FINANCIAL MANAGEMENT
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The original idea of cost-benefit analysis (CBA) was set out in
broad terms by the French civil engineer and self-taught economist
Jules Dupuit in an article in 1848. In 1936, the U.S. Federal Navigation
Act required a cost-benefit analysis for a proposed federal waterway
infrastructure, and Ronald Reagan mandated the use of CBA in the
U.S. regulatory process. The process has been widely adopted by
governments, businesses and accountants as a tool to determine the
worth of any potential investment project.
In the law firm IT world, CBAs have oen been unduly simplistic
and therefore inaccurate. What issues should IT teams consider as
they plan and execute the CBA process? With some reasonable forward
thinking, IT teams can put forward a solid CBA that will be more
realistic –– and less likely to be ignored.
Definitions and Beginnings
Beerevaluation.org defines CBA as:
"A technique used to compare the total costs of a
programme/project with its benefits, using a common
metric (most commonly monetary units). This enables the
calculation of the net cost or benefit associated with the
programme."
The adopted process of undertaking a CBA is to:
» Select measurements and measure all costs and benefit elements
» Predict the outcome of costs and benefits over a relevant time period
by Neil Cameron of Neil Cameron Consulting
The Cost-Benefit Analysis Process:
Making an Educated Decision
The Cost-Benefit Analysis Process: Making an Educated Decision
