Cost benefit analysis is a method used to compare the expected gains of a project with its associated expenses. It is used to assess if a proposed initiative brings more value than it consumes over a set period. This cost benefit analysis template is designed to carry out such evaluations in Excel or Google Sheets. It captures both one-time and repeating costs, organizes projected benefits, and calculates totals over five years. A summary at the top displays the outcome along with a comparison chart of costs and gains for a direct view of the projected result.
Cost Benefit Analysis Template
How to Use This Template
The cost benefit analysis template is divided into three primary parts—costs, benefits, and summary—to carry out a cost benefit analysis and review the projected financial outcome of a project. Here’s a section-by-section breakdown of how each part functions, starting with the cost section.
Costs
This section captures the total investment required to carry out the project, divided into non-recurring and recurring expenses. Each type is laid out year by year, covering a five-year period.
Non-recurring costs are one-time expenses typically tied to the startup or launch phase. These may include infrastructure setup, hardware or software purchases, and early-stage labor or consultancy fees. Although labeled as one-time, these entries can still be spread over multiple years if certain payments are staggered or scheduled in phases. For example, a system deployment might be paid partially in year one and completed in year two. Enter values in the appropriate columns based on when the cost is expected to occur.
Recurring costs refer to ongoing operational spending—such as licensing fees, maintenance charges, or long-term staffing. These are recorded using the same format, with separate entries for each year. Since recurring costs continue beyond the launch phase, accurate forecasting here is essential for evaluating the long-term financial impact of the project. Underestimating these can lead to misleading results in the summary.
All yearly entries are automatically totaled at the end of each row, and those totals are carried into the top summary section. No manual calculation is needed, but if you rename categories or shift cells, it’s important to double-check the formulas to avoid breaking links.
Benefits
This section is used to record the expected value the project is projected to generate over time. Benefits are divided into three categories: revenue, cost savings, and other benefits, each entered year by year for a five-year period.
Revenue refers to any direct income or business gain that results from the project. This might include increased sales, new service income, or productivity improvements that contribute to growth. These figures should reflect realistic estimates based on previous performance or known demand. Inflated numbers can distort the net result and reduce the reliability of the analysis.
Cost savings capture reductions in current or expected spending. These savings may result from updated systems, fewer manual processes, lower staffing needs, or the removal of unnecessary steps in existing workflows. This section is especially relevant when the purpose of the project is to reduce internal costs rather than bring in new revenue.
Other benefits include indirect or less tangible gains that still hold financial value. Examples might include improved brand perception, better compliance, higher employee retention, or shorter turnaround times. While these may not be tied to exact financial records, values can be estimated using internal benchmarks or projected outcomes. It’s important to apply consistent logic when assigning figures and avoid adding benefits that can’t be reasonably justified.
Like the cost section, all yearly inputs are totaled automatically. These totals contribute to the summary section, where the overall gains are compared to the recorded costs.
Summary
The summary section gathers all totals from the cost and benefit entries and displays the financial result of the project. It is located at the top of the template for quick reference and is updated automatically based on the values entered in the lower sections.
It includes three main rows: total costs, total benefits, and net benefit or cost. Each is shown year by year, along with an overall total. The net benefit or cost row subtracts total costs from total benefits to show the financial result for each year and the entire five-year period. A positive number indicates that the project brings in more value than it consumes. A negative number points to a shortfall that may need further review or adjustment.
To the right of this summary table, a bar chart visually compares the total costs and total benefits over time. This chart is linked to the data and adjusts as figures are updated. It provides a quick way to scan for any imbalance between investment and return during specific years.
No input is required in this section. However, if you make structural changes to the layout—such as renaming columns or adding rows—it’s important to confirm that the formulas and chart references are still intact.
FAQs
Yes. You can extend the timeline by adding new year columns to each section. After duplicating the columns, check that row totals, summary cells, and the chart range are updated to reflect the added years.
Yes. Totals for each row and column are calculated using built-in formulas, and the summary section and bar chart update automatically based on those values. If you add new entries—such as an additional cost or benefit row—the formulas will often continue to work as long as they fall within the existing calculated range. However, it’s still important to double-check that your new rows or sections are included in the totals and linked correctly in the summary or chart.
Yes. You can change the category names in the cost and benefit sections to match your project—such as replacing “Technology Investment” with “Equipment Purchase.” These names are linked to the summary section and will update there automatically. There’s no need to manually edit the summary unless you’re adding entirely new sections that fall outside the original layout.
This cost benefit analysis template is designed in Excel and Google Sheets to evaluate the financial outcome of any proposed project or initiative. By separating one-time and ongoing expenses from projected gains, it shows how value is expected to develop over time. The five-year format works well for short and mid-term planning but can be extended by duplicating the sections for longer timelines if needed.