Benefit-Cost Ratio

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A Benefit-Cost Ratio (BCR) is an indicator, used in the formal discipline of cost-benefit analysis, that attempts to summarise the overall value for money of a project or proposal. A BCR is the ratio of the benefits of a project or proposal, expressed in monetary terms, relative to its costs, also expressed in monetary terms.

BCRs have been used most extensively in the field of transport benefit-cost appraisals.

A major shortcoming of BCRs is that, by definition, they ignore non-monetised impacts. Attempts have been made to overcome this limitation by combining BCRs with information about those impacts that cannot be expressed in monetary terms.