UNIT 65 - COSTS AND BENEFITS

UNIT 65 - COSTS AND BENEFITS

UNIT 65 - COSTS AND BENEFITS

A. INTRODUCTION

What is benefit/cost analysis?

Why do it?

Accrual

B. DEFINING COSTS

One-time vs recurring costs

C. BENEFITS OF A GIS

Classifying benefits

Examples of benefits

D. COMPARING COSTS AND BENEFITS

E. EXAMPLE - WASHINGTON STATE

Background

Installed system

Data

Costs

Benefits

Benefits vs Costs

Intangible benefits - Orphan roads project

REFERENCES

Dickinson, H.J., 1988, "Benefit/Cost Analysis of Geographic Information System Implementation," unpublished Master's Thesis, Department of Geography, State University of New York at Buffalo, NY

Dickinson, H.J., and H.W. Calkins, 1988, "The Economic Evaluation of Implementing a GIS," International Journal of Geographical Information Systems 2:307-327.

Epstein, E., and T.D. Duchesneau, 1984, "The Use and Value of a Geodetic Reference System," University of Maine, Orono, Maine. Available from the National Geodetic Information Center (NOAA), Rockland, Maryland, USA.

Joint Nordic Project, 1987. Digital Map Data Bases, Economics and User Experiences in North America, Publications Division of the National Board of Survey, Helsinki, Finland.

King, John L., and E.L. Schrems, 1978, "Cost-Benefit Analysis in Information Systems Development and Operation," Computing Surveys 10:19-34.

Stutheit, J., 1990. "GIS procurements: Weighing the costs", GIS World, April/May 1990:69-70. A general overview of a process conducted by the US Forest Service to determine the costs and benefits of a GIS project.

Clapp, J.L., J.D. McLaughlin, J.G. Sullivan and A.P. Vonderohe, 1989. "Toward a method for the evaluation of

multipurpose land information systems", URISA Journal, 1(1):39-43. Paper originally published in 1985 describes a model for evaluating LIS which measures "operational efficiency, operational effectiveness, program effectiveness and contributions to well-being".

EXAM AND DISCUSSION QUESTIONS

1. Summarize the issues involved in assessing costs and benefits when a) a manual system is replaced by a digital system, b) an existing digital system is replaced, and c) a digital system is introduced to an organization which does not have any existing equivalent, manual or digital.

2. Design a series of experiments to determine as far as possible the intangible benefits which accrue from GIS-based decision- making in an organization such as a National Forest.

3. A parcel delivery service plans to install vehicle navigation systems in each of its vehicles. These feature continuous display of maps of the area surrounding the vehicle, and of the location of the vehicle in relation to a specified destination. Design a study to assess the benefits of such a system.

4. Discuss the problems presented by the dimension of time in the evaluation of costs and benefits.


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Last Updated: August 30, 1997.