Cost-benefit analysis

The Office for National Statistics (ONS) Quality Centre are currently working on improving the approved ONS cost-benefit model which was developed under the Statistical Modernisation Programme.

Cost-benefit analysis, in its simplest term, is the measurement of the potential benefit of a project against the potential cost. The problem with this is that although costs can be easily estimated, it is hard to put a financial value on potential benefits. An improvement project may increase the accuracy of a survey; increase in accuracy is not a financial gain. It therefore cannot be directly measured in monetary terms. Instead, the financial benefit is normally measured indirectly as a percentage of a known proxy value.

Although cost-benefit analysis aims to be as accurate as possible in putting a financial value to potential benefits, the most important aspect is that the analysis is reliable. This means that as long as the parameters used to measure an improvement project remain the same, the results of cost-benefit analysis on different projects will be directly comparable.

For further information, please contact the ONS Quality Centre