3. Obtain the separable cost for each user (X) by deducting the project cost with
user (X) excluded from the total project cost.
4. Add up the separable costs for different users (X).
5. Calculate the total joint costs to be shared among all beneficiaries, by deducting
the total separable cost from the total project cost.
The aim of cost attribution is to apportion the joint costs among the project
users, according to the quantum of benefits they receive from the multipurpose
project. The steps for costs distribution are:
6. Determine benefits for each purpose (X) (this is carried out as part of the
economic analysis).
7. Calculate alternative costs for each user (X), which is the cost of a single
purpose project providing the same benefit to user (X).
8. Compute the justifiable cost, which is the lesser of the two values. It also
characterises the maximum payment allocated to a specific purpose.
9. Calculate the remaining justifiable costs ¼ justifiable cost minus the separable
cost.
If the separable cost is greater than the justifiable cost, the user should
implement a single purpose project.
10. Calculate the apportionment of the remaining justifiable costs. This is the
percentage of the remaining justifiable cost allocated to each user.
11. Distribute joint costs. Individual joint costs are computed by multiplying the
total joint costs by the percentage shares calculated in step 10.
12. The total cost contribution by each user is the sum of the separable cost
(as determined in step 3) and the distributed joint cost (as calculated in step 11).
19.6.3 The Alternative Justifiable Expenditure Method (AJE)
The AJE method, is a SCRB method, suitably modified, to be used when the
determination of the imputed separable costs is not possible, but nevertheless
satisfying all other data requirements. Instead of using the separable cost for each
purpose/function (X), the method only uses the alternative cost to propose a cost
distribution meeting the same target. The steps are similar as in the SCRB method,
except for the imputed separable costs, as below:
1. For each purpose (X) provided by the facility (irrigation, hydropower, flood
control, etc.), determine the benefits.
2. For each purpose (X) provided by the facility, determine the alternative costs of
single-purpose projects that will result in the same benefits as the multi-purpose
facility will produce for each of those purposes.
3. Ascertain the specific costs.
4. For each purpose provided by the facility, subtract the specific costs from the
lesser of the benefits or the alternative single-purpose costs, to obtain the
remaining justifiable cost for each purpose/function (X).
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19 Cost Allocation for Infrastructure Implementation
user (X) excluded from the total project cost.
4. Add up the separable costs for different users (X).
5. Calculate the total joint costs to be shared among all beneficiaries, by deducting
the total separable cost from the total project cost.
The aim of cost attribution is to apportion the joint costs among the project
users, according to the quantum of benefits they receive from the multipurpose
project. The steps for costs distribution are:
6. Determine benefits for each purpose (X) (this is carried out as part of the
economic analysis).
7. Calculate alternative costs for each user (X), which is the cost of a single
purpose project providing the same benefit to user (X).
8. Compute the justifiable cost, which is the lesser of the two values. It also
characterises the maximum payment allocated to a specific purpose.
9. Calculate the remaining justifiable costs ¼ justifiable cost minus the separable
cost.
If the separable cost is greater than the justifiable cost, the user should
implement a single purpose project.
10. Calculate the apportionment of the remaining justifiable costs. This is the
percentage of the remaining justifiable cost allocated to each user.
11. Distribute joint costs. Individual joint costs are computed by multiplying the
total joint costs by the percentage shares calculated in step 10.
12. The total cost contribution by each user is the sum of the separable cost
(as determined in step 3) and the distributed joint cost (as calculated in step 11).
19.6.3 The Alternative Justifiable Expenditure Method (AJE)
The AJE method, is a SCRB method, suitably modified, to be used when the
determination of the imputed separable costs is not possible, but nevertheless
satisfying all other data requirements. Instead of using the separable cost for each
purpose/function (X), the method only uses the alternative cost to propose a cost
distribution meeting the same target. The steps are similar as in the SCRB method,
except for the imputed separable costs, as below:
1. For each purpose (X) provided by the facility (irrigation, hydropower, flood
control, etc.), determine the benefits.
2. For each purpose (X) provided by the facility, determine the alternative costs of
single-purpose projects that will result in the same benefits as the multi-purpose
facility will produce for each of those purposes.
3. Ascertain the specific costs.
4. For each purpose provided by the facility, subtract the specific costs from the
lesser of the benefits or the alternative single-purpose costs, to obtain the
remaining justifiable cost for each purpose/function (X).
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19 Cost Allocation for Infrastructure Implementation