 Pilot site or prototype testing results

 Proof of concept results

 Review team findings

 Work group or functional recommendations (e.g., productivity improvements, or component 

changes)

 Outside consultant studies

 Inspector General reviews or audits

Alternatives

In the alternatives section, the AA IPT discusses and analyzes all viable solutions to the problem that 

were considered and that meet the requirements of the project. Clearly indicate which alternative is 

recommended, why the recommended alternative was selected, and how this alternative will solve the 

identified problem(s). If any alternatives were eliminated, explain why. In this section also address, if 

applicable, the costs of sustaining the existing systems (sustaining baseline), and include a net present 

value (NPV) analysis. 

Market Research 

Provide a summary of the market research that was conducted to identify innovative solutions for this 

investment (e.g., used an RFI to obtain four different solutions to evaluate, held open meetings with 

contractors to discuss investment scope, etc.).

Justification

The justification section identifies and explains how the alternative was investigated and the reasons for 

making the investment. The sponsoring organization must state and agree with the expected benefits 

to be derived from the recommended alternative. 

Include the scope of the alternative, criteria, and considerations other than economics that were used in 

evaluating the options, along with the current status of the opportunity. Illustrations, tables, and 

references may be included. 

Alternative Recommended

Describe the recommended alternative, using diagrams and illustrations as applicable. Explain any 

technical jargon and concepts so that someone who is not an expert in the field can understand the 
PBGC Alternatives Analysis Methodology 

34

recommended alternative. If features or attributes are cited, explain their relevance, importance, and 

benefit(s).

Recommended Alternative Benefits

The expected system benefits typically include factors such as the following:

 Provides a management tool to improve efficiency or decision making

 Improves PBGC fiscal posture

 Meets customer needs

 Provides service and productivity improvements.

 Improves working conditions (e.g., safety, health, and environmental concerns)

 Moves manual operations to an automated environment

 Improves downstream operations

 Reduces downtime and maintenance costs

 Avoids catastrophic failures

 Adds necessary functionality

 Satisfies a legal requirements

Use graphics and cite test results if they will provide a clearer understanding of the benefits. 

Financial Analysis

The Financial Analysis section includes a discussion of economic issues that are relevant to the 

alternatives considered. If the alternative justification is based upon non-economic considerations, this 

must be clearly stated. If the sponsoring AA IPT completed multiple analyses, summarize those that are 

applicable to the recommended alternative (e.g., expected results, sensitivity, risk, break-even, 

minimum hurdle rate, and threshold, lower-bound, and upper-bound scenarios). The minimum hurdle 

rate is the minimum ROI acceptable to the approval authority for a given alternative. The lower-bound 

and upper-bound economic scenarios correspond to the minimum and maximum performance 

scenarios, respectively. Additional analysis may include payback period or total cost of ownership, and 

an NPV analysis comparing the baseline to the proposed alternative with projected cost avoidances. 

Risk Assessment

In the risk assessment section of the AA, identify the technological, operational and integration risks of 

the proposed investment, and rank each risk as low, moderate, or high. Risk is a measure of the 

probability and consequence of not achieving a defined alternative goal. The risk section of the AA is 

used to identify the class of factors that:

1. Have a measurable probability of occurring

2. Have an associated cost or effect on the outcome

Risks are determined based upon a number of factors, including the maturity of the technology,

experience with previous deployments, the results from any pilot or prototype tests, and the projected 

impacts on existing systems or operations. Include this type of information, if applicable, in the AA 

backup section. 
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35

Performance Metrics

Identify the specific metrics or indicators that will be used to measure the recommended alternative’s 

performance during implementation and after deployment. These should be specific metrics that can 

be used to track actual system implementation and performance versus the projected operational and 

financial benefits cited in the decision document (e.g., improved worker productivity, improved 

customer service). See section x for details.

Financial Summary

Include a chart in the established format showing the total capital and expense investments, and the 

results from the cash flow analysis, including ongoing operational costs from baseline operations.

Recommended Alternative Financial Summary

#-Year Period

($ in thousands)*

Capital Investment $ xx,xxx

Expenses Investment $ xx,xxx

Total Investment $ xx,xxx

Net Present Value

Discounted at __% $ xx,xxx

Return on Investment xx.x%

* The minimum number of years depends upon the economic or technical operating life of the 

alternative recommended. 

Recommendation

In the recommendation section, briefly state in one or two paragraphs the recommended alternative, 

including the funding required, what will be delivered, and the major benefits that are expected to 

result from implementing the alternative. Include in this section only information that has been 

discussed in detail elsewhere in the AA.

Appendices

AAs should include the following appendices:

 Comparative Cash flows.

 Cash flow line-item descriptions.

