A technique for enumerating and evaluating the total costs and total benefits associated with an undertaking.
It involves answering four key questions:
1 - which costs and which benefits are to be included
2 - how are the costs to be evaluated;
3 - what interest rate is to be used for assessing the relative weight to give to the parts of the stream of present and future costs and benefits arising in the undertaking; and
4 - what constraints are to be recognized within the analysis, such as the legal, administrative, and budgetary factors that may affect the overall feasibility or impact of the undertaking or the actual distribution of costs and benefits.
Several factors have influenced the extent to which the technique is used within the health sector: it can be very complex, time-consuming, and expensive; it has certain deficiencies; and the interpretation of results can present special challenges for policy makers.