Cost-Benefit Analysis Checklist ( FINANCE )

This checklist is designed to guide the user through the process of performing a cost-benefit analysis to evaluate the financial feasibility of a project or investment. It ensures that all necessary factors are considered before making a decision.

• Define the Project Scope

  Clearly outline the goals and objectives of the project. Identify what is being analyzed and establish parameters for the analysis.

• Identify Costs

  List all potential costs associated with the project, including fixed, variable, direct, and indirect costs. Consider both initial and ongoing expenses.

• Identify Benefits

  Enumerate the expected benefits, both tangible and intangible, that will arise from the project. Include revenue generation, cost savings, and any qualitative benefits.

• Quantify Costs and Benefits

  Assign monetary values to each identified cost and benefit to enable comparison. This may require research or consultation with relevant stakeholders.

• Calculate Net Present Value (NPV)

  Use the NPV formula to assess the value of the project by discounting future benefits and costs to present value terms.

• Analyze the Return on Investment (ROI)

  Calculate the ROI by comparing the net benefits to the total costs to determine the financial return relative to the investment.

• Conduct Sensitivity Analysis

  Evaluate how changes in key assumptions (such as cost estimates or benefit projections) would affect the outcome of the analysis.

• Prepare Summary Report

  Compile the findings into a concise report summarizing costs, benefits, NPV, and ROI, providing a recommendation based on the analysis.

• Review and Approve

  Present the analysis to stakeholders for review and approval before proceeding with the project. Ensure all concerns are addressed.