19.3.5 Allocation of Cost
Allocation of cost is the apportionment or sharing of project cost among the various
purposes or functions or agencies that the project serves.
Allocation of project costs may be required for various administrative reasons, so
as to impute expenses to different agencies or to enable cost recovery from the
different consumers.
19.3.6 Alternative Cost
The alternative cost for each purpose (X) is the lowest cost of achieving the same or
equivalent benefits in a single purpose structure that will accrue to each purpose (X)
in the multipurpose structure.
The alternative considered should be real in the sense that it can be built, and, if
built, would produce equivalent benefits. It may, however, be entirely different in
physical plan. Thus a steam powered generator might be considered as an alternative
to a hydropower plant, for the same benefits. For a water project, it is possible to
consider how the same water supply could be directed towards irrigation if the
structure being assessed had not been constructed.
Thus, single-purpose alternatives should be considered on the assumption that no
irreversible commitments have already been made during planning.
19.3.7 Alternative Justifiable Cost (Expenditure)
The cost of obtaining an equivalent benefit from the most economical alternative
single purpose project available, provided that such cost does not exceed the market
value of the service rendered.
19.3.8 Justifiable Cost
The benefit accruing to a particular purpose or the cost of an alternative project,
whichever is lower. A cost exceeding the benefits could not be reasonably justified!
19.3 Basic Definitions Relating to Cost Allocation
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Allocation of cost is the apportionment or sharing of project cost among the various
purposes or functions or agencies that the project serves.
Allocation of project costs may be required for various administrative reasons, so
as to impute expenses to different agencies or to enable cost recovery from the
different consumers.
19.3.6 Alternative Cost
The alternative cost for each purpose (X) is the lowest cost of achieving the same or
equivalent benefits in a single purpose structure that will accrue to each purpose (X)
in the multipurpose structure.
The alternative considered should be real in the sense that it can be built, and, if
built, would produce equivalent benefits. It may, however, be entirely different in
physical plan. Thus a steam powered generator might be considered as an alternative
to a hydropower plant, for the same benefits. For a water project, it is possible to
consider how the same water supply could be directed towards irrigation if the
structure being assessed had not been constructed.
Thus, single-purpose alternatives should be considered on the assumption that no
irreversible commitments have already been made during planning.
19.3.7 Alternative Justifiable Cost (Expenditure)
The cost of obtaining an equivalent benefit from the most economical alternative
single purpose project available, provided that such cost does not exceed the market
value of the service rendered.
19.3.8 Justifiable Cost
The benefit accruing to a particular purpose or the cost of an alternative project,
whichever is lower. A cost exceeding the benefits could not be reasonably justified!
19.3 Basic Definitions Relating to Cost Allocation
541