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What are disbenefits?

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The purpose of this brief article is to examine the use of the word “disbenefits.” Although this word has been used since 1968¹, I only became aware of it in the last couple of years. I looked-up the word in various Internet sites, but was not satisfied with the information; it seemed to me that there is more to the use of this word. So I decided to write this article to offer my opinion on the meaning of the word since I am starting to see this word used more often in publications on building a business case. I welcome your comments on the meaning and the word itself.

Definitions Found on the Internet

I looked-up disbenefits in a couple of dictionaries and a European Public Sector document. Here is what I found and then some; hopefully one of these definitions will hit a nerve with you:

Disbenefit² (without hyphen) – “disadvantageous or objectionable” citing synonyms of “drawback, debit, disadvantage, downside, handicap, incommodity, liability, minus, negative, strike.” Note the absence of the word cost.

Disbenefit³ (again without a hyphen) – “a disadvantageous or loss resulting from something.” Again note the absence of the word cost. And what is “something?”

Dis-benefits⁴ (with a hyphen) – “the outcomes from a programme (sic) which are perceived by one or more stakeholders as negative, e.g. new operational costs, or loss of green space in an area due to the building of a new school. The same change can be seen by different stakeholders as both a benefit (net cost reduction through fewer staff) and a dis-benefit (job losses). These dis-benefits can be classified, managed and measured in the same way as benefits.” Note this definition is from the European public sector.

Disbenefits⁵ – the result (positive or negative) of electing someone to political office (i.e. living with the solution)

Let’s expand the above word “something” in the context of project management. In my view, “something” is a solution implementation as a result of a project completion. In terms of capital budgeting, the project in question has project benefits composed of savings and revenue minus the project cost composed of initial capital and expenses; note project cost/benefits may be adjusted over time. Disbenefits are not involved in capital budgeting as a project cost.

Disbenefits appear as changes to on-going operating cost once the project is complete. These changes may be in support headcount, administrative overhead, maintenance, licensing etc. This is why disbenefits do not appear in capital budgeting, but in Total Cost of Ownership (i.e., cost of living with a solution).

Simple auto example: Let’s say you purchase a new car for $40K cash; this is a cost, not a disbenefit. Upon the purchase, you assume an increase in home operating costs associated with the car: car insurance payment, fuel to run the car and associated car maintenance. This change in home on-going operating costs are disbenefits and are not included in the purchasing cost of the car. Disbenefits are only included when considering Total Cost of Ownership of the car.

Another auto example: I buy a used car for $25K cash; again this is a cost, not a disbenefit. Upon the purchase, I assume a similar increase in home on-going operating costs. However due to the nature of the purchase (used car), I should expect higher car maintenance (i.e., higher disbenefit). So, I have less purchasing cost than the previous auto example, but most likely will incur a higher car maintenance. Once again this disbenefit is not included in the purchasing cost of the car. Instead it is a component of the total cost of ownership. This example is similar to the scam technique called “bait and switch.” I am led to a lower car purchase, without consideration of a possible higher total cost of ownership.

Project example: A project manager is constructing a large water dam. The project manager incurs a budget shortage. To compensate, the project manager purchases less expensive turbines with a shorter maintenance cycle. The end result is less project cost, but higher operating cost (disbenefits). The “magic” is done using mirrors by shifting the project cost reflection to disbenefits (i.e., now a concern of the operations manager instead of the project manager). Hopefully, the project stakeholders are astute enough to understand the “illusion.”

Conclusion
Disbenefits are changes to on-going operating costs as a result of a project; they could be perceived as positive or negative. These disbenefits are included in defining the Total Cost of Ownership rather than a component of project cost, and is more of a focus for controllers due to its on-going nature rather than one time project savings and revenue.

Project Cost = Solution Benefits (savings + revenue) - Solution Cost (capital + expense)

Total Cost of Ownership = Project Cost + Disbenefits (changes to on-going operating cost)

Before I conclude this article, I should address the word “disbenefit” itself. It’s confusing. The prefix “Dis” implies that it’s negative, but it can be positive. The suffix “benefit” indicates its timeframe is during the project, but it really occurs after the project. I propose the word “aftermath.” The word “aftermath” clearly states it is after the project and implies neither a positive nor a negative outcome. Perhaps, you can suggest a better word.

Author: Mr. Monteleone holds a B.S. in physics and an M.S. in computing science from Texas A&M University. He is certified as a Project Management Professional (PMP®) by the Project Management Institute (PMI®), a Certified Business Analysis Professional (CBAP®) by the International Institute of Business Analysis (IIBA®), a Certified ScrumMaster (CSM) and Certified Scrum Product Owner (CSPO) by the Scrum Alliance. He holds an Advanced Master’s Certificate in Project Management (GWCPM®) and a Business Analyst Certification (GWCBA®) from George Washington University School of Business. Mark is also a member of the Association for the Advancement of Cost Engineering (AACE) International and the International Association of Facilitators (IAF).

Mark is the President of Monteleone Consulting, LLC and author of the book, The 20 Minute Business Analyst: a collection of short articles, humorous stories, and quick reference cards for the busy analyst. He can be contacted via – www.baquickref.com.

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