Reference no: EM132197240

Case 6:

Although the use of mobile communication devices by motor vehicle drivers is a dangerous practice, studies have shown that up to 80% of motor vehicle accidents in in Bubble Country are caused by this practice. Surveys have shown that even though drivers recognize that this is a dangerous practice, they cannot resist the temptation of using the devices. The surveys also found that individuals who regularly use their mobile devices while driving do not consider fines to be deterrent. The percentage of accidents attributable to driver distraction caused by the use of mobile communication devices has been increasing by 2% per year. A risk assessment has shown that the risk of having an accident for a driver using their mobile devices is 15%. Public opinion research suggests that the public is more concern about this issue than drinking and driving and would like the government to address it. Last year there were 20,000 motor vehicle accidents attributed to driver distraction in Bubble Country because of mobile communication device use.

In order to address the issue, the government of Bubble Country is considering a policy that will force car makers to install remote equipment in all cars to ensure that mobile communication devices cannot be used when driving. Such equipment is already available and it will cost car makers $12 to install such equipment in each car. The policy will also make it illegal to use a mobile communication device while driving and individuals found doing this will be given a fine of $800.

Part I:

Based on what you’ve learnt from this course, and your understanding of project evaluation,

A) Describe or summarize what you understand the issue to be

B) What do you think should be the objective and sub-objectives?

C) Do you see a rationale for public sector involvement? Explain

D) Discuss the potential benefits? Be comprehensive

E) Discuss the potential cost? Be comprehensive 

F) Are there any external impacts? Explain

G) Identify the stakeholders and describe who are the winners and losers?

Part II:

With the information above and any additional information you can find and your own reasonable assumptions, undertake a rough cost benefit analysis

A) How will you quantify and monetize all your identified

1) Costs

2 ) Benefits

3) What time frame will you use and why?

B) With a spreadsheet estimate 

1) The Present Value Cost – Economic

2) The present Value Benefits – Economic

3) Discuss any qualitative costs and benefits

C) With the following criteria, determine whether the project is economically feasible

1) Net Present Value Criteria

2) Benefit Cost Ratio