learn to prioritize the company’s projects with these two variables – WAU
By applying the cost-benefit matrix in your company, you ensure that the most important projects are prioritized and that, at the end of the month, the results achieved are the best possible, obtaining the lowest cost and guaranteeing the greatest return.
Managing a business or even a sector of the company is a very important task that plays a decisive role in the results at the end of each month. After all, there are countless projects being suggested, analyzed, approved or rejected. Therefore, it is necessary to know how to identify and define what the priorities of your organization should be and, thus, make the right decisions.
There are several tools available in the market for you to be able to organize yourself properly and ensure that the execution of projects is positive. One way to efficiently evaluate and prioritize activities within your company is to use the cost-benefit matrix.
Want to know more? Continue reading to understand what the cost-benefit matrix is and what the objectives are, the main concepts that compose it, the benefits and limitations of this model and the best ways to apply this analysis in your organization’s day to day. Check out!
What is it and what are the objectives of the cost-benefit matrix?
The first use of the cost-benefit matrix as we know it today was in 1848, when the London engineer Jules Dupuit published an article on the matrix. Since then, this concept has been used by several companies to guarantee the best productivity and efficiency of the organization.
The purpose of the matrix is to show a company’s decision makers what the priority should be at the moment. This decision can often be impacted by political influence or personal opinion, which does not guarantee the best result for the business.
Whether deciding whether to hire more employees or defining a change in a project, the cost-benefit matrix can be very useful. It is therefore used to present a more technical view of the situation, so that decision making is, in fact, positive for the company.
By providing an analysis based only on facts and data, without bias and influence, the matrix presents the consequences of that decision in the most honest way possible. Thus, the actions tend to generate more benefits for the company.
What are the main elements that make it up?
There is no ready recipe or definitive model; it is necessary to adapt the matrix to the reality of each company. However, to set up a complete analysis, it is necessary to be aware of some important elements.
The first step is to make an exchange of ideas – a brainstorming – between those involved in the work, discussing what are the possible expenses to execute the project and what will be the benefits if it is put into practice. A SWOT analysis, for example, can help define what the project’s opportunities and challenges are.
In this step, it is important not to discard any ideas, analyzing all possible scenarios, both for costs and benefits. Do not forget the importance of also determining a time for the execution of tasks, after all, it impacts directly on investments and returns.
Then it’s time to establish a value for the costs of the operation, including from the human resources used to any other type of investment necessary for the project to be successfully produced and carried out. The next step, a little more difficult, is to define what the benefits will be, also in real values, for your company at the end of the project.
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What are the benefits and limitations of the model?
By using the cost-benefit matrix in your company’s daily routine, the gains will be numerous and the positive impact can be monitored at the end of each month – the results presented will indicate an improvement in the processes.
By routinely applying the matrix, you ensure that the decisions made are the most intelligent and productive for your organization. That is, it guarantees a drastic reduction in unnecessary expenses, for example. In addition, it obtains greater efficiency within its projects, requiring a better use of the resources made available initially and achieving even better returns at the end.
Despite making decision making easier and more accurate, the cost-benefit matrix has some limitations in its applications. A project with variable cash flows, for example, with returns that vary from one period to another, may not be the ideal model for this matrix.
Furthermore, defining exactly what the returns will be is not a very simple task, after all, there are benefits that are difficult to measure. How to define, in real values, an intangible return – the strengthening of the brand, for example?
What are the ways to apply the matrix in the daily life of your company?
Applying the cost-benefit matrix to your company’s processes can be very useful, especially for make simpler, more routine decisions. This concept can be important when evaluate new hires for a given team, for example, understanding whether it is really necessary to invest more human resources in the project and what the returns will be.
Another way to apply the matrix on a daily basis can be in the analysis of investment opportunities available to your organization. Thus, you put down on paper what the returns of each would be and you can establish an order of priority.
Another application is during assessment of the need to invest in strategies for marketing automation for your company, for example.
It was evident, therefore, how important the cost-benefit matrix is for your company to register more positive results at the end of each month. However, it is necessary to remember that this method is limited and, depending on the situation, it may offer a conclusion that is not so precise. So, evaluate each project separately and make the best use of this efficient tool.
Now that you understand what the cost-benefit matrix is and how it can be applied productively within your organization, how about checking other content that may be important for your strategy?
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