Cost-Benefit Analysis: A Guide for GIS Students to Make Informed Computer Purchasing Decisions

• 6 minutes of reading

By Shahabuddin Amerudin

Conducting a cost-benefit analysis is an important step when deciding on the appropriate computer specifications for GIS students. This analysis allows students to weigh the benefits of investing in a higher-end computer against the costs associated with owning and maintaining the computer over time. Below are the steps to conduct a cost-benefit analysis:

  1. Identify the costs: When choosing a computer, there are a variety of costs to consider. These include the initial purchase price, as well as ongoing expenses such as maintenance, repairs, and upgrades. It is important to consider all of these costs when conducting a cost-benefit analysis.

  2. Identify the benefits: The benefits of investing in a higher-end computer may include improved performance, increased productivity, and the ability to run more advanced GIS software. Consider the potential benefits that a higher-end computer may provide and weigh them against the costs.

  3. Assign values: Assigning values to the costs and benefits can help to compare the two. This can be done by assigning a monetary value to each cost and benefit. For example, the cost of a computer may be RM4,000, while the benefit of improved productivity may be valued at RM2,000.

  4. Calculate the net benefits: Once all costs and benefits have been assigned a value, subtract the total cost from the total benefits to calculate the net benefits. If the net benefits are positive, then the benefits outweigh the costs, and investing in a higher-end computer may be worth it. If the net benefits are negative, then it may not be worth investing in a higher-end computer.

  5. Consider alternatives: If the net benefits of investing in a higher-end computer are negative, consider alternatives such as purchasing a lower-end computer or upgrading an existing computer. These alternatives may provide a better cost-benefit ratio.

By conducting a cost-benefit analysis, GIS students can make informed decisions when choosing a computer for their coursework. This analysis helps to weigh the potential benefits of investing in a higher-end computer against the costs associated with owning and maintaining the computer over time.

Here are some examples of cost-benefit analysis for purchasing a computer for GIS students:

Example 1: Costs

  • Initial purchase price: RM 4,000
  • Annual maintenance and repairs: RM 500
  • Upgrades every 2 years: RM 1,000

Benefits:

  • Improved productivity and performance: valued at RM 2,000

Net Benefits:

  • Total costs over 4 years: RM 6,500
  • Total benefits over 4 years: RM 2,000
  • Net benefits over 4 years: -RM 4,500

Based on this analysis, investing in a higher-end computer may not be worth it as the net benefits are negative.

Example 2: Costs

  • Initial purchase price: RM 2,000
  • Annual maintenance and repairs: RM 250
  • Upgrades every 3 years: RM 800

Benefits:

  • Improved productivity and performance: valued at RM 2,500

Net Benefits:

  • Total costs over 4 years: RM 3,350
  • Total benefits over 4 years: RM 2,500
  • Net benefits over 4 years: -RM 850

Based on this analysis, investing in a lower-end computer may be a better option as the net benefits are higher compared to Example 1.

Here are some additional examples of cost-benefit analysis for GIS students:

Example 3:  High-End Desktop Computer vs. Mid-Range Laptop

A GIS student is deciding between purchasing a high-end desktop computer or a mid-range laptop for their coursework. The high-end desktop computer costs RM6,000, while the mid-range laptop costs RM4,000. The student assigns a value of RM2,000 to the benefits of the high-end desktop computer, including improved performance and the ability to run more advanced GIS software. The student assigns a value of RM1,500 to the benefits of the mid-range laptop, including portability and convenience. The student calculates the net benefits of the high-end desktop computer by subtracting its cost from its benefits: RM2,000 – RM6,000 = -RM4,000. The net benefits of the mid-range laptop are calculated similarly: RM1,500 – RM4,000 = -RM2,500. Since both options have negative net benefits, the student may consider other alternatives, such as a lower-end desktop computer or a used laptop.

Example 4:  Upgrading vs. Purchasing a New Computer

A GIS student has an older computer that is beginning to slow down and is considering whether to upgrade their current computer or purchase a new one. The cost of upgrading the current computer is RM1,500, while the cost of purchasing a new computer is RM3,000. The student assigns a value of RM1,000 to the benefits of upgrading, including improved performance and the ability to run more advanced GIS software. The student assigns a value of RM2,000 to the benefits of purchasing a new computer, including improved performance, reliability, and a longer lifespan. The student calculates the net benefits of upgrading by subtracting its cost from its benefits: RM1,000 – RM1,500 = -RM500. The net benefits of purchasing a new computer are calculated similarly: RM2,000 – RM3,000 = -RM1,000. Since both options have negative net benefits, the student may consider alternatives such as a lower-end new computer or a refurbished computer.

Example 5: High-End Desktop Computer

A GIS student is considering purchasing a high-end desktop computer for RM8,000. The expected lifespan of the computer is five years. The cost of owning and maintaining the computer over five years is estimated to be RM3,000, including periodic upgrades and repairs. The benefits of the high-end computer include improved performance, increased productivity, and the ability to run more advanced GIS software. Based on market research, it is estimated that the higher-end computer will increase the student’s potential earnings by RM5,000 per year.

To conduct a cost-benefit analysis:

  1. Identify the costs: The cost of purchasing the computer is RM8,000, and the cost of owning and maintaining it over five years is estimated to be RM3,000.

  2. Identify the benefits: The benefits of investing in a higher-end computer include improved performance, increased productivity, and the ability to run more advanced GIS software. Based on market research, it is estimated that the higher-end computer will increase the student’s potential earnings by RM5,000 per year.

  3. Assign values: Assign a monetary value to each cost and benefit. The cost of purchasing the computer is RM8,000, and the cost of owning and maintaining it over five years is RM3,000. The benefits of investing in the computer are estimated to be RM5,000 per year, over five years the total benefit is RM25,000.

  4. Calculate the net benefits: Subtract the total cost of RM11,000 (RM8,000 + RM3,000) from the total benefits of RM25,000 to get a net benefit of RM14,000. Since the net benefit is positive, investing in the high-end computer is worth it.

  5. Consider alternatives: If the net benefit of investing in the high-end computer is negative, consider alternatives such as purchasing a lower-end computer or upgrading an existing computer. These alternatives may provide a better cost-benefit ratio.

By conducting a cost-benefit analysis, the GIS student can make an informed decision when choosing a computer for their coursework. This analysis helps to weigh the potential benefits of investing in a higher-end computer against the costs associated with owning and maintaining the computer over time.

Suggestion for Citation:
Amerudin, S. (2023). Cost-Benefit Analysis: A Guide for GIS Students to Make Informed Computer Purchasing Decisions. [Online] Available at: https://people.utm.my/shahabuddin/?p=6318 (Accessed: 9 April 2023).

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