Cost Benefit Analysis

Procedure

1. Gather Context

# Read the proposal or decision description
PROPOSAL="${1:-/home/shared/proposal.md}"
echo "=== Proposal ==="
cat "$PROPOSAL" 2>/dev/null || echo "No proposal file found at $PROPOSAL"

echo ""
echo "=== Related Artifacts ==="
bash /home/shared/scripts/artifact.sh list 2>/dev/null | jq -r '.[] | "\(.path) — \(.description)"' 2>/dev/null

echo ""
echo "=== Related Tasks ==="
bash /home/shared/scripts/task.sh list 2>/dev/null | jq '.[] | {id: .id, subject: .subject, status: .status}' 2>/dev/null

echo ""
echo "=== Check for Prior Analysis ==="
find /home/shared -name "*cost*" -o -name "*benefit*" -o -name "*roi*" -o -name "*budget*" 2>/dev/null

2. Enumerate Costs

Identify costs in three categories:

• Direct costs: money spent (licenses, hardware, labor, contracts)
• Indirect costs: overhead, training, productivity loss during transition
• Opportunity costs: what you give up by choosing this path

# Create structured cost inventory
cat > /tmp/costs.csv <<'EOF'
id,item,category,one_time,recurring_yearly,years,notes
C1,Software licenses,direct,0,24000,3,Annual SaaS subscription
C2,Migration labor (480 hrs),direct,72000,0,1,3 engineers x 8 weeks x 20 hrs/wk x $150/hr
C3,Staff training,indirect,15000,0,1,2-day workshop for 20 people
C4,Productivity dip during transition,indirect,0,30000,1,Estimated 10% slowdown for 6 months
C5,Feature delay (opportunity cost),opportunity,50000,0,1,3-month delay to roadmap items
EOF

echo "=== Cost Inventory ==="
column -t -s',' /tmp/costs.csv

3. Enumerate Benefits

Identify benefits in two categories:

• Tangible benefits: measurable savings, revenue, time reduction (can assign dollar value)
• Intangible benefits: improved morale, better brand perception, reduced risk (describe qualitatively, estimate where possible)

# Create structured benefit inventory
cat > /tmp/benefits.csv <<'EOF'
id,item,category,one_time,recurring_yearly,years,notes
B1,Reduced infrastructure costs,tangible,0,36000,3,Eliminate 3 legacy servers
B2,Developer productivity gain,tangible,0,60000,3,15% faster feature delivery (4 devs x $100K x 15%)
B3,Reduced incident response time,tangible,0,20000,3,50% fewer P1 incidents x $2K avg cost
B4,Improved developer satisfaction,intangible,0,10000,3,Estimated retention value
B5,Better security posture,intangible,0,15000,3,Reduced breach risk probability
EOF

echo "=== Benefit Inventory ==="
column -t -s',' /tmp/benefits.csv

4. Compute Totals and ROI

python3 <<'PYEOF'
import csv
import json

def load_items(path):
    with open(path) as f:
        return list(csv.DictReader(f))

costs = load_items("/tmp/costs.csv")
benefits = load_items("/tmp/benefits.csv")

def total_value(items):
    """Compute undiscounted total for each item and overall."""
    results = []
    for item in items:
        one_time = float(item["one_time"])
        recurring = float(item["recurring_yearly"])
        years = int(item["years"])
        total = one_time + (recurring * years)
        results.append({**item, "total": total})
    grand_total = sum(r["total"] for r in results)
    return results, grand_total

cost_items, total_costs = total_value(costs)
benefit_items, total_benefits = total_value(benefits)

print("=" * 60)
print("COST SUMMARY")
print("=" * 60)
for c in cost_items:
    print(f"  {c['id']}: {c['item']:<45} ${c['total']:>10,.0f}")
print(f"  {'TOTAL COSTS':<49} ${total_costs:>10,.0f}")

print()
print("=" * 60)
print("BENEFIT SUMMARY")
print("=" * 60)
for b in benefit_items:
    print(f"  {b['id']}: {b['item']:<45} ${b['total']:>10,.0f}")
print(f"  {'TOTAL BENEFITS':<49} ${total_benefits:>10,.0f}")

