The Financial Benefits Report tool can be used to document the quantifiable financial benefits realized on projects. Quantifiable financial benefits are classified into two categories: impact on Net Income or Earnings and impact on Balance Sheet.
This tool can be added to your active workbook by clicking on Project and then selecting Financial Benefits.
Click on Analysis Setup to open the menu options for this tool.
A sample screenshot of the setup menu is shown below.
Specify the tool format for this analysis. This selection is not enabled since there is only one format available.
Specify the currency to use for this analysis. The following options are available:
Use the USD currency
Use the Euro currency
Use the Rupees currency
Click on this button to open the example file. You can view the example to get an idea of how to fill out this tool or you can use the example as a starting point and modify it to meet your project needs.
Help Button: Click on this button to open the help file on this topic.
Cancel Button: Click on this button to exit without saving any changes.
OK Button: Click on this button to save changes and update your analysis results.
Enter the following information in the worksheet:
Enter any incremental revenue you have realized as a result of your project.
Enter the overall average gross margin % for the products/services related to your project.
Enter any costs incurred on the project (do not include sunk costs)
Enter any impact on assets due to your project (such as reduction in inventories).
Enter any impact on liabilities due to your project
Add an effective date for each row to indicate when the benefits are expected to be realized.
Add any comments to describe the logic behind the numbers entered.
For the soft benefits, indicate the potential savings in the area of cost avoidance (such as penalty avoidance),
opportunity costs and capacity increase.
For any other non-quantifiable benefits where you cannot estimate any financial numbers add the comments at the bottom of the report.
If you click on the Verify button, the software will perform some checks on the data you have entered. A sample screenshot of the dialog box is shown in the figure below.
The objective of this analysis as well as any checks that are performed is listed in this dialog box. For example, the software may check if you have correctly specified the input options and entered the required data on the worksheet. The results of the analysis checks are listed on the right. If the checks are passed, then they are shown as a green-colored checkmark. If the verification checks fail, then they are shown as a red-colored cross. If the verification checks result in a warning, they are shown in the orange color exclamation mark and finally, any checks that are required to be performed by the user are shown as blue info icons.
Click on Compute Outputs to update the output calculations. The analysis results consist of the calculation of the impact on net income and the impact on the balance sheet.
The report summarizes the total savings from the income statement and the balance sheet. Once this sheet has been completed, forward this report to your designated financial controller and get their signature.
Here are a few pointers regarding this analysis:
Per Six Sigma guidelines, only the first year of benefits can be usually claimed. Hence, this form supports reporting benefits for a period of 1 year only.
Currently, this tool does not support NPV calculation.
Following examples can be found in the Examples folder.
Use the Benefits Report to document the benefits for a project that improves the delivery performance (Benefits 1.xlsm).