Chapter 9

Question 1

A public sector project

Answer 1

Is a product, service or system used financed and owned by the citizens of any government level. The primary purpose is to provide service to the citizen rate for the public good at no profit. Areas such as public health, criminal justice, safety, transportation, welfare, and utilities are publicly owned and require economic evaluation.

Question 2

Public sector versus private sector size of investment

Answer 2

Public sector has a large investment, private sector has some large, more medium to small

Question 3

Public sector versus private sector life estimates

Answer 3

Public sector is longer, 30 to 50+ years, private sector shorter 2 to 25 years

Question 4

Public sector versus private sector, annual cash flow estimates

Answer 4

Public sector is no profit cost benefits and benefits are estimated. Private sector has revenues contribute to profit cost estimated

Question 5

Cost

Answer 5

Estimated expenditures to the government entity for construction operation and maintenance of the project, less any expected salvage value

Question 6

Benefits

Answer 6

Advantage to be experienced by the owner, the public

Question 7

Disbenefits

Answer 7

Expected undesirable or negative consequences to the owner if the alternative is implemented. Benefits may be indirect economic disadvantages of the alternative.

Question 8

Public sector versus private sector funding

Answer 8

Public sector is funded based on taxes, fees, bonds and private funds. Private sectors are funded based on stocks, bonds loans and individual owners.

Question 9

Public sector versus private sector interest rate

Answer 9

Public sector has a lower interest rate, private sector has a higher interest rate based on cost of capital

Question 10

Design build finance operate maintain DBFOM contract

Answer 10

Is considered a turnkey approach to a project. It requires the contractors to perform all of the DBFOM activities with collaboration and approval of the owner.

Question 11

Financing

Answer 11

Is the management of cash flow to support project implementation by a contracting firm?

Question 12

Benefit cast ratio

Answer 12

B/c = PW of benefits/PW of cost = AW of benefits/AW of costs = FW of benefits/FW of costs

Question 13

Revenue alternative

Answer 13

Possible to develop a direct formula connection between the B/C of a public sector and B/C of a private sector project where both revenues and costs are estimated

Question 14

Profitability Index

Answer 14

Useful in evaluating revenue projects in the public or private sector.
PI = PW of NCS series/PW of initial investments