How is a program-level cost-benefit analysis conducted?

• A. Identify costs and benefits, quantify, discount future values if needed, compare alternatives, and present net value
• B. Focus only on costs
• C. Compare alternatives without quantification
• D. Count benefits without considering costs

Answer: (A)

A program-level cost-benefit analysis operates by capturing the full economic impact of a program and expressing it in a common metric, usually monetary value. The process begins with identifying all relevant costs—development, acquisition, implementation, operations, maintenance, and any risks or opportunity costs—and all relevant benefits, such as improved outcomes, increased efficiency, cost savings, or avoided expenses. Next, these costs and benefits are quantified as much as possible and expressed in monetary terms so they can be directly compared. For components that occur in the future, discounting is applied to bring them to present value, reflecting the time value of money and preference for sooner benefits over later ones. With the quantified, present-valued costs and benefits, you compare the alternatives to determine which yields the greatest net value, commonly summarized as net present value or a similar net metric, and present the overall economic impact to inform the decision. Focusing only on costs misses the benefits; comparing alternatives without quantification makes it impossible to judge true value; counting benefits without accounting for costs ignores the full economic picture.