What is Cost Benefit Analysis in Project Management?
It is a tool used when evaluating the costs vs. benefits in an important business proposal. A formal CBA lists all of the 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 are calculated. A general rule of thumb is the costs should be less than 50% of the benefits and the payback period shouldn't exceed past a year. Some people also refer to cost benefit analysis as benefit cost analysis (BCA).