Abstract

The document talk about description rural development by

European Agricultural fund, the project is example, but the
dates and figures are real.

Introduction
We will start with identifying the project as its talk about
Cost benefit analysis for modernization the agricultural
working roads. Then, we will show the objectives of the
project as it make us know how to choose the best design
and know revenue, and expenditure budgets.
As project has a social and economic component like when
develop of these road will effect positively as will rise the
standard of living and will improve the agricultural.

National Development Plan (NDP)

Its to solve the problem of socio economic development
as it is present public development investments, and it is
special concept of the European economic and social
cohesion policy and it present the strategic planning
document.
NDP show for us some of national development
priorities like:
1- The development in economy must be based on knowledge.

2-The development and modernization of transport infrastructure.

3- Environmental protection and quality improvement.
4- Human resource development.
5- Development in rural economy and increase productivity.
6- Reduce the development disparities among the country regions.

FEADR

Its show us that the beneficiary must prove that the

chosen scenario is the best in term of socio economic as
it divided to two variant: the zero variant (no investment),
investment variant. So we will show three scenarios to
spend most error:
1-The Zero Option (theres not any investment)
2-The Max Option (happen investment and modernization)
3- The Average Option (making repairs for the route)

In the first term (the zero option), there are a lot of

disadvantages resulting from the lack of investment like:
1-Have a risk in the traffic area.
2-The road become unusable as it cant be Reform.
3-Theres no development and modernization on the road.
4-Make a bad view for people in the rural areas.

In this situation we will explain the minor advantages for

each term of the three scenarios:
1-For Zero Variant, theres no need for investment, and its stay
without change.
2-For Max Variant, theres high investment and its take a 6 months
which its the long period.
3-For Medium Variant, theres low investment, take a 4 months.

The following table show the advantages analysis in

the three scenarios.

Version
Economic

Technic

Version Zero
Social

Economic

Version Average

Technic

Social

Version Maximum

Technic

Economic

Social

Paramete
ranalysis

Financial
Investment
0

Road Safety

The risk that the

road can become
useless for o large
period of time

3
3

3
3

The area economic

evolution

Disparities with
other parts of the
country

Disparities with
other EU countries

The area
promotion and
economic
influence

The increasing
duration of use

The increasing of
structural and
functional qualities

The term for the

achievement

The Influence over

areas economic
growth

13

27

24

10

Total

Total Option

28

64

The score was given from 0 (minimum) to 5 (maximum)

From the table we can deduce that the best option is the
max one, as theres development and modernization for
agricultural roads.

The content of the Rural Development

There are methods for the investment financial profitability such as:
VNAF/C indicator (Updated net income calculated on the total
investment value),

RIRF/C internal rate of return calculated on the total investment

value, VNAF/C should be negative and RIRF/C less than the update
rate (RIRF<S).
The projects financial depend on net cash flow (not updated).It must
be positive in each year of the analysis.

Total investment

VNAF/C operator

Total operation costs and revenues

Financial Sustainable

Funding Sources

RIRF/C calculator

Non-Monetary

Flows

Updated cash flows the main method to the financial analysis

development. Depreciation and previsions arent take in nonmonetary.
Reference period is the number of years that make forecasts in
CBA. Reference intervals based on internationally accepted by the
European Commission are provided below.
Sector

Interval de referint

Energie

15-25

Apa si mediul

30

Sector

Interval de referint

Cai ferate

30

Porturi si aeroporturi

25

Drumuri

25-30

Industrie

10

Alte servicii

15

Recommendedtimesforecast

Thedevelelopmentprojectdependsonthecostsandbenefits,the
EuropeonCommissionsupposetaxesthatsustainedbyusers.
Theflowaregeneratedbycashflowsandoutflows.

Typesofcostsforthemodernization
1MaterialCosts2Materialusedforrepairs

3LabourCosts4Sumsofmoneyfortheaggravation
5FinancialCost6Costsforsignage,advertising
Crt.
No.

The
descripti
Maintenan
Interven on and
ce Works
nature
tion
of the
period
interven
tion
Isolated
repair of
hard
Annual
bitumino
us

-locking
warping
cracks
and
crevices
Routine
maintenan
ce during
the
summer

Unit
value
(lei)

Total
value
(lei)

Materi
al
value
(lei)

Labor
value
(lei)

9625/k 34842, 22647, 12194,

m road 5
625
875

Crt.
No.

The
descripti
Maintenan
Interven on and
ce Works
nature
tion
of the
period
interven
tion
Ensuran
ce of
water
running

Annual

-cleaning
ditches
support
walls
maintenan
ce
Routine
maintenan
ce during
the
summer

Preventi
on for
Monthly
effects
of floods

Routine
mainten
ance
during
the
summer

Facilities
mainten Annual
ance for
road
safety

-repairing
the
parapets

marking
s and
signs
Routine
mainten
ance
during
the
summer

Unit
value
(lei)

Total
value
(lei)

Materi
al
value
(lei)

Labor
value
(lei)

2500/k 9050
m road

5882,5 3167,5

50/km
road

117,65 63,35

181

800/k 2896
m road

117,65 63,35

Physicalandvaluegraphicofrepairworksmaintenanceaftercommissioning

Allthesecostswerevaluedatcurrentprices.

