What is a cost-benefit analysis in construction?

A cost-benefit analysis in construction is fundamentally a systematic approach to evaluating the economic viability of a project. This involves comparing the total anticipated costs of a construction project against its expected benefits. By doing so, stakeholders can determine whether the project is feasible and worth pursuing. This analysis takes into account various factors such as direct costs, potential revenue generation, social benefits, and environmental impacts, thereby providing a comprehensive picture of the project's overall value.

This method is crucial for making informed decisions, as it helps to identify whether the benefits outweigh the costs, ensuring that resources are utilized effectively. It allows decision-makers to prioritize projects that promise not only to recover their initial investment but also to provide a satisfactory return. Thus, thorough cost-benefit analysis is essential for establishing the economic justification needed before commencing construction projects.