What Is a Cost-Benefit Analysis (CBA)? A cost-benefit analysis is a systematic process that businesses use to analyze which decisions to make and which to forgo. The cost-benefit analyst sums the potential rewards expected from a situation or action and then subtracts the total costs associated with taking that action.

Who conducts cost-benefit analysis?

For example, the U.S. Securities and Exchange Commission has to conduct cost-benefit analysis before instituting regulations or de-regulations. CBA has two main applications: To determine if an investment (or decision) is sound, ascertaining if – and by how much – its benefits outweigh its costs.

What is the concept of cost-benefit analysis?

A cost-benefit analysis is the process of comparing the projected or estimated costs and benefits (or opportunities) associated with a project decision to determine whether it makes sense from a business perspective.