Whilst many WHS professionals might not claim to be experts in CBA, with a bit of effort, it’s a very easy tool to master. The other benefit is that a well presented CBA is very easy to understand. In fact it’s hard to beat as a way of explaining what might be quite a technical idea in a ‘money and sense’ language that everyone understands.
Establishes organisational support & buy-in
Having a CBA helps to ensure that once the decision to move forward is made, the initiative will be better supported. It will have senior management support and organisational transparency – and therefore great momentum.
Educates the business
A CBA can be a fantastic way of explaining to the wider organisation the value of health & safety - and the true cost when things go wrong. Many organisations have a very naïve appreciation of the true cost of a health & safety incident. CBA offers a way of addressing that.
Provides objectivity
Being numbers-based, a CBA translates what is otherwise a subjective argument into something far more objective. It also helps you to more easily compare various initiatives against each other because you have adopted a common model.
Demonstrates maturity
Completing a CBA demonstrates that the costs and benefits of the initiative have been clearly thought out. It shows maturity of thinking and a command of the true business drivers. It also looks at the overall impact on the business – not just on the basis of WHS alone.
LIMITATIONS OF COST BENEFIT ANALYSIS
1. A CBA always requires guesswork based on the best past and present data available.
2.The further into the future you look, the more error prone the estimation will be.
3.Converting intangible benefits (and costs) into money values can also be a challenge.
A cost-benefit analysis can still, however, serve as a valuable decision tool, as well as a good way to clearly define project objectives and measure project success.
This video gives brief idea about advantages and disadvantages of CBA :
Cost-Benefit Analysis - a simple, quantitative way of formally deciding whether to go ahead with an initiative.
A cost-benefit analysis (CBA) subtracts the expected negative results of a project from the positives to help you decide whether it’s worth pursuing. The net result of a CBA is usually a dollar figure, so you must be able to assign a monetary value to every anticipated benefit and cost included in the analysis
A cost-benefit analysis helps you compare potential projects to see which would be the most beneficial to your business.
There are many reasons why organisations invest in health & safety initiatives and, up to a certain point, it’s simply about being a responsible business.
CBA is deemed to be useful to support a health and safety investment decision.
Having said that, CBA is an extremely useful tool for WHS professionals to use when circumstances dictate. It is also evident that as health & safety issue matures, CBA will become more common in our working lives.
LIMITATIONS OF COST BENEFIT ANALYSIS
