Case Studies with Questions and Answers
Chapter 05: Cost/Benefit Analysis
You are the corporate security manager of a large corporation. You have been told by your boss that your budget for the next year is being reduced and you must continue to provide that same level of service and at the same time find ways to live within your budget. You know that the highest budget costs are related to employees. Your staff is already working at a very efficient and effective level. And reducing staff would mean reducing security service and support, which you must try not to do.
You decided to therefore look at outsourcing some of the security functions. Because the guard force accounts for the majority of your employees, you decided to look at outsourcing the guard services first. As part of the process of determining whether or not outsourcing would be cost beneficial, you must know what the guard force costs you on an annual basis.
You know that each guard post is a 24/7 operation and with breaks, sick time, vacations, you know that for each guard post you require 4.2 guards on a 24-hour shift. You have 12 guard posts. Each guard receives an average pay of $9.75 an hour. According to the Human Resources staff, the benefits pain to each guard casts the corporation $2,135 per year.
In coordination with the corporate contracts office staff, you have already gone out for bids to five security guard service providers. However, you must be able to compare their bid with the costs you are already incurring with your proprietary guard force. Based on the previous information, you will compare the bids with the total costs of your proprietary guard force.