WinDASI: A Software for Cost Benefit Analysis of Investment Projects
Contents
1. Financial and economic prices should be inserted in the Commodity window as explained in the EASY Pol Module 019 WinDASI A Software for Cost Benefit Analysis of Investment Projects Inserting and Managing Data 4 EASYPol Module 020 Analytical Tools The options outputs by quantity by value give the flows of physical outputs or the flow of benefits respectively The net present value option gives the following flows see picture 17a a Outputs i e Benefits b Discounted benefits c Cumulative discounted benefits the sum of b up to each period d Inputs i e costs e Discounted costs f Cumulative discounted costs the sum of d up to each period g Investment h Discounted investment i Cumulative discounted investment the sum of e up to each period j Net Benefits the difference a d g for each period k Discounted Net Benefits the difference b e h for each period l Cumulative Discounted Net Benefits the sum of k up to each period m Incremental Net Benefits the difference between jJ i e the With Project WiP net benefits and the Without Project WoP net benefits for each period n Incremental Discounted Net Benefits the difference between k 1 e the With Project WiP discounted net benefits and the Without Project WoP discounted net benefits for each period and o Incremental Discounted Cum2. Plans MEC FARM start amp 2 A aeraqag Bin B cale Era Kmer gpwin win HIBA 19 26 3 5 Step 5 Run Sensitivity tests and comparisons Sensitivity window Once the flows of costs and benefits and related indicators are calculated you can test the robustness of your indicators to percentage changes in one or more inputs and or outputs using the Sensitivity analysis facility following the procedure here below i From the results window click on the button Sensitivity You will be prompted with the Sensitivity window as reported in figure 6 below 11 Select one or more inputs and or outputs from the proposed list of inputs and outputs 111 Choose a percentage rate of change for the prices or analogously for the quantities of the items you selected and write it in the box Note that as reported in the window positive values will increase prices quantities and negative values will decrease them iv Click on the OK button An updated results window will open as in figure 7 WinDASI a Software for Cost Benefit Analysis of Investment Projects 11 Calculations Performed by the Software Obviously when running sensitivity tests all the switching values NPV IRR and BCR are updated accordingly so the user can check how the project indicators are affected by given changes in the prices quantities of selected items This provides an appreciation of the
3. NEW PLAN which includes one activity named NEW MEC SUN as listed in the small Contents window The result window shows also that a discount rate of 12 has been used for discounting costs and benefits and the calculations are expressed using financial prices Details and examples on how the calculations of flows for investment items and plans are carried out in WinDASI are provided in the next section Figure 2 The results window for the net present value option start 2 A 4Weroae S yw Wc Br s sas Bs gw WinDASI NGAMO3 WDS NEW PLAN o x ER Fie Result View Help x aJa e rs S r contents oran 12 00 Net Present Value Financial prices J Detail investments EF Aggregation fe Switching values 241i Sensitivity an Comparisons Unt Wropoect 1 2 3 4 8 6 7 6 98 OUTPUTS SUNF E 3 640 00 7 280 00 7 280 00 7 280 00 10 920 00 10 920 00 10 920 00 10 920 00 10 920 00 10 920 TOTAL en 3 640 00 7 280 00 7 280 00 7 280 00 10 920 00 10 920 00 10 920 00 10 920 00 10 920 00 10 920 discounted 3 640 00 6 500 00 5 803 57 5 181 76 6 939 86 6 196 30 5 532 41 4 939 65 4 410 40 3 937 cumulative 0 00 6 500 00 12 303 57 17 485 33 24 425 19 30 621 49 36 153 90 41 093 55 45 503 96 49 441 INPUTS OTHER La 100 00 200 00 200 00 200 00 200 00 200 00 200 00 200 00 200 00 200 TOTAL 100 00 200 00 200 00 200 00 200 00 200 00 200 00 200 00 200 00 200
4. calculation options window There are two ways to get the calculation options window i either click on the Calculation button on the Main Toolbar then choose the component for which you wish to carry out the calculation Plan Zone or Project or li click on the Calculation button in the window of a Plan Zone or a Project In either case the Calculation options window Figure 1 will pop up 3 2 Step 2 Select the type of calculation you wish to carry out Select the calculation option you wish to carry out from amongst the list of calculation options see Figure 1 whether the calculation should be carried out either for inputs or outputs by quantity or by value If the calculations are to be carried out by value EASYPol hyperlinks are shown in blue as follows a training paths are shown in underlined bold font b other EAS YPol modules or complementary EASY Pol materials are in bold underlined_ italics c links to the glossary are in bold and d external links are in italics The EASYPol Module 019 _WinDASI A Software for Cost Benefit Analysis of Investment Projects Inserting and Managing Data provides guidance on how to load project data into WinDASI WinDASI a Software for Cost Benefit Analysis of Investment Projects 3 Calculations Performed by the Software you will have also to specify whether to use Financial prices or Economic prices If the by Value
5. discounted and cumulative costs benefits and net benefits c flows of incremental With Without project current discounted and cumulative net benefits and e project indicators such as the Net Present Value NPV the Internal Rate of Return IRR the Benefit Cost Ratio BCR the Switching Values SVs and Sensitivity Analysis Instructions are provided on how to carry out calculations for the different components of an investment project notably plans zones and projects i e at different levels of aggregation In addition this module addresses normal and phased mode of calculation and comparisons of different projects alternative scenarios with project versus without project 2 INTRODUCTION Objectives The main objective of this module is to illustrate how to carry out Cost Benefit calculations in WinDASI after having inserted project data in the data base To this end the user is driven by means of step by step procedures to calculate flows of costs and benefits and main project indicators After reading this document to be used in parallel with the software the user will be able to handle WinDASI to perform the analysis of financial and economic viability of investment projects Target audience This module targets current or future practitioners in Cost Benefit Analysis CBA of investment projects working in public administrations in NGO s professional organizations or consulting firms Also academics can find t
