Evaluation Of Public Projects Research Articles

Effect of Public Projects’ Failure on Infrastructural Development in Ondo State, Nigeria

The primary concern of infrastructural development is to improve and raise both the standard and quality of life. However, the consistent and worrisome failure creates several effects on infrastructural development. In the current dispensation of the global economy, there is an indication that infrastructural development is fast becoming a central issue in the area of sustainable development. This is a sequel to the fact that infrastructural development is an indispensable factor in sustainable development goals in project management. Hence, investigating the effects of public projects’ failure on infrastructural development is inevitable. In achieving the objectives of this work, a well-structured questionnaire was developed. One hundred and Twenty (120) copies of the questionnaire were distributed across the eighteen (18) Local Government Areas of the State. However, one hundred (110) copies of the questionnaire, representing 91.7%, were returned and found suitable for analysis. The respondents include Engineers, Community leaders, Civil servants and General Public. The data analysis used includes simple descriptive and inferential statistics. The results showed that economic deficit and poverty increased with a mean of 3.83, followed by lack of social amenities (3.78), poor standard of living (3.72), inability to meet citizen’s needs (3.40), visual effects (3.14) was the effect of public projects poor performance on infrastructural development. Moreover, the results further showed an increase in security risk (2.97), an abode for criminal activities (2.97), and poor urban development (2.78) as an additional effect. The study recommends effective monitoring and proper evaluation of public projects. Policies that support infrastructural projects development continuity is also imperative and should be legislated to improve the infrastructural development in the study area and the nation.

Evaluation of the usefulness and relevance criteria for high-speed railway route construction projects: case study of Czechia

The main goal of this article is to assess the effectiveness of the high-speed railway routes construction programme in Czechia according to the criteria of usefulness (with primary links to potential revenues) and relevance (with primary links to potential costs) as integral parts of applying the original methodology of multi-criteria evaluation of public projects within transport infrastructure. The first set of performed analyses focused on observing the development of relevant traffic flows. They were outlined based on data from the movement of mobile phone users and verified through surveys of passenger preferences and other indicators. The second set of analyses was based on an evaluation of relevant external (natural and social conditions) and internal (technical and operational conditions) factors. The practical benefit of these analyses is an evaluation of the position of the planned four routes in terms of the examined criteria. They represent an important basis for setting priorities as a strategic component of managing an investment programme.

European and International Perspectives on Benefit-Cost Analysis: Symposium Introduction

AbstractThe idea of assessing the costs and benefits of public and private projects is not new to Europe, dating back to studies at the Ecole des Ponts et Chaussees (Paris) in the XIX century. Later on, in the last century, Benefit-Cost Analysis (BCA) in its current form has been more extensively used in the United States than in Europe. In the last two decades, however, there has been a rapid increase in its use in a number of European countries and at the European Union (EU) level. European governments often undertake tasks that would be done by private companies in the United States, such as the provision of transport, energy, water and waste management, health services, etc. In the United States the focus of BCA has often been regulatory impact analysis, rather than public project evaluation. One might, therefore, expect that Europeans might approach some things differently from their American counterparts and that new insights might result from these efforts. The articles in this symposium, taken from the recent European Society for Benefit-Cost Analysis (SBCA) conference in Toulouse, illustrate some of these differences and some converging themes.

Social Discount Rates for Seventeen Latin American Countries: Theory and Parameter Estimation

This article presents new estimates of social discount rates (SDRs) for seventeen Latin American countries for use in public project evaluation. We derive the SDRs based on the social rate of time preference method and provide the required parameter values. These rates range from 2.14 percent for Paraguay to 5.83 percent for Chile. The unweighted average recommended rate is 3.77 percent, which is close to the rates mandated by most European countries. We also review current governments’ SDR practices worldwide, including Latin America, and find that the proposed country-specific SDRs are significantly lower and less dispersed across countries than the rates most Latin American countries currently recommend. Using four archetypal projects profiles, we show the potential impact on the net present values of varying important parameters, including growth rates.

