Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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Table 4.48 Financial return on national capital (thousands of Euros)1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Total municipal services income 0 0 0 10,096 14,662 14,904 15,150 15,401 15,655 15,914 16,177 16,444 16,716 16,992 17,273Industrial and irrigation water supply0 0 0 4,546 6,573 6,653 6,733 6,815 6,898 6,981 7,066 7,152 7,239 7,326 7,415revenueSALES 0 0 0 14,642 21,235 21,557 21,884 22,216 22,553 22,895 23,243 23,596 23,954 24,318 24,688RESIDUAL VALUE 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL REVENUES 0 0 0 14,642 21,235 21,557 21,884 22,216 22,553 22,895 23,243 23,596 23,954 24,318 24,688Labour cost 0 0 0 1,494 1,523 1,553 1,583 1,614 1,645 1,677 1,710 1,743 1,777 1,811 1,847Electrical energy 0 0 0 129 188 193 198 203 208 213 218 224 229 235 241Materials (Chemicals, reagents, inert,etc.)0 0 0 2,422 3,525 3,590 3,657 3,725 3,794 3,864 3,936 4,009 4,083 4,159 4,236Intermediate services and goods 0 0 0 3,969 5,762 5,855 5,949 6,045 6,143 6,242 6,343 6,446 6,550 6,656 6,763Maintenance 0 0 0 531 770 782 794 805 818 830 842 855 868 881 894Elimination of treatment sludge 0 0 0 2,835 4,137 4,226 4,318 4,411 4,506 4,604 4,703 4,805 4,908 5,015 5,123TOTAL OPERATING COSTS 0 0 0 11,380 15,905 16,199 16,498 16,803 17,113 17,430 17,752 18,080 18,415 18,756 19,104Bonds and other financial resources 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0EIB loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Other loans 0 0 0 1,232 1,232 1,112 988 865 741 618 494 371 247 124 0INTEREST 0 0 0 1,232 1,232 1,112 988 865 741 618 494 371 247 124 0Bonds and other financial resources 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0EIB loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Other loans 0 0 0 0 2,470 2,470 2,470 2,470 2,470 2,470 2,470 2,470 2,470 2,470 0LOANS REIMBOURSEMENT 0 0 0 0 2,470 2,470 2,470 2,470 2,470 2,470 2,470 2,470 2,470 2,470 0PRIVATE EQUITY 3,018 11,275 10,412 0 0 0 0 0 0 0 0 0 0 0 0National contribution 1,258 10,164 7,607 0 0 0 0 0 0 0 0 0 0 0 0Municipal contribution 1,700 4,495 4,068 0 0 0 0 0 0 0 0 0 0 0 0TOTAL NATIONAL PUBLICCONTRIBUTION2,958 14,659 11,675 0 0 0 0 0 0 0 0 0 0 0 0TOTAL EXPENDITURES 5,976 25,934 22,087 12,612 19,607 19,780 19,956 20,137 20,324 20,517 20,716 20,921 21,132 21,350 19,104NET CASH FLOW -5,976 -25,934 -22,087 2,031 1,628 1,776 1,928 2,078 2,228 2,378 2,527 2,675 2,822 2,968 5,58416 17 18 19 20 21 22 23 24 25 26 27 28 29 30Total municipal services income 17,558 17,848 18,143 18,443 18,747 19,057 19,372 19,692 20,017 20,348 20,684 21,026 21,374 21,727 22,086Industrial and irrigation water supply7,505 7,596 7,688 7,782 7,876 7,971 8,068 8,166 8,265 8,365 8,466 8,568 8,672 8,777 8,883revenueSALES 25,063 25,444 25,831 26,224 26,623 27,028 27,440 27,858 28,282 28,713 29,150 29,595 30,046 30,504 30,969RESIDUAL VALUE 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6,030TOTAL REVENUES 25,063 25,444 25,831 26,224 26,623 27,028 27,440 27,858 28,282 28,713 29,150 29,595 30,046 30,504 36,999Labour cost 1,883 1,919 1,957 1,995 2,033 2,073 2,113 2,154 2,196 2,239 2,283 2,327 2,372 2,419 2,466Electrical energy 247 253 259 266 272 279 286 293 301 308 316 324 332 340 349Materials (Chemicals, reagents, inert,etc.)4,315 4,395 4,477 4,560 4,644 4,730 4,818 4,908 4,999 5,091 5,186 5,282 5,380 5,480 5,582Intermediate services and goods 6,872 6,983 7,096 7,211 7,327 7,446 7,566 7,688 7,813 7,939 8,067 8,198 8,330 8,465 8,601Maintenance 907 921 935 949 963 977 992 1,007 1,022 1,037 1,053 1,069 1,085 1,101 1,118Elimination of treatment sludge 5,234 5,347 5,462 5,580 5,701 5,824 5,950 6,078 6,210 6,344 6,481 6,621 6,764 6,910 7,059TOTAL OPERATING COSTS 19,457 19,818 20,185 20,560 20,941 21,329 21,725 22,129 22,540 22,958 23,385 23,820 24,263 24,714 25,174Bonds and other financial resources 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0EIB loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Other loans 0 0 0 0 0 566 510 453 396 340 283 226 170 113 56INTEREST 0 0 0 0 0 566 510 453 396 340 283 226 170 113 56Bonds and other financial resources 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0EIB loans 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Other loans 0 0 0 0 0 1,133 1,133 1,133 1,133 1,133 1,133 1,133 1,133 1,133 1,133LOANS REIMBOURSEMENT 0 0 0 0 0 1,133 1,133 1,133 1,133 1,133 1,133 1,133 1,133 1,133 1,133PRIVATE EQUITY 0 0 0 0 11,326 0 0 0 0 0 0 0 0 0 0National contribution 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Municipal contribution 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL NATIONAL PUBLICCONTRIBUTION0 0 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL EXPENDITURES 19,457 19,818 20,185 20,560 32,267 23,029 23,368 23,715 24,069 24,431 24,801 25,179 25,566 25,960 26,363NET CASH FLOW 5,606 5,626 5,646 5,665 -5,644 4,000 4,072 4,143 4,213 4,281 4,349 4,416 4,480 4,543 10,636Discount Rate 5.0%FNPV(K) -8,357.8FRR(K) 3.7%180
