Identify, quantify and value costs and benefits of each alternative A critical step in CBA process

Step 1: Identify, quantify and value the costs and benefits of each alternative A critical step in the CBA process involves identifying, quantifying and valuing the costs and benefits of each alternative. The types of benefits and costs will depend on the project. To illustrate, consider the construction of a toll motorway to relieve traffic congestion. Relevant costs would include the labour, capital and material costs to construct the road and the value of the land as reflected in the loss of the use of the land for alternative purposes. Benefits of the motorway would include lives saved, reduced travel time (which generally results in fuel and productivity benefits) and possibly the reduction of traffic on alternative routes, including the impact on inlet and outlet roads. Typical costs of a proposal would include: Initial capital costs; capital costs of any buildings, equipment, or facilities that need to be replaced during the life of the project; operating and maintenance costs over the period of a programme or project; and costs which cannot be valued in money terms (often described as 'intangibles'). Typical benefits of a proposal would include: benefits which can be valued in money terms, in the form of revenues, cost savings or non-market outputs; and benefits which cannot be valued in money terms (also described as ‘intangibles’). Estimating the magnitude of costs can be difficult and will normally involve input from accountants, economists and other specialists. Step