Cost /Benefit Analysis
This is one of the most commonly used techniques. Cost/benefit analysis is used
to analyze feasible alternatives in terms of the major costs involved together with
the major benefits that are expected to accrue. There are a number of assumptions
behind cost/benefit analysis:
1. All feasible alternatives have been examined;
2. All costs and benefits can be identified and measured and
3. The costs and benefits can be expressed in common (usually financial)
units.
In practice, these assumptions rarely hold true and managerial judgement is
required in order to incorporate all elements of the analysis into the decision making process. One common difficulty in applying this technique in technology led
initiatives such as e-banking is that many benefits such as enhancement in image
are difficult to quantify. Some costs are also well hidden and sometimes the true
costs of a project become apparent only several years after completion.