Integration Of Cost-Benefit And Financial Analysis In Proje

A conceptual framework for integrating cost-benefit analysis (CBA) and cash flow analysis (CFA) into a 2-tiered methodology for assessing local government activities is proposed. This approach is offered in response to the increasing dependence of local governments on user fees and the resulting need for an analytical process by which ambiguous good may be judged using both social welfare and cash flow orientations. The evaluation process may be entered from a CBA or a CFA viewpoint. CBA measures the actual or expected real impacts of a project on a community. It is an expenditure-evaluation procedure estimating whether public provision of a good or service maximizes net social welfare. CFA measures the actual or expected cash flows for an accounting entity resulting from a project. Application of the 2-tiered model is demonstrated through 2 case examples, a municipal parking garage and an emergency ambulance service. Even with incomplete data, applying the model gives a useful qualitative framework for improved project assessment.