HES2136_Assign1_Questions

HES2136_Assign1_Questions - $2,734,270 $3,435,847 Annual...

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HES2136_ Assignment 1 : Evaluation of Alternatives (Group submission should be a one to two-pages spreadsheet indicating workings and which options you propose under each of the evaluation methods. Due: 29/8/07 (5 pm). This question will help you in determining how to conduct an Economic Evaluation of your alternative alignments for the project. In response to increasing volumes of traffic and a sharp rise in accident rates in a small rural town, the state road authority has commissioned a study for a new bypass. Three alternatives have been identified. Which option would you recommend based on: a) The Net Present Value Method? b) The Net Present Worth Method? c) The Incremental Benefit-Cost Method? NOBUILD OPTION I OPTION 2 OPTION 3 Traffic/Road Information Design Speed - km/h 50 100 100 100 Average Speed - 0.9 * Design Speed 45 90 90 90 Travel Time - minutes 2.4 1.57 1.63 1.50 Distance - km 2.5 2.35 2.45 2.4 Construction Costs $3,135,270
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Unformatted text preview: $2,734,270 $3,435,847 Annual Maintenance Costs (/km) $25,000 $25,000 $25,000 $25,000 You will need the following information: Current traffic volumes/day 3,000 Vehicle mix: 80% cars, 20% trucks. Projected increase in traffic 3% per annum (i.e., compound) Planning horizon 5 years (i.e., 3000 vehicles in year 0, (3000)*(1.03) 1 in year 1…… (3000)*(1.03) 5 in year 5. Accidents before bypass 6/year Accidents after bypass 1/year Discount rate of 4% USER COSTS Travel Costs Cars $13.8/hour Trucks $16.7/hour Operating Costs Cars $0.14/km Trucks $0.50/km Accident Costs/accident $100,000/accident Hints Calculate the NPV costs for the No-build and each option. Realise you need to calculate the ANNUAL user costs and benefits. You need to subtract the user costs for Option 1 from the user costs for No-build and then compute the NPV of the net benefits. Repeat for other two options ....
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