Multi-dimensional project evaluation: Combining cost-benefit analysis and multi-criteria analysis with the COSIMA software system

• Main Author: Jensen, Anders Vestergaard
• Format: Other/Unknown Material
• Language: English
• Published: 2008
• Subjects: /dk/atira/pure/sustainabledevelopmentgoals/life_on_land; SDG 15 - Life on Land; Greenland; Nuuk
• Online Access: https://orbit.dtu.dk/en/publications/9705a38c-9a9f-4e37-824a-309cbafe4fcd

This paper proposes a methodology that integrates quantitative and qualitative assessment. The methodology proposed combines conventional cost-benefit analysis (CBA) with multi-criteria analysis (MCA). The CBA methodology, based on welfare theory, assures that the project with the highest welfare for society is ranked uppermost. To compare the different impacts, it is necessary to have a common monetary unit. Theoretically, all benefits and all costs should be accounted for in socio-economic cost-benefit analysis. However, this is far from in practical the general case due to difficulties in a valuating all the criteria in monetary terms. Thus CBA does not meet the need for a comprehensive evaluation, for which reason MCA is introduced to overcome this problem. Not only does MCA provides an opportunity to include non-market impacts in the analysis, but MCA also provides a framework for breaking down a problem into its constituent parts in order to better understand the problem and consequently arrive at a decision. However, while MCA opens up for the possibility to include non-market impacts, it does not provide the decision makers with guidance combining the CBA with MCA. In the paper different methods for combining cost-benefit analysis and multi-criteria analysis are examined and compared and a software system is presented. The software system gives the decision makers some possibilities regarding preference analysis, sensitivity and risk analysis. The aim of the software is to facilitate a straightforward method to support decision making involving both quantitative and qualitative impacts. An outcome of this is that the methodology and the results on this basis are easily understood by the different stakeholders, which is seen as important. The methodology and software system are demonstrated by examining the decision problem of choosing between alternatives for a new airport to service the capital of Greenland, Nuuk. Three different alternatives are examined ranging in costs from 90m USD to 400m USD. ...