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Cost Benefit Analysis Model with Scenario Analysis

Generic Financial Model to Analyze the financial viability of a project or investment across monthly 5-year (Monthly & Annual) timeline and 3 scenarios

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User-friendly Excel model intended for the preparation of a Cost Benefit Analysis to measure the financial feasibility for a proposed project or investment. The Cost Benefit analysis model has a monthly timeline across a 5 year period and includes 3 scenarios.

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The model follows good practice financial modelling principles and includes instructions, line item explanations, checks and input validations

KEY OUTPUTS

  • The model is generic and not industry-specific. It computes the following key investment appraisal metrics for a proposed project or investment for each of the 3 scenarios:

    • Total one-off costs

    • Average benefits per annum

    • Net present value (NPV)

    • Internal Rate of Return (IRR)

    • Payback years

    • Breakeven Quarter

    • Profitability Index

  • Results also include a summary table for each of the 3 scenarios showing the overall costs and benefits on a:

    • Cash View – presents actual cash impacts of proposed project/investments

    • Profit & Loss (P&L) View – presents P&L impacts of proposed project/investment (e.g. Depreciation for Fixed asset investments rather than cash impact)

  • The Results tab also includes charts showing the cumulative net cash flow over time and costs vs net benefits

KEY INPUTS

Inputs are split into one-off costs incurred during the development phase and changes in ongoing costs and revenues expected to result after implementation of the project investment (which make up the net benefits).

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One-off costs are further split into:

  • Fixed asset investments (up to 5 categories) consisting of investments that are capitalizable rather than expenses when incurred.

  • Project Staff costs (up to 8 categories)

  • Other Project Expenses (up to 15 categories)

Net Benefits are further split into

  • Changes in ongoing revenues resulting from the project/investment (up to 5 categories)

  • Changes in ongoing staff costs resulting from the project/investment (up to 5 categories)

  • Changes in other ongoing expenses (up to 10 categories)

 

Other inputs include:

  • Cost of Capital (for NPV)

  • Inflation rate

  • Corporate tax rate (and tax payment assumptions)

MODEL STRUCTURE

The model contains, 10 tabs split into input ('i_'), calculation ('c_'), output ('o_’) and system tabs. The only tabs to be populated by the user are the input tabs ('i_Setup' and 'i_Assumptions’ – one for each scenario). The calculation tabs (1 for each scenario) uses the user-defined inputs to calculate and produce the template outputs presented in 'o_Results'.

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System tabs include:

  • A 'Front Sheet' containing a disclaimer, instructions and contents;

  • A checks dashboard containing a summary of checks by tab.

KEY FEATURES

  • The model follows good practice financial modelling guidelines and includes instructions, line item explanations, checks and input validations;

  • The model contains a flexible timeline that allows for any mix of project development and project run periods across a 5-year period.

  • Timeline is split on a monthly basis and summarised on an annual basis;

  • The model is not password protected and can be modified as required following download;

  • The model allows for the following number of underlying categories for each line item (these can be easily expanded if required):

    • Scenarios – 3 scenarios

    • Project costs:

      • Fixed asset investments – 5 categories

      • Project staff costs – 8 categories

      • Project expenses – 15 expenses

    • Ongoing costs and revenues:

      • Revenue streams – 5 categories;

      • Variable costs – 5 categories (one per revenue stream)

      • Ongoing staff costs – 5 categories

      • Ongoing other expenses – 10 categories

  • Cost and Revenue descriptions are fully customisable;

  • Project name, currency, scenarios and starting projection period, development phase and run phase are customisable;

  • The model includes a checks dashboard which summarises all the checks included in the various tabs making it easier to identify any errors;

  • The model includes checks and input validations to help ensure input fields are populated accurately.

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