Cost-Benefit Analysis

Success Problem

How is it possible to analyze successful the economic effects of the planned project especially in the public sector where no markets exist to provide this information "authomatically"? In the private sector this problem exists also, especially if there are grounds to mistrust the signals provided by market prices: for example in the case of competitions were the inputs are underpriced or outputs are overpriced.

Impact

The resources of any organization are limited. Therefore it is very useful to analyze carefully the alocation of the organizational resources to the planned projects especially.

Recommendation

Cost-benefit analysis is a method for organising information to aid decisions about hte allocation of resources. Costs and benefits are expressed in money terms and are directly comparable with one another.

Category

• Cost & Finance