Cost-Benefit Analysis and Cost-Effectiveness Analysis

But, what are Cost-Benefit Analysis and Cost-Effectiveness Analysis?
CBA and CEA, both it refer to or is commonly done for financial (cost and benefits). CBA is converted into monetary (money) unit; on the contrary CEA is converted into non-monetary (no money) unit. You can use those to make a comparison related with cost and benefits. Although a cost benefit analysis can be used for almost anything, it is most commonly done on financial things.



Also Cost-Benefits are program outcomes expressed mainly as money. CBA help to appraise, or assess, or maybe in the case for a project, programme or policy proposal; Cost–benefit analysis is often used by individual’s and social perspective; but also by governments to evaluate the desirability of a given intervention. It is heavily used in today's government.

There are some basic set of key cost-benefit indicators, for example:
* NPV (net present value)
* PVB (present value of benefits)
* PVC (present value of costs)
* BCR (benefit cost ratio = PVB / PVC)

CBA help you to plan in very ensure way the cost and benefits, if you want to invest in something, or if you want to do something with which you are unsure about it, because you think it is not going to work. With this you can plan and see if you should do it. And also if you have a business you can use it to see what your costs are and what are the benefits of your business has given you.



And the main differences between CBA and CEA are:
Cost-benefit analysis
* Both costs and benefits are evaluated in monetary (dollar) and compared.



Cost-effectiveness analysis
* The costs of alternative means of achieving some benefit are compared.
* The benefits itself is not evaluated in dollars.