Cost-Benefit Analysis
Cost-Benefit Analysis (CBA) systematically compares the total costs of a project or program with its benefits, using a common metric (usually monetary). It provides a quantitative basis for assessing the overall value and efficiency of an investment.
Use when needing to make informed decisions about resource allocation, program design, or policy choices, especially when comparing multiple options.
Solves: Difficulty in quantifying the overall impact of a program; needing a clear justification for investment.
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Step 1: Define the scope of the analysis and identify all relevant costs and benefits (120 min)
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Step 2: Quantify the costs and benefits in monetary terms (240 min)
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Step 3: Discount future costs and benefits to their present value (60 min)
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Step 4: Calculate the net present value (NPV) and benefit-cost ratio (BCR) (30 min)
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Step 5: Conduct sensitivity analysis to assess the impact of uncertainty (30 min)
- Ensure all relevant costs and benefits are included.
- Use a consistent and defensible discount rate.
- Conduct sensitivity analysis to assess the robustness of the results.
- Social Return on Investment (SROI)
- Cost-Effectiveness Analysis (CEA)