Cost-benefit analysis

Cost-benefit analysis (CBA) is a method used to make business and economic-based decisions. CBA can be used to judge a single option, or compare two or more options to select the most optimal alternative.

CBA consists of estimating all the costs of a particular decision, then comparing them to the estimated benefits of that decision. CBA is not exclusive to business, as governments use it to evaluate different policy choices.

For instance, ABC, Inc. plans to build a new production facility. A CBA will consider the cost to build the new project against the benefits of added productivity from a modern plant. The CBA might also include other benefits such as an increase in employee morale.


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