SOCIAL DISCOUNT RATE: ASSESSMENT METHODOLOGY

The purpose of the paper is to investigate the assessment methods of social discount rate, to determine its calculation algorithm and to substantiate applied aspects relatively implementation of one or another method during cash flow discounting in social projects. Methodology. The research used such methods as follows: method of comparative analysis was used to find out advantages and limitations of chosen assessment methodologies of the social discount rate; synthesis and generalization methods were used during investigation of the gathered experience concerning application of assessment methodology of social discount rate; logical method was used to substantiate made assumptions; formalization method was used to determine assessment parameters of social discount rate. Results. To achieve the target goal, the following tasks were solved: theoretical studies on the assessment of social discount rate were systemized and the most adapted method for a practical implementation was determined; available pragmatic approaches to the determination of the parameters of social discount rate were investigated and the algorithm of its estimation is substantiated; evaluation of research results were tried out. Practical implications. The article substantiates the necessity of application of social discount rate in the evaluation process of investment projects of the public sector. The theoretical approaches to the choice of the social discount rate were studied. The assessment methods developed and adapted for application in the world practice for discounting public projects were considered. The arguments concerning the expediency of application of the social rate of time preferences for the evaluation of public projects are considered. Different approaches to the determination of the social rate of time preferences are analysed. Value/originality. As a result of the research, parameters of the social rate of time preferences were determined. The application algorithm of the assessment methodology of the social rate of time preferences for public project discounting is indicated. The approbation of the assessment methodology of the social discount rate for discounting projects of the public sector in Ukraine was carried out.

Level of Stakeholder Engagement and Participation in Monitoring and Evaluation of Construction Projects in Ghana

Globally, the construction industry is acknowledged as complex and capital intensive. The need for transparency in monitoring and evaluation to promote organizational learning and accountability in project delivery cannot be overemphasized, hence the need for stakeholder engagement and participation. This paper reports on the level of stakeholder engagement in project delivery and participation in monitoring and evaluation of public construction projects in Ghana. Both structured interview guide and questionnaire schedule were used to collect relevant data for the study. A desk review of journal articles, books, conference proceedings, published and unpublished thesis work from the institutions’ database and internet sources relevant to the study ware adopted to underpin the study. Project implementation minutes and meeting attendance were also perused. Data was descriptively analyzed. Six key stakeholders were identified in local government project delivery in Ghana. It was evident from the study that there was a high level of stakeholder engagement in project delivery whiles participation of stakeholders in monitoring and evaluation of public projects at the local government level was very poor. This was attributed to lack of knowledge, understanding, involvement and time devoted for monitoring and evaluation of projects by stakeholders. In conclusion, the poor participation of stakeholders in monitoring and evaluation of local government project delivery may have contributed to the many challenges faced in local government project delivery in Ghana. These challenges included procurement lapses which resulted in bad payment schedules, non-conformity to project specification, delayed project delivery, lack of health and safety compliance, client's dissatisfaction, and corrupt practices in the construction industry. The study advocates for participatory monitoring and evaluation through stakeholder management at the local government level project delivery. This can be promoted through community based development project (CBDP) delivery. The study contributes to the body of knowledge on the level of stakeholder engagement and participation in monitoring and evaluation and its implication in local government project delivery in Ghana.

Valuation of Public Projects for Regional Development: Critical Approach

Public projects for regional development are prepared and implemented in order to create social benefits for society of a particular region – to improve living and working conditions and/or to protect the environment. Every investment option should be evaluated and substantiated before the right investment decision is made. The valuation of public projects is complicated due to complexity of valuation of social benefits for the regional society. Expected impact of public project should effectively satisfy society needs. The methods for public projects’ evaluation should be chosen in critical approach. The aim of this methodological research is highlight the main problems of methods used for evaluation of public projects for regional development. This article provides main characteristic of public projects for regional development, reviews the methods used for evaluation of public projects for regional development, presents problematic questions of public projects’ evaluation raised in scientific literature, provides a summary of the main problems of evaluation methods used for regional development public projects.

