How do you ensure the validity and reliability of cost-benefit analysis data and assumptions?

1 Define the scope and objectives

The first step in conducting a CBA is to clearly define the scope and objectives of the intervention. What is the problem you are trying to solve, and what are the alternative solutions? What are the expected outcomes and impacts of each option, and how will you measure them? What are the relevant costs and benefits, and who will bear or receive them? Defining the scope and objectives will help you identify the key data and assumptions you need, and avoid including irrelevant or redundant information.

2 Collect and verify data

The next step is to collect and verify the data you need for your CBA. Data can come from various sources, such as surveys, reports, studies, databases, or expert opinions. However, not all data are equally reliable or valid, and you need to check their quality and accuracy. Some criteria to consider are: the source and credibility of the data, the methodology and sample size used to collect the data, the currency and relevance of the data, and the consistency and completeness of the data. You can use tools such as data quality assessment frameworks, data validation techniques, or data triangulation methods to evaluate and improve your data quality.

3 Make and justify assumptions

The third step is to make and justify the assumptions you need for your CBA. Assumptions are necessary to fill in the gaps or uncertainties in your data, or to simplify or standardize your analysis. However, assumptions can also introduce biases or errors in your CBA, and you need to make them explicit and reasonable. Some common assumptions in CBA are: the discount rate, the time horizon, the inflation rate, the risk and uncertainty factors, and the distributional effects. You can use tools such as sensitivity analysis, scenario analysis, or Monte Carlo simulation to test and adjust your assumptions, and to show how they affect your results.

4 Present and communicate results

The final step is to present and communicate your CBA results in a clear and transparent way. You should report the main findings and recommendations of your CBA, such as the NPV or BCR of each option, the break-even point, the sensitivity and uncertainty analysis, and the distributional and non-monetary impacts. You should also disclose the data sources, assumptions, and limitations of your CBA, and explain how they influence your conclusions. You can use tools such as tables, charts, graphs, or dashboards to visualize and summarize your CBA results, and to highlight the key messages and implications for decision-making.