Introduction
The U.S government wants to put up the high speed rail system. The system should be of high speed and efficient in its means of transportation. The system should be able to meet the demands of the people in the society as far as gender is concern. The use of the rail transport should first and foremost be safe mode of transportation. This will make it be preferred means of transport which will increase the revenue being collected from its service.
The rail system also should be in a position to meet the requirements of the environment such as less pollution such as the noise and the air. The transport system should have the best services which will favor all the people being transported to and for. The transport system should be in a position to have in place excellent management team which has all the skills at their disposal to increase the revenues and the service being delivered to the customers. The system should be organized in a way that its meets the requirements of the society and be able to overcome the competition challenges that it may be facing.
Discussion
There are several methods which have been used to get the whole details of the performance of the rail system in the country. The various methods are as discussed below. These include the interviews, the observations, listening among others. The interviews were conducted among the people of the public who were using the old rail system on the services they use to get and the efficiency of the rail means of transport. The ideas on the speed of the rail system were gathered. Listed below are the questions which were used to conduct the interview.
- How do you find the speed of the rail system?
- How reliable is the rail system?
- What’s the main predicament that is being faced in the rail system?
Another method that was used is the observation. The analysts spent some time with the public observing how comfortable they are with the old rail systems. Participating also or utilizing the service also as one of the commuters is necessary to the availing of the relevant information. This has been the best way so as to have the accurate data relating to the performance of the service. Listening is another method that has been used in data collection.
The analysts listened to the public on their opinion on the system. This involves cases where the transport system is performing; there are always issues especially if the commuters are not satisfied with the way the service is being executed. Members had a lot of complains about the existing system which is very slow in performance. After visiting various sites relevant information on the rail system was gathered (Sheldon and Brandwein 179).
Cost benefit analysis (CBA) is used mostly in decision making. It is a tool for enacting policies by having the details of the system as far as the costs and the benefits are concerned. When determining how to allot several types of an organization or government spending, CBA plays an important role. It helps management to get a clear understanding of a project on the requirements and the possibilities of the venture in the taking over the plan.
It also enables them to make sound decisions on the execution of the whole process of the train system. This is very important in arriving at the concrete decisions which are informed at all levels of executing a project and the scenarios which surrounds the whole execution. These decisions greatly affect the production of a company and the implementation of different projects. Cost benefit analysis is used in a wide range of fields.
It can be used in public constructions just like any other field to make informed decisions. These constructions could be public roads, rail systems or even bridges. CBA could also be used to make decision on flood safety management or any other disaster that may arise in the country or any parts of the world. In CBA all the costs are calculated so as to arrive at the relevant information which can be translated to relevant decisions which are being made.
All the expenses incurred for every project are also estimated so as to have a clear objective of the required details. Then the alternatives are both analyzed to get the best project. Analysis is done in terms of cost, profitability, service delivery and the risks involved during the life span of the project.
The cost to which it can be incurred in case a particular risk may occur is also evaluated. This shows that the company executing the projects is ready to handle any emergency which will arise as a result of the any predicament which had not been speculated. These measures are for tackling the risks and so forth. The maintenance cost for the selected best alternative is approximate. This is normally done in order to get a clear cost of the project you are about to undertake.
All the terms are normally quantified. This is to convert them into monetary terms for easier understanding and better decision making. The expenditure and remunerations are therefore are discounted and aggregated. This is done so as to find out the present worth of the remaining benefits. In other words the internal return interest. The highest IRR will give greatest social returns. Therefore since it has the largest amount of gain it should be implemented. This is how the analysis is done. These approximations have a high probability that it will take place. The estimated profits and risk are bound to be correct.
However CBA have some shortcomings. This is normally witnessed in the projects which involves nature. These are those projects which concerns natural resources. Environmental products, information and services are also evaluated. This evaluation will guide in coming up with the short comings of the project. The environmental risks are major concerns of the projects hence the users of the transport system should never be affected by the system in their natural habitats. The environment is very important when maintained well since the transportation system also is a benefit to many people.
The transport system is very useful to many people and its aids in elimination of congestion in the towns and the normal public roads since most people will prefer using the rail system in an urban setting. CBA results are not hundred percent accurate. They have some uncertainties which need to be looked at. These methods of CBA are used all over the world. Therefore some critics have been evident all over the universe. They are used in planning period of almost all organization. Some complains are as follows. Some goods are not tangible; hence putting them in monetary terms is next to impossibilities. This has been seen to be a disadvantage in that most assets are intangible.
