Conclusions

The previous chapters have outlined and discussed the main features of project analysis, particularly relating to the economic analysis of projects. This has included a full discussion of the ways in which economic prices can be applied in project analysis using different numeraires, as well as broader issues relating to the environmental and distributional effects of projects. The focus has been to combine theoretical discussions with practical illustrations. In many instances there remains a major gap between research studies which develop best-practice techniques drawn from the academic literature and what is feasible in practical project applications. It is important to stress that project economic analysis was developed principally to avoid accepting projects that were not economically justified. This included cases where financial analysis would approve the wrong projects, for example because they were financially attractive simply because of the protection from imports offered to domestic producers, or financially unattractive because the environmental benefits they provided did not generate revenue for the project. In all cases, the purpose is to arrive at better project decisions and to improve the effectiveness of investments, rather than offering rigorous technical solutions to the problem of valuation of project effects. In short, project economic analysis is intended to offer a pragmatic solution to the question of whether the benefits of a project are an adequate return on its costs. Project analysis has continued to develop in the last decades but at the same time there remain limitations also. This concluding chapter outlines some of the remaining limitations whilst referring to the more recent developments covered in the preceding chapters.