61887 .c - 8 l"- ... e ,.... as N . CO ED - 00- 0) U") ~ 't1 0 tn 11 "i: 0 0 ~ ~ 0 (!) •, tf.) 0 G) .c ~ 0 t- ... O c:: .- ... 0 (.) ::s -C .... 0 ..... -c:: • .. Table of Contents PREFACE .......................................................................................................................................................................•..... It TABLE OF CONTENTS.•....•..•••............................•.....................................•.•...••....•.................•.............................................vi CHAPTER I.COSTAB'S TABLES AND DiViSiONS .......................................................................................................... 1 1.1 COSTAB'S TABLES - WHAT COSTAB PRODUCES FOR yOU.......................................................................................2 1.2 COSTAB'S DIVISIONS ORGANIZE YOUR DATA ........................................................................................................ 4 1.3 ORGANIZATION OF COSTAB'S REQUIRED DiViSiONS.................................................................................................. 5 CHAPTER 2. SIMPLE CASE STUDY: TABLES, DATA AND INPUT INSTRUCTIONS ...............................................7 2.1. COSTAB'S BASIC TABLES .......................................................................................................................................... 1 I 2.2. DATA STRUCTURED FOR COSTAB.............................................................................................................................23 2.3. GEITING STARTED •••••.•••••••••.••..•.•••••••.•••.•••••••..•••.•.•••.•••••.••...•.•.••..•.••.....•••••.•••....••.,••••.•......••••••.•••.....••.•••..••.•...••.••.•. 35 2.4. STEP-BY-STEP INSTRUCTIONS FOR DATA ENTRY ......................................................................................................36 2.5. SAMPLE OUTLINE FOR THE CASE STUDy.................................................................................................................99 CHAPTER 3. ENTERING DETAILED COSTS, FINANCING AND PROCUREMENT.............................................. 107 3.1. DATA STRUCTURED FOR COSTAB........................................................................................................................... 111 3.2. STEP-BY-STEP INSTRUCTIONS FOR DATA ENTRY .................................................................................................... 133 3.3. FINANCING, PROCUREMENT AND LEGAL AGREEMENT ACCOUNTS...................................................................... I 73 3.4. SAMPLE OurLINE...........................................................................................................,•...•.••••••••....••.•....••........••••• 195 CHAPTER 4. PRINTING COSTAB'S REPORTS ............................................................................................................. 221 4.1. GETTING READY TO DISPLAY REpORTS ................................................................................................................224 4.2. PRINTING REPORTS FOR SUMMARY DIVISIONS .....................................................................................................229 4.3. PRINTING REPORTS FOR FINANCING AND DISBURSEMENT ................................................................................... 251 4.4. PRINTING REPORTS FOR PROCUREMENT...............................................................................................................266 4.5. PRINTING REPORTS FOR DETAILED TABLES..........................................................................................................270 . .. 'II • .. • .. Preface Costab is designed to help project analysts organize and analyze project costs. It perfonns the following tasks: • Calculates physical and price contingencies, taxes and foreign exchange. • Produces detailed and summary project cost tables. :D rr! • Produces financing plans and disbursements profiles. C'J ~' r-,'~ ) ;"'i~! ....:-... - t• • Produces procurement tables. '~ c~~ .......... ! ;l .." r·· • Produces a suggested loan allocation table. 2' 1''::> = Z = :; ,-,"I / r~', ;);;' _.. j • Shows project costs by implementing agency and project area. i~q :[1 • Converts financial costs to economic costs for economic analysis. • Stores financial and economic data in Excel for further processing. - 111 ­ • - IV- Who Should Use Costab Project analysts - engineers, agronomists, architects, educators, financial analysts, and economists should use Costab to analyze and summarize project costs. This work should begin early in the project design and preparation process. Who Should Use the Tutorial Although the Tutorial is written for users who have no previous experience using Windows, users who have never used Windows before will find it useful to work through the Windows Tutorial before trying to use Costab. This Tutorial shows you how to use Costab, i.e., how you enter data into a computer. It is intended for analysts who are familiar with the principles of project design, or for support staffwho enter cost data into Costab. Users who are completely new to project work should take the course entitled Principles ofProject Design and Costing before using Costab. How to Use the Tutorial The Tutorial assumes that the reader is familiar with, or is working with a project analyst who is familiar with the principles and methodology for designing and costing a project. A good understanding of the principles of project costing is necessary in order to organize cost data correctly before you enter then into Costab. If you encounter concepts about which you are uncertain as you work through the Tutorial, you should consult with an experienced project analyst who is well versed in the principles of project costing. The case studies in this Tutorial demonstrate how to prepare and enter data into Costab: • Chapter 1 - provides an overview of Costab. It presents the structure of Costab as a set ofinterrelated "divisions", • Chapter 2 - presents an example that demonstrates how to calculate costs for a simple project. It shows how to structure cost data, how to enter the data into a computer, and how to use Costab to produce the basic cost tables required for project preparation and appraisal reports. • Chapter 3 - demonstrates alternative methods for entering detailed costs and shows you how to deal with financing, procurement, and loan allocation. • Chapter 4 - uses the data from Chapter 3 to demonstrate how to print all of Costab's tables. How to Obtain the Software To obtain Costab software, log onto the Costab Home Page. The direct Costab Home Page address