Planning Horizons
To compare different proposals consistently, they all need to have the same time span. The consistent time span for comparing a set of proposals is called the planning horizon (sometimes known as the study period, or n*). The planning horizon can be based on the following:
Company policy
How far into the future you can make reasonable estimates
The economic life of the shortest-lived asset
The economic life of the longest-lived asset
The best judgment of the person performing the decision analysis
Whatever the planning horizon ends up being, the economic lives of the assets within a proposal need to be compared with that time period.
Software itself isn't usually considered to be an asset. However, it's not unusual for software ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access