Urgent Request for Insights on Benefit-Cost Ratios and New Models for Project Delivery
Published on by Richard Seline in Government
"BCR" - Benefit-Cost or Cost-Benefit Analysis, Return on Investment, Performance-Based Outcomes...please share your insights on how new models for BCR, CBA, ROI, PBC are being used in your community and projects.
Simply put from the US Army Corp of Engineers to States and Counties, is there a best practice that is unleashing new resources and unlocking innovations for risk mitigation. Your idea?
Taxonomy
- Risk Mitigation Strategy
- Project Sustainability
- Project Financing
- cost designer
- Cost recovery
- Project Consulting
- Pre-Disaster Risk Mitigation
- Process development
4 Answers
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@Richard Seline We have been exploring a shared savings model, where the utility can achieve substantive reductions in operating expense by optimization of water and wastewater treatment assets and processes. The benefit to the operator is reduced technology risk. The benefit to the technology provider is a long tail of residuals. A cost-benefit analysis is included after a conversation with operational managers. Once uptake of smart contracts is more mainstream, the shared savings business model rewards the innovators.
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Each of them is specific to certain objective and therefore, one has to be clear on what the objective it. Not that they together don't mean anything. Depending upon the nature of project, one of them could be critical and therefore, it is ideal to evaluate all of them and determine the limiting factor for future correction and positive results.
2 Comments
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I am sure you will find a number of them for DIFFERENT sectors like, Transportation, Energy and others which will facilitate your object analysis and application.
Cost Benefit Analysis for Projects – A Step-by-Step Guide, and a few others on the web provide the right information in this regard, please.
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Understood but I am looking for examples including locations in the US that have implemented these new approaches with the USACE
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Richard Seline It would seem, from a practitioners perspective, that there are two individual questions being asked. The first would be "what best practices unlock new resources and innovations?" The answer to this would be more "structure" oriented - ie. joint ventures, public-private partnerships, pure privatization, and/or payments for environmental services (PES).
The second question (in your question) is more related to how would the COE evaluate potential structures, or the success or failure of those structures. That's where I would see a BCR, CBA, ROI, etc. type analysis being appropriate.
So, my question back to you is which one (or both) are you trying to figure out? How to structure projects, or how to evaluate the success of those innovative structures?
Best,
Brad1 Comment
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Brad: both though recognizing the pathway to analysis might be different. Any schematics or graphics showcasing a methodology are appreciated.
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The most relevant and useful ‘new’ approach for any project analysis is the full “Lifecycle Cost Analysis”, including the full impact on resources and other activities. This primarily discloses hidden costs, effects, or detriments that are overlooked in many simple financial projections. It can be a mechanism for more innovation as well as directly affecting risk mitigation.
Wherever resources come from, whether “new” or existing, “unleashing” them efficiently is the key to better results. If “new” resources are wasted in the same way that past or current ones are, due to a lack of sufficient scope in the analysis, then we will just waste them faster instead of making any improvements. A key part of the new LCA models is the inclusion of specific land use and ecological impact effects. Sustainable economics includes much more than a simple balance sheet of money.
1 Comment
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Steven - do you have a schematic or graphic example, please?
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