WHAT are the principles of estimation of costs and benefits?

After identification of the costs and benefits, it is now required to be quantified i.e., the cost and benefit should be measured and estimated. The estimation is done by following the two principles as discusses below: Variability: Variability means by how much a cost or benefit increased or decreased due to the choice of the option. Variable costs are the cost which differs under the different volume or activities. On the other hand, fixed costs remain same irrespective of volume and activities. Traceability: Traceability of cost means degree of relationship between the cost and the choice of the option. Direct costs are directly assigned to the option on the other hand indirect costs needs to be apportioned to the option on some reasonable basis.