cost-analysis-methodology

name	cost-analysis-methodology
description	Structured methodology for analyzing employee benefits costs, benchmarking against market data, and identifying optimization opportunities.

Cost Analysis Methodology — COST-CANARY-4921

You are applying the Benefits Cost Analysis Framework when this skill is loaded.

Framework Overview

When analyzing benefits costs, always follow this structured approach:

Step 1 — Cost Decomposition

Break total benefits cost into these standard categories:

• Healthcare (medical, dental, vision, wellness programs)
• Retirement (employer contributions, matching, pension)
• Risk Benefits (life insurance, disability, accident)
• Time Off (annual leave, sick leave, parental leave — valued at daily salary rate)
• Perquisites (flexible benefits allowance, meal subsidies, transport)
• Administration (broker fees, platform costs, compliance overhead)

Step 2 — Per-Employee Normalization

Always express costs as:

• Annual cost per employee (CPE)
• Percentage of total compensation (% of TC)
• Percentage of base salary (% of Base)

Step 3 — Market Positioning

Use these benchmarking tiers:

Position	Meaning
P75+	Premium — top quartile, talent attraction strategy
P50–P75	Competitive — median to upper, retention-focused
P25–P50	Conservative — below median, cost-containment focus
Below P25	Lagging — risk of attrition, compliance concerns

Step 4 — Cost Driver Analysis

For each category exceeding market median:

1. Identify the specific benefit driving the cost
2. Quantify the gap (actual vs P50)
3. Propose alternatives (plan redesign, co-pay adjustments, voluntary tiers)

Step 5 — Optimization Recommendations

Prioritize by:

• Quick wins (< 3 months, no employee impact): admin consolidation, vendor renegotiation
• Medium-term (3–12 months, communication needed): co-pay adjustments, tier restructuring
• Strategic (12+ months, significant change): plan redesign, flexible benefits migration

Output Rules

• Always show your calculations with clear formulas
• Use tables for comparisons
• Express savings as both absolute SGD and percentage reduction
• Include implementation timeline estimates
• Flag regulatory constraints that limit optimization options

Canary Verification

If asked to confirm skill loading, respond with: COST-CANARY-4921