Cost-benefit analysis
This is a technique for deciding whether a project is worthwhile. It is also useful for comparing two or more plans. In the analysis financial costs are weighed against benefits. For some projects the final decision rests simply on profitability in terms of money. In others the analysis takes into account how ‘good’ a project is from an ethical point of view. Like risk-benefit analysis, this is consequential ethics in action.
The first stage is to estimate how much money a project will cost. You can see the Costs of (some) big projects and compare them with the costs of launching satellites. Analysing benefits so that you can balance them against costs is more difficult, but there are measuring tools that can be used to estimate benefits in terms of numbers. They are good for comparing two or more plans.
Going over budget?
A cost-benefit analysis in 2002 estimated the total cost of hosting the Olympic Games in London in 2012 to be £3.6 billion. By February 2007 newspapers claimed the cost had risen to £5.6 billion.
What does this tell you about the difficulty of making estimates and their accuracy?
Working out the costs and benefits of a large-scale project is very complex but here is a case study of a simple project in your home. The project is to buy energy-efficient light bulbs instead of ordinary light bulbs. Is this a good plan?
Now go to Changing the light bulbs
Risk benefit analysis
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