What is the function of a Cost Benefit Analysis (CBA)?

The function of a Cost Benefit Analysis (CBA) is to compare costs against expected benefits. This analytical tool is essential in decision-making processes, particularly in government and military acquisitions, where budget constraints and resource allocation are critical. By systematically evaluating the anticipated benefits of a project or initiative in relation to its costs, stakeholders are able to ascertain whether the investment is justified.

CBA helps determine the economic feasibility of a project by quantifying expected returns on investment, which can include direct financial benefits as well as indirect benefits like improved performance or enhanced capabilities. The outcome of this analysis aids decision-makers in prioritizing initiatives, ensuring that resources are allocated to projects that offer the maximum value relative to their costs. Thus, understanding the trade-offs in a CBA allows for more informed strategic planning and risk management in acquisition strategies.