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You Need HOW MUCH?? The Cost benefit Analysis

by Dawn Kennedy

EMA Emergency Management, EMS Emergency Medical Services, FD Fire Departments, Law Enforcement, badges article logo label

The most common feedback on the first two articles discussing a repeatable acquisition process (getting your agency what it really needs) has been, “but Dawn, we have to tell the City Council what this is going to cost.” And that is probably the statement that prevents agencies from getting what they need. No one wants to hear, “NO” or “Can’t you find something cheaper?” To make your case to the powers that be, and those who hold the checkbook, grant money, approval for a bake sale, you have to have an approach that ILLUSTRATES why your request is a priority need. Emotional attachment to your concept has to move to the side for a minute, and you MUST build a business case.

One common error in acquisition is assuming that the audience who cuts the check really understands what you are asking for and why your department needs it. It is not obvious. The reviewer does not understand how you operate. The reviewer formed a picture in their mind of what you are asking for, and it is probably not accurate. You have to present the picture, and provide solid rationale. Do not expect others to make the leap of logic that your agency makes based on your field specific knowledge, training, and experience.

The first article spoke to identifying gaps, and the second spoke to refining your requirements. This installment will assist you in identifying and justifying the purchase of an item through a cost-benefit analysis. No, this is not business school. This C-BA is not meant to be a burden and take months. You only need a little market research, a few estimates for equipment at different price points, and a plan to integrate and utilize the equipment your agency purchases. If you have done steps one and two, then you have most of the information you need.

Measuring the REAL Cost (Over the expected life of the system)

In refining your requirements, you looked at the capabilities your department needs. Really needs. These capabilities do cost money, but the amount of the purchase price is only one variable in the calculation of the cost. Start with the base purchase price, and then consider these other expenses: Is there an annual licensing fee? Regular maintenance costs? Does it require disposables such as batteries, filters, etc?

Total Cost of Ownership (TCO) is an analysis meant to uncover all the lifetime costs that follow from owning certain kinds of assets. Ownership brings purchase costs, of course, but ownership can also bring costs for installing, deploying, operating, upgrading, and maintaining the same assets. TCO is sometimes called life cycle cost analysis. For many kinds of acquisitions, TCO analysis finds a very large difference between purchase price and total life cycle costs, especially when viewed across a long ownership period.

Remember, the key is to be honest, and think about what it would REALLY take to be operational over the number of years in service (say 5) and not where you will scrimp and save. There may be equipment that swaps out what you already own, and the ownership cost doesn’t change one dime- just the upfront purchase cost. This is a number that will probably give you something of a heart attack in many cases- but don’t throw down your pen and be angry with me. This is an analytical step- this is NOT the final step, nor the final number.

Weighing the Benefits

Sometimes a more significant upfront investment reaps long term back end savings. We often make the mistake in discussing the cost of something rather than the value. Value may not always be obvious, and you need to describe HOW and WHY this equipment is a good investment for your agency. You must be able to articulate these things to people who are NOT familiar with your agency’s missions. Seriously. Don’t sigh and wish the Council would just “trust me” or “get it- it’s pretty simple.”

Will this vehicle get better gas mileage? Require less maintenance? Retire old equipment that is less reliable or safe? Will it decrease response times? Protect personnel? Enable your agency to do a given call more effectively or efficiently? Reduce training burden? Bring up into compliance with a regulation or statute? Some benefits are hard to quantify with numbers, (such as it saves XX year) so then think about and speak to the benefits to the community at large, your mutual aid partners, your availability to provide a service to the region if something goes bad- before FEMA or a State Agency with greater capability arrives.

Presenting your Decision

If you took steps one and two- you can also address, very clearly, what gaps in capability you are addressing with this purchase, and whether or not the gap will be completely mitigated. There is certain wisdom is starting to close a gap, but with a less expensive technology, then adapting the manner of doing something to address the rest. Could be that with a cheaper piece of equipment, a new SOP for training and employment, and solid implementation of the new capability, the gap is addressed (much better than zero) and the cost burden fits within today’s budget. You may only get 70% closed, and may have to address this again in the future- but the hardest thing to hear sometimes is that, “we couldn’t afford the 100% solution, so we didn’t get any.” Be flexible. Let people come back with questions. Work to get what you need- because you have PROVEN you need it. We are not asking for a “nice to have”

Here is a general outline for a one-page “Information Paper” for decision makers. This may be a good tool for you to prepare your presentation, and may not be intended to go outside the agency. On the other hand, this may be a wonderful tool to vet through people and get feedback on before you present your recommendations. COA means “Courses of Action” and you might do well in identifying at least two before presenting to the City Council. It makes negotiation more interactive and less “there is only one way to win- write me a check”...bees love honey.

If you have any questions, or are looking for a partner to help you with this process, assist with writing grants or identifying “creative” but always ethical and legal ways to get equipment, At the Ready Magazine has a division for “First Responder Solutions.” We are dedicated to responders, and want to help you stay At the Ready. Contact: or

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