Cost/ Benefit Analysis in System Analysis and Design

 System development is an investment done by the company which continues through-out it's life 

Data analysis is an important device for the system analysis. It helps the analyst to perform the cost/benefit analysis in a right way.

The system analyst tests the system and reaches a decision by collecting the data.

The system analysis tests the process, highlights the drawbacks in the process system and suggests to create better alternatives.

The word tangible, here, stands for such costs and benefits which can be anticipated very easily.

Those costs which do apply but their financial value is difficult to be reckoned exactly, are called intangible costs.

The intangible costs, in some cases, can be identified very easily but they hardly can be reckoned.

The direct cost is such a cost which is directly related to the system and which is spent on purchasing the machine, employing the staff and buying the items related to ma-chines, and giving rent.

Indirect costs are such costs which are created in consequence of some action and it is not directly related to the system expert.

The costs which do not vary are called fixed costs, for example the rent of the system is a fixed cost which generally does not change.

The personnel or Labour costs are such class of costs which are applied on the salary and other facilities of such persons who control it. The personnel and labour which are invested during the period of development, they are invested only once. After it, when the system is developed, the labour and expenses done on its control and maintenance are called recurring costs.

Facility expenditures are put in the facility costs which are expended on the facilities meant for the improvement and smooth running of the system. For example, the wiring done for the system, the air-conditioner installed for it and the lighting facilities come under this group. These expenditures are one time expenditures and are counted in the whole cost estimation.

Operating costs are in such a class in which the daily expenditure of the system are counted. Its amount is not permanent. The amount spent on it depends upon that day's workshift, the nature of application and the working capacity of the staff. Such expenditures are kept in several ways. At times these are kept as overhead expenses, at times they are on the basis of the work done by the user and the outcome obtained.