engineering economic analysis - 8th edition：工程经济分析-第八版.[精品].ppt

EGR 403 - Cal Poly Pomona - SA12 EGR 403 - Cal Poly Pomona - SA12 * What is a Benefit-Cost Ratio? A benefit-cost ratio (BCR) is an indicator, used in the formal discipline of Cost-Benefit Analysis,, that attempts to summarize the overall value of money of a project or proposal. A BCR is the ratio of the benefits of a project or proposal, expressed in monetary terms, relative to its costs, also expressed in monetary terms. All benefits and costs should be expressed in discounted present values. EGR 403 - Cal Poly Pomona - SA12 * In the absence of funding constraints, the best value for money projects are those with the highest net present value. Where there is a budget constraint, the ratio of NPV to the expenditure falling within the constraint should be used. In practice, the ratio of NPV to expenditure is expressed as a BCR. BCRs have been used most extensively in the field of transport cost-benefit appraisals. The NPV should be evaluated over the service life of the project. A major shortcoming of BCRs is that, by definition, they ignore non-monetized impacts. Attempts have been made to overcome this limitation by combining BCRs with information about those impacts that cannot be expressed in monetary terms A further complication with BCRs concerns the precise definitions of benefits and costs. These can vary depending on the funding agency. EGR 403 - Cal Poly Pomona - SA12 * Cost-benefit analysis Cost-benefit analysis is a term that refers both to: helping to appraise, or assess, the case for a project or proposal, which itself is a process known as project appraisal; and an informal approach to making decisions of any kind. Under both definitions the process involves, whether explicitly or implicitly, weighing the total expected costs against the total expected benefits of one or more actions in order to choose the best or most profitable option. The formal process is often referred to as either CBA (Cost-Benefit Analysis) or BCA(Benefit-Cost A