Methods of Project Cost-Benet Analysis
Cost-Benefit Analysis (COBA) is essentially an economic accounting framework for appraising the net social welfare contributed by a public investment. It enables calculation of the total monetary value of a project’s benefits relative to the total monetary value of the resources used. The purpose of COBA is to establish how much the former exceeds the latter. As we always face competing uses for available resources, we need to evaluate each in order to identify the alternative providing the highest net contribution to social welfare. COBA is therefore used mainly to rate and prioritize project alternatives although, as we shall see, its application is sometimes limited.