Cost-Benefit Analysis
What is Cost-Benefit Analysis?
Cost-Benefit Analysis is a systematic, evidenced-based approach for appraising and evaluating the economic, social, environmental, and cultural impacts of projects, programs, and policies, relative to their costs. Widely used by governments, cost-benefit analysis is the approach preferred by most treasury departments due to its comprehensive and evidence-based method of analysis.
Why Choose our Cost-Benefit Analysis Services?
Proven Experience: We have successfully completed more than 150 cost-benefit analysis projects for 25 different state and federal government departments and agencies.
Technical Expertise: We have deep technical expertise in cost-benefit analysis across diverse sectors.
Experts in CBA for Government Advertising: Since 2011, we have helped NSW agencies prepare cost-benefit analyses for major government advertising campaigns, ensuring compliance with statutory and other requirements, and supporting them through approval processes. Learn more here.
Independent & Evidenced-Based Approach: Our independent, evidence-based approach to cost-benefit analysis helps organisations to appraise options, evaluate outcomes, inform decision-making, and demonstrate value.
Cost-Benefit Analysis Training and Capacity Building
In addition to undertaking cost-benefit analyses, we also provide professional training and capacity building services in cost-benefit analysis. Our workshops - available as customised in-house or public sessions, in-person or virtual - equip participants with the essential skills and knowledge in cost-benefit analysis that they need.
Resources for Cost-Benefit Analysis
Planning or commissioning a cost-benefit analysis? Explore our comprehensive selection of useful Resources for Cost-Benefit Analysis to guide you through the process.
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Contact us today to discuss your project or training needs.
Examples of Our Work
Australian and New Zealand National Council for fire and emergency services (AFAC) – Australian Fire Danger Rating System Program
Until now, the science underpinning fire danger ratings has largely remained unchanged for more than 50 years. Yet during that time, our understanding of fire and fire behaviour has changed enormously.
Fire Danger Ratings as known by Australians for many years.
The Australian Fire Danger Rating System (AFDRS) Program is redesigning the forecasting of fire danger in Australia. The AFDRS Program is a project of national significance being developed collaboratively by state, territory, and Commonwealth governments.
The AFDRS Program aims to improve public safety and reduce the impacts of bushfires by:
Improving the scientific accuracy behind fire danger predictions.
Improving the way that fire danger is communicated.
Providing government and industry with better decision-making tools.
Reducing the costs associated with bushfire impacts.
Following the development and testing of a working Research Prototype, we worked with the AFDRS Program Team to prepare a cost-benefit analysis in support of the Gateway Review process for the next phase (Phase Three) of the AFDRS Program to commence in 2019. That phase was subsequently funded and has since delivered the following:
An enhanced fire behaviour index using findings from the Phase Two research prototype.
Software and tools to collect and analyse data, and to provide agencies with interrogable fire danger information that will improve decision-making.
A simplified fire danger rating framework (see below), including a unified system of clear, concise and action-oriented messaging that can be easily understood and responded to by the community.
Research prototypes for other indices that could potentially prove useful to further enhance decision-making.
The new Fire Danger Ratings came into effect nationally from 1 September 2022. Instead of the six ratings shown above, the new Fire Danger Ratings now have four - Moderate, High, Extreme and Catastrophic.
From 1 September 2022, Australia has a new, simplified, action-oriented fire danger rating system.
Visit Australian Fire Danger Rating System for more information on the new ratings and visit AFAC for more information on the Australian Fire Danger Rating System Program including community and technical resources.
Cancer Institute NSW – Bowel Cancer Screening Campaign
National Bowel Cancer Screening Program test kit
Bowel cancer is Australia’s second biggest cancer killer. However, if detected early, bowel cancer can be successfully treated in more than 90% of cases. Despite this, only 38% of eligible people in NSW currently take part in the National Bowel Cancer Screening Program, a Commonwealth government-funded program that invites people every two years aged 50 to 74 years to do a free bowel screening test.
