Cost benefit analysis examines the initial costs of construction verses the effective beneficial changes. This case uses the following data to derive results of the four alternatives:
These primary B/C and C/E evaluates stimulated the initiation and development of discussed four lighting preferences that are discussed in the case study. For instance, (W) implemented the plan and is given in details in the form of light poles (approximately every 67 meters) at a cost of almost $3500 for each of the pole. Similarly, the (X) install poles that are twice the distance apart at approximately 134 meters are also part of the implementation plan. Also, the (Y) install, though are relatively cheap, the poles that surrounds the safety guards are composed of slightly lowered lumen bulbs that are about 350 watts and at a cost of $2500 for each pole. Notably, the poles are also 67 meters apart and are estimated to contribute to reduce the benefits by 25%. These estimations are argued to have caused the accident prevention benefit to decrease by approximately 40%. On the other hand, the (Z) installations are from relatively cheaper equipment that are estimated to have cost $2500 per pole with 350-watt light bulbs and placed 134 meters apart. Arguably, the plan is estimated to be effective in the reduction of the accident prevention measures by roughly 50% (that translate into about 124 all the way from 247).
From the data in the case study, letting the B/C value for W be 0.96, and for Y be 0.94,
Therefore, the installation cost of all poles in W is equal to 3500*(87.8/0.067)= $4,586,557
In Y the total cost of installation is 3500*(87.8/0.134)=$ 2,293,283
Lighting the street reduced the number of accidents of accidents that occurred on the road unlike when there are no lights. The alternative X, where the distances of poles were increased further reduced the initial cost of the infrastructure. Therefore, the benefits of increasing the intervals from 67 m to 134m further reduced the price, thus justified. This action that reduces the cost of construction is of benefit to the constructors. The use of cheaper poles and the surrounding guards in alternative Y results in increased accidents on the road. The total cost of construction here was 2500*(87.8/0.067) = $3,276,119 is unjustified as it has detrimental implications.
In alternative the cost of construction is 2500*(87.7/0.134) = $1,638,059. This alternative Z has the cheapest cost compared to the other alternatives W, X, and Y. and can be ascertained by the results.
Alternative W encompasses the installation of light poles at a distance of 67km and the average cost for the implementation of the projects required a projected fee of $3500 for each of the pole. The cost per pole involved provision of lighting using a bulb of 400W. Therefore the total costs of pole are: (3500*87.8/0.067) = $4,586,557.16
Therefore, $4586.57 is the amount to be used in the completion of the first alternative.
Alternative X utilized poles at a distance of 134m. Besides, this alternative was essential in reducing accidents by 40%. The cost for installation is therefore:
The alternative Y included the inclusion of lighting at the provided 67m distance along the 87.8km highway. The third alternative project involved the installation of low-cost poles with additional lighting using a 350W bulb with security implications. This program was estimated to cost $2500 per pole and will reduce the accrued benefit by 25%. The cost for the installation is:
The fourth alternative Z incorporates the installation of cheaper poles at an average cost of $2500 for every p ole. The distance for installation was pegged at 134m. However, this alternative reduced the accident prevention mechanism by 50%. The installation cost therefore is: (2500*87.8/0.134)=$1,638,059.7
The comparison of the four alternatives: W, X, Y, and Z, it is observed that alternative W has the highest operational cost of $ 4,586,557.16 while alternative Z has the least operational cost of $1,638,059.7. Besides, alternatives X and Y had medium charges for project completion of $2,293,283.58 and $3,276,119.40 respectively. Furthermore, alternative W had the most effective accident prevention mechanism given the provision of an adequate lighting provision during the project completion by reducing accident projection above 40%.
Conversely, alternative Z failed in accident prevention by 50% while alternatives X and Y reduced cost benefit by 40% and 20% respectively. In essence, alternative W is the appropriate alternative for highway installations; however, the project completion is economically higher.
Furthermore, alternative Z is cheaper but does not reduce accident and damages occurrence. In the reduction of resource usage in cost benefit analysis, alternative X gives appropriate results since it reduces the occurrence of accidents and damages by 40% and the cost for the project installation is feasible.
Number of preventable accidents
Alternative W reduced 4586557/245=18569 accidents, while,
X 2293284/247=9284 accidents
Y 3276119/247=13263 accidents
Z 1638060/247=6631 accidents
Life-Cycle Cost Analysis
This method assesses the total costs of and the available alternatives to determine the best that saves most in terms of costs and lives and in this case it is alternative Z. These alternatives when compared shows that the cumulative amount of investment in Z was the least, furthermore it reduced the number of accidents by 40%. Alternative techniques that are consistent with LCCA are net reserves cost, savings to investment ratio and internal rate of return. Profitability index, profit/value investment ratio method assesses the percentage change in value caused per unit change in investment. Here, any value above 1 is more profitable and justifiable.