OPS.14:4 - Solution
OPS.14:4.1 - Name the alternatives and the operating change
State the decision, recipient of the comparison, alternatives and horizon. Include current practice or deferral when either is a real option. Establish which alternatives satisfy applicable service, protection and authority conditions; use OPS.12/.13 where those conditions need development.
Describe the operational difference: what accepted result changes, which demand it serves, what work and resources it requires, which work is delayed or displaced, and what happens after failure. Use a schedule or bounded scenarios when timing matters. Keep unresolved assumptions visible.
Follow the proposed gain to its receiving use. Saving preparation time can matter because it changes a payment, frees a resource for another accepted job or protects service. Name the actual consequence before attaching a monetary value to the saved time.
OPS.14:4.2 - Choose quantities that answer the decision
Keep the accounting basis with the quantity being compared.
| Quantity | What the practitioner needs to recover |
|---|---|
| Physical throughput | The physical output counted, its unit and period, keeping completed service results separate from the attempts needed to obtain them. |
| Monetary throughput or contribution | The selected model of proceeds less specified variable costs, with its cost assumptions and demand basis. |
| Recognized revenue or accounting profit | The accounting period and recognition rules supplied for that purpose. |
| Cash receipts and payments | The amounts that actually enter or leave, their timing, conditions and authority. |
| Released resource capacity | The usable time or capability released and the next service or avoided payment that could use it. |
Choose only the quantities whose difference can change the decision. A throughput-accounting model can be useful for a short-horizon product or service mix when one resource is limiting and its assumptions fit. The common direct-material treatment presumes that other costs remain largely fixed over that horizon. Per-use cloud charges, contracted labor or changed support costs can defeat that presumption.
For a suitable model, compare contribution per unit of the scarce resource together with demand limits. With coupled resources, indivisible jobs, sequencing requirements or binding commitments, obtain the feasible schedule or corresponding optimization result. A ranking alone does not determine the feasible mix.
OPS.14:4.3 - Build the incremental financial comparison
For each alternative, identify future payments and receipts that differ because of the choice. State amount, time and the condition that produces the flow. The same unchanged amount in both alternatives cancels in their difference; keep it elsewhere if the receiving account needs the whole operation’s cash position.
Inspect avoidability. A historical payment is not saved by declining future work. An allocated share of rent may remain unchanged, whereas an additional contracted shift or per-use charge can be avoidable. A cost that is fixed this week can become avoidable at a later renewal, so use the decision’s actual horizon.
Include displaced use when it is real. Identify the best relevant foregone alternative and its consequence, or state the qualified premise that no material contribution is displaced. Count that loss once. If the cash comparison already includes the missing receipts and avoided costs of displaced work, do not subtract the same foregone contribution again as an extra opportunity cost.
Connect receipts to demand, delivered service, acceptance and payment conditions. Consider the adverse cases that can change the choice: repeat work, delayed acceptance, nonpayment or a lost resource window. A claimed receipt needs its stated basis even when its arithmetic is simple.
OPS.14:4.4 - Check timing, funding and horizon effects
Calculate each alternative’s net cash within the horizon, then the difference between alternatives. State the direction: completing now minus deferring, for example. Keep this difference distinct from the net cash of either option.
Lay out consequential advance payments and later receipts. Determine whether available authorized funds cover each payment when due, taking prior payments, receipt dates and other obligations on the same funds into account. A favorable final balance can coexist with an earlier funding gap.
Show material flows just outside the horizon and test whether extending it changes the conclusion. A timing advantage can be useful for the receiving cash decision; describe its duration and effect. For longer-lived assets, financing, taxes, discounting or statutory accounting, request the qualified result needed by that use. The simple undiscounted comparison below does not answer those questions.
A fixed annual allocation can be an inadequate description of current need. Refresh the operating forecast and request a resource or funding decision where conditions have changed. A revised forecast itself grants no spending authority.
OPS.14:4.5 - Return the choice, trade-off or exact missing result
Present the feasible alternatives with the consequential service, resource, human, quality and financial differences. State the assumptions that could reverse the comparison and the observation or decision that would resolve them.
If one alternative is better on the receiving decision’s criteria, recommend it with that basis. If earlier service costs more, make the price of that service visible to the authorized decision maker. Preserve mandatory conditions before comparing preferences.
The result can be a short operating account rather than a permanent dashboard. Use OPS.15 when the source events or definitions need repair. After action, compare actual flows and operating results with the assumptions needed for continuation; reopen the affected method or service decision if they change.