Project Evaluation Western Sydney Airport - Cost vs Benefit - Case Study Example

PROJECT EVALUATION WESTERN SYDNEY AIRPORT COST VS BENEFIT REPORT Students Name: Unit Name: Course Name: Instructors Name: Date: PROJECT EVALUATION WESTERN SYDNEY AIRPORT COST VS BENEFIT REPORT Executive summary Projects have been a better method of ensuring service provision to the public by the government. Western Sydney airport project was to provide for communication and transport issues in the city. It was proposed due to some social challenges faced in the town and its outskirts. The traffic had grown rapidly due to increase in the electromotive and personal vehicles. The airport seeks to provide cheap means of transport as it also generates revenue. In order to pursue this projects, evaluation was found necessary to determine the viability, reliability, and relevance of the project to forecasted stakeholders. Cost vs benefit is a thus vital task to determine the benefits vs damages associated with the project. Introduction Evaluation is a technique used in project management to determine the viability of a given project. It enables the concerned parties and the stakeholders to be ascertained on costs and benefits associated with the particular projects. The costs include any expense incurred either to put up the projects, (inputs) and the effects associated with the project under stake which can be described to be either financial. On the hand, benefits are the positive outputs, the services and products to enjoy from the project are termed to be either economic benefits or effects. Projects are important activities in our lives since the involve reduction of cost by efficiency in production due to budgeting. This paper is a report devised in a way to show evaluation on the project western Sydney airport in the terms of cost vs benefits to the society. The costs and benefits of this project are to be presented in a chronological order to determine the worthwhile and economic importance of putting up the western Sydney airport. Cost-benefit analysis is also used to show the relevance of the project to the community and stakeholders. This study emphasizes on the values i.e. costs and benefits to occur by partaking the project western Sydney airport project. This project was suggested for implementation after research in the society in public sector provisional services in 2011[Del14]. After a long evaluation of suggested projects to be implemented the western Sydney airport was considered to be the most effective project to partake. Values are considered to be evaluated using current values (net present values). These values are presented in such a way allowing for future projection in relation to the future benefits (13years) to be obtained from the project implementation. This is done ensure the project is relevant to the society (stakeholders) and other parties within Sydney[Wes131]. This should be carefully done by discounting (5%) these values over a number of years to ensure the validity of the information obtained. The project evaluation ensures efficiency and effectiveness are met in production and provision of essential service to the society by the government. The discounted values are thus evaluated by using the decision method of Net Present Value to measure the degree to which the western Sydney airport benefits exceed the costs. Background Sydney Airport is an international airport in Sydney, Australia. It is located five kilometers south of Sydney City center. This is n in Mascot. It is considered the primary airport that serves the Australian people. It has three runways. It is both the longest and the oldest airport. It handles an average of 41 million passengers and an average of 330,000 aircraft movements in a year. The SACL (Sydney Airport Corporation Limited) manages this airport. Impacts Material benefits expected to the society entail the actual importance of western Sydney airport to the society and community as a whole. The benefits range from the creation of jobs. This is deemed to increase the income to the residents of the city. The living standards are there expected to rise to a level sustainable reducing dependency. In addition to this, the transport channels also assure and promise cheap and fast transport and communication benefits. These include even the least opportunity costs depending on the consumer decision-making process. Economically the project will lead to very significant saving by the commuters leading to a larger earning and saving schemes as well. They can opt for the best and cheaper means as they are presented with alternative means of transport within the city and wider as to touring the world. This will also pose a bigger opportunity by the government in reduction and minimize the traffic congestion and pollution levels by vehicles[Aus14]. Although there are economic benefits, there will also be some demerits as the communal land will be used in the construction of the airport and pollution, both noise, and air pollution. On the other hand, financial benefits involve the price benefits to be involved in the implementation of the western Sydney Airport. These include the material income obtained from the operations of the airport as benefits, salaries to employees, the procurement activities on the purchase of planes and price[Wes11]. The financial should not exceed the economic benefits for the project to be effective and efficient in operation in the society as shown in the table below in Table 1. Table 1: Western Sydney airport log frame. Below is the financial vs impact chart 1: Western Sydney Airport. Log frame: Framework for Western Sydney Airport Narrative Summary Measurable Indicators Means of Verification Important Assumptions Goal: Citizens cheap means of transport Safety of commuters 3. Increase health guaranteed benefits 1.Record the frequency of use, range, and a number of flights. 