Cost-Benefit Analysis

 

IDG helps governments introduce modern cost-benefit analysis techniques for large-scale infrastructure projects, within the context of helping countries establish a sound medium-term expenditure planning framework.  IDG offers technical assistance and training to government agencies to help them improve their processes for capital budgeting and project appraisal.

 

Project Experience 

Azerbaijan Competitiveness and Trade (ACT) ProjectUnder this project, IDG organized and conducted a four-week training on public investment appraisal in conjunction with the Institute for Economic Reform (IER) under the Ministry of Economic Development, for around 30 government officials. The training was organized in collaboration with partner Cambridge Resources International, directed by Glenn Jenkins, a leading authority on cost-benefit analysis and project appraisal.  The course covered the following topics: components of an integrated project appraisal; alternative investment criteria; the use of debt; cash flow analysis; financial modeling from alternative points of view; inflation, interest rates, and exchange rates; financial and economic valuation; cost-effectiveness analysis; risk analysis; contracting issues; microeconomics of cost-benefit analysis; opportunity cost of foreign exchange; measuring economic prices of tradable and non-tradable goods; measuring costs and benefits; the economic cost of capital; assessing environmental impact; evaluating willingness to pay; assessing non-competitive markets; and stakeholder analysis.  The course considered case studies in many sectors: electricity, water, transportation, telecommunications, education, health, roads, ports, and energy. The content of the program was equivalent to two graduate level courses in applied economics and finance. Participants were from the Ministry of Economic Development, the Ministry of Finance, the Ministry of Transportation, the Ministry of Agriculture, the Ministry of Youth and Sport, the Ministry of Health, the Ministry of Emergency Situations, AzerEnergy Joint Stock Company, AzerSu Joint Stock Company, the State Committee on Urban Planning and Architecture, the Azerbaijan State Institute of Water Management Units Design, the Azerbaijan Scientific Production Association for Hydrotechnical Facilities and Land Development, and the State Oil Fund of Azerbaijan.