This CBA policy has also been seen not to look into equity. The issues are very important and should always be put into account. So in overseeing them it is difficult to get actual estimations of the project returns and expenses. There is no enough evaluation of some effects. These are the long term ones. This can happen in case of discounting which is also a demerit. The performance of the CBA procedure itself is expensive. It requires resources like expertise, finances and time.
The analysis is quiet costly and often take a lot of time. The analysis also requires sufficient technical skills in orde4r to make quality and accurate estimates. The analysis of this fastest rail system might be very expensive to carry out. It therefore requires a large amount of public funds. This however does render the CBA less economical. Since the advantages of this analysis far much outweighs the disadvantages (Miller 145).
CBA play a part in the national policy formulation. Also this is seen in the local policies. It is therefore implemented in almost all public decision. The transport sector should be able to make sound decision on the implementation of the high speed rail system. It will be quiet economical since there is proper utilization of time. The speed of transportation will be increased hence leading to rise in the productivity of the country. A country which moves fast and utilizes time effectively will results in the increase in the productivity of the whole country hence the nation should concentrate on the benefits of the rail system as the only means and one of the many to improve the transport system in the country.
This will in turn improve the economy of the country. Industries will be able to get their necessary raw materials within the speculated time and the employees will also be at their workplace within the stipulated time. This will reduce the time which is normally wasted on the roads while on their way to workplace and their homes. This time will now be put into productive use either in the workplace or at home doing home chores or resting as a way of having leisure activity. This will speed of production and hence profitability of the industries.
The competitiveness of an investment is based on the decisions on where to invest. Big efforts should be put in order to choose right project so as to avoid wasting company’s resources. Project evaluation targets the in-depth of the study and development projects, or activities. The main purpose of doing project evaluation is to get an overall understanding of the project. Understanding the project is very important as it will help the developer deliver a project that will be very useful to the user.
This also will ensure that the project having been evaluated, will give the developers a chance to seek the one which is of great economic importance to them. Another reason for doing project evaluation is to prepare main concerns among the ideology to be done. This will ensure that the company pursues the project which is to the set standards of the company and details which will be used. This will enable the developer deliver the project on time. There is also an issue of deciding at the point of continuation of stopping the project. A project may require more resource than it had been projected. Overseeing the projects by taking into account the necessities of the required which had been previously identified.
The implementation of the rail system involves public decision in that it will be of an impact to the economy of the country. It involves the government and the nation as a whole. Undertaking a social cost benefit analysis be implementing a project is very important. The aim is to calculate approximately the welfare impact of several alternatives. The alternative projects should be analyzed in details. Therefore this policy helps to determine the best project out of the available option.
It is also done to select the best policy. The rail project should therefore be compared with other options of transportation and the welfare effects approximated. The policy makers and the CBA specialist should strive to provide a clear understanding of the rail system. Also they should determine its costs and revenue in order to make decision. The stakeholders should sit in an open discussion and share ideas. They should determine the effects of their plans and estimates.
The welfare effects should also be derived. The economists can be of great help in calculating this approximates. They look carefully on how the CBA estimates have been done. Large categories of welfare effects are shown. This is a key aspect of this analysis. The affected classes of people are also indicated in order to find the best estimates. CBA analysts should be able to interpret help principles and outcomes. Policy makers should also do the same.
The weakness of this policy depends greatly on the intermediary steps and also worthiness of individual welfare effects. Environmental valuation theory deals with the expenses incurred in the products are estimated. This includes the useful and non-useful features of environment.
There is the production function policy and the transport cost methodology. More so there are two methodologies from finding out the monetary worth of that impact of environment. They are in most cases minimal and can easily be traced. These effects can be represented in the table for clear analysis and therefore very easy to understand. The present funds have got a greater worth than the future money. Therefore the available money in the public should be used to implement the proposed high speed rail system. The reason for this is that it is better to benefit now than in the coming days. Another important point is that the finances put under investment now will give an increased future benefits. This rail system therefore will bring a lot of positive changes to the economy. Even if the effects are not felt immediately the will definitely be witnessed.
This is a long term investment and will greatly boost the US economy. The will be a higher speed in production and even delivery of goods. The products of production will reach the people faster because of the high speed rail system. It is therefore very economical to invest in this project. Employees will have a fast means of transport. Hence the will get to work earlier or by the require time. This will make the organization quiet efficient and lead to a higher profitability. When there is a fast means of transport in a country the economy will tend to rise. Good infrastructure is a key feature that contributes to a country’s financial position.
