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close this bookAppropriate Community Technology - A Training Manual (Peace Corps; 1982; 685 pages)
View the documentThe Farallones Institute Rural Center
View the documentCHP International, INC.
View the documentPreface
View the documentAcknowledgments
View the documentIntroduction
Open this folder and view contentsPhase I: Introduction to training
Open this folder and view contentsPhase II: Earthen construction and fuel-saving cookstoves
Open this folder and view contentsPhase III: Pedal/treadle power
Open this folder and view contentsPhase IV: Solar water heaters
close this folderPhase V: Solar agricultural dryers
View the documentPhase V Calendar
View the documentSession 1. Introduction to agricultural dryers
View the documentSession 2. Tour of solar dryers
View the documentSession 3. Solar agricultural dryer design procedures and rules of thumb
View the documentSession 4. Two-hour dryer construction
View the documentSession 5. Review of existing solar dryer plans
View the documentSession 6. Smoke testing solar dryers
View the documentSession 7. Introducing new technologies: solar dryers
View the documentSession 8. Design of solar agricultural dryers
View the documentSession 9. Site selection and preparation
View the documentSession 10. Construction of solar agricultural dryers
View the documentSession 11. Issues and methods in development and diffusion of appropriate technology
View the documentSession 12. Natural cooling
View the documentSession 13. Approaches to health systems
View the documentSession 14. Nutritional gardening
View the documentSession 15. Practical drying tips
View the documentSession 16. Cardiopulmonary resuscitation
View the documentSession 17. Dryer assessment and modification
View the documentSession 18. Introduction to cost benefit analysis (cba)
View the documentSession 19. Presentation of solar dryers
View the documentSession 20. Introduction to the final phase of the training program
Open this folder and view contentsPhase VI: Concluding the program: The energy fair
Open this folder and view contentsAppendices
 

Session 18. Introduction to cost benefit analysis (cba)

Total time:

1 hour

Objectives:

* To review and discuss the basic principles of cost benefit analysis (CBA)

 

* To determine the cost benefit of an appropriate technology

 

* To discuss how cost benefit analysis can be used in community development work

Resources:

* Attachment V-18-A, "An Outline of Cost Benefit Analysis"

 

* Attachment V-78-8, "Sample Cost Benefit Analysis of Solar Cooler"

Materials:

Newsprint and felt-tip pens, pencils, paper

Procedures:

Step 1. (5 minutes)
Review the objectives and outline the session activities.

Step 2. (10 minutes)
Distribute, review and explain Attachments V-18-A and V-18-B.

Trainer Notes

* Carefully explain each major point on Attachment V-18A, referring participants to Attachment V-18-B for examples.

* Point out that the figures on Attachment V-18-B are intended only for practice purposes and not meant to reflect the actual costs.

Step 3. (30 minutes)
Have the participants solve two or three sample cost benefit problems.

Trainer Notes

* Ask that those participants who understand the formulas help those who are having difficulty.

* Encourage construction groups to prepare a cost benefit analysis as part of their final presentations.

Step 4. (15 minutes)
Conclude by discussing how cost benefit analysis can be used in community development work.

Trainer Notes

Stimulate discussion by asking the following questions:

* What are the strengths ant weaknesses of CBA?
* To whom is CBA important?
* What information can CBA provide? Not provide? How would you explain CBA principles to people with little or no formal education?
* Can the formulas be simplified?

AN OUTLINE OF COST BENEFIT ANALYSIS

1. Opportunity Cost (fill in a definition in your own words)

2. Present Value (PV)

Problem: What is the present value (PV) of $100.00 of total benefits received a year from now?

If you receive an interest rate of S10% per year, then

PV (Present Value) + (PV x 10%) (Interest)= $100 or
PV (1.10) = $100 so
PV = $ 100/1.10 = $90

3. PV of a Project

In words: The present value equals total benefits minus total costs divided by one plus the interest rate.

Equation: ; r = interest rate

For several years: ; l = year of cost+ benefits

4. Steps for Determining PV of a Project

A. List all costs ant benefits (labor, materials, maintenance).
B. Adjust costs and benefits involving foreign exchange upwards by the foreign exchange multiplier.
C. Add up total benefits (B) and total costs (C).
D. Use equation to calculate PV or Net PV.
E. Compare options and choose project with highest PV (for 1 year) or Net PV (over many years).

SAMPLE COST BENEFIT ANALYSIS OF A SOLAR COOLER (Over one year)

 

COSTS

 
 

Equipment

 

1.

Lid:

 
 

Paint

$.05

 

Straw

.00

 

Polyethylene (12 ft.²), import/.60 x 1.5*

.90

 

Tape, import .05 x 1.5*

.08

 

Subtotal

1.03

2.

Innards:

 
 

Base support

.50

 

Cannister

1.00

 

Metal restraints

.25

 

Wood restraints

.00

 

Various plugs

.70

 

Subtotal

2.45

3.

Outer Container import, $10 x 1.5*

15.00

 

Total Equipment

18.48

 

Labor

 
 

3 workers x 10 hours @ 50¢ per hour

15.00

 

Annual Maintenance

 
 

1. New paint

.05

 

2. 10 minute adjustments per day x 50 ¢/hour x 365 days

30.40

 

Total Annual Maintenance

30.45

 

TOTAL COSTS

$63.93

BENEFITS

 

Food Loss Avoided

 

10¢ saved/day x 365 days

$36.50

Improved Health

 

5 fewer illnesses/year x($5 savings in medical costs + $28 in wages no longer lost)

165.00

Value of Cool Drinks

 

Cost of cool beer=$.50

 

Cost of warm beer=$.25

 

(.50-.25)x365 days

91.00

Additional Benefits

 

Value of time saved by cooking leftovers?

 

Increased straw?

 

TOTAL BENEFITS

$292.50

Interest rate = 10%
Wage rate = $4/day
* Foreign exchange multiplier =1.5

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