6. 13 Labour days 30 35 35 35 35 35 35 Other inputs 5 10 15 20 30 30 30 Yield maize tons 0 7 0 9 1 1 1 3 1 5 1 5 1 5 Activities Activity 2 Wheat growing Unit 1 ha Year WoP 1 2 3 4 5 6 13 Labour days 45 50 50 50 50 50 50 Other inputs 7 10 20 20 20 20 20 Yield wheat tons 0 7 0 8 0 9 1 0 1 1 1 1 1 1 Plans Plan 1 One farmer Unit Farm Year WoP 1 2 3 4 5 13 A Wheat ha 15 10 5 2 2 2 A Maize ha 5 10 15 18 18 18 These project data have been inserted in the database according to the modalities illustrated in the EASYPol Module 019 WinDASI A Software for Cost Benefit Analysis of Investment Projects Inserting and Managing Data Let us now use WinDASI to calculate the quantities and values of inputs and outputs over a 13 year period 18 EASYPol Module 020 Analytical Tools Box 2 cont Example flows of physical quantities costs and benefits for a plan Step 1 Get the calculation option window for the Plan One farmer Step 2 Select the options inputs and by quantity Step 3 run the calculations to obtain the quantities of inputs To calculate total quantities of required labour WinDASI takes the number of required labour days per hectare of maize or wheat year by year from the Activity data and multiplies this by the number of hectares under each crop year by year from the Plan data as shown below Step 2a Select the options Outputs and by qua
7. 2 3 4 5 10 C Rice farm 0 50 30 20 0 0 0 Note that in the above Plan data is entered in terms of incremental levels new farmers joining the project and therefore the total number of farmers undertaking the activity production of rice will be 100 from Y ear 3 onwards as in normal mode 22 EASYPol Module 020 Analytical Tools Box 3 cont Comparing normal and phased mode of calculation The computer will then perform the following calculations Table 1 Total production of rice using the Phased Mode Group WoP 1 2 3 4 5 6 10 Group 1 50x50 50x60 50x70 50x80 50x90 50x90 50x90 50 farms Group 2 30x50 30x50 30x60 30x70 30x0 30x90 30x90 30 farms Group 3 20x50 20x50 20x50 20x60 20x70 20x80 20x90 20 farms Total 5 000 5 500 6 300 7 300 8 300 8 800 9 000 To understand the calculations performed by WinDASI when the Phased Mode is used it may help if you imagine the farmers divided into three groups gt Group 1 enters the project in Year 1 gt Group 2 enters the project in Year 2 and gt Group 3 enters the project in Year 3 Each group continues to produce the output of the WoP situation until it joins the project the first year each group joins the project is highlighted in Table 1 above The build up of yields affects the three groups in different years according to when they entered the project It is worth noting that full production is reached earlier when using the Normal Mode of calculation and the in
8. 5 567 59 8 788 85 Ann nn 12 012 00 12 012 00 6 085 65 39 769 29 2 000 00 2 000 00 1 013 26 25 187 10 9 812 00 4 971 06 13 759 91 Ann An a Plans NEW PLAN start amp 2 A g s paas sa inbox Swinda EJeasve Gwinn EII 19 35 Compare window When using the WinDASI WiP WoP facility i e when the WoP scenario is assumed constant for all the time span of the project in the results window WinDASI reports incremental flows of cumulated discounted net benefits As already explained in section 3 3 above they are the result of the difference between the cumulated discounted net benefits in the With Project scenario WiP minus the cumulated discounted net benefits in the Without Project scenario WoP The Incremental NPV is value of the incremental cumulated discounted net benefits for the last period of the project By Clicking on the button Comparisons in the results window the Compare window that pops up provides by means of a two entry table a synoptic summary view on the way the Incremental NPV is calculated It shows the Incremental NPV as the difference of the WiP Net Present Value minus the WoP Net Present Value or alternatively as the difference between the Incremental Cumulated Discounted Benefits and the Incremental Cumulated Discounted Costs The table 1 below reports the calculations carried out in the Compare window T The WiP W
9. WinDASI then uses these data for computing the incremental values and the project indicators However in certain cases it is not possible to assume that a WoP situation is constant Overtime particularly in certain types of environmental projects where the situation is clearly deteriorating and the major objective of the project is to prevent the costs resulting from falling productivity of resources In this case there is no possibility of using the WinDASI built in facility for the WoP situation and you will have to build a specific scenario for the WoP situation and a distinct scenario for each project alternative The cells and columns reserved for the WoOP situation will be set at zero Two ways of comparing WoP and WiP situations In order to compare the WoP and WiP scenarios you have the two possibilities below the second one being easier to carry out 1 Inthe same WinDASI file insert data for Activities Plans and Zones for both the WoP and WiP situations You can then subtract the Plan Zone or Project of the WoP situation from the corresponding Plan Zone or Project of the WiP situation The results will be the incremental costs and benefits due to the project 1i Create a project data file for each scenario and use a spreadsheet to make the comparison You can start with the WoP situation define the Commodities Activities Plans and Zones and compute the expected costs and benefits By using the previous data file as a b
10. plan component is given in incremental terms such as additional hectares planted for a perennial crop or the new number of farmers joining a project each year Two examples showing the different calculations performed by WinDASI according to whether Normal or Phased Mode is being used are given below in Boxes 3 and 4 WinDASI a Software for Cost Benefit Analysis of Investment Projects 21 Calculations Performed by the Software Box 3 Comparing normal and phased mode of calculation Comparing two variants of a project where Variant 1 Normal mode 100 farmers join the project in Year 1 Variant 2 Phased mode 50 farmers join the project in Year 1 30 farmers join the project in Year 2 and 20 farmers join the project in Year 3 The expected build up of yield of rice production per farm is given below Rice production per farm WoP 1 2 3 4 5 10 Rice yield ton 5 6 7 8 9 9 9 10 10 10 10 Area planted ha 10 10 10 Total production 50 60 70 80 90 90 90 Plan for Variant 1 Normal Mode Plan Total production Unit Project area WoP 1 2 3 4 5 10 N Rice farm 100 100 100 100 100 100 100 The computer will then perform the following calculation to calculate total quantities of rice produced WoP 1 2 3 4 5 10 Yield x farms 50x100 60x100 70x100 80x100 90x100 90x100 90x100 Total 5 000 6 000 7 000 8 000 9 000 9 000 9 000 Plan for Variant 2 Phased Mode Plan Total production Unit Project area WoP 1
