Cost-Benefit versus Cost-Effective Analyses (Essay Sample)

Cost-Benefit versus Cost-Effective Analyses Student’s Name University Affiliation Course Instructor’s Name Date Cost-Benefit versus Cost-Effective Analyses The cost-utility analysis would be the most applicable cost-benefit analysis in the given scenario. The cost-utility analysis helps compare the costs and effects of interventions (Mishan & Quah, 2020). It helps to know if the costs are worth incurring based on the expected outcomes or effects of a process or initiative. The first step would be defining the time horizon or perspective. The second step will be collecting data. The collection of data is critical because, after analysis, it helps to conclude. The third step is the costing of resources. The step helps to know the worth of the resources in place (Mishan & Quah, 2020). The fourth and one of the most important steps is analyzing data. The fifth step is defining and measuring effects. The sixth step is adjusting the effects and costs of discounting and inflation. The seventh and last step is evaluating uncertainty. The data needed to conduct the cost analysis is the current market value and historical procurement. Revenue or costs are the financial resources needed in the analysis (Mishan & Quah, 2020). In this case, it is important to note that one of the main aims of the analysis is to compare the costs and benefits. Regarding human resources, the capability to conduct the analysis is critical. Due to the fact that this is an analysis that depends on data, the input of human resources can only be supportive and not part of the analysis (Mishan & Quah, 2020). The expected results would be the costs and benefits. The two variables are the expected results in the analysis because they help make a clear and accurate decision when compared. For example, if the benefits surpass the costs, the actions associated with the costs are justified (Mishan & Quah, 2020). On the other hand, if the costs exceed the benefits, the activities associated with the costs are not justifiable. The policy decision on price is the cost-effective analysis that would be applicable in this case. The reason behind this pertains to the decisions associated with the analysis. The analysis focuses on policies, and therefore, the policy decision on price becomes the most suitable, cost-effective analysis (Neumann & Sanders, 2017). The first step is specifying the set options. The step is important because it gives the whole analysis process a direction. The second step is deciding the costs and benefits that count. Doing so provides clarity in the whole analysis process. The third step is the identification of impacts and selecting measurement indicators (Neumann & Sanders, 2017). Measurement indicators provide a common scale that the data will be run against. The fourth step is predicting the impact on the life of the proposed regulation. The fifth step is monetizing. Monetizing helps create a universal value that can be used for the costs, benefits, or outcomes. The sixth step is discounting the future costs and benefits to obtain present values (Neumann & Sanders, 2017). The seventh step is computing the net present value for every option. The eighth step is performing sensitivity analysis, and the last step is concluding. Annual net benefits, benefits, and costs are the data sets useful in this process. (Neumann & Sanders, 2017) The financial resources needed in this case are costs and human resources are the knowledge of the analysts. The benefits are supposed to be monetized for the purposes of the analysis, but that does not meet that their origina...