What are the limitations of cost-benefit analysis?

What are the limitations of cost-benefit analysis?

Cost-benefit analysis (CBA) has several limitations, including difficulty in quantifying intangible benefits, potential bias in assigning monetary values, and challenges in predicting future costs and benefits accurately.

Can you give me examples of intangible benefits?

Sure! Intangible benefits can include improved employee morale, enhanced brand reputation, and increased customer satisfaction, which are hard to quantify in monetary terms.

How does bias affect the analysis?

Bias can affect CBA by influencing how costs and benefits are estimated. For instance, stakeholders may overestimate benefits to justify a project or underestimate costs to make it seem more favorable.

Are there alternatives to cost-benefit analysis?

Yes, alternatives include multi-criteria decision analysis (MCDA), which considers various factors beyond just costs and benefits, and qualitative assessments that focus on stakeholder perspectives.

What should I consider when using CBA?

When using CBA, consider the accuracy of your data, the time frame for analysis, potential biases, and the inclusion of both tangible and intangible factors.