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p. 9 of 14 BACK | NEXT Introduction Part I: Scope of Project Economic Analysis Part II: The 10 Areas of Analysis 1. Assess Macroeconomic Context 2. Assess Sector Context 3. Assess Demand 4. Identify Economic Rationale 5. Identify Project Alternatives 6. Identify and Compare Benefits and Costs 7. Assess Financial and Institutional Sustainability 8. Undertake Distribution Analysis 9. Undertake Sensitivity and Risk Analysis 10. Establish a Project Performance Monitoring System (PPMS) Part III: Areas of Analysis in ADB's Project Processing Cycle

Key Areas of Economic Analysis of Projects : Part II: The 10 Areas of Analysis

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Identify and Compare Benefits and Costs

• Identify the types of benefits, and main areas of costs that need to be further assessed.
• Identify and measure the main project benefits and costs, comparing with- and without-project situations for each alternative.
• Review the methods for measuring each type of benefit and cost, considering analytical effort, ease of explanation and understanding, and robustness of results.
• Choose the method/s of measuring benefits and costs. If it is not feasible to measure benefits, determine alternative method of analysis such as cost-effectiveness analysis.
• Establish the basis for shadow pricing by choosing the numeraire and price level.
• Estimate the EIRR and ENPV for each independent subcomponent of the project, and for the project as a whole.
• Explain any expected difficulties in completing the cost-benefit analysis, and how such difficulties may be overcome.
• For unquantified benefits, explain why the benefits were not measured. Describe the benefits qualitatively.
• Assess and justify the time to be taken to complete the project and implications for cost and benefit realization.
• Spell out the major conclusions of the economic analysis, and assess whether the project is economically justified.

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