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Building a Case for Change
Published in James William Martin, Lean Six Sigma for the Office, 2021
Nothing promotes project implementation more than a highly favorable cost benefit analysis. A cost benefit analysis is a financial analysis that calculates the net benefits of solutions after implementation costs are subtracted from them. Figure 7.1 shows that a cost benefit analysis begins upfront when the team creates its project charter. The benefits should be integrated into the annual operating plan for higher productivity. To do this, project charters are created top down to ensure benefit and resource alignment. Using the operating model shown in Figure 1.1, the project is classified based on its expected root causes and general solutions. Some will be Lean focused, others Six Sigma focused, and still others are analytical or require an APM approach.
Economic analysis of projects
Published in J.C. Edison, Infrastructure Development and Construction Management, 2020
The proposed project is economically feasible if the benefits of the project exceed its costs. This will be indicated by an NPV greater than zero (NPV > 0). One cannot rank a number of alternative investment projects by calculating the NPV of a proposed project because the NPV of a project is predominantly positively linked to the project’s investment cost or scale. The benefit–cost ratio is usefulin such a situation since it can evaluate the project in terms of benefits per one monetary unit of cost. A project is worth investing in only if it meets the criterion where the B/C ratio is greater than 1.Cost benefit analysis is an applied economic technique that attempts to assess a government program or project by determining whether societal welfare has or will increase (in the aggregate more people are better off) because of the program or project. At its greatest degree of usefulness, Cost-Benefit Analysis can provide information on the full costs of a program or project and weigh those costs against the dollar value of the benefits. The analyst can then calculate the net benefits (or costs) of the program or project, examine the ratio of benefits to costs, determine the rate of return on the government’s original investment, and compare the program’s benefits and costs with those of other programs or proposed alternatives.(Kee, 2005)
Regulation and Public Policy
Published in Wayne T. Davis, Joshua S. Fu, Thad Godish, Air Quality, 2021
Wayne T. Davis, Joshua S. Fu, Thad Godish
Use of cost-benefit analysis is limited (in fact, rendered unusable) by a variety of practical and theoretical problems. First, it assumes that both damage and control costs are easily quantified. Although true for control costs, the uncertainty of the nature and extent of costs and damages associated with the effects of pollutants on humans and the environment makes their quantification very difficult. Second, it assumes that damage costs to public health and welfare above the point of optimization are socially and politically acceptable. A cost-benefit-based control strategy would pose a public policy nightmare (more so than is already the case) for regulatory officials who would have to make decisions on who or what is to be protected.
Economic analysis of public investment in alternative agricultural water management schemes: a case study from northern Ghana
Published in Water International, 2023
Bedru B. Balana, Mamudu A. Akudugu
Cost–benefit analysis was used to appraise the economic viability of investment at the community level or irrigation scheme level where the discounted flow of costs was compared with the discounted income streams over time from the large electricity-powered scheme for all irrigators (Boeke et al., 2021). Cost–benefit analysis is an analytical approach often used to guide economic agents in resource allocation or investment decisions or policy alternatives. The basic rationale for cost–benefit analysis is rooted in the ‘principle of potential compensation’ (Hicks, 1939; Kaldor, 1939). This principle states that an action is more efficient if those that are made better off could potentially compensate those that are made worse off. In situations where the benefits and costs of an action are spread over time, decisions are based on comparing the present value of benefits and costs. Regarding decisions related to investment or interventions on management or utilization choices, the role of cost–benefit analysis is to measure the benefits and costs of the different options, and consequently cost–benefit analysis enables the comparison of the two systems: with the proposed change and that without it (Clark, 1996; Pearce et al., 2006).
Decomposed fuzzy cost-benefit analysis and an application on ophthalmologic robot selection
Published in The Engineering Economist, 2023
One of the most common methods used in investment analysis is cost-benefit analysis (CBA). Cost-benefit analysis is a method that shows the sum of the benefits that businesses will get against the costs of a project, product, or service they invest in, and it is typically used to evaluate an investment decision. Although CBA is generally used for short-term decisions, it can also be used for long-term decisions. The CBA can takes into account the financial parameters of a potential project and also non-financial factors such as employee motivation or customer satisfaction. For example, companies often include numerous factors into the analysis when identifying potential benefits and costs, such as labor costs, social benefits, and other uncertain future factors.
First-year undergraduate students’ economic decision outcomes in engineering design
Published in The Engineering Economist, 2022
Tugba Karabiyik, Alejandra J. Magana, Brittany A. Newell
Economic decisions using the CBA method can be made to either assess or compare the alternatives for finding the best option or for determining if an investment or decision is beneficial in terms of its benefits outweighing its costs. The cost-benefit analysis involves adding up all the benefits of a project or product and then subtracting the costs of a project or product or calculating the ratios. If the projected benefits are higher than the costs, then that means that decision is potentially a good one.