11. risks of your project Figure 6 The Sensitivity window WinDASI NEWNGA WDS 18 x File Result View Help NEW PLAN Net Present Value NEW M Economic prices gt Aggregation fea Switching values i Sensitivity aa Comparisons a a Ww a QO a ei OUTPUTS Rate 1200 Detail investments 3 640 00 7 280 00 7 280 00 7 280 00 10 920 00 10 920 00 10 920 00 TOTAL i 3 640 00 7 280 00 7 280 00 7 280 00 10 920 00 10 920 00 10 920 00 discounted 3 640 00 6 500 00 5 803 57 5 181 76 6 939 86 6 196 30 5 532 41 0 00 6 500 00 12 303 57 17 485 33 24 425 19 30 621 49 36 153 90 Sensitivity x Input Output NPUTS OTHER OTAL discounted NVESTMENTS RAC I Total 21 000 00 0 00 18 750 00 0 00 18 750 00 discounted 3 540 00 13 920 00 5 Edit values of z Positive number will increase values discounted 3 540 00 12 428 57 4 negative will decrease 0 00 12 428 57 n a OTAL m 0 00 21 000 00 a i lt i ai ae an am ann nn A Plans ANEW PLAN Asan de OREM AAS BRAS Bs _ Gnox Bwna Elease Gwnor senseity EEIE 19 00 Note that in the example reported in the figures 6 and 7 in the plan NEW PLAN the price of the output SUNF is increased by 10 In the updated result window the flows have increased by 10 accordingly e g from 7 280 00 Monetary units to 8 008 00 in period 1 say 7 280 00 x 1 10
12. where P is the value of a Plan Ay Ad An L b i Ci C2 Ch and aj a2 An bi bo bin C1 Co a Cm are the activities specified in the data base are the investments items defined in the database are the commodities specified in the data base are the coefficients specifying the number of units of each activity in the plan are the coefficients specifying the number of units of each investment in the plan are the coefficients specifying the number of units of each commodity in the plan We shall use a practical example Box 2 to illustrate this concept I3 Calculations at Zone and Project level follow the same approach as for Plans Indeed in WinDASI a Zone is aggregations of plans and investment items and a Project is an aggregation of Zones and investment items WinDASI a Software for Cost Benefit Analysis of Investment Projects 17 Calculations Performed by the Software Box 2 Example flows of physical quantities costs and benefits for a plan A farmer with 20 ha of land wants to shift from a wheatbased to a maize based cultivation pattern The project data have been organized to match WinDASI requirements as follows Commodity prices Name Unit Unit price Labour days 0 8 Other inputs 1 0 Maize tons 50 Wheat tons 70 Note 1 Prices here are considered constant throughout the project life Activities Activity 1 Maize growing Unit 1 ha Year WoP 1 2 3 4 5 6
13. 0 47 80 78 cumulative 0 00 22 28 912 75 993 53 1 0 in INVESTMENTS TRACI Total 21 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 19 0 FOTA a 0 00 21 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 19 06 discounted 0 00 18 750 00 1 594 39 1 423 56 1 271 04 1 134 85 1 013 26 904 70 807 77 BE cumulative 0 00 18 750 00 20 344 39 21 767 95 23 038 98 24 173 84 25 187 10 26 091 80 26 899 56 33 7 discounted 3 540 00 12 428 57 4 043 74 3 615 84 5 541 72 4 947 96 4 417 82 3 944 49 3 521 86 25 cumulative 0 00 12 428 57 0 373 03 778 74 5 726 70 10 144 52 14 089 01 17 610 87 14 6 Net Incremental Ben 0 00 17 460 00 1 540 00 1 540 00 5 180 00 5 180 00 5 180 00 5 180 00 5 180 00 11 82 0 00 15 589 29 1 227 68 1 096 14 3 291 98 2 939 27 2 624 35 2 343 17 2 092 12 42 b ANEW PAS start e a dgra fa w mc A faJs Ms faJs 5w vale BG D gt GQ xH 21 10 The Benefit Cost Ratio BCR of a flow of net benefits is defined as the ratio between the Present Value of the Benefits PVB divided by the Present Value of the Costs PVC BCR Lal PVC 8 Note that this implies that if you discount the flows of the plan NEW PLAN with the 16 70 discount rate the NPV of NEW PLAN will result equal to zero 8 EASYPol Module 020 Analytical Tools 40 840 42 For example the BCR of the plan NEW PLAN is BCR 36 209 45 1 1
14. 12 EASYPol Module 020 Analytical Tools Figure 7 Results after the Sensitivity analysis E 181 x WinDASI NEWNGA WDS File Result View Help Comp x poi 2 5 x 15 x t 5 on contents zas Discount 12 00 Detail investments Projects j Zones Ptone NEW PLAN Net Present Value Economic prices gt Aggregation OUTPUTS TOTAL Unit e ay mais TE r a P discounted cumulative Seen aa NVESTMENTS TRACI Total TOTAL o discounted cumulative E fae Net Benefits discounted B esi 2 Switching values 4 004 00 4 004 00 4 004 00 0 00 0 00 0 00 0 00 3 904 00 3 904 00 0 00 naan 243 Sensitivity DZ 1 2 3 4 5 amp 8 008 00 8 008 00 7 150 00 7 150 00 21 000 00 21 000 00 18 750 00 18 750 00 13 192 00 11 778 57 11 778 57 Ann nn BE Comparisons 8 008 00 8 008 00 6 383 93 13 533 93 2 000 00 2 000 00 1 594 39 20 344 39 5 808 00 4 630 10 7 148 47 mmaa nn 8 008 00 8 008 00 5 699 94 19 233 87 2 000 00 2 000 00 1 423 56 21 767 95 5 808 00 4 134 02 3 014 45 mmaa nn 12 012 00 12 012 00 7 633 84 26 867 71 2 000 00 2 000 00 1 271 04 23 038 98 9 812 00 6 235 70 3 221 25 Ann An 12 012 00 12 012 00 6 815 93 33 683 64 2 000 00 2 000 00 1 134 85 24 173 84 9 812 00
15. 2 3 4 5 6 7 8 9 10 11 12 3x800 3x1000 3x1500 3x2000 3x2000 3x2000 3x0 3x0 3x0 3x0 3x0 3x0 2x0 2x800 2x1000 2x1500 2x2000 2x2000 2x2000 2x0 2x0 2x0 2x0 2x0 3x0 3x0 3x0 3x0 3x0 3x0 3x800 3x1000 3x1500 3x2000 3x2000 3x2000 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x800 2x1000 2x1500 2x2000 2x2000 2x2000 3x0 3x0 3x0 3x0 3x0 3x0 3x0 3x0 3x0 3x0 3x0 3x0 3x800 3x1000 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x0 2x800 a0 4 amp D amp D 0 1000 100 600 4600 eo m0 moO 1000 6400 4600 The table above shows the results of the calculation for milk production Each line refers to a new group of cows introduced into the project in the Year specified in the first column 24 EASYPol Module 020 Analytical Tools 7 CONCLUSIONS In this module you have learnt how to carry out calculate flows of physical quantities and costs benefits for plans zones and projects 1 e at different levels of aggregation After having computed flows of costs and benefits you have learnt out how to get the related indicators i e the Net Present Value the Switching Values the Internal Rate of Return and the Benefit Cost Ratio In addition you should be able now to use the WinDASI facilities for sensitivity analysis for the With Without project comparisons and for the calculation of flows and related indicators in Phased Mode 8 READERS NOTES The trainer is recommended to concretely use the software application to show the different functionalities and illustrate t