is: http://www.worldbank.org/htmllopr/costab/contents.html This page contains instructions for downloading the Costab software from the Internet. How to Get Help Users who experience difficulties using Costab may request assistance by sending an email message to: gtemple@worldbank.org -v - - VI ­ Acknowledgments Costab was developed as part of the Operations Policy Department's program to improve the efficiency and effectiveness of project work done by the World Bank and its borrowers. The software builds on the original Costab developed in the early 1980's by Efren Ramiscal, Edward Lee and Gordon Temple. The development team for the Windows version consisted of Gordon Temple (World Bank) and Eric Ace, Jay Basen, Keith Buck, Jim Clark and Karin Verspoor (RDA Consultants Ltd., Hunt Valley, Maryland). Benton Rhee (Consultant) helped develop the Costab icon. Ms. Maria Dimatulac helped edit the Tutorial. Gordon P. Temple June 27, 2001 Chapter 1. Costab's Tables and Divisions This chapter provides a brief overview of Costab. The chapter describes the basic cost tables that Costab produces and discusses Costab's divisions. I. I COSTAR'S T ARLES - WHAT COSTAR PRODUCES FOR yOU ....................................................................................... 2 1.1.1 Detailed tables 1.1.2 Summary cost tables............................................................................................................................................. 2 1.1.3 Optional cost tables.............................................................................................................................................. 3 1.2 COSTAR'S DIVISIONS - ORGANIZE YOUR DATA ........................................................................................................ 4 1.2.1 Basic information division. .................................................................................................................................. 4 1.2.2 Prices contingencies division . .............................................................................................................................. 4 1.2.3 Summary divisions . .............................................................................................................................................. 4 1.2.4 Detailed tables division........................................................................................................................................ 5 1.2.5 Optional divisions and lists. 1.3 ORGANIZATION OF COSTAR'S REQUIRED DiViSiONS.................................................................................................. 5 - 2 - Chapter I: Tables and Divisions 1.1 Costab's Tables - What • Summarizing accounts the accounts into which detailed costs are aggregated for summary costs, Costab produces for you financing tables, procurement tables and the loan allocation report. This section summarizes the tables that Costab produces for In each detailed table, you may suppress the columns that you you. You will see example of these tables as you work through do not want to see. the case studies. In this chapter, you should just develop a basic 1.1.2 Summary cost tables feel for the types of tables that Costab produces. 1.1.1 Detailed tables Summary cost tables summarize the costs shown in the detailed tables: Detailed tables show constituent costs for project components distributed over the life of a project. Costs are shown in • Project cost summaries - show project costs broken columns, in both the local currency and in US dollars: down into local, foreign and total costs in the domestic currency and in US dollars. • Base costs - unit, phasing of quantities, unit costs and base costs. • Base costs by year show detailed base costs summarized by year. Physical and price contingencies, • Total costs including contingencies costs including foreign exchange and taxes are shown at the bottom of allowances for physical and price contingencies. the table. • Cost breakdown - detailed costs broken down into • Total costs by year show detailed costs including foreign exchange, local costs exclusive of taxes, and physical and price contingencies summarized by year. duties and domestic taxes. • Cost breakdown - aggregate base costs, physical • Financing - of expenditures shown by each financier contingencies and price contingencies broken down into and the government. foreign exchange, local costs exclusive of taxes, and duties and domestic taxes. • Cost parameters - assurnptions used for physical contingencie,s, foreign exchange and taxes. 1.1.3 Optional cost tables. - Notes - Financing plans. Financing plans show financing by disbursement accounts, project components, expenditure accounts, procurement accounts, and foreign exchange, local costs and taxes. Costab also calculates a disbursement profile for each financier. Procurement tables. Procurement tables show procurement elements by procurement method. In each cell they show the amount fmanced by a designated fmancier. Loan allocation table. The loan allocation table shows the loan amount for a designated financier broken down into allocated and unallocated loan amounts. Subaggregations. This table shows total project costs for subproject areas by implementing institutions. Costab can also produce each summary table for a group of detailed tables, an individual implementing institution or a specific subproject area. Physical aggregations. These tables show inputs aggregated on a physical basis. For example, a physical aggregation might show the overall number of different types of vehicles that the project requires each year. Another common use is to aggregate the total number of person months for different conSUlting skills that the project will require each year. '" ~ - 4 - Chapter 1: Tables and Divisions 1.2 Costab's Divisions - 1.2.2 Prices contingencies organize your data division The Price Contingencies division specifies the local and Costab consists of a set of divisions (data structures) that foreign inflation rates that Costab should use to calculate price organize the data that Costab uses to produce its reports. Each contingencies. division specifies a coherent set of data and relationships. For instance, the data used to produce a detailed cost table is contained in the Detailed. Setting-up divisions is the major work that you do when you use Costab. 