Learn in the textbookPromoting and Evaluating System Utilization
DefinitionCost-effectiveness analysis (費用対効果分析) is an evaluation that compares the costs spent on a system with the benefits it brings in money, to judge whether the investment is worth it.
ExplanationA typical indicator is the payback period (回収期間), found by dividing the investment by the net benefit per year. The net benefit is the benefit minus the operation and maintenance costs incurred every year after go-live, and if operating costs fall compared with the old system, the savings also count as benefit.
AnalogyWhen switching to an energy-saving fridge, you work out how many years of lower electricity bills it takes to recover the price difference. It is the same calculation.
Memory hookCost-effectiveness sets cost against effect. Picture the two placed on either pan of a balance.