Common
Cost–benefit analysis
Systematic approach to estimating the strengths and weaknesses of alternatives
Cost–benefit analysis
Cost–benefit analysis (CBA), sometimes also called benefit–cost analysis, is a systematic approach to estimating the strengths and weaknesses of alternatives. It is used to determine options which provide the best approach to achieving benefits while preserving savings in, for example, transactions, activities, and functional business requirements. A CBA may be used to compare completed or potential courses of action, and to estimate or evaluate the value against the cost of a decision, project, or policy. It is commonly used to evaluate business or policy decisions (particularly public policy), commercial transactions, and project investments. For example, the U.S. Securities and Exchange Commission must conduct cost–benefit analyses before instituting regulations or deregulations. CBA has two main applications: To determine if an investment (or decision) is sound, ascertaining if – and by how much – its benefits outweigh its costs. To provide a basis for comparing investments (or decisions...
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