The high speed rail system unlike the other rail system will be more trusted in terms of transportation in the country. The public will therefore have a great benefit since they be feel the changes in the passenger transportation sector. The evaluations of the response of the public together with cost approximation are carried by experts of the field of economics. The benefits brought about by the rail system to the country’s economy and even impact on foreign investment is also valued (Tracy and Alf 215).
Another method is the decision analysis method. Here we use the probability estimates.It can be done in many ways. There is a way in which the procedures for evaluation can be used such as the utilization of the stochastic projections. This can be executed using various other techniques. For example, it is possible to use the calculations done by other methods using estimates of the probability of commercial success.The rank index is established as indicated below.
Rank Index = Pt PB (B-C)
The inconsistency in costs and benefits can be subjected to the period of accomplishing the projects. This can also be influenced by the competitive environment. This can be factored in by utilization of the alternative approaches. The developer should consider the negative and the positive values. This method is Marjory used in complex projects. This technique is good though it does not factor the various steps which are usually followed in the execution of the project. The project can be terminated if the progress is not as expected. There are a number of problems that may arise through the use of this method. The developer might take the estimates as the exact future outcomes.
Foreign investment is a major contributor to the economy of every nation. The high speed rail system will influence the type of investment which the investors would want to do since the means of transport is the main factor in having their goods and the people moved from one location to the other. This happens because when foreign investors find out that the mode of transportation is enticingly high they will develop interest in investing.
Hence, they will definitely do their trade and invest in such a country since it’s cost effective in the transport section. This is because they know how it will influence productivity. A fast rail system will enhance transportation of exports from remote industries to the port or the airport. CBA is therefore carried out in order to even educate the public and the potential foreign investors on the benefits of the rail system (Gomez-Mejia and Milkovich 120).
The rail system should therefore be implemented in the transport sector since the benefits overwrites the demerits. The speed of transportation will increase leading to increase and fast production. This will therefore boost the economy of the country. The countries economy is influenced by the means of transportation hence the country will increase the income being generated to the economy. The cost benefit analysis of this project is very crucial. This because, it explains to the strategic managers the need and significance for implementing this high speed rail system.
Cost benefit analysis is considering the expenditure used in doing something against all the revenues generated so as to be able to select the best investment. This difference will indicate whether it is possible to continue with the proposal or not. The management should make sure that the all benefits and all cost are included in the analysis. In calculating benefit the price that an item was bought should not be used in calculation.
The cost of constructing the statewide rail system must be calculated using the cost of materials that are used in constructing it. It may also include the labor that is used to build it and the time spent in building it. The purchase price is always not the final thing but also there is the taxes which are to be paid and the interest rats have got to be included on all the expenditures. The company should decide the means or how it should acquire it such as through outright acquisition.
This also means that the normal extra charges are to be taken in account since that amount should be factored in as it could have been incurred by the company as well. That is the most profitable investment. The opportunity cost has to be calculated so as to evaluate the company process of implementing their plans coming true Expenditure and profit are often considered in form of money. Time is also considered in calculation.
This will enable all the flow of profit and the flow of expenditure against some period of time to be expressed in common basis. This analysis is normally applied by the administration in appraising the profitability of some given projects. This is done by most organizations. The main reason for the analysis is to estimate the competence of the involvement with respect to the position. This analysis is calculated in terms of the public’s ability to pay for the attainment of the profit.
It is also a means in which the public ability to pay for the expenditure used in the project is being evaluated. Contribution is normally calculated use of opportunity costs.Opportunity cost is the value of the project in its greatest substitute use. The directing standard is to record the things affected by the project. Financial value of the result it has on those affected is calculated and the company is in a position to tell whether they can be overcame or not such that it can be decided whether the project is viable or not.
This method entails financial worth of original and the expenses with respect to the anticipated return. Making reasonable trial of the expenses and returns of an action is a very complex task. Analysts have often estimated the expenses and profit by the use of survey method. This can also be done by illustrating the inferences from market behavior. In considering whether to put up the high speed rail system or not the manufacturing and marketing operating cost are compared with predictable sales. A discount rate is selected, this will be used in calculating the prospect cost and benefit in the present worth conditions. If the system has a high reduction rate will lead to very small value of well fare in the coming times. Financial values can be used in less tangible effects including the risks that can contribute to project failure.
This is to be done after discussing with a number of individuals so as to get the aggregate welfare effect. The intangible benefits are also considered in the cost benefit analysis. The intangible benefits will include the environment. The analyst should consider the effect on the environment if the rail system is put up. What will be the effect of the rail system on the pollution? The disregard of justice concerns when expenditure and profit of the public affected are increased without bearing in mind distributional effects. Future effects are to be considered in calculation. This is important since it will help in avoiding future regrets and mistakes in putting up the project.
