What is the purpose of a cost-benefit analysis in IT project planning?

A cost-benefit analysis in IT project planning serves to compare the expected benefits of a project against its associated costs. This analysis helps stakeholders assess whether the financial advantages outweigh the expenses, thereby providing a clear rationale for decision-making. By quantifying both the benefits and costs, the analysis facilitates informed choices regarding resource allocation, prioritization of projects, and justification for investments.

While determining project feasibility involves evaluating whether a project can be successfully implemented, which is a broader assessment, the primary focus of cost-benefit analysis is specifically on measuring benefits against costs. Evaluating potential return on investment (ROI) is a related but separate concept that can stem from the results of the cost-benefit analysis. Risk and compliance assessment, although crucial to IT project planning, also falls outside the specific scope of a cost-benefit analysis, which is centered on financial metrics.