# Cost Impact Scale

A cost impact scale converts the expected cost impact of a risk (e.g. this risk will result in additional expenditures of \$10,000 if it occurs) into a simple numerical scale value. A numerical scale value is required if you want to display the risk on a risk matrix.

A cost impact scale is defined in terms of a series of cost values. These values are entered via the Cost Impact Scale form, which is accessed via the Risk Impacts form.

### Scale Size

The number of levels in your scale is determined by the risk matrix size.

### Constructing a Scale

When constructing a scale, start at the upper and lower limits of the scale.

Upper Limit

Think of the smallest cost overrun that would be considered catastrophic. For example, if your project has a million-dollar budget, a 10 million dollar overrun would presumably be catastrophic. However, would 1 million be catastrophic? \$500,000? \$250,000? The smallest amount that would be considered catastrophic becomes the highest level on your scale. If this amount is, say, \$250,000 then your top level would be ‘cost increase of \$250,000 or more’.

Lower Limit

Think of the largest amount that can be considered as acceptable day-to-day variation. For example, in a million-dollar project a cost overrun of \$10 is probably quite insignificant. How about \$100? \$1,000? \$10,000? Estimate the largest amount which can be considered as acceptable day-to-day variation, and call this level 1. If this amount is \$5,000, for example, then level 1 in your cost scale would be ‘cost increase of less than \$5,000’.

Intermediate Points

Once you have set the upper and lower limits for your scale, you can fill in the intermediate values. For example, if you are developing a 5-level scale and levels 1 and 5 are \$5,000 and \$250,000 respectively, you might set the intermediate values at \$25,000 and \$100,000. Your scale then becomes:

• Level 1: less than \$5,000
• Level 2: \$5,000 or more but less than \$25,000
• Level 3: \$25,000 or more but less than \$100,000
• Level 4: \$100,000 or more but less than \$250,000
• Level 5: \$250,000 or more

### Units

The units in which the data is entered can be in ones, thousands or millions. This is a typing convenience only, and does not affect the actual values which are stored.

### Currency

The scale will normally be in your base currency. However, you can choose to express the scale in any other currency.

### Scale Changes

You can change the scale at any time. Mandrel will automatically change any existing cost impact assessments to comply with the new scale.