Cost benefit analysis (CBA), is a systematic method to estimating the strengths and weaknesses of alternatives used to determine options which provide the best approach to achieving benefits while preserving savings. It can be explained as a methodology for estimating all costs involved and possible profits to be derived from a business opportunity.
CBA takes into account both quantitative and qualitative factors for analysis of the value for money for a particular project or investment opportunity. Benefits to costs ratio and other indicators are used to conduct such analyses. The objective is to ascertain the soundness of any investment opportunity and provide a basis for making comparisons with other such proposals. All positives and negatives of the project are first quantified in monetary terms and then adjusted for their time-value to obtain correct estimates for the analysis.