What is cost-benefit analysis?

Cost-benefit analysis is a process used to evaluate the total expected cost of a project or decision against the expected benefits derived from that project or decision. This analysis involves making a list of all the costs and benefits associated with each option available and then analyzing the outcome by comparing these costs and benefits. This method helps to identify an outcome or project that will yield the most efficient or profitable outcome. It is sometimes referred to as a ‘decision-making tool’ as it helps decision makers to identify the best course of action. It also helps to understand which potential costs and benefits should be taken into consideration, when making decisions.