International Transport Forum Discussion Paper 2011-1
Cost-benefit analysis (CBA) is widely recognized to be helpful, even indispensible, for making good decisions on what transport projects to fund. It essentially aims to figure out which projects offer the best value for money, one of the core criteria for making decisions. However, the practical relevance of cost-benefit analysis does not always live up to its appeal in principle. One problem is that there is disagreement about what to include in both the costs and the benefits side of the analysis, so that value for money is not always a fully transparent concept. A second problem is that value for money is only a partial criterion for decision-making, leading to disagreement about the relative importance of the results from CBA compared to other inputs into the decision-making process. Discussions at the Roundtable aimed to shed light on these conceptual problems by analysing the practice of CBA and comparing approaches to it in different countries. In short the aim was to identify a checklist of items that should be included in a socially relevant cost-benefit analysis, i.e. analysis that can be produced in reasonable time and at reasonable cost but is good enough to help resolve trade-offs.