What is Cost-Benefit Analysis in Project Management?
FAQ | Project Management Guide
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Guide overview
- 1. Project Management Basics
- 2. Project Management Methodologies
- 3. Project Lifecycle
- 4. Project Management Software
- 5. Team Collaboration Tips
- 6. Agile Methodology Basics
- 7. Agile Project Management Tools & Techniques
- 8. Project Management Frameworks
- 9. Resources
- 10. Glossary
- 11. FAQ
- 12. Beginner: I Haven't Started the Project
- 13. Middle: Planning the Project
- 14. Advanced: Managing a Project
Guide overview
- 1. Project Management Basics
- 2. Project Management Methodologies
- 3. Project Lifecycle
- 4. Project Management Software
- 5. Team Collaboration Tips
- 6. Agile Methodology Basics
- 7. Agile Project Management Tools & Techniques
- 8. Project Management Frameworks
- 9. Resources
- 10. Glossary
- 11. FAQ
- 12. Beginner: I Haven't Started the Project
- 13. Middle: Planning the Project
- 14. Advanced: Managing a Project
Advanced Terminology
What is Cost-Benefit Analysis in Project Management?
A cost-benefit analysis (CBA) is a tool to evaluate the costs vs. benefits in an important business proposal. A formal CBA lists all project expenses and tangible benefits, then calculates the return on investment (ROI), internal rate of return (IRR), net present value (NPV), and payback period. Then, the difference between the costs and the benefits from taking action is calculated. A general rule of thumb is the costs should be less than 50% of the benefits, and the payback period shouldn't exceed a year. Some people also refer to cost-benefit analysis as benefit-cost analysis (BCA).
Further reading:
- Peter Taylor on Overcoming 7 Top Project Management Challenges (Book Review)
- Project Management Tools Every Event Planner Should Steal