ABSTRACT
The purpose of cost/benefit analysis is to give management a reasonable picture of the costs, benefits, and risks associated with a given system development project so they can compare it to other investment opportunities. The values generated by cost/benefit analysis resemble standard accounting and financial measures. The accuracy of a cost/benefit analysis can be no better than the accuracy of the underlying cost and benefit estimates. Before performing a cost/benefit analysis, the analyst must generate or otherwise obtain estimates of system development costs, tangible benefits by time period, and operating costs by time period. Before performing a cost/benefit analysis, the analyst must generate or otherwise obtain estimates of system development costs, tangible benefits by time period, and operating costs by time period. Development costs are one-time costs that occur before the system is released to the user.