1.2.3 Summary divisions 1.2.1 Basic information Summary Divisions outline the structure for project's components and the major type of resources that the project division will require: The Basic Information division consists of two Sections: • Components - outline the transformations that the project should achieve by the end of the project. They • Required information - describes your project. In describe what the project will establish, create, or this Section, you specify the name of the country and achieve. (You can also think of Components as the name of the project, which are used as the first two describing the objectives that the project will complete titles in all tables. You also specify the name of the by the time of its completion.) local currency, the first year of your project, the number of years for the project and the exchange rates that • Expenditure accounts - outline the major classes of Costab should use to convert costs in the local currency resources that the project will use. Examples of into US dollars. expenditures accounts that frequently appear in projects include civil works, vehicles, equipment, training, • Default scales - specify the scales that Costab should specialist services and departmental supervision costs. use to read and display data, for instance, whether (You can also think of Expenditure accounts as Costab should display data in thousands or millions of describing the major classes of inputs that a project will US$. This Section also specifies the number of use.) decimals that Costab should use to display unit costs and values. 1.2.4 Detailed tables division • Physical aggregations - specify the structure of how you want Costab to aggregate resources on a physical basis. This division produces a table that can tell you The Detailed Tables division outlines the constituent costs for how many staff months there are of different kinds of project components detailed over the life of the project. You consultants in your project. usually specifY at least one detailed table for each project component. You may specify as many detailed tables as your project requires. 1.3 Organization of Costab's 1.2.5 Optional divisions and required divisions lists Costab's required divisions contain the data that you must specifY to defme a project. The required divisions are organized Five optional divisions provide flexibility to Costab's basic as follows: structure: Basic information • Data generation - specifies data to be used Required information throughout the analysis. You use this division to specifY Default Scales frequently used unit costs and footnotes. Prices contingencies • Subaggregations - outline the structure of subproject areas and implementing institutions. This division Summary divisions produces a report that shows how much money is Components allocated to each ministry, province or state. Expenditure accounts Detailed Tables • Procurement - outlines the structure of procurement Detailed table 1 elements and procurement methods. This division Detailed table 2 produces the procurement tables. Detailed table 3 • Financing and disbursements - outline the structure of financing plans and the loan allocation report. Etc. c; . z -- o (t) til CJ', I Chapter 2. Simple Case Study: Tables, Data and Input Instructions This chapter presents a simple case study based on data drawn from the Dominican Republic: Haina Coal Terminal Project. The chapter's purpose is to help you understand Costab's basic structure. Please read through the case study solely to understand how Costab works, not to see if it can handle all the problems you will face with your project. You will learn about Costab's other capabilities in subsequent Chapters. This chapter has four sections. The first section presents the basic tables that Costab produces. The second section discusses how to structure cost data for input into Costab. The third section presents systematic instructions on how to enter the data. The fourth section shows you what the input data will look like after you have entered them into Costab. 2.1. COSTAB'sBASICTABLES .......................................................................................................................................... 11 2.1.1 Summary tables .................................................................................................................................................. 11 2.1.1.1 Project Cost Summary ...................................................................................................................................................... II 2.1.1.2 Expenditure Accounts by Components............................................................................................................................. 13 2.1.2 Detailed Tables .................................................................................................................................................. 15 2.1.2.1 The Coal Terminal ............................................................................................................................................................ 15 2.1.2.2 The Ash Disposal Facility ......................... :............................................................................... ,...................................... 17 2.1.3 Inflation and Exchange Rates Table ........ :........................... :............................................................................. 19 2.2. DATA STRUCTURED FOR COS1'AB•.••••••••..••••...••..•.....•••.••••.....••.•••••••.•....••..•..••••••..•••..•........•••.....••....•..•....•.•.•.•.......••23 2.2.1 Basic Inj'ormation............................................................................................................................................... 23 'i • -8- Chapter 2: Simple Case Study 2.2.1.1 Required infonnation ........................................................................................................................................................ 23 2.2.1.2 Default scales ...................................................................................................................................................................25 2.2.2 Price Contingencies 2.2.2.1 Price contingency items .................................................................................................................................................... 27 2.2.2.2 BandIes............................................................................................................................................................................. 27 2.2.2.3 Column headings .............................................................................................................................................................. 27 2.2.2.4 Exchanges rates ................................................................................................................................................................ 