Cost Benefit Analysis (CBA)

Cost Benefit Analysis is a powerful, widely used and relatively easy tool for deciding whether to make a change.

Cost Benefit Analysis is a predictive tool and is capable of assessing all the effects of a project on all the affected stakeholders, including environmental costs and benefits.

‘CBA is designed to show whether the total benefits of a policy or a project exceed the costs, including environmental benefits and costs… far as possible, all effects are measured as the persons affected would measure them’. Abelson 1996. 

Companies have to take account of the interests not only of their shareholders but many other parties, including staff, bankers, insurers, media and local communities.  Financial project appraisal does not have a wide enough scope to satisfy all of these stakeholders. 

Cost Benefit Analysis may be of greatest benefit when the economic viability of a new project is to be assessed.

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©2006 David Darlington
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