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Cost Benefit Algorithm for Investment Fund Program

Pamela Muse
Pamela Muse asked

An Alliance members would like to have information on developing a cost benefit algorithm for our investment fund program plus how to quantify direct and indirect costs. We would like to have a tool that would help with decision making on selecting what projects to invest our funds for innovative projects in the County. We’ve been using cost benefits such as cost savings, cost avoidance, and revenue generation but we need something that will help us project out several years on the benefits each project would generate.

Your thoughts, ideas, suggestions or copies of resources you’re using would be very helpful and appreciated.

Pamela Muse
Western Regional Director
Alliance for Innovation
888-468-6450 Voice
480-231-3538 Text


Amanda Dodge

Hi Pamela,

Unfortunately I was unable to find examples of any tools that other local governments are using for cost benefit analysis. There were a few documents I found that seem relevant to your question and will hopefully get you started in your research.

There was an article published in PM magazine in 2007 titled, “Protect Your Community with Financial Planning.” While it does not focus on cost benefit analysis, it does provide some good information on long-term financial planning:

Also, ICMA sells a book called Management Policies in Local Government Finance, 5th Edition that is more of a comprehensive guide for local government officials regarding all aspects of the financing process, including cost benefit analysis:


Finally, there is a guide put out by the EPA that provides some good insight on the cost-benefit analysis system. While it focuses on environmental projects, the questions asked in the analysis process could be valuable on a more general level:

I hope that these are at least of some help!

Amanda Dodge
International City/County Management Association
Knowledge Network Intern

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27 Apr 11
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3 May 11

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