COST BENEFIT ANALYSIS

COST BENEFIT ANALYSIS

Cost benefit analysis is a weight scale approach to taking business decisions.

It appears very simple because it involves placing the pros and cons of the project on opposite sides of the balance. Whichever weighs heavier wins?

For example, Amena Academy is considering purchasing some computers systems for her new out let, Eki Edo.

One the cost side the company management enumerated issues like ; cost of the computers , cost of hiring people to install them and  cost of training the staff to use them.

On the benefit side, the management enumerated the following advantages namely; greater speed in carrying out company’s operation and greater efficiencies in service delivery.

The major difficulty is that all the cost and benefits of a project may not be immediately obvious from the onset.

However, the cost benefits analysis are widely used to analyses public sector projects.