TOOLS FOR ASSESMENT OF DEVELOPMENT THROUGH STRUCTURAL FUNDS PROJECTS – THE COST-BENEFIT ANALYSIS
TOOLS FOR ASSESMENT OF DEVELOPMENT THROUGH STRUCTURAL FUNDS PROJECTS – THE COST-BENEFIT ANALYSIS

Summary/Abstract: The accession to European Union represents for most of the former communist countries a huge opportunity. Or at least in this way sounds the opinion of these countries leaders. The transformation of this potential in reality depends on how the Structural Funds will be absorbed. The point is not only about absorption percentage of this funds but even more important about the quality of the submitted projects. The assessment of these projects is focused on the economic and social efficiency of these public interventions. At the local authorities level the interest is regards more the socio-economic development than the welfare of the individual beneficiary of the project. This is the reason why the cost-benefit analysis represents the main instrument for assessing and selecting the projects. This analysis takes into account both the financial input and output flows and the elements that distort them or that are ignored in a larger socio-economic context. There are added indirect taxes, distortions, relative to the market prices, of the input and output prices, and externalities – positive and negative involved by the project. A distinctive element, due to the life time of the investment, and diversity of the aspects it has an impact on, is represented by the risks introduced by the imprecise estimation of the input variables. Risk analysis has several steps: identification of critical variables through sensitivity analysis, determination of optimistic and pessimistic situations and finally the probability analysis (realized in this paper using Monte Carlo method) which allow us to determine the expected values of Net Present Value and Internal Rate of Revenue (including their distribution).

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