Government's credit-rating concerns and the evaluation of public projects

We study how considerations regarding the credit rating of the government’s debt affect privatization policy. Credit-market discipline presses the government to put more weight on the monetary aspect of public projects, relative to their social benefits, as the anticipated income increases its creditors’ confidence in its ability to repay debt. Yet, several informational problems undermine this discipline, leading to a costly downgrading of the credit rating. Dynamic inconsistency occurs when the monetary to social-benefi tt radeoff is made only after the credit market has priced government’s debt (such as in the decision of the toll on a road): projects are operated with an excessive emphasis on social benefits. Adverse selection occurs when the government has private information regarding a prospective project’s characteristics (such as anticipated traffic). Project selection is tilted towards those with high social benefits and low monetary benefi ts. We study the possible roles for privatization to alleviate these informational problems, and evaluate the regimes with and without the option for privatization.

The nature of discounting

From monetary policies to the climate change problem, from the burden of private credit card debts to the evaluation of public projects, discount rate is the central issue, yet there is little clear understanding about the nature of discounting. In this paper, applying a newly developed production theory, we discuss how discount rate is related to other factors in social systems, such as risk, duration of production, fixed cost in production and market size. The relations among different factors in a social system put constraints on the ranges of discount rate that are viable in particular environments. Our findings have strong policy implications. In a world of increasing cost of extracting natural resources, the continuation of low discount rate policy will generate wide gyration of social systems that we have witnessed in recent years.

Sustainability, Social Discount Rates and the Selection of Project Procurement Method

The notion of sustainability has lead to the evaluation of public projects in terms of wider socio-economic and environmental benefits. The Cost Benefit Analysis and its respective, Social Discount Rate (SDR), is of crucial importance, especially when the advantages of private financing are to be demonstrated in comparison with the alternative traditional procurement of works and services. The SDR seen as a measure of a country’s value of future costs and benefits is related to the notion of promoted sustainability. The impact of smaller and declining SDRs on project selection is investigated, and a conceptual formulation concerning the selection of the project procurement method is presented. The modelled formulation will assist central and local governments in assessing projects and the potential benefit of private financing.

REFLECTIONS ON THE FOUNDATIONS OF ECONOMIC VALUATION

This paper provides a brief review of the measures developed to achieve the goal of economic evaluation of public projects. The limitations of the Kaldor–Hicks criterion are highlighted and these issues lead to the development of the discounted present value (DPV) method and the compounded terminal value (CTV) method. However, the latter methods were not without problems. It is demonstrated that using DPV or CTV to evaluate certain public projects produces exorbitantly small DPVs or exorbitantly large CTVs, which would lead to a manifestly perverse ranking if adopted. A new method of evaluating these public projects, known loosely as the corrected equivalent present value method, is proposed to alleviate the problems of DPV and CTV.

The Nature of Discounting

From monetary policies to climate change problem, from the burden of private credit card debts to the evaluation of public projects, discount rate is the central issue. Yet, there is little clear understanding about the nature of discounting. The main problem in the theory of discounting is that “an economist who knows the literature well” is “able to justify any reasonable social discount rate by some internally consistent story”. In this paper, applying a newly developed production theory, we discuss how discount rate is related to other factors in biological and social production systems, such as risk, duration of project or life span, fixed cost of project and size of market. The relations among different factors in a production system will put constraints on the range of discount rate that is viable in particular environments. Our findings have strong policy implications. When the cost of extracting nonrenewable resources is low, lower interest rate policy will help accelerate economy growth. With steady increase of the cost of extracting natural resources, steady economic growth has become increasingly difficult. In such environment, a gradual increase of interest rate will provide a gentle soft landing instead of wide gyration of social systems that we have witnessed in the recent years under the mainly low interest rate environment.

