Question

1. Explain the procedure for the development and economic evaluation of Alternate plans in DA.

2. Explain the short terms analysis and Break even analysis in economic evaluation of DA.

Answer 1

Ans 1 - Development Application/Approval (DA) is required for the development of infrastructure and other amenities in the local area. Usually more than one applications are received for the undertaking of the development project. This creates alternatives to choose from for the project to be completed, hence these alternatives are evaluated on through analysis methods and the best alternative is chosen. Economic evaluation is done through a systematic process of measurement and evaluation of the inputs and the outcomes of the alternatives and comparative analysis is done between the alternatives. The techniques usually used to evaluate the alternatives are cost-benefit analysis, break even analysis, payback period analysis, annual worth analysis and present worth analysis. The evaluation is done on the basis of the budget allocated for the development and the costs involved in the same.

Ans 2 – Short term analysis in the economic evaluation of a development plan involves the analysis of the plan for its worth in the near future. Some alternatives may have benefits in the long term and some may have benefits immediately. Break even analysis is done to evaluate the period for the plan to generate positive returns. Break even point is the point of time where only the costs have been recovered and there is no profit and no loss. To have a knowledge regarding the break even point gives a base for evaluation for the alternative plans.