Table of Contents

4.0 Option Identification

4.1 Introduction

4.2 Stating the Problem or Opportunity

4.3 Identifying Options

4.3.1 The Base Case Option

4.3.2 Other Options

4.4 Screening Options

4.5 Summary

5.0 A Common Frame for Comparison

5.1 Introduction

5.2 Self-Standing Options

5.3 Identification and Quantification of Benefits and Costs

5.4 Timeframe

5.5 Level of Effort

5.6 Designing the BCA Model

5.7 Summary

6.0 Project-Related Costs

6.1 Introduction

6.2 Costing Principles

6.3 Incremental Costs

6.3.1 Sunk Costs

6.3.2 Depreciation Allowance

6.3.3 Interest Expense

6.4 Project Independance

6.5 Opportunity Costs

6.6 Measuring Project-Related Costs

6.6.1 Planning Phase

6.6.2 Construction/Development Phase

6.6.3 Operational Phase

6.6.4 Post Forecast Phase

6.7 Life-Cycle Cost Analysis

6.8 Summary

7.0 Benefits and Other Effects of Projects

7.1 Introduction

7.2 Measurement Principles

7.2.1 Willingness to Pay

7.3 Benefits

7.3.1 Safety Benefits

7.3.2 Transportation Efficiency Benefits:

• Passenger Travel-Time Savings
• Small Travel-Time Savings
• Cargo Transit-Time Savings
• Congestion
• Operating Costs Savings
• Benefits to Non-Canadians
• Generated and Diverted Traffic
• Benefits from Concessions

7.3.3 Productivity Gains

7.4 Conditional Benefits

7.5 Environmental Effects

7.5.1 Measurement of Environmental Effects:

• Commercial Losses
• Property Value and Damage
• Abatement and Cleanup Costs
• Habitat Loss
• Health Risks

7.6 Transitional Effects

7.7 Exclusion of Economic Impacts

7.8 Summary

8.0 Discounting

8.1 Introduction

8.2 Inflation

8.3 Why Discount?

8.4 Discounting Arithmetic

8.5 Discount Rate

8.6 Discounting Conventions

8.6.1 Timing of Benefits and Costs

8.6.2 Calendar of Fiscal Year

8.6.3 Base Year

8.6.4 Choosing a Timeframe

8.7 Impact of Timing

8.8 Summary

9.0 Evaluation of Options

9.1 Introduction

9.2 Investment Criteria

9.3 Illustrative Evaluation of Options

9.4 Dealing with Uncertainty

9.4.1 Sensitivity Analysis

9.4.2 Assessing Option Risk

9.4.3 Probability Analysis

9.5 Cost-Based Comparisons of Options

9.5.1 Dealing with Unquantifiable Effects

9.5.2 Least-Cost Analysis

9.6 Presentation of Results

9.7 Summary

10.0 Structure of a BCA Report