# Simple ROI
net_benefit = total_benefits - total_costs
roi = (net_benefit / total_costs * 100) if total_costs > 0 else 0
bcr = total_benefits / total_costs if total_costs > 0 else 0

print()
print("=" * 60)
print("FINANCIAL SUMMARY (undiscounted)")
print("=" * 60)
print(f"  Total Costs:        ${total_costs:>12,.0f}")
print(f"  Total Benefits:     ${total_benefits:>12,.0f}")
print(f"  Net Benefit:        ${net_benefit:>12,.0f}")
print(f"  ROI:                {roi:>11.1f}%")
print(f"  Benefit-Cost Ratio: {bcr:>11.2f}:1")

# Write summary as JSON for downstream use
summary = {
    "total_costs": total_costs,
    "total_benefits": total_benefits,
    "net_benefit": net_benefit,
    "roi_percent": round(roi, 1),
    "benefit_cost_ratio": round(bcr, 2)
}
with open("/tmp/cba-summary.json", "w") as f:
    json.dump(summary, f, indent=2)

print()
print("Summary written to /tmp/cba-summary.json")
PYEOF

5. Compute Net Present Value (NPV)

python3 <<'PYEOF'
import csv
import json

DISCOUNT_RATE = 0.08  # 8% annual discount rate
HORIZON_YEARS = 3

def load_items(path):
    with open(path) as f:
        return list(csv.DictReader(f))

costs = load_items("/tmp/costs.csv")
benefits = load_items("/tmp/benefits.csv")

def yearly_cashflows(items, horizon):
    """Build array of cashflows per year from item definitions."""
    flows = [0.0] * (horizon + 1)  # year 0 through year N
    for item in items:
        one_time = float(item["one_time"])
        recurring = float(item["recurring_yearly"])
        years = min(int(item["years"]), horizon)
        flows[0] += one_time
        for y in range(1, years + 1):
            flows[y] += recurring
    return flows

cost_flows = yearly_cashflows(costs, HORIZON_YEARS)
benefit_flows = yearly_cashflows(benefits, HORIZON_YEARS)

print(f"Discount rate: {DISCOUNT_RATE*100:.0f}%")
print(f"Horizon: {HORIZON_YEARS} years")
print()
print(f"{'Year':<6} {'Costs':>12} {'Benefits':>12} {'Net':>12} {'PV Factor':>10} {'PV Net':>12}")
print("-" * 66)

npv = 0.0
cumulative = 0.0
payback_year = None

for y in range(HORIZON_YEARS + 1):
    c = cost_flows[y]
    b = benefit_flows[y]
    net = b - c
    pv_factor = 1 / ((1 + DISCOUNT_RATE) ** y)
    pv_net = net * pv_factor
    npv += pv_net
    cumulative += net

    if payback_year is None and cumulative >= 0 and y > 0:
        payback_year = y

    print(f"  {y:<4} ${c:>10,.0f} ${b:>10,.0f} ${net:>10,.0f} {pv_factor:>9.4f} ${pv_net:>10,.0f}")

print("-" * 66)
print(f"  NPV: ${npv:>10,.0f}")

if payback_year is not None:
    # Interpolate for partial year
    prev_cumulative = cumulative - (benefit_flows[payback_year] - cost_flows[payback_year])
    net_in_year = benefit_flows[payback_year] - cost_flows[payback_year]
    if net_in_year > 0:
        fraction = abs(prev_cumulative) / net_in_year
        payback_months = ((payback_year - 1) + fraction) * 12
    else:
        payback_months = payback_year * 12
    print(f"  Payback period: ~{payback_months:.0f} months")