Identifying an Australian 'Shadow' Benefit/Cost Ratio for Public Projects

This paper examines the social opportunity cost of a hypothetical public project in Australia and compares these values with the cost of the project as measured by factor prices. Since 2001, the Australian taxation system has included an ad valorem tax, the Goods and Services Tax, however relatively little analysis of the impact of this tax on public project evaluation methods has been undertaken. This tax creates divergences between social opportunity cost and conventional cost measures. Therefore it is recommended that shadow prices be applied to pubic projects. Following Campbell (1975), a shadow price can be introduced into Australian project evaluation in the form of a cut-off benefit cost ratio. The calculations reported on in the paper indicate that this ratio lies between 1 and 1.3 for public projects in Australia.

Government's Credit-Rating Concerns and the Evaluation of Public Projects

Public projects typically generate both monetary revenue and social benefits that cannot be monetized. We show that a government concerned with the credit rating of its debt should put different discount rates on these two aspects. The credit rating reflects the probability of default on the government's debt and thus affect its financing costs. Monetary revenues, which can be used in financial distress to repay debt, improve the credit rating and thus carry an additional credit-market compared to social benefits. However, informational problems -- dynamic inconsistency and adverse selection -- push the government to an excessive emphasis on social benefits, ignoring the external effect of monetary revenue on debtholders. Since the credit market anticipates this, the government's credit rating is adversely affected and it is thus unable to extract the full potential value of the projects. Privatization can sometimes alleviate these problems; However, the option to privatize has complex effects on the market's assessment of projects that remain in government's hands and thus might sometimes be harmful.

Investiční rozhodování a veřejně prospěšné projekty

Hodnocení investic veřejné sféry je třeba zkoumat napříč spektrem ekonomických disciplin. V naší hospodářské praxi lze v této oblasti narazit na řadu přetrvávajících iracionálních názorů nekorespondujících se soudobou ekonomickou teorií. Pro zvýšení efektivity společenského investičního rozhodování je třeba kvalifikovat řadu tržních i veřejných subjektů a poskytnout jim kvalitní, teoreticky bezrozporný rámec pro hodnocení veřejných investičních projektů, jejichž smyslem není maximalizace shareholder value, ale růst blahobytu společnosti co nejvhodnější alokací vzácných zdrojů mezi konkurující si způsoby určení. Takovouto metodou je Cost-Benefit Analysis, která kvantifikuje v peněžních jednotkách hodnotu všech dopadů tohoto investičního projektu na členy společnosti. Základními koncepčními předpoklady jsou propojení mezi alokační efektivitou a hodnotu projektu, vymezení základního principu ohodnocení výstupů na bázi Willingness-to-Pay (WTP) a ohodnocení vstupů do projektu na úrovni oportunitních nákladů, závislost WTP na vymezení společnosti a antropocentrická povaha CBA. Mikroekonomickým odrazem čistých benefitů plynoucích z dopadů projektu je změna společenského přebytku. Ohodnocení dopadů projektu je reálně závislé na tom, zda pro ně existuje efektivní trh, neefektivní trh nebo neexistuje žádný trh. Výsledně získané socioekonomické toky jsou převedeny na jejich současnou hodnotu společenskou diskontní sazbou a následně je z nich vypočtena NPV.

A Generalized Approach to Multigeneration Project Evaluation

In this article, we generalize the existing descriptive approach to multigeneration public project evaluation, taking into account distortionary taxes on capital income. In contrast to conventional wisdom, we show that such generalization does not require a project‐specific social discount rate (SDR) expressedas a weighted average of gross and net rates of return. What emerges is the concept of the marginal cost of public funds (MCF) that has the convenient property of project independence. In addition, the MCF‐based criterion identifies projects that, along with appropriate intergenerational transfers through time‐varying head taxes, are Pareto improving, and is, therefore, independent of any utilitarian social welfare function being used.

