Page 125 - DMGT521_PROJECT_MANAGEMENT

Project Management

Notes 2. Subsidies are definite monetary gains
From social point of view taxes and subsidies are generally regarded as transfer payments and
hence considered irrelevant.

Concern for Savings

Parts of benefit saved is deemed more valuable than the part of benefits consumed.

In SCBA higher valuation is placed on savings and a lower valuation is put on consumption.

Task Describe about Market Imperfection.

Self Assessment

Fill in the blanks:

1. …………………… Analysis means to analyze the social cost and total social benefits if we
accept any project.
2. In public investment, we analyze and compare government expenditure with total benefits
to society through ……………………
3. Externalities are non-cash or benefits which an organization suffer or get if it starts the
……………………
4. …………………… is payment on the earning of the project and it will reduce our overall
benefits.

5. SCBA is concerned with tactical decision making within the framework of broad strategic
choices defined by planning at the …………………… level.

8.2 UNIDO Approach for Social Cost Benefit Analysis

Two principle approach for SCBA:

1. UNIDO Approach
2. Little-Mirrlees Approach
UNIDO method involves five stages:
1. Calculation of financial profitability measured at market prices.

2. Obtaining the net benefit of the project measured in terms of economic (efficiency) prices.
3. Adjustment for the impact of the project on savings and investment.
4. Adjustment for the impact of the project on income distribution.
5. Adjustment for the impact of the project on merit goods and demerit goods.

Net benefit in terms of Economic (Efficiency) prices:
1. Also referred to as shadow prices.
2. Market prices represent shadow prices only under conditions of perfect markets.

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