Certified Government Financial Manager (CGFM) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

In a government's decision to "make or buy," considering feasibility and cost analysis is crucial. This approach involves a comprehensive evaluation of not only the financial implications of producing a good or service internally versus purchasing it from an external source, but also the practicality of each option in terms of capabilities, resources, time, and operational impact.

Cost analysis ensures that the decision is financially sound, examining direct costs such as materials and labor, as well as indirect costs like overhead and potential inefficiencies. Feasibility analysis assesses if the organization possesses the necessary skills, technology, and resources to successfully execute the production process internally. This dual focus on feasibility and cost equips decision-makers with the critical information needed to determine the most advantageous approach in the context of government operations.

While other factors like market trends, vendor reputation, and political implications can be relevant in the larger context of procurement decisions, they do not address the foundational elements necessary for evaluating the basic "make or buy" dilemma. These factors may influence the decision, but they are secondary to understanding the internal capabilities and financial impacts of the options being weighed.