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Iceberg on Icelake in Iceland
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My report on reducing the carbon footprint of a 1920's home - Impact Overview

 

Section 4 -- Impact Overview

 

The normal way of measuring the effectiveness of an expenditure or investment in a potential project is to look and what you get for your money. Traditionally, it was measured in hard cash, how much money will it cost and how much money will I get back, as savings or returns. Return on Investment, or ROI. Slowly the equation definition has expanded to include other benefits, not just hard cash. Soft benefits were also included. Those soft benefits, which could be anything from safety to additional jobs created,  are translated into monetary terms to allow the equation to function. A road job (Road Investment Strategy) with a ratio of 5.7 is more likely to get funding than one with a ratio of 2.0. 

Value for Money (VfM)
DfT classifies any investment as having very high VfM if the Benefit Cost Ratio (BCR) is greater than 4.0, high VfM if the BCR is between 2.0 and 4.0 and medium VfM if the BCR is between 1.5 and 2.0. Low VfM is represented by a BCR between 1.0 and 1.5 and poor VfM occurs if the BCR is less than 1.0. For projects with a very high and high VfM classification there is a very strong investment case.

In terms of the environment, the measurement tends to be referred to as the Environmental Impact of a Project or Activity. Again, as a narrow criteria, a lot of projects have a negative impact on the environment. Trees have to be felled, or newts moved. However, if you take in all the factors, the overall impact may be positive, justifying the smaller loss for the greater gain. HS2 is an example of this.

Accordingly, this section refers to impact as apposed to Cost Benefit or Value for Money, but it deals with the same issues. Is it worth spending my money on … to reduce my homes carbon footprint. 

 

Cost Benefit Analysis

 

Cost Benefit Analysis

 

Normally a project goes through some stages and at each stage there should be some form of Cost Benefit Analysis before going to the next stage.

You can either take that at face value and move on or click to expand a quick course on Project Management. I have been involved in Projects of one type or another for most of my career, so it could be a tedious off topic diatribe or quite informative, depending on your perspective.

 

Project Controls Overview

Cost Benefit is also known as Benefit Cost Ratio. The latter puts the words in the same order as the formula, but it is the same process. What will be the Benefits that I get out of spending the money, Cost.

Sometimes the straight cash only Cost Benefit Analysis gives a very poor return, but adding safety, deaths avoided, economic benefits, environmental benefits, social benefits, and reputational benefits, can change a poor investment into an essential investment.

For this exercise I will not be applying the strict investment rules, but a looser, perhaps set of guidelines.

Some projects will be done just because I want to, with no reference to Cost Benefit Analysis at all. Such as the Greywater Recycling and the Smart Home. 

Whilst other projects will be rejected because the potential payback period is excessive, otherwise said as the positive impact is to small to be worth the effort and expense, unless it contributes to a larger gain when used to facilitate another project.

The Cost Benefit Analysis can also help to provide the correct order of doing projects, with those with the greatest impact done first. However, that is not the only parameter for deciding the order.

 

 


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