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Delivering a first-rate transportation system for Seattle Scott Kubly, Director

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Cost Benefit Analysis

A cost benefit analysis (CBA) is done to determine how well, or how poorly, a planned action will turn out. Although a CBA can be used for almost anything, it is most commonly done on financial questions. CBA estimates and totals up the equivalent money value of the benefits and costs to the community of projects to establish whether they are worthwhile. These projects may be dams and highways or training programs and health care systems. A cost benefit analysis finds, quantifies, and adds all the positive factors--the benefits. Then it identifies, quantifies, and subtracts all the negatives--the costs. The difference between the two indicates whether the planned action is advisable. The real trick to doing a cost benefit analysis well is making sure you include all the costs and all the benefits and properly quantify them.

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