Factors for a reliable Cost Benefit Analysis

There are some specific necessary factors for a reliable CBA. These factors are the following:

1. The CBA time period should match the system life cycle. The system life cycle includes the following stages/phases: (1) feasibility study (2) design (3) development (4) implementation (5) operation and (6) maintenance. A system life cycle ends when the system is terminated or is replaced by a system that has significant differences in processing, operational capabilities, resource requirements, or system outputs.
2. The analysis has to include at least three alternative solutions that consider alternative ways of fulfilling the demanded project.
3. In the end of the analysis the decision maker should do a sensitivity analysis for the costs and the benefits considered during the previous steps. Sensitivity analysis identifies those input parameters that have the greatest influence on the outcome, repeats the analysis with different input parameter values, and evaluates the results to determine which, if any, input parameters are sensitive. If a relatively small change in the value of an input parameter changes the alternative selected, then the analysis is considered to be sensitive to that parameter.