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Lifecycle Cost Analysis & Delhi Metro Case Study

Lifecycle Cost Analysis (LCCA) evaluates the total cost of owning and maintaining an asset, potentially saving 20% to 30% compared to traditional methods. A case study of the Delhi Metro shows a Net Present Social Benefit of Rs. 419,979.6 million with a social rate of return of 22.7%, exceeding the public investment cut-off rate. The analysis highlights income gains for various stakeholders while noting income losses for traditional transporters, adjusting the social rate of return due to income inequality.

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31 views11 pages

Lifecycle Cost Analysis & Delhi Metro Case Study

Lifecycle Cost Analysis (LCCA) evaluates the total cost of owning and maintaining an asset, potentially saving 20% to 30% compared to traditional methods. A case study of the Delhi Metro shows a Net Present Social Benefit of Rs. 419,979.6 million with a social rate of return of 22.7%, exceeding the public investment cut-off rate. The analysis highlights income gains for various stakeholders while noting income losses for traditional transporters, adjusting the social rate of return due to income inequality.

Uploaded by

sarthakinamdar18
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

1.

3 Lifecycle Cost Analysis:


Method for assessing and quantifying the total cost of owning, operating, and maintaining an asset over its entire
lifecycle.
Research indicates that projects using LCCA can save between 20% to 30% over their lifespan compared to
traditional methods.
Purpose of this analysis is to estimate the overall cost of project options and then select the designs that can ensure
the facility provides the overall lowest cost of ownership consistent with the function and its quality.
1.5 Case Study: Value Engineering in Delhi metro
The Net Present Social Benefit (NPSB) of the Delhi Metro is estimated at Rs. 419,979.6 million (2004–05 prices)
with a social rate of return of 22.7%, significantly above the 8% social time preference rate.

The economic rate of return is 21.5%, and financial return is 17%, both exceeding the standard 10% cut-off rate
for public investments in India.

After accounting for shadow pricing (labour, foreign exchange, capital), the economic rate of return increases to
22.5%, and further to 23.9% when air pollution reduction benefits are [Link] Impact Analysis: Metro
yields income gains for passengers, public, government, and unskilled labour, but causes income losses to
traditional transporters.

Distributional Effects: Considering income inequality (Delhi public earning >2x national per capita income), the
social rate of return is adjusted back to 22.7% due to less progressive income distribution.

Net Present Economic Benefits and Economic Rate of Return of Metro The net present economic benefits (NPEB)
and the economic rate of return of the Metro are estimated after taking into account all the flows of benefits and
costs described above for the time period 1995-2041 during the life of the project.

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