6.0_SOCIAL_PROFITABILITY_ANALYSIS

6.0_SOCIAL_PROFITABILITY_ANALYSIS - SOCIAL PROFITABILITY...

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SOCIAL PROFITABILITY ANALYSIS IE 153
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OUTLINE 1.0 Objectives, Scope and Assumptions 2.0 Socio-Economic Criteria 3.0 Cost-Benefit Analysis 4.0 Cost-Effectiveness Analysis 5.0 Economic Feasibility Evaluation
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1.0 OBJECTIVE To determine whether the project is socially attractive or not based on mandated criterion. The rationale behind the appraisal criterion may be to select those projects for which the country’s resources are most appropriate and to avoid the others.
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APPRAISAL CRITERION Based on National Objectives such as: Minimum use of foreign exchange Minimum fuel consumption per worker Maximum use of labor Minimum use of capital, or other factors The project must be evaluated to estimate its contributions to the achievement of these objectives, and the appraisal criteria used are based on some form of investment guidelines.
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1.0 SCOPE Covers the socio-economic contributions of the project Among others it includes: Foreign exchange savings Improved standards of living Increased community development Lowering of prices Utilization of local materials Minimum consumption Maximum use of labor Minimum use of capital
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Usually attempts to include all factors attributable to the project both measurable and non-measurable Normally required by government financing agencies Investment guidelines issued by the Board of Investments serve as the general priorities plan of the government 1.0 SCOPE
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1.0 ASSUMPTIONS Dependent on investment guidelines issued by the government The use of commercial project to determine the economic value of the project is not an accurate guide The technical and financial studies have been completed.
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2.0 SOCIO-ECONOMIC CRITERIA Net Present Value (at a given social discount rate) Internal Rate of Return Benefit-Cost Ratio (at a given social discount rate)
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3.0 COST-BENEFIT ANALYSIS Methods of quantifying the social profitability of a project Must be compatible with national objectives
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6.0_SOCIAL_PROFITABILITY_ANALYSIS - SOCIAL PROFITABILITY...

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