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Impact Analysis

Impact analysis (or assessment) is the term given to the process of thinking through, identifying and evaluating the effects of an activity or program. Unlike cost-benefit analysis, impact analysis begins before the results of an activity have been produced in a measurable form. It then gradually incorporates the measurement of results as they are generated. The planning process is thus optimized and the risk of not achieving the desired goals minimized.

Are processes sufficiently safeguarded both at the planning and execution stages? Where are the potential problem areas in individual process steps? Are there any gaps in any process chains that could lead to a breakdown of process flow? Do all individual process steps achieve the required result? Has each individual activity within a given measure actually produced the desired results and effects? Have the correlations between individual process steps turned out as planned and are recent changes having the expected effect? Do the results obtained in practice justify the use of resources? Is an increase in sales, for example, solely the result of the changes that were implemented or is it due to some external influence? Carrying out an impact analysis can provide answers to these and many more questions.

Impact analysis is a methodologically proven instrument for assessing the value of projects, programs and proposed changes. It allows their effectiveness to be evaluated at different levels from individual processes upward and through all the phases involved on the way to achieving the desired result. Within the field of internal audit, carrying out impact analyses is virtually unheard of.

An impact analysis is especially recommended in the case of qualitatively focused activities. This is due to the near absence of any concrete figures, such as:

  • increased (or decreased) turnover
  • error rates or
  • production figures.

Qualitative activities include such things as training programs, measures aimed at improving quality and structural reorganization. But it is also well worth subjecting processes that are intended to produce quantitative effects (e.g. increase in sales volume) to an impact analysis.