16. 3 as reported in figure 3 Note that in this respect it 1s useful to remember that these indicators can be obtained in WinDASI as Financial indicators by selecting Financial prices in the calculation windows and as Economic indicators by selecting Economic prices Aggregation Window In calculating both flows and indicators you can make use of the Aggregation feature For example benefits and costs of the projects could be grouped into homogeneous categories with a sizeable financial and economic weight to avoid large positive or negative values for very small cost or benefit values The Aggregation feature for calculating aggregate flows and indicators makes use of Aggregates of costs and benefits that the user should have pre defined Figure 4 show the aggregation window For example for the plan MEC FARM the aggregates OUTPUT SEEDS and FERTIL grouping respectively all the output items the seed items and the fertilizers have been selected A Note also that the NPV the SVs and the BCR depend on the Discount Rate The IRR instead is independent of the discount rate 10 On how to define aggregates of costs and benefits see the EASYPol Module 019 WinDASI A Software for Cost Benefit Analysis of Investment Projects Inserting and Managing Data which provides guidance on how to load and manage project data into WinDASI Each aggregation AG is a linear combination of the existing inputs and out
17. 70 2 270 2 2 x 70 10 5 x 560 315 140 154 154 154 154 70 735 6 Total 910 1010 1 140 1 310 1 504 1 504 1 504 1 504 production 7 Balance 910 1010 880 1140 1310 1 504 1 504 1504 1504 1 168 790 130 945 998 1 168 1 168 1 168 336 120 205 312 336 336 336 WinDASI a Software for Cost Benefit Analysis of Investment Projects 19 Calculations Performed by the Software 5 COMPARING PROJECT ALTERNATIVES WITH PROJ ECT VERSUS WITHOUT PROJ ECT SITUATIONS A major objective of financial and economic analysis of a project is to investigate the profitability of a given investment scenario and hopefully to identify the best project alternative Without project situation WoP This process is achieved through a systematic comparison of project scenarios The most important scenario to be analyzed is the WoP situation 1 e the situation that you would expect to happen in the project area if the project is not implemented This scenario will then be taken as a basis for comparing all other project alternatives and in general when we talk about incremental costs or benefits we are referring to the differences in costs and benefits between a given scenario and the WoP situation In many cases the WoP situation is assumed to be constant over the project life and for this reason WinDASI offers the facility of introducing the related data in the first cell or column of the project data just before the first year of the project
18. EA YPOlI On line resource materal for policy making WinDASI A Software for Cost Benefit Analysis of Investment Projects Calculations Performed by the Software EASYPOo On ine resource materials for policy making WinDASI A Software for Cost Benefit Analysis of Investment Projects Calculations Performed by the Software Lorenzo Giovanni Bellt Agricultural Policy Support Service Policy Assistance Division Food and Agriculture Organization of the United Nations FAO Rome Italy for the Food and Agriculture Organization of the United Nations FAO About EASYPol EASYPol is a an on line interactive multilingual repository of downloadable resource materials for capacity development in policy making for food agriculture and rural development The EASYPol home page Is available at www fao org tc easypol EASYPol has been developed and is maintained by the Agricultural Policy Support Service FAO The designations employed and the presentation of the material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country territory city or area or of its authorities or concerning the delimitation of its frontiers or boundaries FAO November 2005 All rights reserved Reproduction and dissemination of material contained on FAO s Web site for educational or other non
19. R the Switching Values SVs and Sensitivity Analysis Instructions provided on how to carry out calculations for the different components of an Investment project notably plans zones and projects i e at different levels of aggregation In addition this module addresses normal and phased mode of calculation and comparisons of different projects alternative scenarios with project versus without project 5 Date November 2005 6 Author s Lorenzo Giovanni Bellu Agricultural Policy Support Service Policy Assistance Division Food and Agriculture Organization of the United Nations FAO Rome Italy 7 Module type L Thematic overview _ Conceptual and technical materials XX Analytical tools _ Applied materials _ Complementary resources 8 Topic covered _ Agriculture in the macroeconomic context by the module _ Agricultural and sub sectoral policies _ Agro industry and food chain policies _ Environment and sustainability _ Institutional and organizational development XX Investment planning and policies _ Poverty and food security _ Regional integration and international trade _ Rural Development 9 Subtopics covered by the module 10 Training path Investment planning for rural development 11 Keywords
20. acts of an Irrigation and Mechanization Project EASYPol Module 024 WinDASI Exercise NGAMO4 Starting a Coffee Plantation in a Phased Mode WinDASI a Software for Cost Benefit Analysis of Investment Projects 25 Calculations Performed by the Software In addition a case study presenting the use of WinDASI to analyze a real project is reported in the EAS YPol module EASYPol Module 039 WinDASI A Software for Cost Benefit Analysis of Investment Projects Case Study Crop Intensification and Coffee Plantation 26 EASYPol Module 020 Analytical Tools Module metadata 1 EASYPol module 020 2 Title in original language English WinDASI A Software for Cost Benefit Analysis of Investment Projects French Spanish Other language 3 Subtitle in original language English Calculations Performed by the Software French Spanish Other language 4 Summary This module illustrates how to carry out cost benefit calculations of investment projects in WinDASI after data are inserted in the database It explains by means of a step by step procedure how to calculate a flows of physical quantities of outputs inputs and investment items b flows of current discounted and cumulative costs benefits and net benefits c flows of incremental With Without project current discounted and cumulative net benefits and e project indicators such as the Net Present Value NPV the Internal Rate of Return IRR the Benefit Cost Ratio BC
