What cost threshold triggers the need for an Economic Analysis?

What cost threshold triggers the need for an Economic Analysis?

• A. $500,000
• B. $2,000,000
• C. $5,000,000
• D. $1,000,000

Answer: (D)

An Economic Analysis is required when the estimated life-cycle cost of a program reaches a defined dollar amount, prompting a formal look at costs, benefits, and alternatives. The threshold here is one million dollars, so once a project’s cost is at least $1,000,000, a formal Economic Analysis must be prepared. This ensures that investments of substantial size are evaluated for value and efficiency, while smaller actions can rely on simpler justifications. The other figures are either below the threshold (not requiring a formal EA) or above it (which would trigger the EA, but the minimum trigger is $1,000,000).

An Economic Analysis is required when the estimated life-cycle cost of a program reaches a defined dollar amount, prompting a formal look at costs, benefits, and alternatives. The threshold here is one million dollars, so once a project’s cost is at least $1,000,000, a formal Economic Analysis must be prepared. This ensures that investments of substantial size are evaluated for value and efficiency, while smaller actions can rely on simpler justifications. The other figures are either below the threshold (not requiring a formal EA) or above it (which would trigger the EA, but the minimum trigger is $1,000,000).