Talk:Cost–benefit analysis/Archives/2016

Dr. Miklyaev's comment on this article

Dr. Miklyaev has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I belie ve the List of Steps in the Process section should start by:

1. Identifying the status quo 2. Assure that status quo is technically optimal (or include optimization as one of the project alternatives) It is very common that the least cost alternative to achieve required outcomes is to optimize the existing project. Therefore, exclusion of optimization option from the analysis may result on a wrong choice of the best alternative. For instance, in many water supply projects, plugging water leaks allows to increase water supply per household at a cost that is lower then the cost of infrastructure expansion.

INCREMENTAL ANALYSIS

I believe a section highlighting importance of conducting CBA on incremental basis would improve the content. Vast majority of projects are not green field investments, rather expansion/improvement of the existing infrastructure. For such projects, CBA has to be conducted on incremental basis. Consider project that will double number of rooms in a hotel. If the current occupancy rate of the hotel is close to 100% (leading to idea of expansion), while expected occupancy (based on demand indicators) is 70%, if analysis is conducted not on incremental basis (revenues and operating cost based on 70% of occupancy) the project may result on the positive financial returns. If same project is appraised on incremental basis (investment cost is compared with expected incremental net benefits) the returns very well may be negative.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Miklyaev has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Glenn P. Jenkins & Mikhail Miklyaev & Katarzyna Pankowska, 2014. "A Cost-Benefit Analysis Of Small Scale Red Haricot Beans Production In Ethiopia: Intercropping As A Risk Diversification Mechanism," Development Discussion Papers 2013-14, JDI Executive Programs.

ExpertIdeasBot (talk) 14:51, 30 May 2016 (UTC)