21. asis you can build a project scenario 20 EASYPol Module 020 Analytical Tools describing the WiP situation for which you can compute the related costs and benefits The comparison between the various possible project scenarios of the WoOP situation will be carried out in a second stage using a spreadsheet 6 NORMAL VERSUS PHASED MODES OF CALCULATION WinDASI allows you to calculate flows of quantities and costs and benefits in two different ways either Normal or Phased Normal mode The Normal Mode assumes a uniform build up of the activities etc contained in a plan and was the method used for the calculation illustrated in Box 2 Phased mode The Phased Mode of calculation allows for different groups of economic agents entering the project in different years Those who enter the project in Year will have different yields by Year 3 from those who enter the project in Year 3 and starting perennial activities like tree plantations livestock production etc in different years of the project Thus animals trees etc can be introduced gradually into the project Where the Normal Mode is required the letter N is placed in the first column of the Plan Window Component and the level of activities etc contained in the plan is given as the total number of units for each year see 2 4 2 iv in Part 1 Where the Phased Mode is required the letter C is placed in the first column and the level of the activity or other
22. commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged Reproduction of material for resale or other commercial purposes is prohibited without the written permission of the copyright holders Applications for such permission should be addressed to copyright fao org WinDASI A Software for Cost Benefit Analysis of Investment Projects Calculations Performed by the Software Acknowledgements This module draws upon the TCAS publication WinDASI User Manual Training Materials for Agricultural Planning 43 FAO Rome 2000 whose main contributors are Carlo Cappi who is also the main designer of the computer software and Lorenzo Giovanni Bellu The author would like to acknowledge with thanks the contribution of Francesca Petrina who volunteered for reviewing the first draft of this module and to all the others who contributed in different ways to this final version The WinDASI software was developed by Laurent Cazalet and Gilles Cappella under the supervision of Mahmoud Allaya at the Institut Agonomique M diterrane n de Montpellier AM M France WinDASI A Software for Cost Benefit Analysis of Investment Projects Calculations Performed by the Software Table of contents 1 SUMMA y eiers eeina e a a aa aa reie 1 2 ER OOUCUO Neea a aA fanart 1 3 Steps to carry out calculations of flows and indicatorS sssesesereress 2 3 1 Step 1 Get the calcula
23. crease in total production is smoother more gradual when using the Phased Mode WinDASI a Software for Cost Benefit Analysis of Investment Projects Calculations Performed by the Software Box 4 Milk production Phased Mode Analysing a plan for a small livestock farm over a period of 14 years Phased Mode The first step in the analysis is to define the inputs required and the production of milk per cow tivity Cows Uniti 1 Cow 1 2 3 4 5 6 2 2 2 2 9 2 5 25 2 5 800 1 000 1500 2000 2000 2 000 Note that feed consumption and milk production are defined for each year for which the cow is kept by the farmer Year 1 is the first year after the cow has been purchased and Year 6 is the last year before the cow is sold Three cows are to be introduced in the first year of the project and two in the second year Each cow is kept for 6 years and then sold and replaced by another The Plan for the farm will have to use the Phased Mode of calculation since Feed requirements and Milk output for each cow varies according to when the cow was purchased Plan Small farmers Cows Note The plan has coefficients in Years 7 8 13 and 14 because we wish to replace the cows that will have been sold The table below shows the details of the calculations for milk production Each line refers to a new group of cows introduced into the project in the year specified at the beginning of the Production of milk by small scale farmers 1
24. discounted 100 00 178 57 159 44 142 36 127 10 113 49 101 33 90 47 80 78 72 cumulative 0 00 178 57 338 01 480 37 607 47 720 96 822 28 912 75 993 53 1 065 INVESTMENTS ai TRAC I Total Sa 21 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 19 000 TOTAL pee 0 00 21 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 2 000 00 19 000 discounted 0 00 18 750 00 1 594 39 1 423 56 1 271 04 1 134 85 1 013 26 904 70 807 77 6 951 cumulative 0 00 18 750 00 20 344 39 21 767 95 23 038 98 24 173 84 25 187 10 26 091 80 26 899 56 33 751 Net Benefits EE 3 540 00 13 920 00 5 080 00 5 080 00 8 720 00 8 720 00 8 720 00 8 720 00 8 720 00 8 280 discounted 3 540 00 12 428 57 4 049 74 3 615 94 5 541 72 4 947 96 4 417 92 3 944 49 3 521 96 2 985 cumulative 0 00 12 428 57 8 378 83 4 762 98 778 74 5 726 70 10 144 52 14 089 01 17 610 87 14 625 Net Incremental Ben 0 00 17 460 00 1 540 00 1 540 00 5 180 00 5 180 00 5 180 00 5 180 00 5 180 00 11 820 discounted 0 00 15 589 29 1 227 68 1 096 14 3 291 98 2 939 27 2 624 35 2 343 17 2 092 12 4 262 cumulative 0 00 15 589 29 14 361 61 13 265 47 9 973 48 7 034 21 4 409 86 2 066 69 25 42 4 236 Roxio Project Selector ELT Das 3 20 12 In Figure 2 the benefits are shown under the heading Outputs Costs are separated into two categories Annual inputs are shown under Inputs and the various investment items with their related costs are included under Investme
25. ents and plans using concrete examples 4 1 Investment items Investment items are characteristic of investment projects WinDASI has technical facilities that allow you to carry out calculations for each investment item considering its life duration in years the lag in operation and maintenance in years the purchasing price the operation and maintenance costs a contingency allowance and the residual value as percentages of the purchasing price These calculations are explained in Box 1 WinDASI a Software for Cost Benefit Analysis of Investment Projects 15 Calculations Performed by the Software Box 1 Example flows of costs for an Investment item A farmer is going to purchase a new small tractor SMA TRAC in the first year of the project The characteristics of the tractor are Investment Tractor Life duration years 7 Lag in operation and maintenance years 1 Operation and maintenance 15 Physical contingencies 5 Residual value 10 Price of the tractor 5 000 Once these data are loaded into the database and the investment item SMA TRAC is inserted in a Plan Zone or Project you can proceed to calculate the flows of costs generated by the purchase and use of SMA TRAC following the step by step procedure illustrated in the section above After obtaining the Calculation options window step1 you have to click on investments and values step 2 WinDASI Provides the following table step 3 Inv
