Presentation
Clarity and credibility should be the goals of the presentation. Because benefit-cost analysis is sometimes used to justify rather than evaluate a project by overstating benefits, understating costs, or using inappropriate alternatives, decision-makers and the general public are often skeptical about its validity and value. Therefore, the presentation should:
Clearly state the purpose of the analysis. What decision is it intended to inform? Will the decision be made solely on the basis of the benefit-cost analysis or will there be other important considerations not included in the analysis, such as economic impacts on the community?
Provide a clear description of alternatives and the measures used to evaluate them.
Compare the benefit-cost measures for all alternatives.
Highlight the costs and benefits that most affected differences between alternatives.
Sensitivity analysis should be used to test the sensitivity of the results to different assumptions about benefits and costs; the results should be included in the final report. If there are significant differences in rankings as a result of uncertain estimates, then ranges can be presented. In some cases making the spreadsheets used for the analysis available to interested parties so that they can modify assumptions that may enhance the credibility of the findings.
The presentation is as important as the analysis itself. If the benefit-cost analysis is executed and documented with an eye toward its purpose and eventual presentation, the presentation will be better as well as easier to prepare.
Presentation Content
The presentation of the benefit cost analysis and results will vary depending on the audience. Below is a table showing typical audiences and the type of information that is generally appropriate to each. This is only a guide. In general, the benefit cost analysis should be documented and presented with as much information and detail as would be of interest to and understood by each audience.
Presentation Content for Different Audiences
Presentation Materials for Different Audiences
Tables and Graphs for Presenting Benefit-Cost Information
Tables and graphs are often easier to use and understand than text when presenting values and calculations. Below are a few examples of the tabular presentation of parameter assumptions and calculations used in the calculation of travel time and the presentation of the benefit cost analysis results.
In the value of time by user type table, the assumed values and calculation of the value of vehicle travel time is shown. In the original report, additional citations and explanation pertaining to the individual assumptions and values was also provided following the table.
Value of Time by User Type-Value of One Hour of Travel Time (Dollar values are in $1995)
Source: FHWA. Toolbox for Regional Policy Analysis. Portland Freeway Benefit Cost Case Study.
A summary table can be used to concisely and compactly present the results of the benefit cost analysis. In this example table, the present value of the transportation project costs and benefits, as well as the net present value of the project benefits and benefit cost ratio are displayed.
Simplified Example of a Results Summary Table (Dollar values are in $2008)
1. Number of drivers times three minutes a day (3/60 hours) over 260 workdays.
2. Hours at $13.70 per hour ($2008)
3. Includes costs from delays to users during construction.
Source: Federal Register. US DOT Notice of Funding Availability for the Department of Transportation’s National Infrastructure Investments Under the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act for 2010, 75(104), June 1, 2010.
In addition to presenting the annual affected users, benefits, costs, and the final discounted net benefits, as shown above, a final summary table can display the final net present benefits of the project and the other final results measures from the analysis.
Summary Table of Final Results
Graphical Display of Benefit-Cost Relationships
The benefits and costs of 3 alternatives, A, B, and C, are plotted on a graph below, with benefits on the vertical axis and costs on the horizontal axis. A number of things can be illustrated with such a plot. The slope of the line through the origin and a project's benefit-cost point is its benefit-cost ratio; the project with the steepest slope has the highest ratio. The vertical intercept of a 45° line through the point is the benefit minus the cost (net present value). The project with the highest line has the greatest benefit minus cost. If some minimum benefit is required, projects with benefits below that minimum can be eliminated from consideration. Similarly, if funds are limited, projects with costs above the limit can be eliminated.
In this case project B has the highest benefit-cost ratio and the highest net present value and C the lowest.
The same type of plot can be used to display the level of uncertainty associated with each project. Vertical lines can be used to indicate the range of benefit estimates.
In this case, A might be selected because there is less uncertainty regarding its benefits and there is a chance that the benefits of B might be lower than either A or C. If both benefits and costs are uncertain, then a rectangle could be drawn around each point.
Graphical Display of Benefit Uncertainty
The STEAM model developed by the FHWA displays the likelihood of various benefit levels as a probability distribution as shown in the screen picture below.
Sources
Federal Register. Notice of Funding Availability for the Department of Transportation’s National Infrastructure Investments Under the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act for 2010, 75(104), June 1, 2010.
FHWA. Toolbox for Regional Policy Analysis. Portland Freeway Benefit Cost Case Study. http://wwwcf.fhwa.dot.gov/planning/toolbox/portland_overview.htm