Recent development near Eugene, Oregon, has identified a need for improved acces

Question

Recent development near Eugene, Oregon, has identified a need for improved access to Interstate 5 at one location Civil engineers and public planners are considering three alternative access plans. Benefits are estimated for the public in general: disbenefits primarily affect some local proprietors who will see traffic pattern changes as undesirable. Costs are monetary for construction and upkeep, and savings are a reduction in cost of those operations today that will not be necessary in the future. All figures are relative to the present situation, retention of which is still an alternative, and are annualized over the 20-year planning horizon. A B C Alternative Benefits $200,000 $300,000 $400,000 Disbenefits S37,000 S69,000 S102,000 $150,000 $234,000 $312,000 Costs Savings $15,000 $31,000 $42,000 a. What is the B/Cratio for each of these alternatives? b. Using incremental BIC ratio analysis, which alternative should be selected? c. Determine the value of B C for each alternative.

Explanation / Answer

B = Benefits - Disbenefits

C = Costs - Savings

a. Alternative A:

B = 200000 - 37000 = 163000

C = 150000 - 15000 = 135000

B/C = 163000/135000 = 1.2074

Alternative B:

B = 300000 - 69000 = 231000

C = 234000 - 31000 = 203000

B/C = 231000/203000 = 1.1379

Alternative C:

B = 400000 - 102000 = 298000

C = 312000 - 42000 = 270000

B/C = 298000/270000 = 1.1037

b. As the B/C ratio is highest for alternative A, it should be selected.

c. Alternative A: B - C = 163000 - 135000 = 28000

Alternative B: B - C = 231000 - 203000 = 28000

Alternative C: B - C = 298000 - 270000 = 28000

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