26. estment Years 1 2 3 4 5 7 8 9 10 12 13 Tractor 5 000 5 000 2 Unexpected costs 250 250 Maintenance 750 750 750 750 750 750 750 Residual value 500 1785 Total investment cost The above values are computed by WinDASI in the following way Tractor this line contains the cost of the investment in year 1 i e when the tractor is purchased In year 8 the tractor is replaced after 7 years of use note that WinDASI automatically replaces the tractor Unexpected costs the physical price contingency of 250 is computed at 5 of the purchase cost of the tractor and it is included in the year that the tractor was purchased This item allows you to include additional costs when there are price increases unforeseen costs or underestimation of the investment Maintenance the maintenance cost of 750 is computed at 15 of the purchase cost of 5 000 It is repeated each year starting from year 2 since the Lag in operation and maintenance is 1 year Residual value this takes into account the value of the tractor at the end of its life year 8 and at the end of the project life year 13 The value of 500 in year 8 computed at 10 of the purchase cost is the estimated revenue produced by the sale of the old tractor at the time of its replacement the negative sign indicates that they are inflows rather than costs The value of 1 785 takes into account
27. ftware for Cost Benefit Analysis of Investment Projects 7 Calculations Performed by the Software costs increases by 12 79 the NPV of the new plan switches from 4630 47 monetary units to 0 The Internal Rate of Return IRR of a flow of net benefits is defined as the discount rate that equates the NPV of that flow to zero _ net benefit 7 net benefit ae net benefit _ 1 IRR 1 IRR 1 IRR where i 0 1 is the index of the different periods in the flow For example the IRR of the plan NEW PLAN is 16 70 as reported in figure 18a Figure 3 The results window for the net present value option WinDASI NGAMO3 WDS NEW PLAN E Hs 18 x Ps Fie Result View Help 18 x e m Modified 3 540 00 13 920 00 5 080 00 5 080 00 8 720 00 8 720 00 8 720 00 8 720 00 8 720 00 8 2 Net Benefits contents NEW PLAN Nise int ba Financial prices Name Coeff Net Present Val Switching values gt Agaregation fe Switching values 40 840 42 O oooO Unit Wo project Costs 1 0 95 208 86 oureurs f a Sun o 3 640 00 4 630 47 10 920 00 10 920 00 Torat 2600 IRR____ 16 70 0 00 1092000 10 920 00 10 92 discounted 3 640 00 1 13 82 41 4 939 65 4 410 40 3 cumulative 0 00 53 90 41 093 55 45 503 96 49 4 a ee INPUTS OTHER 100 00 00 00 200 00 200 00 Z TOTAL J 100 00 0 00 200 00 200 00 2e discounted 100 00 01 33 9
28. he examples Alternatively in a first phase before accessing WinDASI the trainer could use examples provided in Boxes 1 and 2 or simplified versions to develop in the classroom a step by step exercise by hand or on a spreadsheet In this first phase the trainees could better understand the type of calculations to carry out for running a CBA In a second phase when using WinDASI they would better understand the rationale of using a specific software to run CBA calculations 8 1 EASYPol Links This module belongs to a set of EASYPol modules which illustrate how to use the WinDASI application for financial and economic analysis of projects Before starting with the material presented in this module the user should already know how to insert and manage data in WinDASI To this end he is referred to EASYPol Module 018 WinDASI A Software for Cost Benefit Analysis of Investment Projects Installation Note In addition issues addressed in this module are further expanded and exemplified in the following modules EASYPol Module 019 WinDASI A_ Software for Cost Benefit Analysis of Investment Projects Inserting and Managing Data EASYPol Module 021 WinDASI Exercise NGAMO1 An_ Irrigation Project Impacts of Irrigation on Traditional Farms EASYPol Module 022 WinDASI Exercise NGAMO2 An Irrigation Project Impacts of Irrigation and Mechanization on Traditional Farms EASYPol Module 023 WinDASI Exercise NGAMO3 Economic Imp
29. his material useful to support their courses in CBA and development economics Furthermore students can use this material to improve their skills in CBA and complement their curricula Required background To fully understand the content of this module the user must be familiar with concepts of project cycle management concepts of project financial analysis concepts of project economic analysis The insertion and management of project data in WinDASI 2 EASYPol Module 020 Analytical Tools Selected EAS YPol modules can be used to strengthen the background of the reader and to further expand its knowledge about investment projects and cost benefit analysis Links with relevant EASYPol modules further readings and references are reported both in the text and in the last section of the module 3 STEPS TO CARRY OUT CALCULATIONS OF FLOWS AND INDICATORS Before starting the calculations the user must have inserted relevant data in the database Once data are inserted Cost Benefit calculations in WinDASI are carried out in five main steps as follows Step 1 get the calculation options window Step 2 select the type of calculation you wish to carry out Step 3 calculate of flows of physical quantities and costs benefits Step 4 calculate indicators Step 5 run Sensitivity tests and comparisons These steps are described here below and examples are provided in the next section 3 1 Step 1 Get the
30. lustrated in figure 5 reports the aggregated flows for OUTPUT SEEDS and FERTIL that aggregate the respective items 10 EASYPol Module 020 Analytical Tools Figure 5 Results using the aggregation facility WinDASI NEWNGA WDS File Result wiew Help or 5 x MEC FARM Net Present Value Economic prices Rate 1200 Detail investments a 4 SE Comparisons 10 349 14 10 343 14 0 00 5 415 00 3 880 10 10 481 74 10 481 74 0 00 10 349 14 10 349 14 9 240 30 9 240 30 3 880 10 711 20 90 00 385 44 722 00 21 000 00 26 788 74 5 168 52 5 168 52 16 433 61 14 678 22 14 678 22 10 349 14 10 349 14 8 250 27 17 490 57 3 880 10 711 20 90 00 385 44 722 00 2 000 00 7 788 74 4 614 75 9 783 27 2 560 40 2 041 13 12 637 09 13 430 86 13 430 86 9 559 82 27 050 39 4 340 70 744 69 120 00 442 16 790 00 2 000 00 8 427 55 4 575 00 14 358 28 5 003 31 3 561 26 9 075 83 16 918 21 16 918 21 10 751 83 3 802 22 4 455 50 778 17 136 00 481 54 800 80 2 000 00 8 652 01 4 227 48 18 585 75 8 266 20 5 253 32 3 822 51 19 101 66 19 101 66 10 838 79 49 641 02 4 587 80 817 28 152 00 524 22 825 20 2 000 00 8 906 50 3 918 94 22 504 69 10 195 16 5 785 01 1 962 49 20 358 11 20 358 11 10 314 05 58 955 07 4 697 00 850 77 169 00 558 06 845 60 2 000 00 9 120 43 3 607 43 26 112 12 11 237 68 5 693 36 7 655 85 Z