It will also help in minimizing the future and the present risks. Neglecting this will lead to an irreversible effect which may be negative to the future generation. The cost of doing benefit analysis may be high. This calls for proper planning for it. It should be done exhaustively so as to repay the money used in calculating it. The U.S government should put aside enough money that will be used in analyzing the cost benefit of the rail system.
In the analysis of the viability of the system SWOT analysis was used. Considering the capability of the system was worth the budget created for it. Checking whether the use of the project by the company would make it have a competitive advantage. The experience, knowledge of the users is considered whether they would be able to use the system. The project also was analyzed for weaknesses. Project had a limited budget. In SWOT analysis project opportunities is also analyzed. The way the end users responded to the new product; the end users would like the rail system as it fastens the mode of traveling from one station to the next. Adoption of the system could support core business opportunities. Threat is another major factor that should be analyzed. There could be a possibility of negative publicity if the project was adopted.
Rail system being a public investment, the analysis involve a great measurement of complexity, as it is required to determine the greater variety of costs and benefits not only to the company involved or the government , it is to the whole nation. This calculation the entire social costs and benefits must be included. This may include the costs which are outside the transaction; these are not usually considered in private companies. A very complex calculation which involves calculus in terms of money has been introduced to help analyzing the cost benefit. Analysts explain that analysis is part of the very idea of decision-making.
An investor may not be sure on the investment to take when he has so many options to choose from. This analysis will help him in choosing the best option. The analysis will help in telling the advantage of taking the rail system and also pointing out the disadvantages. It will then evaluate whether its advantages outweighs its disadvantages. If it outweighs then the system will be adopted.If the disadvantages outweigh the advantages then the system will not be taken. In calculating the cost or the expense that were used in the construction of the rail system, operational cost, recurring cost and the non recurring cost were used.
Operational cost is the cost of all the expenditure and the expected expenditure in maintaining the high speed rail system. The labor cost which is used in putting up the rail system. Recurring cost are the costs that are supposed to be paid regularly. This may include things like taxes. The non –recurring costs are those that are paid once in a lifetime of the system. The capital price of the high speed rail system is calculated. This may include security and the risks of the system. This can be calculated as:
- Es This represents the estimate security return.
- Rf This represents the estimated returns without risks.
- βs Represents the security risks.
- RM the actual return.
- (RM-Rf) Represents the risk premium.
Return on investment was also used in analysis. Return on investment is the calculation on the profitability of the investment. It is utilized in the determination of the proficiency of the type of investment which is to be made. To calculate Return on investment, the income earned from the investments is related to its cost and expressed as a percentage. Return on investment is very common because it is simple and versatile. Investments should be counter checked so as to validate whether is positive or not so as to determine if it’s favorable if its executed (Byrd 201).
This calculation can be applied to any situation depending on what you include as returns and costs. This analysis just tries to get the profitability of the investment. In or project; we compare two rail systems, the old and the new by dividing the revenue that can be generated by each webpage. These were compared using different return on investment calculation. This method is flexible so it can be manipulated to fit any type of application. To use this method well one must understand the inputs.
It is calculated as shown below
ROI = (Return from an investment – the investment expenses)
The investment expenses
The cost of investment of the rail system will be determined whether it will be undertaken or not. The projects with a high investment will not be taken. If the rail system ROI is high it should be undertaken. Although the cost benefit document has various assumptions. It is generally accepted as a better way of analyzing the project. The assumptions made on the rail system project are that it has no environmental disadvantage. These assumptions can later be considered by the use of RIS.
Environment The fishbone diagram is shown below.
Risk management matrix was used to identify the non-financial implications that could arise as a result of this project.One of the methods was the fish bone. The main issue that the fish bone diagram seeks to check is the quality of problem that could be encountered in the development and use of the project. The things which were analysed include Human being. How supervision is to be done so as to avoid the risks from arising. The way the developer relate with the users, the management and the executive. Poor relation between the developer and the user may result to a poor project (Brent 127.
Measurement is another important issue. The quality of equipment being used should be in good condition to avoid it failing in the middle of the process. This equipment should be tested regularly and the faulty ones are fixed or replace. Another thing is the environment. The working environment should be conducive for the developer. The resulting project should as well be useful to the end user
The resources used were also considered. The resources used were economically viable. It did not exceed the benefit that resulted from the use of the system. The process used is another issue. The process used was of good design so as to avoid using too many resources. The machines used were in a good condition. The old and the worn out machines were replaced the good ones.
