Perform Cost-Benefit Analysis (CBA) Slide 1: Title slide U.S. ARMY SOLDIER SUPPORT INSTITUTE Noncommissioned Officer Academy - Senior Leaders Course 542-36B40-C46 - Financial Management ACC6B103 – Perform Cost Benefit Analysis SCOPE Perform Cost Benefit Analysis (CBA) is a lesson designed to explain the guidelines, methods, and general practices to be used in performing a cost benefit analysis. At the conclusion of this lesson, students should be able to identify key points, characteristics, and eight steps of a CBA, . This lesson should also assist Financial Managers with understanding the purpose, composition, and process of a Cost Benefit Analysis Review Board (CBARB). Perform Cost Benefit Analysis solidifies an environment of fiduciary responsibility and accountability as a lesson in TLO 2.0. Perform Cost Benefit Analysis also supports learning objectives and desired outcomes of ELO 2.1 and 2.2. Method of Instruction: Discussion Educational Outcomes: Soldiers-Valued members of the team who exhibit character, accountability, resilience, adaptability, initiative, and sound judgment while honorably serving in a Division/ASCC G-8 or SRC 14 delivering FM support. Doctrinally Sound-Competently delivers timely, accurate, and relevant FM support. Technically Capable-Demonstrate the capabilities and perform the basic functions of FM enabling systems. -Understands the FM’s role in accomplishing the Division/ASCC G-8 or SRC 14 mission in support of Unified Land operations. Critical and Creative-Able to solve sometimes ambiguous problems using logical thinking and sound reasoning to develop viable recommendations or solutions. Safety Requirements: In a training environment, leaders must perform a risk assessment in accordance with DA PAM 385-30, Risk Management. Leaders will complete a DD Form 2977 RISK MANAGEMENT WORKSHEET during the planning and completion of each task and sub-task by assessing mission, enemy, terrain and weather, troops and support available-time available and civil considerations, (METT-TC). Local policies and procedures must be followed during times of increased heat category in order to avoid heat related injury. Consider the work/rest cycles and water replacement guidelines IAW TRADOC Regulation 50-29. Instructional Guidance: Throughout this lesson, solicit from students the challenges they experienced in the operational environment (OE) and what they did to resolve them. Encourage students to apply at least one of the critical variables: Political, Military, Economic, Social, Information, Infrastructure, Physical Environment and Time (PMESII-PT). 21st Century Soldier Competencies: 5. Teamwork and collaboration 6. Communication and engagement (oral, written, negotiation) 7. Critical thinking and problem solving 9. Tactical and technical competence FM Senior Leaders Course – 542-36B4O-C46

Enabling Learning Objective Action: Perform Cost-Benefit Analysis (CBA) Conditions: FM Leaders in a training environment working individually and as a member of a small group, using FM 1-06 Financial Management Operations and US Army Cost-Benefit Analysis Guide (January 2010), self-study exercises, personal experiences, practical exercises, handouts, and discussion. Standard: Students will be assessed within 80% accuracy by demonstrating: Examine key points of a CBA Identify characteristics of a CBA Identify the eight steps process of a CBA Slide 2: Enabling Learning Objective 2. ENABLING LEARNING OBJECTIVE Action: Perform Cost Benefit Analysis (CBA) Conditions: FM Leaders in a training environment working individually and as a member of a small group, using FM 1-06 Financial Management Operations and US Army Cost-Benefit Analysis Guide (January 2010), self-study exercises, personal experiences, practical exercises, handouts, and discussion. Standards: Students will be assessed within 80% accuracy by demonstrating: Examine key points of a CBA Identify characteristics of a CBA Identify the eight steps process of a CBA Learning Domain: Affective Level of Learning: Valuing 3. ASSIGNED STUDENT READINGS N/A 4. INSTRUCTOR ADDITIONAL READING(S)/MATERIAL 5. TRAINING AIDS This lesson is taught in a small group classroom setting with personal computer systems, Panasonic projection televisions, Mr. Podium MP42 Lectern, indoor speakers, Touch panel TPS-3100I Crestron, Ceiling mountable projector, internet access, and a dry erase/white board. Appendix A: Assessment Plan Appendix B: Slides 6. CONDUCT OF LESSON Lesson Timeline: 10 minutes Concrete Experience: Culture of Cost Conscious Video minutes Publish and Process 140 minutes Generalize New Information: Introduce the lesson 160 minutes Break 10 minutes Develop 630 minutes Apply Instructor Note: Adjust the Lesson Timeline as necessary to facilitate class schedule, your teaching style, and student learning. There are no time constraints during any particular phase of the ELM model. 36B SLC – Perform Cost-Benefit Analysis

