A cost benefit analysis is the process of identifying, measuring, and comparing the benefits and costs of an investment project or program.
“An investment project makes a difference and the role of benefit-cost analysis is to measure the difference…the world with the project and the world without the project.” Benefit- Cost Analysis by Harry Campbell and Richard Brown, .
Business cases and cost-benefit analysis focus on economic efficiency: the allocation of scarce resources in a way that maximizes the resulting net benefits of that resource allocation. And both aim for the highest return on investment.
But a business case is much more than a cost benefit analysis.
A business case makes an argument by recommending an investment, while a cost-benefit analysis is a calculation.
Although a cost-benefit analysis is an element of a business case -- the financial or ROI model.-- it's incomplete. Similar to a legal case, which has facts and legal principles as elements, an advocate still has to pull together multiple elements to make a compelling business case. Other elements include pinpointing a painful problem, creating real solution alternatives, and assessing risks and assumptions.
This is an extract from the forthcoming The One-Page Business Case. Sign Up for occasional book and blog updates.