Analysis Theory week 3 discussion 1 first post
What is a cost-benefit analysis and who should be responsible for conducting
one? When is the most appropriate time in the budget cycle to
conduct the analysis and why? Should each cost be subjective to a
cost-benefit analysis? Why or why not?
Our discussion first then the individuals response list references tell bad and good of post thanks
analysis is a rating of a particular program that determines whether it is
valuable and effective. This means that the positives are weighed or
rated against the negatives, economical factors, and the system or program is
determined to be of value economically. The real question that must be
asked and answered in this analysis is: Do the benefits to the pubic outweigh
the costs to the public? Our textbook states, “When the project’s impact
has been estimated, the worth of its benefits must then be gauged. Such
valuation permits comparison of project cost to project returns and helps
establish whether the undertaking increases the net well-being of the
region. (Mikesell, 2011, p. 312)
A financial analyst should complete
the cost-benefit analysis, due to the complex formulas needed to render the
proper analysis. An administrator should have a rough idea of how to
complete an analysis, but as stated, “The underlying logic of consumer surplus
is relatively simple, although its application is anything but
simple…” (Mikesell, 2011, p. 312) This statement is in reference to
a perceptual change that a customer does not receive a tangible good and is
therefore not paying a direct price. This is placed on a curve and is
based on that person’s value of the product. This is complex and a value
system must be determined for these types of services. A product or
program that has direct cost can also have non-tangible value (Lauria,
2007). The administrator can argue the program from the value to the
department as they should be the one who knows it best.
A true analysis must be based on
actual numbers as future numbers are based on estimates. The historical
numbers do not change, but the future can only be estimated (Mikesell,
2011). The future numbers can be based and estimated on specific formulas
but the actual numbers that appear may be very different, based on any number
of variables that may appear.
Every cost, particularly an
emergency services department, can be analyzed from a cost-benefit
position. But, this will be highly subjective as the perception of the
public is analyzed along with the perceptions of the officers. This is in
regards particularly to the perception of officers, the citizens and the
government in the vehicle program (Lauria, 2007). Many issues can
impact the cost-benefit analysis. This means that a cost-benefit analysis
of one program can be indicative of other programs. Cost-benefit analysis
should be used on those projects that have long-term impacts and a high demand
for public monies.
D. T. (2007, May 18). Cost-Benefit Analysis of Tacoma's Assigned Vehicle
Program. Police Quarterly, pp. 191-217.
J. L. (2011). Fiscal Administration: Analysis and Applications for the
Public Sector. Boston: Wadsworth Cengage Learning.