BENEFIT-COST RATIOS' A WORD OF CAUTION /AND DISCUSSION/

A DISCUSSION IS PRESENTED OF THE BENEFIT-COST RATIO METHOD OF COMPARING DESIGN ALTERNATIVES WIDELY USED IN THE EVALUATION OF CAPITAL EXPENDITURE PROPOSALS FOR PUBLIC PROJECTS, ESPECIALLY IN HIGHWAY FACILITY PLANNING. THE TECHNIQUES OF INCREMENTAL ANALYSIS ARE DEMONSTRATED TO SHOW THE EQUIVALENCE OF VARIOUS ANALYTICAL METHODS. THREE CRUCIAL DEFECTS IN THE BENEFIT-COST RATIO METHOD WERE REANALYZED TO ILLUSTRATE THAT THESE ARE MATTERS OF PROCEDURAL ERROR RATHER THAN INHERENT INVALIDITY. THE DIFFERENCES BETWEEN THE BENEFIT-COST RATIO AND SAVINGS-COST RATIO METHODS ARE EFFECTIVELY INCONSEQUENTIAL. THE RATE OF RETURN METHODS PROVED TO BE EQUIVALENT TO THE BENEFIT-COST RATIO AND SAVINGS-COST RATIO. REFERENCES' ROAD USER BENEFIT ANALYSES, AASHO, 1960. ENGINEERING ECONOMY, C. E. BULLINGER, 3RD ED., MCGRAW-HILL , 1958. ENGINEERING ECONOMY, E. P. DEGARMO, 3RD ED., MACMILLAN, 1960. PRINCIPLES OF ENGINEERING ECONOMY, GRANT AND IRESON, 4TH ED., RONALD PRESS, 1960. ECONOMIC ANALYSIS IN HIGHWAY PROGRAMMING, LOCATION, AND DESIGN, HRB SPECIAL REPORT 56, 1960. HIGHWAY NEEDS AND PROGRAMMING PRIORITIES, HRB BULL, 249, 1960. A CRITIQUE OF SOME RECENT ECONOMIC STUDIES COMPARING ALTERNATIVE HIGHWAY LOCATIONS, E. L. GRANT AND C. H. OGLESBY, HRB PROC., 39'1-14, 1960. ENGINEERING ECONOMY, W. T. MORRIS, RICHARD D. IRWIN, HOMEWOOD, ILLINOIS, 1960. PROJECT ECONOMY, E. S. ROSCOE, RICHARD D. IRWIN, HOMEWOOD, ILLINOIS, 1960. ENGINEERING ECONOMY, H. G. THUESEN, 2ND ED., PRENTICE- HALL, 1957.

Media Info

  • Media Type: Print
  • Features: References; Tables;
  • Pagination: pp 77-90
  • Monograph Title: Highway economics
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00201103
  • Record Type: Publication
  • Files: TRIS, TRB
  • Created Date: Dec 12 1994 12:00AM