Rank: New forum user 
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Can anyone explain what the significance of the ‘1’ in the CBA calculation?
Cost > 1 x DF
Benefits
To me it appears to be saying that cost/benefit must be greater than the DF.
Any thoughts?
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Rank: Super forum user 
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Ian
I have seen several interpretations of ratios but not being a numbers person they don't mean much to me. You might like to try: http://en.wikipedia.org/wiki/Cost-benefit_ratio. I believe the principle is based on a measure of present value per £ invested. Benefit-Cost ratio = Net present value divided by Initial outlay. Presumably '1' equals £1 in monetary terms.
Ray
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Rank: New forum user
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Ray,
Thank you for your reply and for the website info. In the end I decided to email the HSE as the formula came from their website: http://www.hse.gov.uk/risk/theory/alarpcheck.htm I understand the CBA principle as there is a nice example at the bottom of the above link; I just couldn’t see the point of the ‘1’.
The formula states that the cost divided by the benefits has to be greater than 1 x the DF. The DF is always between 1 and 10 and so the DF multiplied by 1 will always be equal to the DF (1 to 10), therefore why isn’t the formula cost/benefit > DF?
I’ll let you know the response from the HSE.
Thanks again
Ian
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