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Short Case Tutorial - Questions

The document evaluates two cases of investment in the Malaysian public sector: the Pan Borneo Highway Project and the Government Rural Health Clinic Programme. It includes calculations for cost-benefit analysis and cost-effectiveness analysis, assessing project costs, benefits, and patient treatment costs. The aim is to determine the viability and effectiveness of these projects for improving connectivity and healthcare access in Malaysia.

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5 views2 pages

Short Case Tutorial - Questions

The document evaluates two cases of investment in the Malaysian public sector: the Pan Borneo Highway Project and the Government Rural Health Clinic Programme. It includes calculations for cost-benefit analysis and cost-effectiveness analysis, assessing project costs, benefits, and patient treatment costs. The aim is to determine the viability and effectiveness of these projects for improving connectivity and healthcare access in Malaysia.

Uploaded by

Siblings S3 PRODUCTION
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

EVALUATION OF INVESTMENT IN PUBLIC SECTOR

Tutorial Cases (Malaysian Context)

Case 3.1: Cost–Benefit Analysis (CBA)

Case: Pan Borneo Highway Project (Sarawak)


The government of Malaysia, through the Ministry of Works Malaysia, approved the
development of the Pan Borneo Highway to improve connectivity and promote regional
economic growth in East Malaysia.
A simplified feasibility analysis was conducted for one segment of the highway in Sarawak.
Project Information
Estimated Project Cost:

Item Amount (RM million)

Construction Cost 3,500

Land Acquisition 500

Environmental Mitigation 200

Total Cost 4,200

Estimated Annual Benefits:

Benefit Type Annual Value (RM million)

Reduced Travel Time 450

Lower Vehicle Operating Cost 200

Increased Business Activities 300

Reduced Road Accidents 100

Total Annual Benefits 1,050

Project Life: 10 years


Discount Rate: 5% Present Value (PV) factor for 10 years at 5%: 7.72
Required:
a) Calculate the Present Value (PV) of Benefits
b) Calculate the Net Present Value (NPV)
c) Calculate the Benefit–Cost Ratio (BCR)
d) Based on the results, evaluate whether the government should proceed with the project.
Case 3.2: Cost-Effectiveness Analysis (CEA)

Case: Government Rural Health Clinic Programme


The Ministry of Health Malaysia plans to improve healthcare access in rural areas of
Terengganu by expanding services through rural health clinics.
Two alternative programmes are considered.

Programme Information

Total Cost (RM Number of Patients


Programme
million) Treated per Year

Programme A: Build New Clinics 120 240,000

Programme B: Upgrade Existing Clinics 80 180,000

Required:
a) Calculate the Cost per Patient for each programme.
b) Identify the most cost-effective programme.
c) Explain why Cost-Effectiveness Analysis is more suitable than Cost-Benefit Analysis for
healthcare programmes.

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