A Generalized Approach to Multigeneration Project Evaluation

1. IntroductionIt is well-known that the choice of discount rate plays a significant role in the ranking of projects with varying time paths of costs and benefits. For public projects, the choice of the appropriate social discount rate (SDR) is not clear-cut even in the context of short-lived projects in which costs and benefits occur within a single generation. In particular, when capital taxes produce a wedge between gross and net rates of return, should one discount at the economy's rate of return (the before tax rate) or the individual's rate of return (the after tax rate)? In the single-generation context, the literature falls in two camps.1 One camp argues that the appropriate SDR is a weighted average of the gross and net rates of return with weights typically determined by the fractions of resources drawn from consumption and private investment, respectively.2 A second camp argues that future benefits should be discounted at the net rate of return, but that the initial investment should be multiplied by a scale factor so that the direct costs of the project can be expressed in terms of consumption units.3Both approaches suffer from severe implementation problems. For the first approach, there is no general formula for the weights needed to calculate the SDR as a weighted average of two market rates of return (Dreze 1974). Indeed, the appropriate SDR to use is project-specific (Stiglitz 1982). Without a systematic methodology to derive project specific SDRs, the weighted average approach is hard to implement. For the second approach, which equalizes the SDR to the net rate of return, the scale factor--the opportunity cost of public investment--must be quantified. The opportunity cost of public investment depends on whether resources come from private investment or consumption and on the calculation of the present value of the future consumption yielded by a unit of capital discounted at the net rate of return; that is, the shadow price of capital. As Lind (1997) points out, however, there is no general agreement on a specific procedure for calculating the shadow price of capital. Indeed, the concept of the opportunity cost of public investment suffers the same project dependence problem as the first view of the SDR (Diamond 1968).Multigeneration projects such as nuclear waste disposal, natural resource conservation, or even Social Security reform further complicate discount rate choice. Specifically, intergenerational equity, in addition to intertemporal efficiency, plays a role in determining the appropriate social discount rate for multigeneration public project evaluation.4 As in the single-generation context, there are two competing views on the appropriate discount rate when evaluating multigeneration projects: the descriptive and the prescriptive approaches.5The descriptive approach to discounting is a market-based approach. It does not rely on an explicit social welfare function (SWF) or the pure time preference rate embedded in the SWF. However, the descriptive approach works under the assumption that intergenerational compensation through changes in the tax/debt policy is available.6 It is argued that, under appropriate intergenerational compensation, the market rates of return are still relevant for calculating the SDR for multigeneration project evaluation, and, in general, the SDR should be a weighted average of the gross and net rates of return. This descriptive view of setting the SDR equal to the market return appears to underlie the Office of Management and Budget's (OMB) adoption of 7% as the appropriate discount rate for federal programs.7The intent of the prescriptive approach is to use the social discount rate as an expression of ethical judgment on how consumption of future generations should be compared to consumption of current generations. …

Real options analysis of the Minami Alps forest road construction project: new valuation approach to social infrastructure project with sequential unit projects

This article illustrates how the real options approach to public project evaluation is executed with a large-scale forest road construction project in one of the national park regions in Japan as a case study. Paying due attention to the existence of specified beneficiaries who want to make sure the allocated cost burden is warranted by prospective tangible economic benefits realized by the project’s execution, framing the real options application to public projects is made possible with the use of market-priced risk value in similar public projects. The article analyzes ex ante project evaluation models under both the existing legal framework and a new legal framework that allows the option to abandon the project totally or partially and clarifies how positive net present values of the Minami Alps forest road construction project depend on the cost-effectiveness parameter values of environmental damage mitigation activities and the degree of uncertainty embedded in the planned project. The article also executes sensitivity analysis to illustrate how the optimal domain of cost-effectiveness parameter values are affected by other parameters, such as the investment cost of unit project; and summarizes its contribution to the field of public project evaluation.

Public Project Evaluation System and Agricultural and Rural Development Project in Mie Prefecture

Public Project Evaluation System and Agricultural and Rural Development Project in Mie Prefecture

Ocena projektów publicznych z wykorzystaniem analizy kosztów - korzyści

Ocena projektów publicznych z wykorzystaniem analizy kosztów - korzyści