Kostnyttebalansen

Kostnyttebalansen, often translated as cost-benefit analysis, is an economic technique used to assess the desirability of a project or policy by comparing its expected costs against its expected benefits. The core principle is to determine whether the anticipated advantages of an undertaking outweigh its financial and non-financial expenditures. This involves identifying, quantifying, and then comparing all relevant costs and benefits, which can be tangible or intangible, direct or indirect, and occur at different points in time.

The process typically begins with defining the scope of the analysis, including the project's objectives and the timeframe for evaluating costs and benefits. Next, all potential costs are identified. These can include direct expenses like labor and materials, as well as indirect costs such as environmental impact or opportunity costs. Subsequently, all potential benefits are identified, which might encompass increased revenue, improved efficiency, societal welfare gains, or enhanced public safety.

Once identified, costs and benefits are often monetized to facilitate comparison. This can be challenging for intangible items, requiring the use of valuation techniques. The net present value (NPV), which accounts for the time value of money by discounting future costs and benefits to their present value, is a common metric used in cost-benefit analysis. If the NPV is positive, meaning the present value of benefits exceeds the present value of costs, the project is generally considered economically viable. Other metrics like the benefit-cost ratio (BCR) and internal rate of return (IRR) are also frequently employed.