Name:
Dandira Rosemary
Reg number:
R1710965
Course:
Policy Analysis Management and Governance
Course Code: AD228
Lecturer:
Mr Zvoushe
Question:
Cost Benefit Analysis is a process through which the merits and demerits of
alternative programs are determined and used as criteria for making informed decisions about the
worth of such programs. Prepare a cost benefit analysis to evaluate the alternatives you proposed
in the Issue paper. Your paper should comprise the following sections
(a) An introduction which states the purpose of your CBA paper
(b) A description of the alternatives in procedural terms, stating exactly who should do what and
when
(c) Presentation of each of the alternative’s tangible and intangible costs and benefits, their
reduction to dollar terms and discounting in cases where they accrue or are realized in the future,
and the computation of net benefits for each alternative. The time span for your alternative
should be five years and the discount rate is 5%.
(d) A comment about the worthiness of each of the alternatives and identification of the best one.
(e )Conclusion and recommendations where you single out one alternative and recommend
appropriate action by the responsible authority.
a) The question requires one to prepare a cost benefit analysis to evaluate the alternatives in
solving a public problem. According to Saez, E. (2010) cost benefit analysis is the comparison of
costs and benefits of public goods projects to decide if they should be undertaken. This paper
will focus on the horrendous menace on roads in Zimbabwe. For the past several years, there has
been a public outcry over the state of roads in Harare which have been infested by potholes and
some that have never been tarred. This is because most of the roads have outlived their supposed
normal lifespan as some were constructed during the colonial era. The bad roads in Harare are
the major causes of horrendous accidents that are reported daily thus need for urgent solutions.
Therefore the cost benefit analysis paper seeks to evaluate the alternatives that can be considered
by The Ministry of Transport, Communication and Infrastructural Development to try and solve
this public problem. The alternatives include complete new road construction, road surface
maintenance and road improvements.
b) Firstly, road surfacing extents the life of the roads by sealing cracks and repairing base
failures. It also reduces road hazards by grading gravel shoulders. Road surface maintenance is
the improving of the road system to ensure safe and convenient travel by the public and it
involves production of an excellently bonded pavement structure, and leveling surface course.
The base layer of a road lays the foundation for the upper pavement structure and it offers
excellent bearing capacity and can be able to withstand a broader range of different climatic
conditions and remain functional over several decades. Road improvements involves the
upgrading of road systems by installing road cameras, street lights, purchasing data collecting
equipment which monitors the conditions of the highways and new, creating safer routes for
public transport ,prioritizing people by putting in place vehicle-free zones,designing safer
intersections for example roundabouts. Road constructions connects smaller areas to big cities
and highway network also makes transportation schedules and deliveries more reliable and
timely thus promoting economic development.
c) Alternative A: Road surface maintenance
Costs in thousands
2019
2020
2021
2022
2023
Raw materials
30
57
40
34
70
Machinery
200
455
300
450
200
Labor
10
33
40
20
42
Cost value
240
545
380
504
312
240(1,05)1
545(1,05)2
380(1,05)3
504(1,05)4
312(1,05)5
252
600.8
439.89
612.6
398.19
Total costs =$2303,5
Benefits
Employment
Reduces road
accidents
Reduces
traffic jam
Benefits value
2019
20
300
2020
30
430
2021
30
320
2022
45
48
2023
50
20
30
30
27
34
50
350
490
377
127
350(1,05)1
490(1,05)2
377(1,05)3
127(1,05)4
367,5
540,2
436,4
154,4
Total benefits=NB=DPV Benefits -DPV Costs=$15088,1-$7324,7=$7763,4
120
120(1,05)5
153,2
Net Benefits=DPV Benefits -DPV Costs=$7763,4-$2303,5=$5459,9
intangible benefits: reduces congestion,reduces road accidents
Alternative B: Road improvements
Costs
Machinery
2019
100
2020
200
2021
788
2022
800
2023
300
Data collecting
equipment
Street lights
equipment
Cost value
200
300
400
300
800
100
700
300
500
400
400(1,05)1
420
1200(1,05)2
1323
1488(1,05)3
1722,5
1600(1,05)4
1944,8
1500(1,05)5
1914,4
Total costs =$7324,7
tangible costs; machinery data collecting equipment
Benefits
Stimulate
tourism
Better
transportation
network
Better access
to services
2019
2000
2020
0
2021
4000
2022
0
2023
5000
180
0
200
0
400
300
0
300
0
300
2480(1.05)1
2604
Total benefits=$15088,1
4500(1,05)3
5209,3
Benefit value
5700(1,05)5
7274,8
NB=DPV Benefits -DPV Costs=$15088,1-$7324,7=$7763,4
tangible benefits :investor attraction
intangible benefits :economic development,reduced congestion,good transport infrastructure
Alternative C :New road Construction
Costs
Machinery
100
2020
0
Labor
200
Raw materials
Research
Costs value
2019
57
2022
0
0
455
0
200
100
0
33
0
42
400
0
545
0
312
800(1,05)1
840
2021
2023
70
1090(1,05)3
624(1,05)5
1261,8
796,4
Total costs =$2898,2
tangible costs:machinery,raw materials,Labor
Benefits
2019
2020
2021
Employment 2000
700
200
Investors
10000
200
300
Economic
10000
300
5000
development
Benefits value 22000(1,05)1 12000(1,05)2 5500(1,05)3
Total benefits=23100+13230+6366,9+421,2=$42696,9
2022
0
0
0
2023
90
50
190
330(1,05)5
NB=DPV Benefits -DPV Costs=$42696,9-$2898,2=$3979,7
tangible benefits:employment
intangible:reduced congestion,improved safety,air quality and noise,good transport infrastructure
d) Alternative B is the best alternative among the three since it yields the greatest cost benefit
ratio. Therefore it is the best investment with benefits of investor attraction economic
development,reduced congestion,good transport infrastructure and journey reliability. Alternative
A and C also have benefits but are outweighed by those of Alternative B. Therefore the
authorities responsible should consider road improvements.
e) as a recommendation the Ministry of Transport, Communication and Infrastructural
Development and the central government should consider investing in Alternative B which is the
improvement of roads in the country .Government should prioritize updating road design
standards and ensure that new roads are planned, designed and operated according to safety
standard.
BIBLIOGRAPHY
Campbell, J.(2009).Road Maintenance Techniques
Ncube, M. (2019). Infrastructure paving the road towards 2030’. The Herald. 17 March
Gruber,J.(2007 ).Public Finance and Public Policy .Worth Publishers.
Mapani ,S and Ngwenya, R. (2019).’Horrendous menace on Harare roads.’ The Herald,12
January
Saez, E. (2010).Cost-Benefit Analysis
The Ministry of Transport, Communication and Infrastructural Development