Transportation Decision-making – Principles of Project Evaluation and Programming
           Evaluating the Economic Efficiency of Transportation 
                                      Interventions
                                   Costs           
                                     $              Benefits       
                                                       $
               K u m a r e s   C.   S I n h a    a n d  S a m U E L    L a b I
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       Contents of this Presentation
              Cash Flow Illustrations
              The 5 Variables in any Cash Flow Diagram
              Equivalence Equations (Interest Formula)
               Criteria for Economic Efficiency Evaluation 
              Special Cases of Equivalence Equation
              Steps for Economic Efficiency Analysis
              What is Life-cycle Cost Analysis (LCCA)?
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                                                                                Economic Efficiency 
            Why Carry out Economic Efficiency Analysis?
                Economic efficiency is a key criterion for evaluation of 
                   most engineering systems
                Useful for evaluating systems on basis of 1 or more PM that 
                   are monetizeable
                Is a type of multiple-objective decision analysis
                Reflects that fact that the value of money changes over time 
                   (Example: $1,000 in today is not the same as $1,000 in 1993, and is not the 
                   same as $1,000 in 2013)
                Concept of cash flow over time 
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                                                                          Economic 
                                                                          Efficiency
           The Concept of Cash Flows
             Is a representation of money inflows and outflows assoc. with 
                an engineering system
             Table or Diagram can be used
             Table: +ve Æ money coming in (revenues, savings)
                     -ve Æ money going out (costs)
             Diagram: downward arrows Æmoney coming in (revenues, savings)
                        upward arrows Æ money going out (costs)
             Time intervals of money flows: daily, weekly, monthly, yearly, 
                etc.
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