Prevention Cost
As with all capital projects, cost is always a key factor to consider. The cost of prevention activities is likely to always be a component of any project cost. But, how does one calculate the cost of prevention activities? Calculating the cost of prevention activities to a project is not always a straight forward calculation. This article will discuss the various components of prevention cost, the factors that need to be accounted for, and the benefits of including prevention cost in the project budget.
The most obvious component of the cost of prevention activities is the actual costs of the activity, including materials, labor, supplies, and other costs associated with the prevention activity. This includes any staffing costs to be budgeted for and any overhead costs associated with the project. This should include costs for all personnel involved with the project, and, depending on the nature of the prevention activity, possibly all the specialized materials and equipment required. These costs should be calculated before any other costs associated with the project.
In addition to the actual cost of the prevention activity, other items that need to be included when calculating prevention cost are the costs associated with back-up plans, emergency planning, and other “just-in-case” contingencies. These can include emergency staff, equipment, and other materials that will be necessary should the prevention activity fail. These costs should also be taken into account when calculating the prevention cost of a project.
It is also important to factor in the possible costs of adjusting the project design or workflow if the prevention activity does not work as planned. These costs are less tangible but can easily add up, and should be anticipated when coming up with the total prevention cost for a project.
In addition to the actual monetary costs of the prevention activity and the associated contingency planning, there are also the intangible costs and benefits associated with the prevention activity. These include the potential for improved efficiency, better quality assurance, improved safety, and enhanced customer satisfaction. Thus, the cost of prevention activities should almost always be greater than just the simple calculation of the actual cost.
Finally, in addition to budgeting for the prevention cost of a project, it is also important to consider the long term benefits associated with preventive activities, as well as the long term cost savings. In some cases, such activity may prevent the need for large scale capital investment or major renovations down the road. This could lead to significant long term cost savings. Thus, these long term cost savings should be taken into account when assessing the total prevention cost of a project.
Overall, prevention cost should be an integral part of any project cost estimate. The actual cost of the activity, the costs associated with back-up plans and contingency plans, the potential cost of revising the design or workflow should the activity not work as expected, and the long term savings associated should all be taken into account when assessing the overall cost of the prevention activity. With this knowledge, any business can better assess the cost of prevention activities for their projects, and make wise and informed decisions about the cost including preventative measures in the budget.