 List of major assumptions.

 Roadmap (Gantt chart). 

The following additional exhibits may be included if they serve to clarify the proposed investment and 

ensure a sound business decision:

 Net present value (NPV) analysis.

 Conceptual or logical charts and graphics.
PBGC Alternatives Analysis Methodology 

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 Service and productively improvements.

 Sensitivity analysis (if deemed necessary)

 Visualizations

Cash Flow Analysis

A cash flow is required for all PBGC alternative analysis. A cash flow analysis is used to itemize 

investment costs and benefits over the applicable analysis period (usually the investment period plus 

the standard service life of the technology or solution). This information is used to determine the return 

of investment and net present value that will result from implementing the approved alternative. 

Comparative cash flow statements are required. They are included as part of the backup 

documentation. The AA must include a cash flow for each scenario (i.e., threshold, upper-bound, and 

lower-bound). 

Cash Flow Line-Item Descriptions

Use this exhibit to explain each line item in the cash flow analysis. Capital and expense investments, and 

costs or savings. Provide all costs, calculations, charts, and references as appropriate.

Major Assumptions

This exhibit lists the significant assumptions used in the analysis of the alternatives.

Roadmap

PBGC AAs must include a milestone chart that shows each major step to achieve the desired objectives 

and benefits. This roadmap will assist sponsoring senior executives in determine whether to approve 

the alternative based on the quality of the planning and the length of time to fulfill the identified 

business or performance gap. 

Net Present Value Analysis

Where applicable, the AA should include an exhibit detailing the NPV analysis. An NPV analysis is

typically used to compare the present values of mutually exclusive alternatives with the continuation of 

present, or baseline, conditions. 
PBGC Alternatives Analysis Methodology 

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Appendix II: Criteria Considerations for Managed and Shared Services -

Cloud and Non-Cloud Deployments

Technical criteria must be used when comparing managed services solutions – whether they are cloud 

or non-cloud services, federally or private sector hosted. This is to ensure there is a minimal threshold 

for these type of solutions to be minimally acceptable to operate in the PBGC environment. A TRB 

Review is required during the Planning Phase of the ITSLCM Framework. 

Below are the criteria considerations:

Business Architecture

 What business processes are impacted by this solution? What are the up and downstream 

processes impacted?

 What existing application supports the same and adjoining business processes?

 Have the applications related to these business processes been analyzed to determine if there is 

a redundancy in function and/or data?

 Have business process models been developed to capture business processes?

 Are there external policies or PBGC directives that impact the solution?

Data Architecture

 What type of data are being sent and received by the solution?

 What are the interfaces to the solution?

Infrastructure

 Are any existing of new infrastructure products or services required for the implementation or 

ongoing use of the service? 

 The IPT needs to list any products or technologies that will need to be purchased in order to 

complete the solution.

 If product(s) need to be purchased:

- Costing: one-time purchase cost, yearly subscription renewals, other?

- Is the product going to be a permanent addition to the TRM or will it be used 

temporarily and decommissioned? Time frame on decommissioning?

- Licensing, security, other requirements?

 How are back-up and archiving handled?

 Is there a COOP / business recovery service option

Performance Requirements 

 Scalability: Can the solution be expanded or reduced in size to meet business requirements?

 Reliability: Can the solution be failure-free, such as 24/7 or a specified period of time to meet 

business and performance requirements?

 Flexibility: Can the solution guarantee the level of reliability required by the business for 

performing consistently under both normal and adverse operational conditions?
PBGC Alternatives Analysis Methodology 

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 Performance: Does the solution meet the performance metrics required by the business? (e.g. 

ability to quickly route HTTP traffic, handle SSL sessions, return a 3rd party service call, etc.)

 Manageability: Does the solution contain the instrumentation or tool to be proactively managed?

Information Security

 Is the service/solution currently provided by a PBGC’s common control service provider?

 Has the service/solution been approved by the business area representative, and an IT 

Compliance Checklist has been completed?

 Does this system process, store or transmit any sensitive data such as PII that requires special 

protection such as encryption in database or in transit?

 Will a PIV-card solution be used for the identification and authentication? If not, how will access 

and authorization be managed?

 Is this solution FedRAMP approved? If not, is there an ATO approved by another Federal agency?

Compliance

 Does the User interface comply with the Americans with Disabilities Act (ADA) Section 508?

 Is Section 508 Accessibility testing conducted or planned? Are the results documented? 

Post Deployment management

 How is Help Desk Tiers 1, 2, and 3 handled? Are the service level documented and if so what are 

they?

 Has an exit strategy been documented?

- What is the timeframe allowed for exiting the services?

- Is there a cost to exit or recover data?