Cost-Benefit Analysis (CBA) is a systematic process used to evaluate the economic viability of a project or decision by comparing the expected costs and benefits associated with it. The analysis aims to identify the overall value or impact of the initiative, allowing stakeholders to make informed decisions.
In CBA, costs typically include direct expenses, opportunity costs, and any negative consequences, while benefits encompass all positive outcomes, such as increased revenue and improved efficiency. The results of a CBA are often expressed as a ratio or a net present value, helping to determine whether the benefits outweigh the costs and to what degree.
CBA is commonly used in business, government policy, healthcare, environmental projects, and various sectors to assess the feasibility and prioritize resource allocation for different initiatives. By quantifying potential impacts, CBA assists in understanding the trade-offs involved in decision-making and supports rational and strategic planning.
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