Guidelines for Cost-Benefit Analysis

The Department of Transport oversees a portfolio of infrastructure and major projects with a total estimated investment in excess of $20 billion. The value of this infrastructure to the State emphasises the critical importance of the project selection process, effective implementation and delivery and on-going management.

The department uses the Guidelines for Cost-Benefit Analysis (PDF, 570 KB, 57 pp.) as an important tool for evaluating proposed capital projects.

The guidelines are consistent with the National Guidelines for Transport System Management in Australia available on the Australian Transport Council website and should be read in conjunction with them.

An example of the Cost Benefits Analysis workbook (PDF, 87 KB, 22 pp.) is also available.

For a copy of the Excel file please contact the department on (03) 9655 6202.

Discount rate for appraisal of projects for the 2011-12 Victorian Budget

In preparing economic cost benefit appraisals for possible projects for the forthcoming Budget cycle, please use the real discount rate of 5 per cent per annum.

For transport projects there is no need to add an extra risk premium, as the 5 per cent incorporates this already.

Transport project proponents requiring a nominal discount rate should use 7.7 per cent.

Projects with significant Information and Communication Technology (ICT) and enterprise software components will require a higher customised discount rate – please contact us.

If there is a substantial change in economic conditions, the Department of Treasury and Finance may amend the 5 per cent real discount rate, in which case we would advise all project proponents.

Please direct any queries to the department's Senior Economist on (03) 9655 3347.