Proposed Modifications to the Cost-Benefit Analysis Decision Criteria for Road Project Evaluation to Improve Decisionmaking

Proposed Modifications to the Cost-Benefit Analysis Decision Criteria for Road Project Evaluation... Abstract: The Australian Transport Council (ATC) have identified that the benefit cost ratio (BCR), the net present value (NPV), and first-year rate of return (FYRR) decision criteria are appropriate inputs to project prioritization, mutual exclusive project selection, and optimal timing, respectively. This article suggests the net benefit investment ratio (NBIR), the incremental net benefit investment ratio (INBIR), and the internal rate of return (IRR) subject to decision criteria incorporating the marginal project as alternatives to those proposed by the ATC. The proposed decision criteria aim to reduce the impact of uncertainty surrounding discount rates and opportunity costs of capital, hence improving the quality of the quantitative inputs provided to decisionmakers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Transportation Journal Penn State University Press

Proposed Modifications to the Cost-Benefit Analysis Decision Criteria for Road Project Evaluation to Improve Decisionmaking

Transportation Journal, Volume 51 (4) – Oct 9, 2012

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Publisher
Penn State University Press
Copyright
Copyright © The Pennsylvania State University
ISSN
0022-6865
Publisher site
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Abstract

Abstract: The Australian Transport Council (ATC) have identified that the benefit cost ratio (BCR), the net present value (NPV), and first-year rate of return (FYRR) decision criteria are appropriate inputs to project prioritization, mutual exclusive project selection, and optimal timing, respectively. This article suggests the net benefit investment ratio (NBIR), the incremental net benefit investment ratio (INBIR), and the internal rate of return (IRR) subject to decision criteria incorporating the marginal project as alternatives to those proposed by the ATC. The proposed decision criteria aim to reduce the impact of uncertainty surrounding discount rates and opportunity costs of capital, hence improving the quality of the quantitative inputs provided to decisionmakers.

Journal

Transportation JournalPenn State University Press

Published: Oct 9, 2012

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