27 2.2.3 Components............................................................ ............................................................................................ 29 2.2.4 Expenditure Accounts......................................................................................................................................... 29 2.2.5 Detailed Cost Tables .......................................................................................................................................... 31 2.2.5.1 The Coal Tenninal ............................................................................................................................................................ 31 2.2.5.2 The A"h Disposal Facility ................................................................................................................................................33 2.2.6 Overall structure ................................................................................................................................................ 34 2.3. GETTING STARTED....................................................................................................................................................35 2.3.1 Hardware requirements ..................................................................................................................................... 35 2.3.2 So.fiware requirements........................................................................................................................................ 35 2.3.3 Installing Costab ..........................................................................................................................................._ 35 .... 2.3.4 Previous experience. .......................................................................................................................................... 35 2.4. STEP-BY-STEP INSTRUCTIONS FOR DATA ENTRY ......................................................................................................36 2.4.1 StartingCostab................................................................................................................................................... 36 2.4.2 Using the Outline. 2.4.2.1 Moving around the outline...............................................................................................................................................38 2.4.2.2 Expanding and contracting the outline .............................................................................................................................38 2.4.3 Entering Basic Information ................................................................................................................................ 41 2.4.3.1 Required infonnation ........................................................................................................................................................ 41 2.4.3.2 Default Scales ................................................................................................................................................................... 47 2.4.3.3 Saving your work ............................................................................................................................................................. 49 2.4.3.4 Gather and Explode .......................................................................................................................................................... 50 2.4.4 Price Contingencies 2.4.4.1 Opening the dialog box..................................................................................................................................................... 53 2.4.4.2 Most goods and services................................................................................................................................................... 55 2.4.4.3 Zero ......................................................................................................................... :........................................................ 57 2.4.4.4 Displaying the Inflation and Exchange Rates Report ....................................................................................................... 57 2.4.5 Optional Divisions ............................................................................................................................................. 58 2.4.6 Components........................................................................................................................................................ 59 2.4.6.1 Indents .............................................................................................................................................................................. 59 2.4.6.2 The Next Menu ................................................................................................................................................................. 61 2.4.6.3 Entering data for the Components ....................................................................................................................................63 2.4.7 Expenditure Accounts......................................................................................................................................... 65 2.4.7.1 Entering Cascaded Attributes ........................................................................................................................................... 67 2.4.7.2 Investment Cost Level ......................................................................................................................................................69 2.4.7.3 Rule for specifying a handle ............................................................................................................................................. 71 2.4.7.4 Entering data for a category with no items ....................................................................................................................... 71 2.4.7.5 Entering data for a category with items ............................................................................................................................71 2.4.7.6 Entering data for items .....................................................................................................................................................73 2.4.7.7 Using the Next Menu to add a category............................................................................................................................ 73 2.4.7.8 Finishing up the Expenditure Accounts division .............................................................................................................. 