USING COST-EFFECTIVENESS ANALYSIS AS A HELPFUL TOOL IN THE PROCESS OF REDUCING COSTS IN DEFENSE PROGRAMMES

Abstract

“Cost-Effectiveness Analysis” is a method of economic analysis that evaluates the efficiency of indicators and highlights the results of a project. This analysis determines the most effective way to complete a project, being a helpful tool in the decision-making process in the initial phase of a procurement programme. Four years after signing the agreement on the allocation of a minimum of 2% of GDP for the budget of the Ministry of National Defence starting with 2017, we are again facing a critical moment in the recent history, that of the Covid-19 pandemic. In this context, the decline in the economic growth, as a result of the drastic measures imposed against the spread of the virus, will most likely lead to further budget cuts. Through this article, our aim is to present the concept of cost-effectiveness analysis, as a useful method in the decision-making process and one of the necessary tools for the efficient operation of the investment resources in defence procurement programs.