What is the purpose of completing a cost/benefit calculation?

The purpose of completing a cost/benefit calculation is to assess the financial viability and potential value of a project. This process involves analyzing the costs associated with implementing the project against the anticipated benefits or savings that would result from it. By choosing to determine the savings associated with a project, organizations can make informed decisions about resource allocation and whether the investment justifies the potential return. This approach helps ensure that projects align with overall business objectives and can lead to improved efficiency and financial performance.

While documenting costs is certainly important for compliance and tracking purposes, the primary goal of cost/benefit analysis is to evaluate the potential advantages over the expenditures involved in a project. Similarly, getting approval for a project with low expenses and identifying staff reductions are considerations that reflect specific aspects of project management, but they do not encapsulate the broader purpose of a cost/benefit calculation, which is fundamentally to compare costs against expected benefits.