Time to move You have 19.5 years TIS. You receive BAH with dependents. You are on assignment to Fort Drum, NY. Below are the following facts and assumptions: Facts: Current BAH rate is $1800; current mortgage and utilities total to $1500 Current BAH rate at Fort Drum is $1600 You have negative equity in your house (-$20k) Assumptions On-post housing is available at Fort Drum You can find a renter within three months of relocating You can sale your house before relocating Your spouse will find employment within one month of relocating Slide 3: Concrete Experience “Time to Move” c. Concrete Experience (25 minutes) The concrete experience serves as a trigger of past experience, knowledge, and it is also a focusing mechanism for the lesson that follows to support the teaching of new content. The collective intent is to force the student to connect to the lesson and is the precursor to intuitive thinking of experiential learning model. Instructor note: separate the class into four groups. Each group has to discuss the the scenario and come up with three courses of actions to choose from, then select the optimal choice. (05 minutes) Groups must present findings to class. (20 minutes; 5 minutes each group) d. Publish and Process (10 Minutes) During this phase of the Army Learning Model the instructor will solicit responses of the students reaction to the concrete experience. The students will reflect on their experience and knowledge of the topic and they will begin a reconciliation of where they are and, if successful, where they will be at lesson end. The critical portion of this part of the ELM process is to force the students to reflect. As the instructor you can achieve this by asking a series of thought influencing questions, for example: What would you do? What else should be considered? What’s the most effective option? What other cost efficient moves can be taken? Having the students think critically is the ultimate goal of publish and process. Force the students to explain their answers; meaning, how and why did they derive at the solution to the questions. As the instructor, you should be also looking for responses that will help the students transition from publish and process to generalize new information. During this process, remind the students of lesson objectives as they transition from publish and process into generalize new information. 36B SLC – Perform Cost-Benefit Analysis

Cost-Benefit Analysis Examined Tool to support resource informed decision making Considers non-financial or non-quantifiable benefits of a specific COA Provides an evaluation and justification of a proposed solution Includes analysis of business process performance and associated needs or problems Slide 4: Cost benefit Analysis Explained e. Generalize New Information (140 minutes) In its most basic form, the CBA is a tool to support resource informed decision-making. CBA is defined as the following (per CBA Guide) A decision support and planning tool that document s the predicted effect of actions under consideration to solve a problem or take advantage of an opportunity. A structured proposal that functions as a decision package for organizational decision makers. It defines a solution aimed at achieving specific Army and organizational objects by quantifying the potential financial impacts and other business benefits such as: Savings and/or cost avoidance Revenue enhancements and/or cash-flow improvements Performance improvements Considers non-financial or non-quantifiable benefits of a specific course of action (COA). This feature is important because although the financial data may favor one COA over another, there may be situations where the non-financial data/information is considered more important to the analyst or senior decision maker. Furthermore, the non-financial criteria and conclusions may support something other than what the financial data favors. Includes an analysis of business process performance and associated needs or problems, proposed alternative solutions, assumptions, constraints, a risk analysis. Is process oriented. It will not only develop a set of choices that will be analyzed but it will also lead the analyst to a recommended choice. Provides an evaluation and justification of a proposed solution (including any associated expenditures) before a significant amount of funds are invested. Documents the reasons for the investment and the options available and describes how the investment helps the organization reach its goals. Guides the decision maker to focus on the major issues surrounding the recommended solution and to not spend time on minor issues. 36B SLC – Perform Cost-Benefit Analysis (US Army CBA Guide, pg 8)

Characteristics of a CBA Must be tailored to fit problem Will not produce a result that is more valid than the input data Will not make a final decision Will not act as a substitute for sound judgement, management, or control Slide 5: Characteristics of a CBA e. Generalize New Information (140 minutes) con’t Some characteristics of a CBA are: It must be tailored to fit the problem It will not produce a result that is more valid than the input data It will not make a final decision; that will be the responsibility of the decision-maker/leadership It will not act as a substitute for sound judgement, management, or control. 36B SLC – Perform Cost-Benefit Analysis (US Army CBA Guide, pg 8)

