Cost-Benefit Analysis

• Performing a Cost-Benefit Analysis

Cost-benefit analyses help you to

    Decide whether to undertake a project or decide which of several projects to undertake.

    Frame appropriate project objectives.

    Develop appropriate before and after measures of project success.

    Prepare estimates of the resources required to perform the project work.

Everything gets a dollar value in a cost-benefit analysis
Whenever possible, express benefits and costs in monetary terms to facilitate the assessment of a project’s net value.
Consider costs for all phases of the project. Such costs may be nonrecurring (such as labor, capital investment, and certain operations and services) or recurring (such as changes in personnel, supplies, and materials or maintenance and repair). I


Cost-benefit analysis: Weighing future values today
For example, you may expect to reap benefits for years from a new computer system, but changing technology may make your new system obsolete after only one year.
http://www.dummies.com/how-to/content/performing-a-costbenefit-analysis.html

• How to Do a Cost Analysis

A cost analysis (also called cost-benefit analysis, or CBA) is a detailed outline of the potential risks and gains of a projected venture.

1 Define your CBA's unit of cost  benefit
CBA measures literal cost in terms of money, but, in cases where money is not an issue, CBAs can measure cost in terms of time, energy usage, and more.

2 Itemize the tangible costs of the intended project.
Costs can be one-time events or ongoing expenses

3 Itemize any and all intangible costs.
Usually, CBAs also take into account a project's intangible demands - things like the time and energy required to complete the project.

4 Itemize the projected benefits.

5 Add up and compare the project's costs and benefits
we determine whether the benefits of our project outweigh the costs

6 Calculate a payback time for the venture

7 Use your CBA to inform your decision about whether to pursue your project
if it's not clear that a project can generate additional profit in the long run or pay for itself in a reasonable amount of time, you will probably want to reconsider the project or even scrap it all together.