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John Spacey, September 17, 2017 updated on January 23, 2022
Cost analysis is the process of modeling costs to support strategic planning, decision making and cost reduction. The following are common types of cost analysis.
EstimatesDeveloping and validating forecasts of costs. A fundamental step in planning a business, strategy, program or project.Calculating the expected total cost of ownership of an asset over its lifespan. Modeling and comparing costs and benefits such as product development costs versus revenue. Typically uses estimates such as payback period and return on investment.
Measures of cost efficiency based on the efficiency formula.Cost EffectivenessCost effectiveness is the process of comparing the costs of strategies relative to results where results aren't purely financial. For example, comparing different ways to improve your quality of life according to cost and non-financial results such as happiness.
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