Original Post Date: Monday, November 8, 2010 

Margaret Wolfe Hungerford in 1878 in her book Molly Bawn coined the phrase …”Beauty is in the eye of the beholder”. This concept of the “value of beauty” has been expressed by others such as:

 

 Benjamin Frankin in Poor Richards Almanack 1741 when he wrote;

                “Beauty, like supreme dominion

                Is but supported by opinion”

David Hume in Moral and Political 1742

“Beauty in things exists merely in the mind which contemplates them.”

 

So what does this have to do with Cost Benefit? Well Merriam-Webster dictionary defines benefit as something that provides useful aid. Inherent in the term “useful” is the idea of value. Value in the context of useful only becomes meaningful when someone considers or contemplates it as being valuable. The degree to which something is evaluated as useful becomes a mental process of a stakeholder or user of the item. You might say that value is in the eye of the user! This becomes important in our efforts as cost estimators especially when we are involved in cost-benefit analysis. The mental evaluation of the stakeholder assigns meaning to the cost we calculate. Payback, and return on investment are related to this same mental evaluation. These kinds of metrics are a way of quantifying a stakeholders opinion about value and the usefulness of a program, project, or system. We as cost analysts should never lose sight of this truth.

Bob Koury
Senior Cost Research Analyst, PRICE Systems