Question

To what extent is CBA useful to managers making decesions?

Answer 1

CBA is useful in decision making in the following manner:

1. All the costs related to a project and benefits that can be derived from the project are studied and analysed in detail under the CBA and that included unexpected costs and the benefits that may not be anticipated at the beginning of the project and when a descision is taken after such an indepth analysis of the risks and rewards associated with the project, the success of the project is much more.
2. CBA helps more effective utilization of the scarce resources . As managers who are involved in public desicion making using the CBA approach helps in understanding the strength and weaknesses of the various policy alternatives and then take the descisions that improve the operational capacity in the public domain.
3. CBA is useful for analysis of old and new projects both and therefore of great help to the managers in taking decisions regarding the development of new techniques for evaluation of the social benefits.
4. CBA is useful for businesses as it helps them prioritize their investments, choosing the investment opportunity with the greatest benefit and lowest cost to invest in first. In this way, you can achieve the fastest return on their investments and use remaining capital to fuel additional projects.
5. CBA helps in establishing goals and benchmarks for the organization in various fields like marketing , human resource and finance .