31. nt Value of the plan NEW PLAN is 4 630 37 monetary units6 The Switching Values SV in WinDASI are defined as follows given the Net Present Value NPV of a flow of net benefits composed by aggregating n present values of flows of benefits and costs PVi i 1 n the Switching Value SV for a flow of benefits or costs 1 1s the percentage change of PV that makes the Net Present Value NPV equal to zero It is computed as follows SVi NPV PY x 100 where SV is the Switching Value expressed as percentage for the flow of benefit or cost 1 NPV is the Net Present Value of the flow of net benefits PV is the Present Value of the flow of the benefit or cost a In figure 3 the switching values for the aggregate benefit items 11 34 and aggregate cost items 12 79 of the plan NEW PLAN are reported This means that if in the new plan the present value of the benefits drop by 11 34 or the present value of Note that the output of the Compare window can be copied into the MS Windows Clipboard and pasted in a spreadsheet for further elaborations Note that PVi is positive for benefits and negative for costs Therefore the sign of SW depends on whether we are considering the SW of a cost or of a benefit and whether the sign of NPV is positive or negative This formula is directly derived from the above definition of switching value which requires that NPV PV x SV 100 0 WinDASI a So
32. ntity and outputs Step 3a Run the calculations to obtain the quantities of outputs Years WoP 1 3 1 Labour used Maize 30 x5 35 x 10 35x15 35x18 Wheat 45x15 50 x 10 50x5 50 x 2 Total 825 850 775 735 2 Other inputs consumed Maize 5x5 10 x 10 15x15 20x18 Wheat 7x15 10 x 10 20 xx 5 20 x2 Total 130 200 325 580 3 Maize production Maize 0 7x5 0 9x 10 11x15 13x18 Total 3 5 9 16 5 23 4 4 Wheat production Wheat 0 7 x15 0 8 x10 0 9 x5 1 0 x 2 Total 10 5 8 4 5 2 4 5 13 35 x 18 35 x 18 50 x 2 50 x 2 735 735 30 x 18 30 x 18 20 x2 20 x2 580 580 15x18 15x18 27 27 1 1x2 1 1x2 2 2 2 2 Similarly for the same plan you may calculate the Values of Commodities produced and consumed WinDASI calculates the values of commodities produced and consumed by taking the total quantities you have just calculated and then multiplying by the appropriate prices from the Commodity data In this way the total costs and benefits of the project are obtained year by year as shown here below Costs ben WoP 1 2 3 4 7 8 9 12 13 1 Labour 825x0 8 850x0 775x0 8 735x0 8 735x0 8 735x0 8 735x0 8 735 x 0 8 660 8 620 588 588 588 588 588 2 Other 130x1 680 325x1 400x1 580x1 580x1 580 x1 580 x 1 Inputs 130 200 x 1 325 400 580 580 580 580 200 7 Total 790 880 945 988 1168 1168 1168 1168 inputs Production value 4 Maize 35x5 9x50 16 5 x50 23 4x50 27x50 27x50 27 x 50 27 x 50 0 450 825 1170 1 350 1 350 1 350 1 350 5 Wheat 175 8 x 70 45x70 2x70 22x70 22x
33. nts The following buttons also appear on the Main Toolbar of the Results window Delete it allows you to delete the results Save it allows you to save the results Print it allows you to print the results Copy it allows you to copy the results and insert them into a spreadsheet to facilitate further analysis and allow for a better presentation of the results through the use of graphics and tables This is a very important facility as will be demonstrated in the exercises Close it allows you to exit the Results window 6 EASYPol Module 020 Analytical Tools 3 4 Step 4 Calculate indicators When the calculation option Net Present Value is selected the flows shown in Figure 2 can be further analyzed by clicking on the buttons Switching Values Aggregation Sensitivity and Comparisons Switching values window By clicking the button Switching values the Switching values window pops up see figure 3 In that window WinDASI provides Net Present Value NPV the Switching Values SV the Internal Rate of Return IRR and the Benefit Cost Ratio BCR which are the most common indicators used to measure a project s financial and economic profitability The Net Present Value NPV of a flow of net benefits 1s calculated as the discounted cumulative net benefits for the last period of a flow of net benefits as already indicated in the section above For example as reported in figure 18a the Net Prese
34. oP facility of WinDASI is explained in the EASY Pol Module 019 WinDASI A Software for Cost Benefit Analysis of Investment Projects Inserting and Managing Data and in section 5 of the present module WinDASI a Software for Cost Benefit Analysis of Investment Projects Calculations Performed by the Software 13 Table 1 Incremental Net Present Value NPV in the Compare window Cumulated Discounted Benefits 1 Cumulated Discounted Costs 2 Cumulated Net Discounted Values ey aby 2 WiP a WiP Cumulated Discounted Benefits WiP Cumulated Discounted Costs WiP NPV WiP Cumulated Discounted Net Benefits WoP b WoP Cumulated Discounted Benefits WoP Cumulated Discounted Costs WoP NPV WoP Cumulated Discounted Net Benefits Incremental Values c a b Incremental Cumulated Discounted Benefits Incremental Cumulated Discounted Costs Figure 8 below shows an example of calculations in the compare window for the plan NEW PLAN Note that the Incremental NPV of 4 630 48 monetary units is obtained both as difference between the WiP NPV minus the WoP NPV 28 740 94 24 110 46 4 630 48 and as difference between the Incremental Cumulated Discounted Benefits minus the Incremental Cumulated Discounted Costs 4 840 83 36 209 45 4 630 48 12 Note that the output of the Compare window can be copied into the MS Windows Clipboard and pasted in a spreadsheet f
35. option is chosen also the Net Benefit flows can be calculated If you want to get the Net Present Value and related project indicators you need to specify the Discount rate as a percentage at which the values should be discounted In any case for all the calculations you have to indicate the number of years Life over which the calculation should be carried out and in the Conversion box whether the results should be printed in thousands millions etc Then click on Next Figure 1 The calculation options window Calculation options Calculate NGAMOJ Operations Options C Inputs f By quantity fbi value C Outputs Investments f Financial prices C Economic prices C Net Ben f Net Present Value Discounting rate Conversion Lite EATS 3 3 Step 3 Calculate flows of quantities and costs benefits Give a name and description to the results of the calculation although a default name is suggested automatically Then Click on Execute WinDASI will carry out the requested calculation The results window showing the results opens automatically after a calculation is complete The different flows according to the calculation option chosen are shown period by period for the specific component on which the calculations are carried out i e plan zone or project In particular The options inputs by quantity by value give the flows of physical inputs or the flow of costs respectively