75 1.4.8 Detail Table/or the Coal Terminal .................................................................................................................... 77 2.4.8.1 The Detailed Table dialog box .........................................................................................................................................77 2.4.8.2 The Detailed Table Level ................................................................................................................................................. 77 2.4.8.3 The Investment Costs Level ............................................................................................................................................. 79 2.4.8.4 The Category Level ..........................................................................................................................................................81 2.4.8.5 The Item Level .................................................................................................................................................................83 2.4.8.6 Entering the remaining infonnation ................ :................................................................................................................. 85 2.4.8.7 Checking the infonnation ................................................................................................................................................. 86 1.4.9 Detailed Table/or the Ash Disposal Facilily ..................................................................................................... 89 2.4.9.1Describing the detailed table ............................................................................................................................................ 89 2.4.9.2Entering data for the first category ...................................................................................................................................89 2.4.9.3SpecifYing an optional handle .......................................................................................................................................... 91 2.4.9.4The Professional fees function..........................................................................................................................................93 2.4.9.5Footnotes .............. :........................................................................................................................................................... 95 2.4.9.6Looking at all data columns .............................................................................................................................................. 96 2.4.10 Printing all the tables at once. ........................................................................................................................... 97 2.4.10.1 Displaying all tables on the screen ...................................................................................................................................97 2.4.10.2 Displaying all tables on the printer ...................................................................................................................................98 2.S. SAMPLE OUTLINE FOR THE CASE STUDV.................................................................................................................99 1'\ - to . - 10- Chapter 2: Simple Case Study Dominican Republic Halna Coal Project Project Cost Summary % % Total {DR$ Mllllonl {US$ Mllllonl Foreign Base Local Foreign Total Local Foreign Total Exchange Costs Coal Terminal 45.2 218.9 264.1 3.2 15.6 18.9 83 86 Ash Disposal Facility 23.0 21.6 44.6 1.6 1.5 3.2 48 14 Total BASELINE COSTS 68.2 240.5 308.7 4.9 17.2 22.0 78 100 Physical Contingencies 8.4 34.7 43.2 0.6 2.5 3.1 80 14 Price Contingencies 7.7 25.2 32.9 0.6 1.8 2.4 76 11 Total PROJECT COSTS 84.4 300.4 384.8 6.0 21.5 27.5 78 125 Dominican Republic Haina Coal Project Expenditure Accounts by Components (US$ Million) Ash Coal Disposal Terminal Facili~ Total I. Investment Costs A. Land acquisition 0.5 0.5 B. Civil works Structures 11.5 1.3 12.9 Engineering design and supervision 0.9 0.7 1.6 Subtotal Civil works 12.4 2.1 14.5 C. EqUipment 11.0 0.8 11.7 D. Consulting services 0.4 0.4 0.8 Total PROJECT COSTS 23.8 3.7 27.5 Taxes Foreign Exchange 19.7 1.8 21.5 2.1.1.1 Project Cost Summary 2.1. Costab's Basic Tables The Project Cost Summary for this case study summarizes This Section reviews the basic tables that Costab produces. projects costs by what the project will create: After you have read the Section, you should have a good idea • A single-berth coal terminal capable of discharging of what the summary tables, the detailed cost tables, and the conventional ocean carriers of up to 30,000 DWT. inflation and exchange rates table look like. You should also have an idea of how the costs for this simple case study will need to be structured. • An ash disposal facility capable of accommodating the maximum solid waste expected to be produced over a The data for this case study are drawn from the Dominican period of 20 years. Republic: Haina Coal Project. The project is designed to reduce the cost of generating electric power by providing a The first table above shows these components as two items. It thermal plant with cheaper access to coal that is transported shows base costs in the local and foreign currencies. For each from a nearby port. The cost data are typical of the data that are component, the table breaks base costs further down into local required for an infrastructure project. and foreign costs. The bottom of the table shows physical contingencies and price contingencies for the entire project. 