The Cancer Institute NSW is responsible for developing, implementing, and evaluating social marketing programs to encourage bowel cancer screening in NSW.
We worked with the Cancer Institute NSW to prepare a cost-benefit analysis for their 2021 bowel cancer screening campaign in accordance with Section 7 (1) of the Government Advertising Act 2011 and other relevant requirements.
The 2021 campaign included the ‘There’s A Lot We Can Do’ creative. Fronted by Australian physician and media personality, Dr Norman Swan, the advertisement encourages people between 50-74 to use the Home Test Kit in a bid to fight bowel cancer.
More About the Bowel Cancer Screening Campaign
Resources for Cost-Benefit Analysis
If you are planning or commissioning a cost-benefit analysis, useful resources include:
Australian General Guidance on Cost-Benefit Analysis
NSW Government Guide to Cost-Benefit Analysis (TPG23-08) - a Treasury Policy and Guidelines paper that sets out how to undertake cost-benefit analysis for NSW government initiatives. It also describes the role of cost-benefit analysis in supporting evidence-informed decision making and provides guidance for practitioners. It is central to the NSW investment framework for the appraisal and evaluation of public investments.
NSW Government Technical Note on Ex-Post Cost-Benefit Analysis (TPG22-22) - supplementary guidance for undertaking ex-post cost-benefit analysis when an initiative is underway (interim or ‘in media res’ ex-post CBA) or completed (final ex-post CBA) to assess the net social benefits of an implemented initiative.
Commonwealth Grants Rules and Principles 2024 - Updating the previous Commonwealth Grants Rules and Principles 2017, the new guidelines formalize the requirement for cost-benefit analysis: “Grants administration should provide value, as should the grantees in delivering grant activities. This requires the careful comparison of the costs and benefits of feasible options in all phases of grants administration.”
Australian Government Guide to Policy Impact Analysis (2023) - replacing the Australian Government Guide to Regulatory Impact Analysis, the new guide is intended to inform policy making by the Australian Government by ensuring that advice to government is accompanied by robust analysis, data, and an accurate overview of the effects of proposed policies on the community. This analysis includes measuring the net benefit of each policy option by taking into account all of the costs and benefits.
Australian Government Cost-Benefit Analysis Guidance Note (2023) - this note provides guidance to policy makers on the use of cost-benefit analysis for policy proposals, and is relevant for policy makers working on proposals made by both the Australian Government or intergovernmental decision-making bodies.
Victoria State Government Economic Assessment Information Portal - access to guidance on how to undertake an economic assessment (cost-benefit analysis is the preferred form of economic assessment) to inform decision making across the Victorian Government.
Victorian Guide to Regulation (2024) - guidance issued by Victoria State Government for developing policy proposals and regulatory impact assessments.
Victorian Economic Evaluation for Business Cases - Technical Guidelines (2013) - guidelines issued by Victoria State Government for the economic appraisal of investment decisions (with cost-benefit analysis the preferred approach) in relation to economic and social infrastructure.
Queensland Project Assessment Framework - Cost-Benefit Analysis Guidelines (2024) - provides practical guidance regarding the range of issues to consider when conducting a financial and economic analysis of project options at either the preliminary appraisal/evaluation or business case development stages of the project lifecycle.
Key Texts and Journals on Cost-Benefit Analysis
Society for Benefit-Cost Analysis - working to improve the theory and practice of benefit-cost analysis and to support evidence-based policy decisions.
Journal of Benefit-Cost Analysis - the only journal devoted exclusively to benefit-cost analysis, it publishes theory, empirical analyses, case studies, and techniques.
Cost-Benefit Analysis Concepts and Practice 5th Edition (2018) by Anthony E. Boardman (Author), David H. Greenberg (Author), Aidan R. Vining (Author), David L. Weimer (Author) - widely cited, it is recognized as an authoritative source on cost-benefit analysis.
