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EMCA5103 Assignment PROJECT COST ANALYSIS AND APPRAISAL

# EMCA5103 Assignment PROJECT COST ANALYSIS AND APPRAISAL

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Author will not be resposible shall any of the information given in this document is wrong.
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05/26/2012

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SEPTEMBER SEMESTER 2011LECTURER;

SR. DR. ZULKIFLEE BIN ABDUL SAMAD
STUDENT;
NAME: MOHD. NORIZAM BIN MD. SALLEH MATRIC NO.: CGS 00534317 I/C NO: 670703-01-6045 COURSE: MASTER PROJECT MANAGEMENT
ASSIGNMENT PROJECT COST ANALYSIS AND APPRAISAL – EMCA5103

Name: Mohd. Norizam Bin Md. SallehMatriculation No.: CGS 00534317Assignment: EMCA5103 (Project Cost Analysis and Appraisal)

Semester September 2011
ii

Question 1 ............................................................................................................................................... 1

1.1

Introduction .................................................................................................................................... 1

1.2

Misconception on CBA .................................................................................................................. 5

1.2.1

CBA is a mechanical substitute for common sense. ............................................................. 5

1.2.2

Unethical to use CBA for making public policy decisions. .................................................... 8

1.2.3

Regards the difference between a net improvement and a confirmed panacea. ............... 11

1.3

Conclusion ................................................................................................................................... 13

Question 2 ............................................................................................................................................. 17

2.1

Introduction .................................................................................................................................. 17

2.2

Three (3) Problems That Will Affect The Using of Demand Function to Measure Indirect Benefit...................................................................................................................................................... 18

2.2.1

The Shape of Demand Function (Elasticity) ........................................................................ 19

2.2.2

Shifts in the Demand Function ............................................................................................ 27

2.2.3

Market Effects...................................................................................................................... 32

2.3

Conclusion ................................................................................................................................... 37

Reference (continued) ........................................................................................................................... 40

List of Figures
Figure 1: The Cost Benefit Analysis Process .......................................................................................... 2

Figure 2: National Lead Poisoning Campaign Conducted in US. ........................................................... 7

Figure 3: Penang Bridge.......................................................................................................................... 9

Figure 4: Pedestrians Are Exposes to the Pollution Emitted by Vehicles ............................................. 10

Figure 5: Has Anti Drug Campaign achieved 100% its Goals? ............................................................. 12

Figure 6: Perfectly Elastic Demand Curve ............................................................................................ 20

Figure 7: Perfectly Inelastic Demand Curve .......................................................................................... 21

Figure 8:
BenefitFromaSubway.
......................................................................................................... 23

Figure 9: Shift in Demand ...................................................................................................................... 28

Figure 10: Income and Substitution Effects ........................................................................................... 30

Name: Mohd. Norizam Bin Md. SallehMatriculation No.: CGS 00534317Assignment: EMCA5103 (Project Cost Analysis and Appraisal)

Semester September 20111
SEPTEMBER SEMESTER 2011PROJECT COST ANALYSIS AND APRAISAL – EMCA5103ASSIGNMENT (50%)Question 1
Cost-Benefit Analysis (CBA) is a method of evaluating the relative merits of alternative public investment projects in order to achieve efficient allocation of resources. It helps to identify, portray and assess the factors which need to be considered in making rational economic choices. However, there are still misconceptions about CBA. Critically discuss three common misconceptions about CBA. Support your answers with appropriate illustrations and examples.(50 marks)
There are a lot of misconceptions on Cost Benefit Analysis (CBA) and before we gofurther it is good for us to understand what CBA is all about. Some author calls itCBA and some call it BCA (Benefit Cost Analysis). They are actually the same but inthis assignment term CBA will be used. An understanding on CBA shall give us theanswer how these misconceptions came about.According to

The Free Dictionary

the definition of CBA in governmental planningand budgeting is the attempt to measure the social benefits of a proposed project inmonetary terms and compare them with its costs. The procedure was first proposedin 1844 by Arsene-Jules-Etienne-Juvenal Dupuit (1804–66). It was not seriouslyapplied until the 1936 U.S. Flood Control Act, which required that the benefits offlood-control projects exceed their costs. A cost-benefit ratio is determined bydividing the projected benefits of a program by the projected costs. A wide range ofvariables, including non-quantitative ones such as quality of life, are often consideredbecause the value of the benefits may be indirect or projected far into the future.

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