2.1.1 Summary tables The % Foreign Exchange column shows amount of foreign exchange for each component. Costab produces two principal summary tables that you use in project reports: The % Total Base Costs shows the distribution of baseline • Project Cost Summary costs. • Expenditure Accounts by Components _ 11 _ • • - 12 - Chapter 2: Simple Case Study Dominican Republic Haina Coal Project Project Cost Summary % % Total (DRS Million) (USS Million) Foreign Base Local Foreign Total Local Foreign Total Exchan.9.!. Costs Coal Terminal 45.2 218.9 264.1 3.2 15.6 18.9 83 86 Ash Disposal Facility 23.0 21.6 44.6 1.6 1.5 3.2 48 14 Total BASELINE COSTS 6[2 240.5 308.7 4.9 17.2 22.0 78 100 Physical Contingencies 8.4 34.7 43.2 0.6 2.5 3.1 80 14 Price Contingencies 7.7 25.2 32.9 0.6 1.8 2.4 76 11 Total PROJECT COSTS 84.4 300.4 384.8 6.0 21.5 27.5 78 125 Dominican Republic Halna Coal Project Expenditure Accounts by Components (US$ Million) Ash Coal Disposal Tenninal . Facility Total I. Investment Costs A. Land acquisition 0.5 0.5 B. Civil works Structures 11.5 1.3 12.9 Engineering design and supervision 0.9 0.7 1.6 Subtotal Civil works 12.4 2.1 14.5 C. Equipment 11.0 0.8 11.7 D. Consulting services 0.4 0.4 0.8 Total PROJECT COSTS 23.8 3.7 27.5 Taxes Foreign Exchange 19.7 1.8 21.5 ~ 2.1.1.2 Expenditure Accounts by Components The table shows how resource use is distributed amongst the components. Notice that only the Ash Disposal Facility requires The Expenditure Accounts by Components table shown at the land acquisition. The Coal Terminal requires most of the bottom of the page above provides an aggregate view of the equipment. resources that the project will use. This table allocates contingencies to each element of cost. The expenditure accounts for this case study consist only of The bottom of the table shows total costs, total taxes, and total investment costs. (The next case study will show you a project foreign exchange requirements for each component. that contains both investment and recurrent costs.) The costs of the resources the project will use are broken down into four The Expenditure Accounts by Components report appears as categories: the first table in the annex on project costs. • Land acquisition; - Notes­ • Civil works; • Equipment; and • Consulting services. The civil works category is broken down further into two items: • Structures; and • Engineering design and supervision. 11 • • - 14- Chapter 2: Simple Case Study Dominican Republic Halna Coal Project Table 1. Provide a Well.Managed Coal Terminal Detailed Costs Parameters lin %} Phy. Summa!} Divisions Base Cost {DR$ Million} Cont. For. Gross Expenditure Unit 99/00 00/01 01/02 02103 Total Rate Exch. Tax Rate Component Account I. Investment Costs A. Construct coal terminal Wharf structure amount 31.5 22.5 4.5 58.5 15.0 74.0 0.0 COAL STRUC Conveyor structure amount 45.0 22.5 3.6 71.1 15.0 85.0 0.0 COAL STRUC Subtotal Construct coal terminal 76.5 45.0 8.1 129.6 B. Provide equipment Ship unloader amount 9.0 45.0 8.0 62.0 15.0 95.0 0.0 COAL EO Conveyor equipment amount 27.0 27.0 4.5 58.5 15.0 85.0 0.0 COAL EO Subtotal Provide equipment 36.0 72.0 12.5 120.5 C. Supervise construction amount 4.0 4.0 1.5 9.5 15.0 50.0 0.0 COAL ENG D. Provide training to Improve coal operations amount 1.8 1.8 0.9 4.5 5.0 40.0 0.0 COAL CON_SER Total 116.5 122.8 23.9 0.9 264.1 2.1.2 Detailed Tables • Base costs ­ the phasing for each element of cost using prices that are expected to exist at the date of project negotiations. A detailed cost table shows the constituent costs for a component distributed over the life of a project. Usually there is one detailed table for each component. • Parameters (in %) - show the basic percentage assumptions. In this case study, physical contingencies Detailed cost tables serve two purposes. First, they allow are 15% for all costs except consulting services. specialists who prepare and appraise projects to review Foreign exchange percentages are different for each underlying technical assumptions - e.g., the percentages lil,le of costs. Gross tax rates are 0% for all costs. I assumed for physical contingencies, foreign exchange, and taxes. Second, for the manager who will be responsible for • Summary Divisions ­ specify the Component and implementing the component, a detailed table documents the Expenditure Account into which Costab should timing of activities planned for each component. aggregate each element of the detailed costs. In the table shown above, the component for all the costs will The base costs in this case study are taken from a feasibility be the Coal Terminal component. The expenditure study and therefore are shown on a highly aggregated, value account for the first two lines of the detailed costs will basis. be Structures; the expenditure account for the next two lines will be Equipment; and the expenditure account 2.1.2.1 The Coal Terminal for the last two lines will be Consulting Services. The detailed cost table for the Coal Terminal is shown above. This table shows the following columns: • Unit - the measure in which costs are calculated. In this simple case study, all costs are given in amounts. The next chapter provides a case study in which costs are specified on both a quantity and a value basis. I You should always carefully check the base costs and parameters in detailed tables to ensure that you have entered the detailed costs correctly and that they are sensible. 1" _ • - 16- Chapter 2: Simple Case Study Dominican Republic Haina Coal Project Table 2. Provide an Environmentally Sound Ash Disposal Facility Detailed Costs Parameters (in 0/0) Phy. Summary Divisions Base Cost (DR$ Million) Cont For. Gross Expenditure Unit 99/00 00101 01/02 02103 Total Rate Exch. Tax Rate Component Account I. Investment Costs A. Construct facility land acquisition amount 6.0 6.0 0.0 0.0 0.0 ASH LAND Earthwork and structures amount ,.., 1~.5 1.8 15.3 15.0 35.0 0.0 ASH STRUC Subtotal Construct facility --.-. 19.5 1.8 21.3 B. Install pipeline and equipment amount 7.0 1.8 8.8 15.0 83.0 0.0 ASH EQ C. Design and supervise construction Contract EBASCO Corp. to engineer facility /a amount 8.9 8.9 0.0 74.0 0.0 ASH ENG Supervise construction amount 1'14 0.4 0.2 1.1 15.0 50.0 0.0 ASH ENG Subtotal Design and supervise construction . - - -9.3 0.4 0.2 10.0 D. Train staff to operate facility amount _ __ 1.8 1.8 0.9 4.5 5.0 40.0 0.0 ASH CON_SER Total 35.8 -s.a 2.0 0.9 44.6 \a Engineering design work completed before project start. 2.1.2.2 The Ash Disposal Facility • Foreign exchange - the percentage is different for every element of cost. Detailed costs for the Ash Disposal component are shown above. This detailed table shows the same colwnns as the table for the Coal Terminal. • Taxes - are 0% for every element of costs. • Component - all costs will be aggregated into the Indents in the data structure. All tables have indents in Ash Disposal Facility component. their data structures - i.e. the places where you would indent in an Excel spreadsheet. In the table above, there are two • Expenditure accounts - notice that the expenditure indents of data: account is different for almost every element of costs. • First indent - the first indent consists of the four categories: Construct facility, Install pipeline and Footnote. Costab has appended /a to the first item in equipment, Design and supervise construction, and category C. This directs the reader's attention to the footnote at Train staff to operate facility. the bottom of the page. Costab automatically puts footnote references into tables