Road Projects | Stratecon

Economic Feasibility / Cost Benefit Analysis

Cost Benefit Analysis is the definitive method for determining whether a project should proceed on economic grounds. A project is deemed economically efficient if the societal benefits outweigh its costs.

At StratEcon, Cost-Benefit Analysis (CBA) forms a cornerstone of our work, providing a rigorous, evidence-based assessment of whether a project is economically efficient. This type of analysis is crucial and it is one of the key criteria used by the South African National Treasury when determining which projects to support. It is also a key assessment prescribed in its manual for assessing public private partnerships (PPP) or whether infrastructure projects should be supported through its Budget Facility for Infrastructure (BFI).

CBA involves quantifying all costs and societal benefits associated with a project over its entire lifespan. These are then converted into economic values using shadow pricing and discounted to present values using an appropriate social discount rate. If the total discounted benefits exceed the total discounted costs, the project is considered economically efficient. The outcome of the analysis is the reporting of a benefit cost ratio (BCR), the project net present value (NPV) and economic internal rate of return (EIRR), offering clear metrics for decision-makers.

StratEcon conducted its first CBA in 2003, evaluating the proposed relocation of Durban International Airport from south of the city to La Mercy. We later refined our methodology in a study on pollution reduction initiatives, an analysis that was published in a leading international journal and continues to be cited in academic research.

Since then, we have undertaken numerous CBAs across sectors, and the method has become a defining aspect of our expertise. Our clients rely on us for robust, credible analyses that meet both national and international standards.

Some of our Larger Projects and Clients are:

The South African National Roads Agency (SANRAL), for road upgrade and alignment options in Gauteng, the Western Cape, the Eastern Cape and KwaZulu-Natal.
The Gautrain Management Agency for the post 2026 Gautrain operations and its application for BFI funding.
uMngeni Water for the public private partnership development and operation of biodigesters at its Darvill wastewater plant.
The eThekwini Municipality for new water production facilities at its Northern and KwaMashu wastewater treatment plants.
The Department of Telecommunications and Postal Services for the economic feasibility assessment of SA Connect, broadband infrastructure connecting government institutions across South Africa.
The Zambezi River Authority for the development of the Batoka Gorge Hydroelectric power plant.
The Zimbabwe Rural Electrification Agency for developing the rollout of electricity solutions to rural villages across the country.
The Namibian Electricity Control Board for the rollout of low-income household support tariffs
The Mauritius Road Development Agency for road freeway upgrade and finance options.
PRASA for the Blue Downs Rail link in Cape Town.
The Saldanha Bay Industrial Development Zone for new port infrastructure.
The development of the Atlantis Special Economic Zone.
The Mozambican Roads Administration for the benefits of development and tolling of the EN4 between Maputo and Ressano Garcia.
The City of Johannesburg for ex-post and ex-ante evaluations of the Rea Vays Bus Rapid Transit system.
The Lesotho Roads Department for the maintenance of the A1 between Masianokeng and Mafeteng.
The Cape Town International Convention Centre for expanding its operations.