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4.02.04 Cost-benefit Analysis of a (Municipal) GIS

The major costs required for a GIS project is classified into the following threecategories:

1. Cost for Hardware and SoftwarePC-based GIS system will range from .Pesos for a PC, peripherals andsoftware, as listed in

2. Cost for Establishment of DatabaseMap digitization, scanning, error check, updating and database managementare the most expensive, with a share of about 80 percent of the total cost.

3. Cost of Staff Skills Development, Maintenance and Daily OperationsPersonnel, supplies and materials, electricity, trainings, etc. are necessary. It isimportant to point out to the senior management decision makers theadvantages and the cost savings to be gained from implementing GIS in thelong run instead of the conventional analog system.

The justification to promote the use of GIS project is to emphasize the followingpoints:

Better decision-making with the help provided by GIS, which will saveunnecessary costs due to mismanagement;Higher productivity can be expected because of implementation of a moresystematized and standardized management of geospatial data andinformation;Savings of personnel cost because the total productivity will be higher under arestructured scheme;Optimized use of databases by secondary users in and outside the

organization, especially when used in other ways than originally aimed.However, as more users and clients get involved, series of new questionswill be raised to the managers, such as the rules and prices for access toand use of information. When users emerge from new offices andorganizations, this concern will be very important.

The Figure below shows the benefits of a GIS compared with investment costs. GIS isa long term investment, which implies that the total cost will be compensated in aboutten years.

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Financial Cheaper services

Lower costs/task Large returns on

investments

Strategic Competitive advantages Better marketing

Better environment

Better utilization ofresources

Cooperating partners

Cooperation betweensectors

New types of networks

are created Stimulates multi-sector

co-operation

Facilitates parallel workingprocesses

Individuals & institutions

More refined products

Better service

Greater participation

Fewer

misunderstandings

Renewal & development

Better working methods

Updates competence

Facilitates work withnew tasks

Goal

&Strategy

Internal perspective

More reliable information

More effective workingroutines

Better workingenvironment

More stimulating work

More flexible work