Cost Benefit Analysis

1. What is it? 

 Before going any further, it is important to first understand what is Cost Benefit Analysis (CBA) ? 

- It is a methodology used to evaluate the total anticipated cost of a project compared to the total expected benefits over the appropriate period of time in order to determine whether a proposed project is worthwhile for a company or team. 

To put it simply, CBA is a simple and quantitative method to assess investments in WHS initiatives.

 2. Reasons why CBA is a good thing 

 There are several important advantages of conducting a Cost Benefit Analysis, as this evaluative method is relatively straight forward, easy to use and understand. Furthermore, comparability is another advantage of this tool, by quantifying all costs and benefits a CBA helps managers easily compare various initiatives against each other and turn a subjective argument into something far more objective. 

3. Limitations 

 Since some costs and benefits are non-monetary in nature, subjectively measurements can potentially lead to inaccurate and misleading CBA results. Additionally, potential inaccuracies in calculating present value such as unrealistic discount rate can also result in misleading analyses.

4. Should the Cost Benefit Analysis be carried out in every organisation?

If we apply Cost Benefit Analysis to WHS initiatives, particularly in safety engineering, the comparisons or the alternatives should be monetary or safety valuation of 1) the risk of performing a task or 2) the benefit of performing a task

From my points of view, even few drawbacks still exist, conducting a Cost Benefit Analysis to WHS initiatives should be carried out in every organisation. Taking ANGLO AMERICAN MINING COMPANY for example, perfunctory safety check can cause shut down of a really huge mining company.

5. In Navitas’s context

For an organization like Navitas Professional Service, this method is also important because the higher costs in safety aspects, like WHS training courses for staff, can bring benefits to such company with lower risks in future hazard costs of the company.

To sum up, it is very necessary for Navitas Professional Services to conduct a Cost Benefit Analysis in the area of WHS.