for you. • Second indent - the second indent consists of the two items in the first and third categories. Rounding. In this case study Costab shows detailed costs rounded to the closest DR$ million with 1 place for decimals. Whenever you construct a table, you must first think about Had the data for the next to last line - Supervise construction how many indents of data the table will have. - been rounded to two decimal places, the table would have shown 0.45, 0.45, 0.17 and added them up to a total of 1.07. Parameters. Check the assumptions for each of the This would have appeared to be more accurate, yet the following: calculations would have been the same. When you encounter problems of accuracy, you should print the costs first in units. • Physical contingencies - vary more in this table. Then, you can choose the best scale - e.g., thousands, millions Notice that physical contingencies are set to 0% for - in which to show the results of Costab's calculations. Costab land acquisition and Contract EBASCO Corp. to actually does its arithmetic with 14 places of accuracy, which engineer facility. should meet the accuracy requirements for any project. - 17 - - 18- Chapter 2: Simple Case Study Dominican Republic Haina Coal Project Inflation and Exchange Rates Up to Up to Project 1!!aotiation Start 99/00 00/01 01/02 02103 Inflation (in %'s) /a Most goods and services Annual rates Local 0.00 0.00 10.00 9.00 B.OO B.OO Foreign 0.00 0.00 8.00 B.OO B.OO 8.00 Compounded rates Local 0.00 0.00 5.00 14.95 24.70 34.67 Foreign 0.00 0.00 4.00 12.32 21.31 31.01 Zero Annual rates Local 0.00 0.00 0.00 0.00 0.00 0.00 Foreign 0.00 0.00 0.00 0.00 0.00 0.00 Compounded rates Local 0.00 0.00 0.00 0.00 0.00 0.00 Foreign 0.00 0.00 0.00 0.00 0.00 0.00 Exchange rates (Local/Foreign) /b Most goods and services Rates actually used 14.00 14.00 14.00 14.00 14.00 14.00 Constant purchasing parity rates 14.00 14.00 14.13 14.33 14.39 14.39 % deviation 0.00 0.00 -0.95 -2.29 -2.72 -2.72 Zero Rates actually used 14.00 14.00 14.00 14.00 14.00 14.00 Constant purchasing parity rates 14.00 14.00 14.00 14.00 14.00 14.00 % deviation 0.00 0.00 0.00 0.00 0.00 0.00 \a Yearly values are within Each Project Year \b Yearly values are at Project Year Midpoints 2.1.3 Inflation and Exchange • Rates actually used the exchange rates that Costab actually uses to convert local currency costs into the Rates Table foreign currency costs. The Inflation and Exchange Rates table is shown above. The • Constant purchasing parity rates. These exchange table has two items: rates would adjust perfectly for the difference between local and foreign inflation. Adding the impact of • Most goods and services - specifies the inflation devaluation to the impact of foreign inflation would rates that apply to most goods and services. keep the relative costs of imported and locally manufactured goods constant and not affect local • Zero - specifies inflation rates for costs incurred prior purchasing decisions - hence the name "constant to the beginning of the project.2 purchasing parity rates". You should compare this set of exchange rates with the exchange rates that you instruct Costab to use.3 Rows. The rows of the table show: • % deviation. In this case study, the savings in US • Annual rates - the annual rates of inflation that the dollar forecast for the last two years of the project is user entered into Costab. small- only 2.72%. If the percentage savings that is forecast for your project is large, you should rethink the exchange rates that you have instructed Costab to use to • Compounded rates - the percentages for the inflation calculate your project costs. allowances that Costab compounds from the annual rates. Costab uses these percentages to price contingencies. 2 In this case study the project will retroactively finance the EBASCO Corp. engineering costs in Detailed Table 2 that occur before the project 3 If you actually want Costab to use these rates in its calculations, select starts. Use CPP Exchange Rates from the Options Menu. - 1Q ­ - 20- Chapter 2: Simple Case Study Dominican Republic Haina Coal Project Inflation and Exchange Rates Up to Up to Project .!!!9.0tiation Start 99/00 00101 01/02 02103 Inflation (in %'s) la Most goods and services Annual rates Local 0.00 0.00 10.00 9.00 8.00 8.00 Foreign 0.00 0.00 8.00 8.00 8.00 8.00 Compounded rates Local 0.00 0.00 5,00 14.95 24.70 34.67 Foreign 0.00 0.00 4.00 12.32 21.31 31.01 Zero Annual rates Local 0.00 0.00 0.00 0.00 0.00 0.00 Foreign 0.00 0.00 0.00 0.00 0.00 0.00 Compounded rates Local 0.00 0.00 0.00 0.00 0.00 0.00 Foreign 0.00 0.00 0.00 0.00 0.00 0.00 Exchange rates (Local/Foreign) Ib Most goods and services Rates actually used 14.00 14.00 14.00 14.00 14.00 14.00 Constant purchasing parity rates 14.00 14.00 14.13 14.33 14.39 14.39 % deviation 0.00 0.00 -0.95 -2.29 -2.72 -2.72 Zero Rates actually used 14.00 14.00 14.00 14.00 14.00 14.00 Constant purchasing parity rates 14.00 14.00 14.00 14.00 14.00 14.00 % deviation 0.00 0.00 0.00 0.00 0.00 0.00 \a Yearly values are within Each Project Year \b Yearly values are at Project Year Midpoints Column headings. The column headings indicate the inflation is only 8% per annwn, Costab will increase foreign . following: costs for most goods and services in the last year by 31.01 %. • Up to Negotiation - are the rates for the time that - Notes- elapses between data collection and negotiations. Because World Bank guidelines require that base costs be estimated using prices that are expected to prevail as of the date of negotiations, Costab adjusts base costs to allow for inflation and devaluation between data collection and negotiations. • Up to Project Start - is the inflation percentage for the time that elapses between negotiations and project start. The effects of inflation and devaluation within this period are included in price contingencies. • Annual rates - the remaining columns show the inflation and exchange rates used for each project year. Checking your data. Check the Inflation and Exchange Rates table to ensure that the rates that Costab actually uses for your project are correct and that the compounded inflation weights are sensible. Pay particular attention to the amount that will be added onto base costs to adjust for inflation. Even though annual inflation may be low, the impact of inflation after compounding can stilI be large. In this case study for example, even though foreign ") 1 - - 22- Chapter 2: Simple Case Study Basic Information Required Information Country O~RelJubUo Project tt~ Cocil.tProjed: Local currency OR$ Foreign currency US$ Input currency OR$ Begin year 99(00 Number of years Lf Exchange rates (Local/foreign) At data collection lLf At negotiations lLf At project-year midpoints lLf fOR 4 Default values Local Foreign Unit cost input scale 6 6 .............. Unit cost print scale 6 6 Unit cost decimals G G Value input scale 6 6 Value print scale .6 6- Value decimals 1 1 2.2. Data Structured for 2.2.1.1 Required information The required infonnation for this case study is shown above. Costab It consists of: The tables that Costab produces give a nicely organized view • Country name and project name - appear as titles at of the project, but real world data from which the tables derive the top of all tables. are less well ordered. When you use Costab, your first task will be to arrange data in a way that will allow you to enter them • Local and foreign currency labels - are used to rapidly into a computer. document currency data. This section discusses how the data for this case study are organized. You should use the approach presented 'here when • Input currency - indicates the currency in which you you organize your own data. By the end ofthis Section, you will enter most of your cost data. should have a good feel for the data structure for this case study. • Begin year - sets the first column heading for your tables. When your project spans two calendar years, you can use integer/integer - e.g., 99/00. Remember, tbe purpose of this Section is to show you bow data for tbis example are organized. Do • Number of years - sets the number of columns for not enter the data yet. Wait until Section 2.3, cost data. which instructs you bow to start Cos tab, and bow to enter the data. • Excbange rates - specifies the rates at which the local currency exchanges for US dollars. In this case study the exchange rate is assumed to remain constant 2.2.1 Basic Information throughout the life of the project. Note that 14 FOR 4 instructs Costab to repeat 14 for four years. The Basic Infonnation division consists of two sections ­ i.e. Required Infonnation and Default Scales. These sections describe the project and establish scales for the data. - ')~ ­ - 24- Chapter 2: Simple Case Study Basic Information Required Information Country V~RepubUo Project H.~Co-al; Project' Local currency VR$ Foreign currency US$ Input currency VR$ Begin year 99/00 Number ofyears If Exchange rates (LocaVforeign) At data collection 1'+ At negotiations 1'+ At project-year midpoints 1'+ FOR If Default values Local Foreign Unit cost input scale 6 6 Unit cost print scale 6 6 Unit cost decimals G G Value input scale 6 6 Value print scale 6 6 Value decimals 1 1 2.2.1.2 Default scales Value decimals. The value information - e.g., for base costs will be displayed with 1 decimal point. Default scales tell Costab how you will enter data. They also tell Costab how to display the results that'it calculates. The The G Format for unit costs. The letter G stands for the problem is that a number such as 3.2 means nothing without a general fonnat. This instructs Costab to display unit costs in the scale. However, if you know that the scale is millions and that least amount of space necessary so as not to lose accuracy of the data represent local currency, then 3.2 for this case study the data entered. The following shows the same numbers would mean DR$3.2 million. Until the scale and the currency displayed in the G format and with 2 decimals. Notice the are specified, numbers have no meaning. numbers that truncate to O! For example. 0.0003 is shown as 0.00. The G format minimizes the space required to display The default scales for this project are shown above. Costab numbers, avoids the loss of accuracy, but decimal points do not uses powers of 10 to represent scales. In this case study 6 is line up. used to mean 10 to the 6th power, which is one million. The scales shown above tell Costab to read input data and to print its calculated results in millions: G format 2 decimals 3,000 3,000.00 • Input scales - tell Costab how to read the data, in this 300 300.00 case in millions. You specify input scales in only one 30 30.00 place. 3 3.00 0.3 0.30 0.03 0.03 • Print scales - tell Costab how to print or display the 0.003 0.00 results of its calculations, in this case in millions of 0.0003 0.00 DR$ and millions of US dollars. 0.00003 0.00 • Decimals - are specified as an integer. 4 4 Chapter 3 will explain how to use G format. "" - 26- Chapter 2: Simple Case Study Up to Up to Project Price Contingencies Handle Negotiations Start 99/00 00/01 01/02 02/03 Most goods and services MOST Inflation rates Local 0 0 10 9 8 8 Foreign 0 0 8 8 8 8 Exchange rates 14 14 14 14 14 14 Zero ZERO InDation rates Local 0 0 0 0 0 0 Foreign 0 0 0 0 0 0 Exchange rates 14 14 14 14 14 14 2.2.2 Price Contingencies 2.2.2.3 Column beadings The column headings indicate the following: Price contingencies reflect allowances for inflation, devaluation, and uncertainty. In this case study, allowances for • Up to negotiation. Inflation between data collection price contingencies depend only on local and foreign inflation and negotiations is assumed to be zero. rates. The data for price contingencies are shown above. • Up to project start. Inflation between negotiations and 2.2.2.1 Price contingency items project start is also assumed to be zero. This case study has two price contingency items: • Within project years. The rest of the inflation data • Most goods and services. These inflation rates apply to represent the amount of inflation that is expected to all goods and services, except for design work that is occur within each project year. expected to be performed before the project starts. The handle for this set of rates is MOST. The World Bank's Operations Policy Department provides forecasts of annual foreign inflation. The responsible Country • Zero. This set represents inflation rates that are all zero. Department provides forecasts of annual local inflation. You These rates apply to design costs that will be incurred must adjust the annual rates provided by these departments to before the project begins. The handle for this set of fit your project years. rates is ZERO. 2.2.2.4 Exchanges rates 2.2.2.2 Handles Exchange rates are the rates at which the local currency Think of a "handle" as a code or short name. You will use exchanges for the foreign currency. Exchange rates during handles to tell Costab which set of inflation and exchange rates project implementation must be mid-project year rates. The it should use to calculate inflation allowances. exchange rates for this case study are assumed to remain constant at 14 throughout the life of the project. _ '17 - 28- Chapter 2: Simple Case Study Components Description Handle C~Ter~ CC!ML A!l'vDi4p01