Interpretation of Costs

Abstract

The use of electronic data processing now permits more alternatives to be analyzed for a given engineering project and has focused attention on the suitability of the various economic analysis techniques used throughout the profession. A critique of methods of economic analysis is presented. The implications of input decisions are examined, including the compatibility of alternative plans, the handling of generated traffic, and the conversion of trips from an alternate mode. A theoretical investigation of the most commonly used methods of analysis is presented. It is shown that the normal benefit-cost ratio method may not produce rational solutions or solutions which are compatible with other methods of analysis. The minimum cost method is shown to be consistent with the incremental cost methods. The adoption of this method is proposed because of its simplicity and its ability to retain indentification of the various component costs.