TheInflationevolutionmustbetakenasareference.
Proiectadinamiciiinflatiei(ratedecrestereanuala%)
2006

2007

2008

2009

2010

2011

2012

2013

2014

6.56

4.84

7.5

4.5

3.6

3.2

2.8

2.5

2.3

2015

2016

2017

2018

2019

2020

2021 si urmatorii ani

2.0

2.0

2.0

2.0

2.0

2.0

2.0

Thefinancialcostsvaluemustbe0.2%fromtheinvolved
costsvalue.Thesignageandotherandadvertisingcostvalue
dependingonthehistoryandparallelbetweencurrent
investmentandothersimilarinvestments.
Theadvertisingcostis0.5%atmaximumconditions.

Youmusttakeintoaccountwhencalculatethesizingcostthat
itisdependingonthetrafficstudysegmentandoccursunder
normalconditions.
Nowletstalkaboutthecashinandcashoutflows.
Thetablebelowshowsthecashoutflowsfor15yearsof
operation.

Calculation
Elements

Investment
implementatio
n

Year 1

Year 2

Year 3

Year 4

Year 5

Expected
Inflation
Index

3.6

3.2

2.8

2.5

2.3

Maintenance
and repairs

51.017

52.650

54.124

55.477

56.753

Salaries regular
costs
associated

28.471

29.382

30.205

30.960

31.672

Fees and
taxes related
to salaries

8.826

9.108

9.363

9.598

9.818

Other
operating
costs,
signage,
advertisinget
c.

750

774

796

816

834

Finacial
expenses

178

184

189

194

198

Other
Operating
Costs

446

460

473

485

496

Raw
Materials
Utilities/Ener
gy

Fees and
taxes related
to salaries
Loan Cost

Investment
Costs

4.107.120

Total
Payments

4.107.120

89.688

92.558

95.150

97.529

99.772

CashinflowProjections
ThetargetedprojectdefinedbytheEuropeanCommission
Revenuegeneratingprojectmeansanyoperationinvolving
investmentininfrastructuresuchastaxesthatsustainedby
usersoranytransactioninvolvingthesaleorrentaloflandsor
buildingsorservicefee.Cashinflowsonlymakedeductions
fromthebudgetmaintenanceworkandinterventions
financing
Exampleforcashinflowsinthetablebelow.

Calculation
Elements

Investment
Implementati
on

Year 1

Year 2

Year 3

Year 4

Year 5

89.688

92.558

95.150

97.529

99.772

89.688

92.558

95.150

97.529

99.772

Necessary
funded
Grant/not
callable
financing

4.107.120

Budget
breakdown /
budget
funds
Total Income

4.107.120

Projectionsofcashinflowsfor15yearsoperation(simplifiedduration)

UpdateRateCalculation

Tocalculatethenetpresentvalue(UNAF),weshouldupdatethe
appropriaterate.
Therearemanymethodsthearticleandpracticalmethodsusedtoupdate
thefinancialanalysis.

Theinvestorsshouldbenefitdiscountratethatusedinfinancialanalysis.
Thisdiscountconsiderthebestalternativeprojectthecommissionsuggests
theapplicationofafinancialratediscountupto5%forpublicinvestment
projects.

Thecalculationandanalysisoffinancialperformanceindicatorswhichare
specifictoinvestment
Calculation
Elements

Investment
Implementation

Year 1

Year 2

Year 3

Year 4

Year 5

Total
Payment

4.107.120

89.688

92.558

95.150

97.59

99.772

Total Income

4.107.120

89.688

92.558

95.150

97.59

99.772

Cash Flow

Discount
Factor

1.00

0.95

0.91

0.86

0.82

0.78

Discount
Financial
cash flow

VANF/C

-4.107.120

RIRF/C

Negative, intangible

Cash Flow

>=0

C/B Report

<=1

References
1.

Anexa 4.1-Recomandari pentru elaborarea ANLIZEI COSTBENEFICIU, FEADR/2010/M.125

2.

Anthony E. Boardman, David H. Greeenberg, Aidan R.

Vining, David L. Weimer Analiza cost-beneficiu,
concepte si practica, editia a II-a, Editura ARC

3.

HG nr. 28/2008

4.

Softuri specializate analiza financiara si economica (tabele)

5.

Cristian Bisa, Elaborarea studiilor de fezabilitate si a

planurilor de afaceri, BMT, 2005

6.

Richard Newton, Management de proiect - Pas cu pas,

Meteor Press, 2007