Cost Benefit Analysis and Cost Effectiveness Analysis

Cost Benefit Analysis and Cost Effectiveness Analysis

In the 5^th session of module V we learnt about two different analysis used in the evaluation of a program, both of them represent differences in function also we can say that:

In the evaluation of a program we need to know the differences between CBA and CEA, everyone can be used in the evaluation of a program in order to determine the cost of the benefits that represent into the project

Differences between Cost-benefit and cost-effectiveness analysis

Cost Benefit Analysis (CBA)

Both costs and benefits are evaluated in dollars or monetary results; its value is quantitative and can be measurable

Cost Effectiveness analysis (CEA)

The costs of alternative means of achieving some benefit are compared.

The benefit itself is not evaluated in money.

In the second method we can take into consideration that the most important to use this program analysis is the benefits of people like:  lives saved, people attended, security and safe. The results can achieved in no measurable means because the benefits can be measurable or can not be countable, the benefits are qualitative

Also we refers to an important tern to take into consideration we  talk about those analysis that is refers to  NPV net present value NPV is an indicator of how much value an investment or project adds to the firm. The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. 

                                        CBA

CBA is a quantitative analytical tool to aid decision-makers in the efficient allocation of resources.

CBA helps to determine its value answer the following questions:

Could the outcomes a benefit to the entire community?

Could be measurable the benefit of the program?

Should continue with the same program runed?

CEA

But in order to talk about the Cost effectiveness analysis we need to take into account that also requires taking a cost of a program costs, although the benefit in the end isn’t valuable in dollars. 

In cost-effectiveness analysis, benefits (or effects) are expressed on some quantitative scale other than dollars.