It is beneficial to conduct a cost-benefit analysis prior to taking on a new project or continuing to develop an existing one. This process evaluates the risk and the reward of a particular development option. This involves consideration of all of the potential expense and revenue that may be created if a venture has forward motion. The conclusion of the analysis will clarify whether the project is financially viable, or if an alternative should be pursued. In essence, cost benefit analysis is a strategy where business choices are examined. The benefits of a particular development or project are given a sum total followed by the deduction of the related associated costs.
The role of the appraiser or consultant is to offer an independent third party review providing a series of summary discussions including probable servicing and development costs in order of magnitude, a summary of the taxation analysis and the economic spin-off, cost and benefit calculations. The primary recommendation of the appraiser focuses on assisting the client in making an informed decision as to whether the qualitative and quantitative benefits appear to offset the costs. This leads directly to a recommendation to proceed with the venture or ultimately making the critical decision to bring an end to the process.