In this day and age,
some people think that implementing safety norms or following safety rules is
expensive and not economical, but it is actually economic to follow safety
norms and implementing them according to recent study. There are many advantages
of conducting a Cost Benefit Analysis. Frist, it is data-driven which is more
scientific and logical and it can avoid personal biases. Second, it can simplify
the process of decision making since business decisions are more complex by
nature and the cost-benefit analysis can make it more straight forward by
comparing the cost spending. Last, it can also uncover hidden costs and
benefits which can maximize the profit.
Although cost-benefit
analysis is very beneficial, there are still limitations of it. First, it is
difficult to predict all variables. If analyst does not predict all the factors,
the outcome can be affected. Also, if the incomplete or inaccurate data are
applied in the cost-benefit analysis, the result will also be inaccurate or
incomplete. Furthermore, the cost-benefit analysis also removes the human
element, it could be difficult to reconcile moral or ‘human’ perspectives with
business case since there are non-monetary reasons an organization might decide
to process a project or decision which could affect the result of the analysis.
From a personal point
of view, the cost benefit analysis is more beneficial to be carried out in
organisations which are mainly doing short and mid-length projects. The cost
benefit analysis has greater potential of missing the mark for those projects
have longer timeframes. It is because that making accurate predictions for long
term project is normally more complex, and the long-term forecasts will be
inaccurately account for variables such as inflation, which could result in an inaccurate
analysis. Therefore, cost benefit analysis is not suit for every organisation,
it is suitable for organisations with short and mid-length projects.
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