Why is cost-benefit analysis important?

Decisions that are not data-driven can be significantly influenced by the opinion of the decision-maker, leaving more room for error. Cost-benefit analysis involves a company analyzing the cost of a particular plan (like a marketing campaign) or purchase (like new equipment) and then comparing it to the expected business benefits.

What are the pros and cons of cost benefit analysis?

Cost benefit analysis isn’t a perfect system though, and has some drawbacks that must be carefully balanced with its positive qualities when making a major life decision. Some cons include: Unknown variables, changes in circumstance, often based on assumptions. People could use CBA for important lifestyle decisions.

What is the difference between a feasibility study and a cost-benefit analysis?

A feasibility study determines whether a project or business initiative is feasible by determining whether it meets technical, economic, legal and market criteria. A cost-benefit analysis should be included in a business requirements document, a document that explains what a project entails and what it requires for its successful completion.