Projects
Total value analysis advisory services

Panuku Development Auckland sought to better understand the non-commercial value generated by its activities to make more informed and balanced decisions.

SGS worked with Panuku Development Auckland to complete a total value analysis, helping Panuku management and staff better articulate, measure, and monetise the non-commercial benefits and costs generated by the organisation’s activities.

The results complemented Panuku’s existing processes for financial appraisal of project opportunities, facilitating better decision-making in project design and execution.

The cost benefit analysis part of the project addressed environmental, social, and business impacts of the proposal at hand. Positive and negative effects were quantified and monetised where possible and then compared to conclude whether the proposal will make the community better off or worse off in net terms compared with persevering with business-as-usual conditions.

The principal steps in the cost benefit analysis included:

• Differentiating between the outcomes under a ‘business as usual’ or ‘base case’ scenario and those arising with alternative ‘project cases’.
• Identifying the marginal economic, social and environmental costs and benefits that might arise in moving from the ‘base case’ to the project cases.
• Quantifying and monetising these costs and benefits, where possible, over a suitable project evaluation period (typically between 10 and 20 years).
• Generating measures of net community impact using discounted cash flow techniques requires expressing future costs and benefits in present value terms, using a discount (or interest) rate that reflects the opportunity costs of resources diverted to implementing the project cases.
• Testing the sensitivity of these measures to changes in the underlying assumptions.
• Supplementing this quantitative analysis with a description of costs and benefits that cannot be readily quantified and monetised.