COST-BENEFIT ANALYSIS OF AN INVESTMENT IN GIS

COST-BENEFIT ANALYSIS OF AN INVESTMENT IN GIS

GIS is sometimes criticised as an expensive solution to a simple problem. This is true when using high-end GIS to solve problems that can be tackled by simple inexpensive desktop mapping packages. Hence it is difficult to quantify the benefits of using GIS. The organisation paying for the software may find it difficult to realise the financial benefits immediately whereas outsiders gaining access to the products will be pleased with the higher accuracy. However, the digital output products will have ling-term benefits.

Major costs are incurred in the early stages of a project in GIS and the benefits may materialise later into the project cycle. This is due to the fact that an initially large investment results in lower maintenance and updating costs resulting in sustainable benefits in the long run. The long term benefits are significantly higher as the process results in a multi-purpose digital database.

The introduction of GIS and requires a change of routine and expense not only for software and hardware but also for data purchase, training, planning and organizational restructuring.

Some of the costs not directly related to GIS but required for data input into GIS are:
-costs involved for data collection
-costs involved in data conversion

The various cost components required for implementation of a project in GIS are listed below:
-Evaluation of available data and development of a data conversion strategy
-Requirement of computers with fast processors, plenty of storage space, other peripherals
 required by GIS such as digitizers, large-format colour printers, etc.
-Evaluation and selection of GIS mapping software
-Prototype development
-Hardware/Software system configuration/customisation
-Establishing human resource planning to ensure a smooth transition to the new system
-Training is the fourth most expense of any GIS activity. It amounts to almost 5 to 10% of the
 total project cost.
-Costs involved in database design, data modeling and procedural manual development
-Additional costs are incurred if the old and new systems have to be operated in parallel during the transition period.
-Costs are incurred for data acquisition and data purchase or data capture and data conversion
-Since data conversion is labour intensive and error prone, a rigorous procedure for checking the resulting data for positional accuracy and logical consistency should be part of the process
-System maintenance involving software and hardware upgrades along with training due to such upgrades is to the tune of 10% of initial investment per year
-A periodic review of the GIS group’s work should be part of the regular activities
-Development of data distribution strategies

The various benefits of GIS are listed below:
Benefits are of two types:-
Efficiency benefits and
Effectiveness benefits

Efficiency benefits include:
-Cost savings
-Productivity gains

These benefits may be:
-measurable benefits
-indirect effects

Another benefit of GIS is the greater credibility and authority of map products.
Digital techniques help produce maps requested by customers quickly and cheaply.
Digital approach helps produce maps with higher accuracy.
A digital database ensures a high degree of consistency
GIS supports a thriving secondary market in associated mapping services.

Effectiveness benefits include:
-Improved analysis
-Improved policy making
-Improved data sharing and
-Improved outreach