Cost-Benefit Analysis Tools
NSW Treasury Cost-Benefit Analysis Tool (2024) - excel workbook developed to support analysts to conduct calculations in cost-benefit analysis.
NSW Treasury Rapid Cost-Benefit Analysis Tool User Guide (2024) - provides details of the Tool’s functions, parameters and inputs and provides a step-by-step guide in how to use the Tool.
NSW Treasury Quality Assessment Tools (2024)
Ex-ante Cost-Benefit Analysis Quality Assessment Tool supports reviews aligned to the Guide to Cost-Benefit Analysis (TPG23-08)
Ex-post Cost-Benefit Quality Assessment Tool supports reviews aligned to the Evaluation Guidelines (TPG22-22), Guide to Cost-Benefit Analysis (TPG23-08) and Ex Post Cost-Benefit Analysis Technical Note.
New Zealand Treasury CBAx Tool and User Guidance (2023) - spreadsheet model containing a common database to help New Zealand organisations monetise impacts and do cost-benefit analysis.
International Guidance on Cost-Benefit Analysis
The Green Book (UK 2022) and accompanying guidance and documents - guidance issued by HM Treasury on how to appraise and evaluate policies, programs and projects. Supplementary materials, which provide more detailed guidance on specific issues and applying the Green Book in particular contexts, include:
Value for Money (2022) - shows how the best value for money option is reached when applying the Green Book method.
Wellbeing Guidance for Appraisal (2021) - explains where, when and how wellbeing concepts, measurement and estimation may contribute to the appraisal of social, or public value.
Valuation of energy use and greenhouse gas emissions for appraisal (2021) - providing specific guidance on how analysts should quantify and value energy use and emissions of greenhouse gases.
Enabling a Natural Capital Approach (2023) - provides guidance, tools, and resources for considering and incorporating the value of the natural environment for people and the economy in policy and decision-making.
Cultural and Heritage Capital Portal - brings together research, guidance and estimates to help government and private organisations consider the value of culture and heritage capital.
U.S. Office of Management and Budget - OMB Circular No. A-4: Regulatory Analysis (Nov 2023) - provides guidance to Federal agencies on how to conduct regulatory analysis, and standardizes the way benefits and costs of Federal regulatory actions are measured and reported. This Circular supersedes and rescinds the previous version of OMB Circular No. A-4, issued on September 17, 2003.
U.S. Office of Information and Regulatory Affairs - Guidance for Assessing Changes in Environmental and Ecosystem Services in Benefit-Cost Analysis (2024) - represents OMB’s recommended best practices for ecosystem services analyses in agency benefit-cost analyses.
European Commission Economic Appraisal Vademecum 2021-2027 - provides guidance on economic appraisal methodologies (including cost-benefit
analysis, cost-effectiveness analysis, least-cost and multi-criteria analysis) in support of the early screening of investments.
Economic Appraisal of Investment Projects at the European Investment Bank (2023) - presents how the EIB conducts economic appraisal (including its use of cost–benefit analysis, cost-effectiveness analysis and multicriteria analysis) across the various sectors of the economy where it operates.
Reference Case Guidelines for Benefit-Cost Analysis in Global Health and Development (May 2019) - guidelines developed out of the ‘'Benefit‐Cost Analysis Reference Case: Principles, Methods, and Standards’ project, initiated by the Bill & Melinda Gates Foundation in 2016.
OECD: Cost-Benefit Analysis and the Environment (2018) - This book explores recent developments in the theory and practice of environmental cost-benefit analysis.
New Zealand Guide to Social Cost Benefit Analysis (2015) - guidance issued by the New Zealand Treasury on carrying out social cost-benefit analysis.
United States Environmental Protection Agency Guidelines for Preparing Economic Analyses (2016) - provides a framework for performing economic analyses of environmental regulations and policies and incorporating recent advances in theoretical and applied work in the field of environmental economics.
