The Global Project Assessment Method: A New Tool to Bridge the Gap between Cost-Benefit Analysis and Budgetary Decisions

Jeanne Amar () and Vincent Piron
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Vincent Piron: Piron Consulting

No 2020-55, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: Despite a broad consensus that infrastructure is essential for economic development, investment in infrastructure is far below what is needed, even in developed countries. One of the main reasons is that it is difficult to assess with certainty the medium- and long-term budgetary impacts (expenditure and revenue) generated by a project, as this assessment calls for a micro-economic analysis of the project (cost-benefit analysis) to be linked with budgetary macroeconomic impacts, through country-specific financial mechanisms. In general, the cost benefit analysis stops just before the budget impact assessment. As a result, evaluations predict an almost systematic deterioration in the debt-to-GDP ratio and thus slow down the investment decision. However, some projects generate future direct and indirect revenue streams for the State, the discounted value of which is higher than the initial investment. In this paper, we propose a new evaluation method, the Global Project Assessment Method (GLOPRAM), which takes into account the complexe nature of investment assessment for public decision and better reflects the economic and budgetary reality. More specifically, the GLOPRAM makes it possible, for a given project, to reconcile the socio-economic assessment, the environmental impact study and the budgetary impact.

Keywords: Project appraisal; Cost-Benefit Analysis; Infrastructure; Public Policy; Budgetary Decisions (search for similar items in EconPapers)
JEL-codes: H54 H61 H68 O18 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2020-12
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