Capital decision-making: Analysis and judgment

Quantitative analysis, the traditional technique for capital budgeting evaluation, is experiencing widespread disuse in decision-making. This is asserted to be due to the inability of cost-benefit analysis to quantify benefits received from public investments. Such analysis fails to take into account qualitative factors and political considerations. Research of a municipal capital budget found only 6.5% of the projects to be primarily justified by cost-benefit analysis. The various processes and structures used in public capital budgeting are argued to be of significance in determining budgetary output.