How does cost-benefit analysis support a business case?

Cost-benefit analysis is a fundamental component of a business case as it facilitates a systematic evaluation of the anticipated financial implications of a project or initiative. By comparing anticipated costs and benefits, organizations can make informed decisions about whether to proceed with a project. This analysis quantifies the expected expenses associated with project implementation against the projected benefits, which helps stakeholders understand the potential return on investment.

This process allows decision-makers to weigh options more effectively, considering not only the monetary aspects but also the timing and likelihood of those costs and benefits materializing. A well-executed cost-benefit analysis offers critical insights that can significantly influence the approval or rejection of a business case, as it emphasizes the overall value that the project is expected to deliver.

While evaluating stakeholder interests and assessing team performance are important aspects of project management, they do not directly relate to the financial justifications that typically underpin a cost-benefit analysis. Similarly, providing a timeline for project execution focuses more on planning rather than the direct financial evaluation central to a cost-benefit analysis.