European Commission Guide to Cost-Benefit Analysis of Investment Projects (2014) - practical guidance on major project appraisals including common principles and rules for application of the cost-benefit analysis approach in different sectors.
Asian Development Bank: Cost-Benefit Analysis for Development (2013) - provides an overview of recent methodological developments in cost–benefit analysis as well as suggested improvements in the economic analysis of projects in selected sectors through case studies.
Australian Technical Guidance on Cost-Benefit Analysis
Australian Government: Office of Impact Analysis Guidance Note, Value of Statistical Life (2024) - provides guidance on the use of estimates of the value of statistical life in cost-benefit analysis.
First Nations Investment Framework TPG24-28 (2024) - a guide to good practice in working with First Nations people and communities on the design, appraisal, and evaluation of initiatives.
Transport for NSW Cost-Benefit Analysis Guide (2024) - sets out the principles, concepts, methodology and procedures to use when developing CBAs for NSW Transport cluster initiatives. The Guide is supported by extensive Technical Guidance which comprises a suite of frameworks, economic appraisal policies, guidelines, and tools, to support the development of CBAs.
Disaster Cost-Benefit Framework TPG23-17 (2023) - developed by NSW Treasury, the framework guides use of cost-benefit analysis for disaster resilience initiatives (disaster resilience includes the prevention, preparedness, response, and recovery phases of disaster management). The framework sets out guiding principles to support development of initiatives that support disaster resilience as well as methods, data sources, and standard parameters to support their appraisal. The Framework also includes a Flood Cost-Benefit Analysis Tool to support CBA of flood resilience initiatives.
Framework for Valuing Green Infrastructure and Public Spaces (2023) - developed by NSW Department of Planning and Environment together with NSW Treasury, the framework provides a standardised, robust, and comprehensive way to identify and quantify costs and benefits associated with green infrastructure and public spaces. This framework is complemented by technical appendices for recommended approaches.
Technical Note to TPG23-08: Carbon value in cost-benefit analysis - the NSW Government Guide to Cost-Benefit Analysis (TPG23–08) states that the cost of CO2 emissions (and other emissions measured in CO2 equivalent emissions), or the benefits of reduced CO2 emissions, should be included in CBA where the cost or benefit is likely to materially affect the NPV and BCR. This technical note sets out the method, consistent with the discussion in the CBA Guide, to calculate carbon values for all initiatives.
NSW Government Framework for Valuing Green Infrastructure and Public Spaces (2023) - framework providing detailed guidance for undertaking cost-benefit analysis of projects, programs and policies relating to green infrastructure and public space.
Australian Transport Assessment and Planning Guidelines - T2 Cost Benefit Analysis (2022) - CBA is the core appraisal tool in the ATAP Guidelines framework. This part of the Guidelines, ‘T2’, provides general guidance for undertaking CBA of transport initiatives and their associated options.
Infrastructure Australia Assessment Framework Guide to Economic Appraisal (2021) - guidance on various economic appraisal techniques and the circumstances in which they should be applied within the Assessment Framework.
Queensland Government Cost Benefit Analysis Guide: Business Case Development Framework (2021) - provides practical guidance for undertaking robust and transparent cost-benefit analysis in support of business cases for infrastructure proposals (supports the Stage 2: Options Analysis and Stage 3: Detailed Business Case).
NSW Health Guide to Cost-Benefit Analysis of Health Capital Projects (2018) - sets out the principles, concepts, methodology and steps to be used in the evaluation of major health capital project proposals.
Australian Government Research Report: Environmental valuation and uncertainty (2014) - general guidance for undertaking cost-benefit analysis of policies that are likely to have an environmental impact, or that are characterised by significant uncertainty.
Productivity Commission - Environmental Policy Analysis: A Guide to Non-Market Valuation (2014) - examines issues around use of non-market valuation methods in environmental policy analysis.