A benefit–cost ratio[1] (BCR) is an indicator, used in cost–benefit analysis, that attempts to summarize the overall value for money of a project or proposal.
The general rule of thumb is that if the benefit is higher than the cost the project is a good investment.
In practice, the ratio of present value (PV) of future net benefits to expenditure is expressed as a BCR.
These impacts are usually incorporated by estimating them in monetary terms, using measures such as WTP (willingness to pay), though these are often difficult to assess.
A further complication with BCRs concerns the precise definitions of benefits and costs.