Browse Definitions :
Definition

cost-benefit analysis (CBA)

Cost-benefit analysis (CBA) is an analytical tool for assessing and the pros and cons of moving forward with a business proposal. 

A formal CBA tallies all of the planned project costs, quantifies each of the tangible benefits and calculates key financial performance metrics such as return on investment (ROI), net present value (NPV), internal rate of return (IRR) and payback period. The costs associated with taking action are then subtracted from the benefits that would be gained. As a general rule, the costs should be less than 50 percent of the benefits and the payback period shouldn't exceed 12 months.

A CBA is considered to be a subjective (as opposed to objective) assessment tool because cost and benefit calculations can be influenced by the choice of supporting data and estimation methodologies. Sometimes its most valuable use when assessing the value of a business proposal is to serve as a vehicle for discussion. 

Cost-benefit analysis is sometimes called benefit-cost analysis (BCA).

This was last updated in August 2011

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

SearchCompliance

  • data governance policy

    A data governance policy is a documented set of guidelines for ensuring that an organization's data and information assets are ...

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

  • compliance as a service (CaaS)

    Compliance as a Service (CaaS) is a cloud service service level agreement (SLA) that specified how a managed service provider (...

SearchSecurity

SearchHealthIT

SearchDisasterRecovery

SearchStorage

  • cache memory

    Cache memory, also called CPU memory, is high-speed static random access memory (SRAM) that a computer microprocessor can access ...

  • capacity management

    Capacity management is the broad term describing a variety of IT monitoring, administration and planning actions that are taken ...

  • cloud storage

    Cloud storage is a service model in which data is transmitted and stored on remote storage systems, where it is maintained, ...

Close