Eight CBA Steps Define the Problem Statement, Define the Objective and Scope Formulate Assumptions and Identify Constraints Document the Current State (the Status Quo) Define Alternatives with Cost Estimates Identify Quantifiable and Non-Quantifiable Benefits Define Alternative Selection Criteria Compare Alternatives Report Results and Recommendations Slide 6: Eight Steps of CBA e. Generalize New Information (140 minutes) con’t Group work activity Instructor note: separate the class into four groups. Each group has to discuss their assigned step (listed below). (45 minutes) Groups must formally present findings to class (40 mins) Group 1: Steps 1 and 2 Group 2: Steps 3 and 4 Group 3: Steps 5 and 6 Group 4: Steps 7 and 8 Each group explores and discuss each section main areas and review to ensure all main points are discussed (45 mins) Each group present finding to class (20 mins) 36B SLC – Perform Cost-Benefit Analysis (US Army CBA Guide, pg 8)

Critical Thinking: CBA Case Study “Determining the Best Course of Action (COA) to provide the Next Brigade Combat Team (NBCT) with Supply and Maintenance Logistic Support)” How did they define the Problem Statement? Is there a clear distinction between assumptions,, facts, and constraints? How did the author present each course of action? How did the author determine the weighted totals? What are the differences between the report and the presentation? How could you do this inside a S8/G8? Slide 7: CBA Case Study f. Developing Appendix E shows a complete CBA report and presentation slides on “Determining the Best Course of Action (COA) to provide the Next Brigade Combat Team (NBCT) with Supply and Maintenance Logistics Support. Have students return to their groups to discuss the questions listed on the slide. Bring back together and discuss as a class. 36B SLC – Perform Cost-Benefit Analysis (US Army CBA Guide, Appendix E, pg 71)

Check on Learning What are the eight steps of a CBA? What are some characteristics of a CBA? Slide 8: Check on Learning What are the eight steps of a CBA (pgs 10 -11) Develop the Problem Statement, Define the Objective and the Scope Formulate Assumptions and Identify Constraints Document the Current State (the Status Quo) Define Alternatives with Cost Estimates Identify Quantifiable and Non-Quantifiable Benefits Define Alternative Selection Criteria Compare Alternatives Report Results and Recommendations What are some characteristics of a CBA? (pg 9) It must be tailored to fit the problem. It will not produce a result that is more valid than the input data. It will not make a final decision; that will be the responsibility of the decision maker/leadership. It will not act as a substitute for sound judgment, management, or control. 36B SLC – Perform Cost-Benefit Analysis (US Army CBA Guide, Appendix E, pg 71)

Enabling Learning Objective Action: Perform Cost-Benefit Analysis (CBA) Conditions: FM Leaders in a training environment working individually and as a member of a small group, using FM 1-06 Financial Management Operations and US Army Cost-Benefit Analysis Guide (January 2010), self-study exercises, personal experiences, practical exercises, handouts, and discussion. Standard: Students will be assessed within 80% accuracy by demonstrating: Examine key points of a CBA Identify characteristics of a CBA Identify the eight steps process of a CBA Slide 29 Enabling Learning Objective 2. ENABLING LEARNING OBJECTIVE Action: Perform Cost Benefit Analysis (CBA) Conditions: FM Leaders in a training environment working individually and as a member of a small group, using FM 1-06 Financial Management Operations and US Army Cost-Benefit Analysis Guide (January 2010), self-study exercises, personal experiences, practical exercises, handouts, and discussion. Standards: Students will be assessed within 80% accuracy by demonstrating: Examine key points of a CBA Identify characteristics of a CBA Identify the eight steps process of a CBA Learning Domain: Affective Level of Learning: Valuing 3. ASSIGNED STUDENT READINGS N/A 4. INSTRUCTOR ADDITIONAL READING(S)/MATERIAL 5. TRAINING AIDS This lesson is taught in a small group classroom setting with personal computer systems, Panasonic projection televisions, Mr. Podium MP42 Lectern, indoor speakers, Touch panel TPS-3100I Crestron, Ceiling mountable projector, internet access, and a dry erase/white board. Appendix A: Assessment Plan Appendix B: Slides 6. CONDUCT OF LESSON Lesson Timeline: 10 minutes Concrete Experience: Culture of Cost Conscious Video minutes Publish and Process 140 minutes Generalize New Information: Introduce the lesson 160 minutes Break 10 minutes Develop 630 minutes Apply Instructor Note: Adjust the Lesson Timeline as necessary to facilitate class schedule, your teaching style, and student learning. There are no time constraints during any particular phase of the ELM model. 36B SLC – Perform Cost-Benefit Analysis