Outsourcing Cost / Benefit Calculator

Overview

This Cost/Benefit Calculator is based on a more full-featured template Willis Group has utilized in evaluating outsourcing options for our clients.

Given the current CPB Healthy Networks Grant initiative to encourage outsourcing Public TV master control playout, we are pleased to make this free generic version available to assist those who are currently evaluating costs/benefits associated with outsourcing.

To be sure, there are many variables to consider, so our evaluations are typically highly customized to address a client's unique situation. While a customized evaluation would be ideal to address your specific circumstances, this generic version of our calculator should provide valuable insights.

Assumptions

Each of the yellow-shaded cells is a variable used in calculating costs/benefits. Clicking on a cell will reveal instructions for entering a value.

Not all fields are necessarily applicable to every television station. Fill in those that apply, and skip those that don't.

Summary Results

Summary results are displayed in a graph next to the Assumptions section.

1.   a purple line graphs values for cumulative capital and operating costs to continue local master control playout
2.   an aqua line graphs values for cumulative capital and operating costs to outsource master control playout

Projected net savings or losses are displayed as a column in each of fourteen years:

1. a green column represents cumulative net benefits (savings) from outsourcing master control playout through a given year
2. a red column represents cumulative net costs (losses) from outsourcing master control playout through a given year

Numerical values of summary results are displayed below the Assumptions section. Three groups of financial analyses are shown, color-coded similarly to the chart:

1. –   light purple for capital and operating costs to continue local origination
2. –   aqua for capital and operating costs associated with outsourcing
3. –   grey for cost-benefit analyses comparing outsourcing to local origination

Financial evaluations show CapEx and OpEx for each of the above. Three rows of calculations: Annual Costs, Cumulative Annual Costs and NPV (net present value) of Cumulative Annual Costs are calculated for each of 14 years. Cost Benefit Analyses are then computed using the following formulae:

1. –   Net Annual Benefit (Cost) of Outsourcing = annual local master control cost MINUS annual outsourcing cost
2. –   Net Cummulative Benefit (Cost) of Outsourcing = previous year cummulative Benefit (Cost) PLUS current year annual Benefit (Cost)
3. –   NPV Cummulative Benefit (Cost) of Outsourcing = NPV of previous year cummulative Benefit (Cost) PLUS current year annual Benefit (Cost)

Master Cost Model

Calculations for Summary Results described above are performed in the Master Cost Model. Scroll down beyond Summary Results to view the entire model, including all detailed computations.

Report

To save or print a copy of your results, use the download link at the bottom of the spreadsheet window. Scroll to the bottom of the spreadsheet and click this icon in the bottom right corner.

Open the downloaded file, and print a report from within your local spreadsheet application.

To evaluate another scenario with different assumptions, you may do one of the following:

1. –   modify variables in the online spreadsheet on this page, and then download the file again
2. –   open the downloaded file locally, and modify using your spreadsheet application

You may evaluate an unlimited number of scenarios using either of these approaches.