In the wake of hurricane Katrina, many critics will cite the failure of the cost-benefit analysis, used to engineer the levies surrounding New Orleans, as the major contributing factor to the disaster. It's easy to play armchair quarterback after an incident has occurred, but this is when we learn the most about the miscalculations and limitations of the algorithms and models used to make cost/benefit estimates.
When the cost-benefit variables are self-evident and explicit, such as determining equipment upgrades in relation to the benefits of increased product quality and output, the process is rather simplistic-even obvious. The challenge arises when the variables are less explicit. For example, how does one put a numerical value on beauty, peace of mind, or a sense of safety and security? We know these things have value; however, the question is how much value?