ABSTRACT
A public sector project, the term cost benefit analysis is usually used in place of an investment appraisal exercise or capital appraisal justification. The two are similar except the Cost Benefit Analysis (CBA) will also include justification of all costs and consequences. Because of this difficulty in evaluation of the many benefits in the public sector, market or shadow prices can be used. There are four techniques most commonly used in organisations are payback; accounting rate of return; discounted cash flow methods net present value; and internal rate of return. A buyer needs to be aware that the source of the finance could affect the viability of the project. For instance, when assessing a project relating to changing suppliers, this essentially means a source of finance related to working capital. The buyer should be aware of its total cost of ownership, whether it is a capital or a revenue item, although this usually refers to long-term assets.
