cost benefit analysis(cba)
Post on 18-Feb-2017
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Welcome
PRESENTATION ON
COST BENEFIT ANALYSIS ITS IMPORTANCE
By Stinu kj
msw
COST BENEFIT ANALYSIS
DEFINITIONAccording to the business directory “cost benefit analysis is a
process of quantifying costs and benefits of a decision, programme, or project (over a period), and those over it alternatives, In order to have a single scale of comparison for unbiased evaluation.
It can be explained as a procedure for estimating all costs involved and possible profits to be derived from a business opportunity or proposal.
FOUNDER :FRENCH ECONOMIST JULES DUPUIT
COST AND BENEFITCOSTAny negative effective on an organisation resulting from the implementation of the project.EXMPLES1. Maintaining cost2. Environment3. Research and development4. Labour costs
BENEFITA benefit is any positive effect on the organization resulting from the implementation of the project.EXMPLES1. Increase productivity2. Reduction in costs3. Saving time
COST BENEFIT ANALYSISCBA is a quantitative analytical tool to aid decision-makers in the efficient allocation of resources. it identifies and attempts to quantify the costs and benefits of a programme or activity and converts available data into manageable information.
COST-BENEFI T ANALYSIS (CBA) is a tool used to determine the worth of a project, programme or policy. it is used to assist in making judgments and appraising available options.
The strength of the method is that it provides a framework for analysing data in a logical and consistent way
ADVANTAGES OF CBA
Makes explicit the economic assumptions that might otherwise
remain implicit or overlooked at the
design stage.
Useful for convincing policy makers and funders that the
benefits justify the activity.
Good quality approach for estimating the
efficiency of programme and
projects.
AS A BUSINESS ORGANISATION
CBA HELPS TO AUTHORITY TO ANSWER QUESTIONS SUCH AS:
1. Does the proposal provide a net benefit to the community as a whole?
2. Should the proposed project, programme or policy be undertaken?
3. Should the project or programme be continued?4. Which of various alternative projects or programmes
should be undertaken
WHY UNDERTAKE A COST-BENEFIT ANALYSIS?
The main reason for undertaking a CBA is to determine whether a project, programme or policy will make the wider community better or worse off. In other words, whether the net impact of the project is positive or negative
IMPORTANCE OF CBA ANALYSISCBA FACILITATES MEANINGFUL COMPARISONS
CBA IS CONDUCIVE TO GOOD PROGRAMME MANAGEMENT
CBA AND DISTRIBUTIONAL IMPACT
CBA AS INTEGRAL TO AN EVALUATION STRATEGY
CBA CAN HELP TO MEET LEGISLATIVE REQUIREMENTS
WHEN IS A COST-BENEFIT ANALYSIS USED?
Analysing capital
expenditure
Analysing a policy option
Using or disposing of an existing asset
Post evaluation of a project or
programme
Quantification issues
Thank you
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