Cost-benefit analysis (CBA)

 A cost-benefit analysis (CBA) is a data-driven process that helps businesses determine the financial feasibility of a project or decision. It's a decision-making tool that compares the costs and benefits of a project to help businesses make rational choices. 

CBAs are used in a variety of situations, including: 

Project planning

CBAs can help businesses decide whether to pursue new projects, add employees, purchase equipment, or expand facilities. 

Comparing options

CBAs can help businesses compare two or more options to determine which is the best fit. 

Maintaining the status quo

CBAs can help businesses determine if it's better to maintain the status quo or pursue a new project. 

Here are some steps you can take to perform a CBA: 

Understand the cost of maintaining the status quo. 

Identify all costs associated with the project. 

Identify all potential benefits of the project. 

Assign a monetary value to all costs and benefits. 

Create a timeline for expected costs and revenue. 

Calculate the total costs and total benefits. 

 

Compare the costs and benefits to determine the project's overall value and feasibility. 

 

A project's cost-benefit ratio (BCR) can help determine if it's a financially viable option. A BCR greater than 1.0 indicates that the project's benefits exceed its costs, while a BCR less than

 1.0 indicates the opposite.