Another risk management matrix used is the mind map. Mind map is the representation of words and ideas in diagram. They are used to visualize and classify ideas. It helps in decision making and problem solving.The elements in the mind map according to the importance of concepts. The goal of this grouping and branches is to give a representation of semantic. Mind map enhances brainstorming by the use of graphs. This encourages understanding the concept hence understanding the project. The developer on the other hand understands the ser requirement. The difference between the mind mapping and concept mapping is based on the link of the varied prototype while mind mapping denote the affiliation with central governing perception.
The rail system is a necessity in the country as its enables most participants to have its services positively. The rail system will enable the city or the urban center to be free from any type of congestions either that of the human being or the vehicles. The human beings will bring the congestions when all of them are after the minimal transport system in the city. The human beings will be able to get accessed to the rail at their own time of transit hence its make it more convenient to their traveling. The rail system also will eliminate the unnecessary vehicles in the city since all the users will be able to utilize the rail system in its means of transportation.
Apart from the congestions, the rail system will be of great benefit since it will eliminate the high rate of carbon release to the environment. Carbon is a very dangerous gas to the environment hence it will be able to be reduced hence the issues relating to the pollution of the environment will be minimal. This will be able to increase the abilities of the environmentalist to instill many others effective ways of eliminating the carbon (Crouhy 147).
The issues related to the parking costs will be eliminated. This is because the public will not be able to purchase the private vehicles hence there is reduction in the number the number. The country or the urban center will be utilizing the transit other than the automobile means. This means that the people will be able to save on the packing cost since they will not be traveling using them. There are a lot of benefits which are being attained in the utilization of the transit rail system as the parking savings. There is the issue of the government being able to run its activities well without having to think of giving the subsidies on the parking costs.
The government will not spend time establishing policies which are to be used in the implementation of the parking centers. There is also creation of space which will be utilized in coming up with buildings for commercial purposes in the city. The buildings are of great economic benefits hence the rail system is very important and a service which should not be ignored in the urban centers. It’s cost effective to have it in place. The rail system also will benefit the lot in reducing the effects on the motorist who would want to move faster without any interference in the city.
The whole society will be able to benefit from the rail system in place. This is because the system has established itself in other countries to be the most reliable means of transport especially the developed nations. The less developed nations and the other major urban centers in the developed countries needs to utilize the rail system since it offers them great benefits than the costs. The project should be of great interests to the other centers since they can derive the benefits which are very important and necessary to be attained in the society. The rail system as has been evaluated before offers the commuters a lot of benefits than the costs which can be incurred in the center (Adler and Posner 235).
The commuters also will be able not to participate in the strike in the country since they are not in a position to complain in the services which they get from the rail transport system in the center. The commuters will be able to have the savings associated with the normal transport system since they are very expensive to use. The automobile services are very expensive hence there is a lot of savings which the people will be making hence the economy will grow in the country. This is because the savings people make are directly related to the investments which are being made in the country.
The gross domestic product in the country also will be increased as a result of the introduction of the rail system. The rail system is therefore very important and the most economical means of transport to be used in the country in all the centers.
There are more benefits in the use or the implementation of the rail system. There is therefore need for the urban centers to set the most reliable means of transportation the urban centers. There will ease in controlling and regulation of the transport sector in the centers. This means also that the tax collected are directly related to the transport system in the center hence no tax evasions. The rail system for urban centers is a viable project which needs to be pursued in the country. The system will benefit all the users and it’s cost effective to implement than to have other forms of transports in the center. It’s therefore advisable to implement the rail system project.
Works cited
Adler, Michael and Edward Posner. New foundations of cost-benefit analysis. Cambridge: Harvard University Press, 2006.
Brent, Richards. Applied cost-benefit analysis. 2nd ed. Cheltenham: Edward Elgar Publishing, 2008.
Byrd, Ricardo. Using public transportation to reduce the economic, social and human costs of personal immobility. Wales: Transportation Research Board, 2008.
Crouhy, Michel. The essentials of risk management. New York: McGraw-Hill Professional, 2006.
Gomez-Mejia, Loura and Godfrey Milkovich. Compensation and Benefits. New Jersey: Books on Demand, 2007.
Miller, LeRoy. Economics today: The macro view. 14th ed. New York: Pearson Education, 2008.
Sheldon, Nancy and Robert Brandwein. The economic and social impact of investments in public transit. London: Lexington Books, 2006.
Tracy, Tonny and John Alf. Small Business Financial Management Kit for Dummies. New Jersey: For Dummies, 2007.