2. NPV 1. CBA 2. Data analysis goal achieved Purpose: Change people's travel habits, reduce car dependence. Improve traffic congestion in the city and its outskirts. the number of users Increased Reduce traffic congestion Registration statistics of the commuters Income statistics evaluation Purpose to Goal A Large area of coverage ensures easy and fast transportation to both people, goods, and services. Means to improved trade in perishables More opportunity cost related benefit Outputs: 1. planes 2. Plane management system. i.e. booking programs etc. 3. the runway stations and regular vehicle service. 4. Occupation of public space. 1. a large number of planes. 2.Landing base in western Sydney and plane runways 3. Utility vehicle for recovery and maintenance 4. Airport plane services website Output to Purpose The airplane flights supplemented by the road transport The website will make it easy for booking, it's more convenient. Activities: Planes and accessories procurement. Plane landing bases and runways construction Management web site construction Inputs: They include the management personnel, system development, labor, procurement department for planes hire and maintenance department ISO certification Construction report ACT EPA report Activities to Output The government allows the use of public space EIA passed Plane quality standards website Safety standards Airport and landing bases quality standards List of measurable factors that made the project a success. These will include the factor to determine the number of stakeholders to benefit from the project, directly and indirectly, the level of reduction in the congestion of vehicles after implementation of the project, p, the deviation to the budget should be minimal since its assumed that the economy will remain constant for a period of time. In addition, the no of customers opting to use the airport website for service is to be determined to determine the project relevance, monitoring, and adherence to the budget, all costs are to be relative to the budget domestic companies attending, and the number of foreign customers using the Kingsford airport. The other measurable factor is the number of the residents employed or secure jobs due the initiation and implementation of the project. The factors are SMART (specific, measurable, achievable, realizable and time bound). The project end will be marked by the employment of the residents and a follow up to indicate performance in the job environment. Decision Criteria The discounted values are thus evaluated by using the decision method of Net Present Value to measure the degree to which the western Sydney airport benefits exceed the costs. The Net Present Value normally abbreviated as NPV is the overall difference between the current value of inflows and the current value of outflows. It mainly analyses and measures the profitability or maximum benefits of a project or an investment. It is used by economic operators in capital budgeting. To calculate NPV, we use the following formula; ct = net inflow of cash within a period of time t, t = period, c0 = total initial investment costs, r = discount rate. If the projected earnings from a project exceed the anticipated costs, then this concludes hat we shall have a positive net present value. A positive NPV is considered to be a profit while a negative NPV is considered to be a loss. Conclusion The costs vs benefit effects of the western Sydney airport indicate that the airport is more relevant economically to the society. It provides an alternative cheap transport hence the opportunity cost evaluation in the decision-making by the commuters. This enables saving as they can opt for the cheaper means of transport. The financial aspects are less compared to the economic benefits. The society will benefit much in the project economically. The living standards of the people are deemed to rise as the project will lead growth in economy providing employment. Traffic congestion will be minimized to minimal levels hence cheaper transportation of people, goods, and services. This will facilitate the trade in perishable goods and services around the world. Although the project has benefits, it also has some disadvantages in the form of costs for environmental pollution and utilization of communal land. Recommendations I, therefore, recommend the costs vs. economic evaluation to be used to determine the viability of the Kingsford Smith airport. This will analyze the pros and cons associated with the project. The stakeholders of the project i.e. the residents and land owners who will suffer losses in form costs will be therefore compensated adequately. The benefits should be by far much than the costs. The benefits thus should be valued in monetary values for purposes of being measurable and to ensure comparability. This will ensure that the decision is also made under material evidence that can be well understood by the residents and presented to the government for funding. The benefits should be set in such a way that the benefits trickle down up to the final consumer or stakeholder of the project. References Del14: , (Economics, 2014), Wes131: , ((N.S.W.), 2013), Aus14: , (Australia, 2014), Wes11: , (Councils, 2011), Read More