Page 122 - DMGT521_PROJECT_MANAGEMENT

Unit 8: Social Cost Benefit Analysis
Anand Thakur, Lovely Professional University

Unit 8: Social Cost Benefit Analysis Notes

CONTENTS
Objectives
Introduction

8.1 Rationale for Social Cost Benefit Analysis
8.1.1 Market Imperfection
8.2 UNIDO Approach for Social Cost Benefit Analysis

8.2.1 Shadow Pricing
8.2.2 Concept of Tradability
8.2.3 Sources of Shadow Prices
8.3 Methods followed by Financial Institutions
8.4 Little Mirrlees Approach

8.5 Summary
8.6 Keywords
8.7 Review Questions

8.8 Further Readings
Objectives

After studying this unit, you will be able to:
 Know about Rationale for Social Cost Benefit Analysis
 Understand UNIDO approach for Social Cost Benefit Analysis

 Know about the methods followed by Financial Institutions

Introduction

It refers to the study of feasibility of a project in terms of its total economic cost and total
economic benefits. It means to compare total cost with total benefit if we add external cost with
private cost, it’s called total social cost if we add external benefit with private benefit, called total
social benefit.

8.1 Rationale for Social Cost Benefit Analysis

Social Cost Benefits Analysis means to analyze the social cost and total social benefits if we
accept any project. We all know that for completing the big project, we need big investment. In
Social Cost Benefit Analysis (SCBA), we see whether return or benefits on this investment are
more than its cost from point of view of society in which we are living.
In public investment, we analyze and compare government expenditure with total benefits to
society through SCBA. It is also good technique of financial evaluation of a project because we
leave that project whose benefits to society are less than total cost which will to society because
all resources are from society.

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