The NSW Government Guide to Cost-Benefit Analysis (CBA) sets out how to undertake cost-benefit analysis for NSW government initiatives. It also describes the role of CBA in supporting evidence-informed decision making and provides guidance for practitioners.
Cost-benefit analysis (CBA) is a holistic appraisal method that estimates the net economic, social, environmental, and cultural benefits of an initiative and expresses them in monetary terms. It is Treasury’s preferred method for assessing the relative merit of proposed initiatives, including policies, programs, regulatory changes and infrastructure projects.
CBA offers a structure for assessing initiatives in terms of their capacity to improve community welfare. Generally, the results are expressed as a benefit-cost ratio (BCR), which are the net benefits to society as a share of the required investment.
CBA is more than a financial analysis as it attempts to capture the full range of an initiative’s monetary and non-monetary benefits, including economic, social, environmental and cultural. Ideally it allows decision makers to directly compare the benefits and costs of initiatives on a like for like basis. Where impacts cannot be quantified or expressed in monetary terms, CBA can include a qualitative assessment.
CBA is an important component of business cases seeking funding through the NSW Budget process. It aims to provide comprehensive, evidence-based analysis to support decision makers.
