Where to Use Cost Effectiveness Techniques Rather Than Cost Benefit Analysis

Mackie, Peter; Nellthorp, John; Laird, James

Where to Use Cost Effectiveness Techniques Rather Than Cost Benefit Analysis

Autores

Mackie, Peter

Nellthorp, John

Laird, James

Editor

World Bank, Washington, DC

Descripción

Cost Benefit Analysis, and the measures of economic performance that can be derived from it (see Note 6: When and How to Use NPV, IRR and Adjusted IRR), is the preferred method for demonstrating the economic justification of transport investments. Such an approach, however, relies on the ability to be able to measure costs and benefits in monetary terms (see Note 5: Framework), which renders it problematic for projects where the majority of benefits cannot be readily monetised. Such a project could be a Low Volume Rural Road (see Note 21: Low Volume Rural Roads). In such situations consideration should be given to the use of measures derived from cost effectiveness or weighted cost effectiveness (also known as Multi Criteria Analysis) techniques as the basis for the decision regarding whether to invest or not. Cost effectiveness techniques are also a very useful tool for project screening or ranking. Such a screening process ensures that projects that are subjected to a more detailed analysis (including cost benefit analysis) are those that best fit with the objectives of the investment (e.g. poverty alleviation). Section 1 of this note outlines the situations in which cost effectiveness techniques should be used, whilst Section 2 describes the two main types of approaches. Section 3 discusses the issue of economic viability and cost effectiveness whilst Section 4 presents a summary of recommendations.

Palabras clave

AGRICULTURAL DEVELOPMENT, BASIC ACCESS, BASIC ACCESS ROADS, BASIC ROAD ACCESS, BETTER ACCESS TO MARKETS, CLEAN DRINKING WATER, COMPOSITE MEASURE, COST BENEFIT, COST BENEFIT ANALYSIS, COST EFFECTIVE ANALYSIS, COST EFFECTIVENESS, COST-EFFECTIVENESS, DATA AVAILABILITY, DATA COLLECTION, DEVELOPING COUNTRIES, DISTRICT TRANSPORT MASTER PLANNING PROCESS, EARTH ROADS, ECONOMIC ANALYSIS, ECONOMIC DATA, FOOTBRIDGES, FRAMEWORK, GRAVEL, HIGHWAY PROJECTS, INCOME, LIVING STANDARDS, LOW VOLUME RURAL ROAD, MEANS OF TRANSPORT, MONETARY TERMS, MULTI CRITERIA ANALYSIS, PARTICIPATORY PLANNING, PATH, PATHS, POLICY MAKERS, POOR, POOR DISTRICTS, POOR PERSON, POOR RURAL DWELLERS, POPULATION GROUPS, POVERTY ALLEVIATION, POVERTY CRITERIA, POVERTY REDUCTION, PUBLIC RESOURCES, QUANTITATIVE DATA, RATE OF RETURN, ROAD AXIS, ROAD CLASS, ROAD ENGINEERING, ROAD IMPROVEMENT, ROAD NETWORK, ROAD QUALITY, ROAD TRANSPORT, ROUGHNESS, ROUTES, RURAL, RURAL ACCESS, RURAL ACCESS PROJECT, RURAL ACCESS ROADS, RURAL AREAS, RURAL BASIC ACCESS ROAD, RURAL COMMUNITIES, RURAL ROAD SYSTEMS, RURAL ROADS, RURAL TRANSPORT, RURAL TRANSPORT INFRASTRUCTURE, SAVINGS, SOCIAL DEVELOPMENT, SOCIAL IMPACTS, SOCIAL INFRASTRUCTURE, SPEED, SPOT IMPROVEMENT, TARGETING, TERRAIN, TRAFFIC, TRAFFIC LEVEL, TRAFFIC LEVELS, TRANSPORT, TRANSPORT ECONOMICS, TRANSPORT PROJECTS, TRANSPORT SERVICES, TRIPS, VEHICLE OPERATING, VEHICLE OPERATING COSTS, VEHICLES, VILLAGE TRACK, VILLAGE TRANSPORT, VILLAGE TRANSPORT NETWORK, WEATHER ROAD ACCESS, WEIGHTING SCHEME