Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

A Cost-Benefit Analysis should consider:BenefitsCostsBetter positioning in the market for existing companies. To evaluate the benefit arising from the betterpositioning, it is necessary to consider:- savings in transport costs- effect of possible promotional activities- lower costs for basic services- technological improvements- availability of real servicesIn addition to the costs listed in the financial analysis, the other costs that might be considered are:- environmental costs- urban and transport congestion caused by the realisation of the infrastructure. Note, however, that sincethe impacts considered increase in the area surrounding the new infrastructure, they should decrease in therest of the catchments area; the global effect – which is what should be considered in the analysis – maybe for the better or for the worse3.4.5.6 Risk assessmentCritical factors- Investment costs- Difficulty in forecasting the real rate of penetration in the catchmentarea, from the point of view of both the relocation of companies andthe development of new businessesMainvariablesto consider- Expropriation costs- Equipment costs- The rate of installations in the area- The birth and early mortality rate of new businessesCHECKLISTEstimate the demand from existing companies to relocate to the new industrial areaForecast the number of new companies that would be born thanks to the new equipped areaEvaluate carefully possible expropriation costsThe main economic benefits are represented by the cost savings that being located in such an area could ensure for thecompanies. In evaluating the cost savings it is necessary to forecast the costs that a company is expected to sustain iflocated in an industrial zone and the costs the same company would have sustained in another location with the samebusiness level.127