Table 4.49 Financial return on local public capital (thousands of Euros)1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Service fee (PPP) 0 0 0 601 872 887 902 916 932 947 963 978 995 1,011 1,028SALES 0 0 0 601 872 887 902 916 932 947 963 978 995 1,011 1,028RESIDUAL VALUETOTAL REVENUES 0 0 0 601 872 887 902 916 932 947 963 978 995 1,011 1,028Labour costElectrical energyMaterials (Chemicals, reagents,inert, etc.)Intermediate services and goodsMaintenanceElimination of treatment sludgeTOTAL OPERATING COSTS 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Bonds and other financialresourcesEIB loansOther loansINTEREST 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Bonds and other financialresourcesEIB loansOther loansLOANS REIMBOURSEMENT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0PRIVATE EQUITYMunicipal contribution 1,700 4,495 4,068 0 0 0 0 0 0 0 0 0 0 0 0TOTAL NATIONAL PUBLICCONTRIBUTION1,700 4,495 4,068 0 0 0 0 0 0 0 0 0 0 0 0TOTAL EXPENDITURES 1,700 4,495 4,068 0 0 0 0 0 0 0 0 0 0 0 0NET CASH FLOW -1,700 -4,495 -4,068 601 872 887 902 916 932 947 963 978 995 1,011 1,02816 17 18 19 20 21 22 23 24 25 26 27 28 29 30Service fee (PPP) 1,045 1,062 1,080 1,097 1,116 1,134 1,153 1,172 1,191 1,211 1,231 1,251 1,272 1,293 1,314SALES 1,045 1,062 1,080 1,097 1,116 1,134 1,153 1,172 1,191 1,211 1,231 1,251 1,272 1,293 1,314RESIDUAL VALUETOTAL REVENUES 1,045 1,062 1,080 1,097 1,116 1,134 1,153 1,172 1,191 1,211 1,231 1,251 1,272 1,293 1,314Labour costElectrical energyMaterials (Chemicals, reagents,inert, etc.)Intermediate services and goodsMaintenanceElimination of treatment sludgeTOTAL OPERATING COSTS 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Bonds and other financialresourcesEIB loansOther loansINTEREST 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Bonds and other financialresourcesEIB loansOther loansLOANS REIMBOURSEMENT 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0PRIVATE EQUITYMunicipal contribution 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL NATIONAL PUBLICCONTRIBUTION0 0 0 0 0 0 0 0 0 0 0 0 0 0 0TOTAL EXPENDITURES 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0NET CASH FLOW 1,045 1,062 1,080 1,097 1,116 1,134 1,153 1,172 1,191 1,211 1,231 1,251 1,272 1,293 1,314Discount Rate 5.0%FNPV(Kg) 3,491.0FRR(Kg) 7.8%181
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ACRONYMS AND ABBREVIATIONSBAUB/CCBA
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TABLESTable 2.1 Financial analysis
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FIGURESFigure 1.1 Project cost spre
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Cohesion Fund, and through the leve
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or the plant will not reveal excess
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CHAPTER ONEPROJECT APPRAISAL IN THE
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Some specifications for financial t
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FOCUS: INFORMATION REQUIREDGeneral
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In particular, CBA results should p
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CHAPTER TWOAN AGENDA FOR THE PROJEC
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objectives, are, as far as possible
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considered the appropriate shadow p
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2.3.2 Feasibility analysisFeasibili
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This approach will be presented in
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Current assets include:- receivable
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The following items are usually not
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Mainly, the examiner uses the FRR(C
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The dynamics of the incoming flows
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eturn on their own capital (Kp). Th
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While the approach presented in thi
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2.5.1 Conversion of market to accou
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Table 2.9 Electricity price dispers
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2.5.1.2 Fiscal correctionsSome item
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previously estimated in projects wi
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FOCUS: ENPV VS. FNPVThe difference
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2.6 Risk assessmentProject appraisa
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Table 2.14 Impact analysis of criti
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Figure 2.6 Probability distribution
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eneficiary. The project proposer sh
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There are many ways to design an MC
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PROJECT APPRAISAL CHECK-LISTCONTEXT
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- reduction of congestion by elimin
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- the methods applied to estimate e
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- the marginal external costs: cong
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- the benefits for the existing tra
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The following tables show some refe
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3.1.1.6 Risk assessmentDue to their
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As shown in Figure 3.1, only under
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3.1.3.7 Other project evaluation ap
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- Waste Management Hierarchy rules
