Measures the public interest of an investment before making the decision
When a public administration plans a significant investment in infrastructure or a new mobility service, a new public transport line, a high-capacity cycling corridor, a modal interchange, or a traffic management system, the fundamental question is not whether the project is technically viable. It is whether the public resources allocated to it are justified by the benefits it will generate for society as a whole.
The Cost-Benefit Analysis (CBA) is the methodological tool that allows this question to be answered rigorously and objectively. It is also a formal requirement of major public administrations and European funding bodies for investments exceeding certain volume thresholds, and an increasingly present tool in the evaluation of mobility regulatory changes within frameworks such as the Sustainable Mobility Law.
What is and what is not a Cost-Benefit Analysis
The CBA is a socioeconomic assessment that measures the total resources that will need to be allocated to a project and compares them with the benefits it can generate for society as a whole over time. It is an aggregate calculation: it does not discriminate between the actors who bear the costs and those who receive the benefits, nor does it take into account existing acquired rights.
Unlike conventional financial studies, CBA **does not consider**:
- Financing costs or capital transfers between agents
- Tax payments or compensation between parties
- Effects on the labor market: workers who lose or have to change jobs
- The cost of acquiring land or effects on the real estate market
All these aspects are transfers between economic agents that, when aggregated for society as a whole, sum to zero. CBA focuses on what does represent a net gain or loss for society: time savings, accident reduction, improved air quality, reduced emissions, or increased accessibility.
How we conduct Cost-Benefit Analyses
At **VAIC Mobility, a mobility consultancy**, we carry out cost-benefit analyses of mobility projects and services following the methodological guidelines of reference from the European Commission, the European Investment Bank, and Spanish and Catalan public administrations, adapting them to the specific characteristics of each project.
The process combines the modeling of mobility demand to quantify the changes in transport flows that the project will generate with the monetization of its socioeconomic and environmental impacts, using the reference unit values established by the evaluation guides.
Do you need a Cost-Benefit Analysis to justify an investment in mobility or to access European funding?
We help you develop a rigorous socioeconomic assessment, tailored to the requirements of each administration or funding body.
What benefits are quantified
Time savings
User time savings is usually the most significant component in the CBA of transport projects. It is quantified based on the changes in travel times that the project will generate: reduction of congestion, improvement of public transport commercial speed, reduction of access times, and it is monetized by applying the reference value of time for each type of journey and user profile.
Reduction of accidents and improvement of road safety
Interventions on the road network and active mobility infrastructure have measurable effects on accident rates. We quantify the expected reduction in accidents and their severity, and monetize them with the reference social costs for each type of accident.
Environmental impacts and climate change
We monetize the changes in greenhouse gas emissions and atmospheric pollutants associated with the project, including the effects on air quality in low-emission zones and sensitive urban environments, by applying the carbon values and external pollution costs from European evaluation guidelines.
Public health benefits
Projects that increase active mobility: bike lanes, cycling routes, pedestrian improvements, generate quantifiable public health benefits derived from increased physical activity of the population. We apply reference calculation methodologies, such as the HEAT tool from the World Health Organization, to monetize these benefits.
Accessibility and territorial cohesion benefits
In public transport and on-demand transport projects in territories with low accessibility, we quantify the accessibility benefits for groups who currently have no alternatives to private vehicles, contributing to the territorial and social cohesion argument of the project.
Socioeconomic profitability indicators
The results of the CBA are presented through the standard indicators for public investment evaluation:
- Net Present Value (NPV): present value of all benefits minus all costs throughout the project’s useful life
- Internal Rate of Return (IRR): discount rate at which the NPV equals zero
- Benefit-Cost Ratio (BCR): ratio between the updated value of benefits and that of costs
These indicators allow for the comparison of alternative projects, prioritization of investments, and justification of decisions before governing bodies and financing organizations.