Un análisis de costos y beneficios implica determinar todos los posibles efectos positivos y negativos de una decisión.

Un análisis de costos y beneficios, a veces denominado por el acrónimo CBA, comienza con el encuadre adecuado de una pregunta de investigación. Esto implica determinar todos los efectos positivos potenciales de una decisión de inversión potencial particular y luego convertirlos en valores monetarios. Luego se sigue el mismo proceso para todos los costos asociados con un proyecto en cuestión. Cuando se han calculado ambos conjuntos de valores, simplemente se pueden comparar. Los proyectos cuyos beneficios superen sus costos deben emprenderse, mientras que aquellos cuyos costos excedan sus beneficios deben rediseñarse o cancelarse.

Este tipo de análisis es ideal para ciertos tipos de problemas. Cualquier proyecto que se pueda enmarcar fácilmente utilizando el valor de la moneda es una buena opción para dicho análisis. Los proyectos cuyos costos o beneficios son difíciles de convertir a este tipo de valoración son difíciles de analizar satisfactoriamente con análisis de costos y beneficios. El análisis de costos y beneficios requiere proyectos que son limitados tanto en tiempo como en espacio, o el cálculo de costos y beneficios es imposible. La elección cuidadosa de estos límites es fundamental para obtener resultados útiles.

One factor that may affect this decision is environmental impact, which is notoriously hard to assign a reasonable and widely-accepted cost value, as costs are long-term and widely-distributed. Another is the cost of human life, which can be computed, but not always in a manner that is free of controversy. A standard method for determining the value of human life for purposes of cost and benefit analysis relies on the choices that people make themselves when pricing risk of death or injury versus economic reward.

Computing the costs for a cost and benefit analysis involves simply determining the cash value of all the expenditures needed to implement a project. Concrete expenditures for capital and labor are easy to value. Other, less obvious costs must be valued as well and sometimes weighted by the probability that they will occur. Building an airport might impose a small but serious potential cost in the form of a risk of air crashes, and this must be computed.

The valuation of potential benefits proceeds in the same fashion as that of potential costs. Both physical and intangible benefits can be considered. Corporations that make use of cost and benefit analysis typically employ market pricing models to determine the relative value of each unit of benefit, which will tend to decline from unit to unit as consumers become less interested in acquiring more of a particular good.

When computing costs and benefits, time must also be factored into the decision making process. Money that must be spent in the future is less valuable than money that must be spent immediately, as that money can be expected to earn interest in the interim. This makes future expenditures less expensive in terms of current money, and the greater the time before the investment must be made, the greater the effective discount. Careful and conservative computation of the rate at which to discount future costs is crucial to the success of this technique.