3.10 - Cost benefit evaluation
- 3.1- Overview
- 3.2 - Method of evaluation
- 3.3 - Scope of analysis
- 3.4 - Stages of analysis
- 3.5 - Do minimum
- 3.6 - Travel impacts
- 3.7 - Costs of TDM programmes
- 3.8 - Benefits of TDM programmes
- 3.9 - Period of analysis
- 3.10 - Cost benefit evaluation
- 3.11 - Alternatives and options
- 3.12 - Sensitivity analysis
- 3.13 - Monitoring
- 3.14 - Selecting the appropriate evaluation method
- 3.15 - References
3.10 - Cost benefit evaluation
Introduction
Costs and benefits of TDM proposals need to be presented in a manner that facilitates decision-making. Although benefits for some TDM proposals are defined in a different manner (consumer perception) from than for infrastructure projects (mainly resource costs), the concepts of cost benefit evaluation described in volume 1 are still applicable.
National benefit cost ratio
Land Transport NZ uses the national benefit cost ratio (BCRN) as a measure of economic efficiency from a national perspective - see section 2 in volume 1.
In its basic form, BCRN is defined as:
where:
national economic benefits = net direct and indirect benefits and disbenefits to all affected transport users plus all other monetised impacts.
national economic costs
= net costs to Land Transport NZ and approved organisations (where there is no service provider or non-government contribution)
= net service provider costs plus net costs to Land Transport NZ and approved organisations (where there is a service provider).
Note: Where an external service provider is involved, the net costs to government include the 'funding gap' that is paid by local and central government to the service provider so that the service is financially viable to the service provider.
BCRN applies equally to TDM projects, transport services and road infrastructure projects. It indicates whether it is in the national interest to do the project from an economic efficiency perspective.
Government benefit cost ratio
Land Transport NZ also uses a government benefit cost ratio (BCRG), which indicates the monetised benefits obtained for the government expenditure (value for money from a central and local government perspective).
BCRG is defined as:
where:
national economic benefits = net direct and indirect benefits and disbenefits to all affected transport users plus all other monetised impacts.
government costs = net costs to Land Transport NZ and approved organisations.
Note: Where an external service provider is involved, the net costs to government include the 'funding gap' that is paid by local and central government to the service provider so that the service is financially viable to the service provider.
BCRG is equal to BCRN where there is no service provider or non-government contribution, as shown above.