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The time horizon for a project anal
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every user support the total costs
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Territorial reference frameworkIf t
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Cycle and phases of the projectGrea
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One of the most important aims of t
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projects, as in other sectors in wh
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3.2.3.2 Project identificationBasic
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In order to evaluate the overall im
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for regassification plants, number
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Examples of objectives are:- change
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decontamination if any;- the techni
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3.3.3.6 Risk AnalysisCritical facto
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3.3.4.6 Risk assessmentCritical fac
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3.4.1.5 Economic analysisThe follow
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Financial inflows• Admission fees
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expectancy suitably adjusted by the
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The time horizon for project analys
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A Cost-Benefit Analysis should cons
Page 129 and 130: CHAPTER FOURCASE STUDIESOverviewThi
Page 131 and 132: - finally, there is the traffic tha
Page 134 and 135: c) Road users producer’s surplus:
Page 136 and 137: 4.1.5 Scenario analysisTwo scenario
Page 138 and 139: The financial performance indicator
Page 140 and 141: Table 4.10 Economic analysis (Milli
Page 142 and 143: Table 4.12 Financial return on capi
Page 144 and 145: 4.2 Case Study: investment in a rai
Page 146 and 147: 4.2.4 Economic analysisThe benefits
Page 148 and 149: Financial investment costs have bee
Page 150 and 151: Figure 4.6 Results of the risk anal
Page 152 and 153: Table 4.22 Economic analysis (Milli
Page 156 and 157: 4.3 Case Study: investment in an in
Page 158 and 159: ate of 0.6% per year is assumed for
Page 160 and 161: The shadow price of the CO 2 avoide
Page 162 and 163: As a result, the probability distri
Page 166 and 167: 16 17 18 19 20 21 22 23 24 25 26 27
Page 168 and 169: 4.4 Case Study: investment in a was
Page 170 and 171: 4.4.2 Financial analysisAlthough in
Page 172 and 173: THE CALCULATION OF REVENUESReferrin
Page 174 and 175: 0.15 m 3 /m 2 a depreciation of 20%
Page 176 and 177: As result, the probability distribu
Page 178 and 179: Figure 4.13 Probability distributio
Page 182 and 183: Table 4.50 Financial return on priv
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Page 186 and 187: 4.5 Case Study: industrial investme
Page 188 and 189: 4.5.4.1 Investment costsThe total i
Page 190 and 191: Finally, a residual value was estim
Page 192 and 193: This analysis shows the need to pay
Page 194 and 195: Table 4.62 Financial return on inve
Page 196 and 197: Table 4.64 Return on private equity
Page 198 and 199: Table 4.66 Economic analysis (thous
Page 200 and 201: ANNEX ADEMAND ANALYSISDemand foreca
Page 202 and 203: The method applied for the forecast
Page 204 and 205: Furthermore, travel demand depends
Page 206 and 207: This Guide supports a unique refere
Page 208 and 209: A higher discount rate for countrie
Page 210 and 211: Figure C.1 Project ranking by NPV v
Page 212 and 213: The main problems with this indicat
Page 214 and 215: EXAMPLE OF SHADOW WAGE IN DUAL MARK
Page 216 and 217: Another exhaustive way to include d
Page 218 and 219: Figure E.2 Percentage of low income
Page 220 and 221: ANNEX FEVALUATION OF HEALTH &ENVIRO
Page 222 and 223: Figure F.1 Main evaluation methodsS
Page 224 and 225: - expenditure on capital equipment
Page 226 and 227: due to air pollution or water conta
Page 228 and 229: BENEFIT TRANSFER - SELECTED REFEREN
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ANNEX GEVALUATION OF PPP PROJECTSIt
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adjustments for Competitive Neutral
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ANNEX HRISK ASSESSMENTIn ex-ante pr
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Reference ForecastingThe question o
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Figure H.5 Levels of risks in diffe
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ANNEX IDETERMINATION OF THE EU GRAN
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A.4. Technological Alternatives and
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GLOSSARYAccounting period: the inte
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Market price: the price at which a
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BIBLIOGRAPHY1. ReferencesBelli, P.,
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Ray, A. 1984, Cost-benefit analysis
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EnvironmentGeneralAtkinson, G., 200
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European Commission, DG Tren, 2003,
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Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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