Cost-Benefit Analysis and Project Performance
Keywords:
Cost-benefit analysis, project performance, project management, decision-making, resource allocationAbstract
Aim: The aim of this study was to examine the impact of cost-benefit analysis on project performance.
Methods: The study was a thematic review of literature on effect of Cost-Benefit Analysis on Project Performance. Included in the review were data-based research articles, along with other articles containing helpful recommendations for improving project outcomes.
Results: The study found that cost-benefit analysis plays a crucial role in enhancing project performance by enabling project managers to make informed decisions based on a comprehensive understanding of costs and benefits associated with various project alternatives. This approach helps to prioritize resources and investments, reducing the likelihood of cost overruns and schedule delays. Additionally, cost-benefit analysis contributes to improved stakeholder communication and alignment, as it facilitates a transparent and quantifiable understanding of the project's value proposition. However, the study also identified challenges in implementing cost-benefit analysis, such as the need for accurate data, the difficulty in quantifying intangible benefits, and the potential for biases in decision-making.
Conclusion: Cost-benefit analysis can significantly improve project performance, but its effectiveness depends on addressing the inherent challenges and ensuring that decision-makers have access to accurate and reliable information. To maximize the benefits of cost-benefit analysis, organizations must invest in developing robust methodologies, fostering a culture of data-driven decision-making, and continuously refining their processes based on lessons learned from past projects.
Recommendation: Project managers, decision-makers, and stakeholders should focus on establishing accurate data collection methods, developing strategies to quantify intangible benefits, and addressing potential biases in the decision-making process. Moreover, organizations should invest in training and capacity-building to ensure that cost-benefit analysis is effectively integrated into project planning and management processes. Further research is also needed to explore the application of cost-benefit analysis in diverse project settings and to better understand its long-term effects on project performance.
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