Cost Benefit Analysis
Cost Benefit Analysis (CBA) is a systematic approach to evaluating the financial and non-financial advantages and disadvantages of a project, decision, or policy by comparing its total expected costs against its total expected benefits. It helps quantify the value of an investment or action in monetary terms, often using metrics like Net Present Value (NPV) or Benefit-Cost Ratio (BCR). This methodology is widely used in business, economics, and public policy to support data-driven decision-making and prioritize resources effectively.
Developers should learn and use Cost Benefit Analysis when evaluating technical decisions, such as choosing between software architectures, adopting new technologies, or implementing development processes, to ensure investments align with business goals and maximize return on investment. It is particularly valuable in project planning, resource allocation, and risk management, helping teams justify expenditures, compare alternatives objectively, and communicate the value of technical initiatives to stakeholders. For example, it can be applied to assess the trade-offs of migrating to a cloud platform versus maintaining on-premises infrastructure.