Make or Buy Analysis

Make or buy analysis is a project management technique that seeks to demonstrate which processes should be executed internally with available assets rather than those that must be obtained from an external source. This project management method is upheld in resource management as a strategy and approach.

In order to accurately assess the cost and benefit of making or buying, the choice should consider various components including cost, resources, and potential risks. When used together, cost-benefit analysis simplifies the choice-making process and in the end assists with the correct decision. It is used in;

When assessing the necessary tasks for project management and shipments to be finished, it can be apparent what must be done. In some cases, carrying out a make or buy analysis to assess the costs, resources and advantages of either manufacturing or purchasing the goods or services can be advantageous when the choice is not evident.

By examining the various options available, this analysis will enable you to decide which is most economically feasible. Outsourcing could be the answer if your company lacks the necessary skill set and experience for the task as it will both speed up the process and help manage any risks associated.  There are also compelling reasons to consider internal solutions, such as safeguarding the confidentiality, cutting costs, taking advantage of current employees' competence and skill and increasing efficiency. 

See also:

Sensitivity Analysis

Variance Analysis

What-if Scenario Analysis