INTRODUCTION TO SOCIAL COST BENEFIT ANALYSIS Subject - PROJECT MANAGEMENT & CONTROL-II Paper code- OPFM-306 Module-II

PROJECT MANAGEMENT Project management deals with planning, scheduling, controlling and monitoring the complex non- routine activities that must be completed to reach the predetermined objectives of the project.

Case Study Study the following situation and list out the costs and benefits associated with this project. Let us suppose that the Government is considering to construct a bridge in a very congested area. If people use this bridge then the traffic will be reduced by a good amount in that area . People in that area will receive benefits other than reduction in traffic like- well connected transport network, link to the main city, development of transport system will lead to the growth of industries. This will bring employment for the people residing in the surrounding areas. The construction of the bridge will require a large amount of investment, maintenance cost. Toll taxes can be applied to recover the expenses related to maintenance of the bridge. The costs associated with this project is huge.

Analysis of Projects Analysis Commercial Cost Benefit Analysis Social Cost Benefit Analysis

Social Cost Benefit Analysis (SCBA) To reflect the real value of the project to the society, one has to consider the impact of the project on the society. So when we evaluate the project from the view point of the society or the economy as a whole , it is known as Social Cost Benefit Analysis. Social cost-benefit analysis is a systematic and cohesive method to survey all the impacts caused by an urban development project. It comprises not just the financial effects (investment costs, direct benefits like tax and fees, et cetera), but all the social effects, like: pollution, safety, indirect (labour) market, legal aspects, et cetera.

Impact of the project on the society Positive Impact (Social Benefit) Negative Impact (Social Cost)

Social Benefits & Social Costs Social Cost is the cost to society as a whole from an action, project or policy change. Social benefit means the improvements attained in the living conditions of its beneficiaries that are directly attributable to the project.

Essence of SCBA Let Social Cost = C Social Benefit = B To evaluate the costs and benefits of the project and to proceed with it if and only if benefits match or exceed the cots. B> C or at least B=C.

Objectives of SCBA Contribution of project towards the fulfillment of certain social objectives which in turn is beneficial for the society like- employment, self sufficiency etc. A great impact is created on the level of savings and investments in the society. Provides economic benefits. Creates an impact of the project on the income distribution in the society.

Scope of SCBA Public Investment-SCBA is important socially for the developing countries where Govt. plays a significant role in economic development. Private Investment-SCBA is also important in case of Private Investment since they are to be approved by various Govt. & semi- Govt. agencies.

Significances of SCBA Market imperfections Externalities Taxes and subsidies Concern for saving Concern for redistribution Merit wants

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