Preparing for a cost analysis requires gathering historical documents that reflect the functions that must be performed for the particular type of activities (whether that be an organization or repository, a short-term project, ongoing operations of a department or business unit, or attaining infrastructure you are thinking about implementing). You will also need to gather as much historical cost information on previous operations that are similar to your topic of interest. Finally, you will need to come up with a way of gathering the information that you need, which will often include a combination of literature reviews, environmental scans, past and present budget documents, assessment of salary standards for the types of personnel you will be using, and interviews with people who are doing or have done the tasks that your activities involve. To understand past cost information and budgets, you will need to find out how budgetary information is tracked within the organization you are studying, or in the case of a newly implemented project or program, determine what kind of accounting scheme will be used. As a result, one of the most important things you will need in order to get started is a clear understanding of the goal of your cost analysis and an assessment of what kind of cost analysis will best suit your needs.
- What kinds of cost analyses can be performed and what are the goals of each of them?
- Which activity or activities do I need include in my cost analysis?
- Is the cost analysis to be retrospective, current or predictive in nature?
- For what period of time do costs need to be assessed? (e.g., how many months or years of cost data do you want to generate?)
- How much time is available to you for your cost assessment?