The cost-benefit analysis is about comparing the costs and benefits of a project or a major activity and using this comparison as a basis for decision-making for the implementation of the project/activity. The costs and benefits are in most cases described in monetary terms to allow comparison. However, it is sometimes difficult to express welfare gains, for example, as a monetary unit. If at the end of the analysis the benefit is higher than the total cost, a project/activity should be implemented. Experience and expected values are used to determine costs and benefits in advance.
Experts who determine the expected values for the benefits and costs
1. Calculate/estimate total costs or determine expected value
2. Determine/estimate benefit or determine expected value
3. Comparison of benefits and costs
4. positive result --> execute project/activity
5. negative result --> withdraw project/activity
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