Fast, Good, Cheap: On Making Your Cost-Benefit Analysis

Fast, Good, Cheap. You’ve heard of the entrepreneurial trifecta, right? There are also other, prettier variations of this sign, like the ones here (for web developers) and here (for freelancers). Wikipedia’s explanation of the project triangle also has a colorful diagram (but not as funny). When you make plans and draw up time-line for your projects, what factors do you consider in your risk mathematics?

  • When the emphasis is on COST, the aim may be to max it out where you feel that you have to get more than what you’re paying for, if you get what I’m saying. A bargain. A steal, as it were. If you’re serious about success and building a network, for example, and want to establish relationships you intend to be long-term, starting with a steal may not be the best thing.
  • If the emphasis in on SPEED, how is your time-line? Congested? Open? Tangled?
  • With an emphasis on QUALITY, you enter into craftsmanship, painstaking attention to detail, precision engineering, no fudging, no cutting corners…you want the expected results.

What are you looking at, priority-wise? You want to save money, so you draw up a budget. You want to get the most out of the money you have earmarked and spend on quality. You want to get it done on time. What you want to happen decides what needs to be done. And how it’s done is affected by your priorities.

What do you want? Settle on the desired result and work your way backward.
There are the high-level analysis done by governments and multi-million dollar companies for which their decisions carry the weight of affecting a country or the lifespan of the company. Then there are the relatively more mundane analysis we do at certain stages in our lives. To go to college, and which one to go to? Which job offer to take, where to live, etc.

On the whole, the factors you select and how you balance the weighing process shows your inclinations quite clearly. Not for nothing are people required to do those investor-analysis questionnaires when the first start investing in mutual funds (just as an example).

Here’s a well-worn example: Which one’s better, an exercise program or a diet?

Everyone knows the benefits of each one, and the more than doubled benefits of using both to supplement the other. So the trick question is based on a too simplistic equation. Saying YES to one means saying NO to the other.

Saying YES to both, however, makes the benefits you get from each much more attainable. So 1+1 doesn’t always equal 2. You look at all the factors, assign them certain weights, and then act to get the desired results with what you have.

How do you commit to the choices laid out by your equation?
Sure, it’s all fine and dandy to know on one level that diet and exercise, or forced savings, or cutting down on expenses, or deliberate practice can make a difference in your life. But you do you keep yourself at it? It’s one thing to know, another thing to do. After all, we know a lot of things can be good for us…but what do we do about what we know?

See, doing a cost-benefits analysis means you’re seriously weighing the factors and the probable outcomes of several open choices, to narrow down the field to the best, most optimal choice. That’s it. You’re weighing the options. Acting on one though is another phase.

But what about things that require long-term investment – vis-a-vis time, labor and commitment, you ask? Same thing, scaled up. You use the factors and play with them. You poke and pry and keep asking questions.

  • How much time do you have? If you can spread heavy labor or a big chunk of expenses over time, you spread the pain/payment over time, lessening the discomfort enough to bearable levels.
  • How much money do you have and how easy is it to trade that for what you want or need? Short-sightedness is short focus – maybe you intended to save now and make up for the skimping later, but then over the long run it takes more money to compensate for what you ‘saved’. Unless you get the best use out of what you pay for, cutting corners is not cost-cutting.
  • How good do you want it? When you have a very clear image of what you want, and you make it happen, it’s one of the best feelings in the world.

Cost-benefits analysis is one method of achieving clarity in the planning stages of any project, official or not, large or small. With more practice and awareness of what you’re doing while you’re doing it, you’ll develop a very good habit that will serve you well.

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