Costbenefitanalyser

Costbenefitanalyser is a tool or framework used to perform cost-benefit analysis (CBA) of projects, policies, or programs. It aggregates the monetary costs and monetary or monetized benefits associated with an intervention to assess its overall value and justify decisions.

The analyzer typically requires defining the scope, identifying stakeholders, listing all relevant costs and benefits, and assigning monetary values where possible. It often includes both direct and indirect effects, opportunity costs, and any externalities. When benefits or costs are difficult to monetize, qualitative or semi-quantitative assessments may be included alongside monetary estimates.

Key methods within costbenefitanalyser outputs include net present value (NPV), which sums discounted future costs and benefits; the benefit-cost ratio (BCR), which compares total benefits to total costs; and, in some cases, internal rate of return (IRR) or simple payback periods. Discounting reflects the time value of money and is guided by a chosen social or opportunity cost of capital. Sensitivity analysis tests how results change with alternative assumptions, while distributional analysis considers how impacts are spread across different groups.

Applications span public sector evaluations (infrastructure, health, education, environmental policy) and private sector decision making. Limitations include the challenge of placing monetary values on nonmarket impacts, data uncertainty, and the influence of chosen discount rates and scope. A well-documented costbenefitanalyser report presents assumptions, data sources, limitations, and policy or investment implications for informed decision making.