COURSE TITLE: Cost Benefit Analysis
COURSE CODE: HEC 412
CREDIT POINTS: 15
PREREQUISITES: Intermediate Microeconomics HEC 203, Intermediate Macroeconomics
HEC 311
COURSE DESCRIPTION
This course covers the economic aspects of cost-benefit analysis and examines how an economic analysis fits into a complete cost-benefit analysis. The emphasis will be on the use of economic theory to measure the benefits and costs of projects. Applications to infrastructure investments such as roads, electricity and water supply and sustainable projects in rural setting of PNG inclusive of social sectors (health, education). In addition, the course will cover the theory and measurement of the economic opportunity cost of public funds, examines the rationale for government provision of goods and services and presents cost-benefit analysis as a method to evaluate public participation in a market economy. It also covers a variety of financial techniques necessary to quantify costs and benefits are explained, including present-value, return-on-investment (ROI), and break even. In addition, several practical forecasting techniques for revenue, expenses, and project growth are presented. Finally, several decision-making strategies are shown that help in making informed project decisions. The participants will leave with a thorough understanding of how to write a detailed yet concise business case.
LEARNING OUTCOMES
On completion of the course students can:
v Understand the structure and content of a business case
v Quantify financial and non-financial benefits and costs
v Calculate estimates through forecasting
v Take into account the time-value of money through present-value ROI analysis
v Make decisions under uncertainty and risk using decision tables and decision trees
CONETENT
- Introduction to Cost Benefit Analysis
- Conceptual Foundations of Cost-Benefit Analysis
- Microeconomics Foundation of Cost Benefit Analysis
- Types of Costs and Benefits
- Financial Analysis Techniques
- Cost Benefit Analysis, Return on Investment, Internal Rate of Return, Present Value Analysis
- Forecasting Techniques
- Forecasting Essentials, Straight-Line Model
- Moving Average Models, Regression
- Risk Analysis
- Probabilities, Impact Assessment, Risk Management Strategies, Risk Costing
- Decision Analysis
- Making Decisions under Uncertainty, Making Decisions using Probabilities, Decision Tables & Trees
TEACHING AND LEARNING STRATEGIES
Participative lecture, guest lecture, case studies, exposition, concept development, group work and presentation, interest-based research project and problem solving.
ASSESSESSMENT
The course assessments are as follows:
Formative Assessment 50%
Tests x2 (10% each)
Major assignment x1 (25%)
Class Attendance and Participation (5%)
Summative Assessment
Exam (50%)
EVALUATION
Evaluation will be formative and summative. Evaluation strategies include observation of student progress, oral questioning or written questionnaire. Findings of the evaluation will be used to make decisions for ongoing improvement and as a measure of ascertaining quality.
REFERENCES
Boardman, A.E., Greenberg, D.H., Vining, A.R. and Weimer D.L. (2018) Cost-Benefit Analysis: Concepts and Practice (Fifth Edition). USA: Sharidan Book Inc.
Gomi J Gipe (1998) Essential Elements of Practical Cost Benefit Analysis for PNG Analysts, Lae Unitech, PNG
Mishan, E.J. & Quah, E. (2007) Cost Benefit Analysis (Fifth Edition). London and New York: Routledge, Taylor & Francis Group
CONTACT HOURS
There will be 3 contact hours per week
Lectures: 1 hour
Tutorials: 2 hours
LECTURE & TUTORIAL TIME SCHEDUELS
|
Sessions |
Program |
L&T Day |
Time |
Venue |
|
Lecture |
BBE & BTA |
Monday |
11 – 12 noon |
Unigor Conference Room |
|
Tutorial |
BBE & BTA |
Thursday |
8 – 9 am |
R1 |
|
Consultation Times: |
BBE & BTA |
Wednesday |
1 – 3 pm |
R64 |
Course Facilitator: Ms. Kinagita YASI
- Teacher: Alwyn Kawona