36. or further elaborations 14 EASYPol Module 020 Analytical Tools Figure 8 The Compare window WinDASI NEWNGA WDS e la x File Result Yiew Help eTa e Ea el T o New runny 10 xi el E Hee A E nan SS Eroieets Zones Biens m Rat NEW PLAN EEIN a T 12 00 Coma fActivities lavest ih Presen vane NEW MEC SUN 4 Economic prices Detail investments gt Aggregation fe Switching values Hi Sensitivity JE Comparisons O eee ee ee eee ee ee ee ee eee ee OUTPUTS SUNF F 10 920 00 roan 10 920 00 discounted E rere Svahaetnenet Bains 3 viral cumulative 5 631 97 24 791 55 40 840 43 36 153 90 SSS SSS jae 36 891 03 681 09 36 209 95 INPUTS 28 740 94 24 110 46 4 630 48 OTHER TOTA E discounted C cumulative ey INVESTMENTS TRACE Toa w 200000 TOTAL 2 000 00 P discounted 3 1013 26 25 187 10 a ey BR coy Net Benefits Ss 8 720 00 discounted 3 540 00 12 428 57 4 049 74 3 615 84 5 541 72 4 947 96 4 417 82 0 00 12 428 57 8 378 83 4 762 98 778 74 5 726 70 10 144 52 nnn a anm nan a mamn mmn a mamn mn e ann nn e ann nn o oam nn ra Pstart amp 6 AWS As PY GBOH Asi Ginbox wnd Eas Gwinds compare PG HRA 20 14 4 EXAMPLES OF CALCULATIONS OF FLOWS This section explains in detail how WinDASI carries out calculations of flows for selected components of a project notably investm
37. puts commodities Mathematically we have AG a V a V2 an Vn Where AG is the Aggregate Vi Vo Vn are the commodities produced or consumed or investments within a given plan and a a a are the coefficients positive or negative by which the variables V1 V2 Va are multiplied before the addition These coefficients are set at 1 by default WinDASI a Software for Cost Benefit Analysis of Investment Projects 9 Calculations Performed by the Software Figure 4 The aggregation window WinDASI NEWNGA WDS He l x File Result View Help 5 Ea 9 Xi componente eccrar oix MEC FARM sy Rate Comm Activities Invest mas 120 Economic prices MEC FARM po Unit weoproject ot 2 a a oureurs PadHY o 6 112 26 6 112 26 6 112 26 6 535 62 6619 41 7 408 90 7 501 41 TRA 218460 2 1846 xi 211178 1 688 28 1 688 2 8 287 92 364 00 364 0 Available Selected 2 457 00 10 349 14 10 349 1 10 349 14 9 240 3 0 00 9 240 3 I Detail investments OTAL discounted INPUTS ULLOCKS HIR LAB RR TAX 5 415 00 a cn 3 880 10 830 4 697 00 82 50 82 50 59 72 90 00 50 00 207 24 171 60 6 60 68 04 169 00 57 75 62 25 65 75 208 68 209 40 210 12 256 36 291 72 318 24 29 70 earans Plans MEC FARM Astart 2 ie mi Es gy fe E in f calc FA Emicr gwn mwin Aggres BY So 3 19 25 The results window il
38. the fact that at the end of the project year 13 the tractor purchased in year 8 has only been used for 5 years Therefore after 7 years there is a residual value of 500 that has to be increased for the remaining 2 years of useful life The software uses the following formula Y Rv Pv Rv RI L where Y residual value at the end of the project Rv residual value at the end of the investment life Pv isthe purchase value RI is the remaining life of the investment at the end of the project in years L isthe life duration of the investment in years The formula when applied to the tractor is thus 500 5 000 500 2 7 1 785 Note that the investment items of a project need not necessarily be placed under the Investments category For example if you have a time series of investment costs for which no life duration maintenance costs or residual values are specified you may include these investment costs as normal inputs of the project WinDASI will include these costs among the project costs and all the indicators of the project will thus be correctly calculated 16 4 2 Plans EASYPol Module 020 Analytical Tools WinDASI carries out calculations of flows and indicators at the Plan level Zone and Project levels In mathematical terms a plan is a linear combination of activities investments and commodities Thus we have P a Ay a A gt Ser anAn b l bok Pees bmlan C1C CC le sees Cmm
39. tion options WINGOW ccceceeeeeeeeeeeeneees 2 3 2 Step 2 Select the type of calculation you wish to carry Out 2 3 3 Step 3 Calculate flows of quantities and costs benefits 000ee 3 3 4 Step 4 Calculate Indicators cece cece cece cece cece eeeeeeeeeeeeseseeeaaeneennes 6 3 5 Step 5 Run Sensitivity tests ANd COMPALiSONS ccce cesses cece eeees 10 4 Examples of calculations Of flOWS cccccceee cece ee eeeee eee eeeeeneeeeeeaas 14 Ak WIV CSUMVCII GEIS erra e ETE na ndcemaeanteies 14 D2 o i A E 2 A E A tetas tied A EE E E awd sone AAE ee ennee eee 16 5 Comparing project alternatives with project versus without project SILUALIONS eet a a a a a e ae aaa arne 19 6 Normal versus phased modes of CalCulatiOn ccccceeeeeeeeeeeeeeeees 20 7 CONGIUSIONS inesecsdaduidrccnduacuaoscsdtosanetoatnacuaeseateseuomoetmin aaa 24 8 Readers MOLES ekra eerie senior ei eeacasuiee N a 24 Od EAS 9h ld lt gt e e a A ETE A EET 24 Module MeETAC Ala sick isena a a A a e 26 WinDASI a Software for Cost Benefit Analysis of Investment Projects 1 Calculations Performed by the Software 1 SUMMARY This module illustrates how to carry out cost benefit calculations of investment projects in WinDASI after data are inserted in the database It explains by means of a step by step procedure how to calculate a flows of physical quantities of outputs inputs and investment items b flows of current
40. ulative Net Benefits the sum of n up to each period Note that the Net Benefits under j are the difference between benefits Costs and Investment items The Incremental Net Benefits are the Net Benefits due to the project i e the Net Benefits of the with project WiP situation minus the Net Benefits of the without project WoP situation The flow of Cumulative Values under c f 1 l and o are computed using the following formula Ci Cer Ay where Ci Cumulative Value up to year t C Cumulative Value up to year t 1 and At Value of year t When you ask for the Net Present Value you must specify the discount rate to be used in order to calculate the present values If this rate is set at zero the flows of discounted costs and benefits are equal to the flows of non discounted costs and benefits Note that the incremental discounted cumulative net benefits for the last period of a flow of net t The WiP WoP approach is explained with detail in section gt These Incremental Net Benefit values form the basis on which all the other indicators are built WinDASI a Software for Cost Benefit Analysis of Investment Projects Calculations Performed by the Software benefits e g the flow of net benefits of a project is the incremental Net Present Value NPV of that of flow of net benefits 1 e the NPV of that project Figure 2 shows the results of the calculations carried out by WinDASI for a plan named
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