COST – BENEFIT ANALYSIS ESSAY a national standard swimming pool for NEU students phân tích chi phí lợi ích

NATIONAL ECONOMICS UNIVERSITY

COST – BENEFIT ANALYSIS ESSAY
Topic 1: A national standard swimming pool for NEU students
Members:
Phạm Hải Anh – 11180420
Vi Thị Mai Linh – 11182938
Trần Bảo Ánh – 11180615
Nguyễn Thị Thu Hằng – 11181529
Nguyễn Huyền Huy – 11182209
Nguyễn Duy Hùng – 11182021
Trần Thị Thu Ngân - 11183581
Nguyễn Thị Phúc Phương – 11184060
Class:

Investment Economics AEP K60

Lecturer: PhD. Hoang Thu Ha

✦ HA NOI - 2021 ✦
1


CONTENTS
I.

Problem identification................................................................................................... 3

II. Alternative project 1: National 4 seasons swimming pool.......................................... 3
B/C TABLE 1...................................................................................................................... 5
A. Measure cost benefit with market price........................................................................ 5

B. Cost and benefit measurement without market price.................................................... 12
III. Alternative project 2: Complex of swimming pools combined with restaurants to
organize events.................................................................................................................... 13
B/C TABLE 2.................................................................................................................... 17
A. Measure cost & benefit with market price................................................................... 18
B. Cost benefit measurement without market price........................................................... 24
IV. Alternative project 3: Outdoor swimming pool project............................................ 26
B/C TABLE 3.................................................................................................................... 27
A. Measure cost-benefit with market price........................................................................ 28
B.

Cost-benefit measurement without a market price..................................................... 34

V. Alternative project 4: Swimming pool NEU.............................................................. 36
B/C TABLE 4.................................................................................................................... 43
A. Measure cost benefit with market price........................................................................ 43
B. Cost benefit measurement without market price......................................................... 50
VI. Conclusion.................................................................................................................... 51


I.

Problem identification

Building a complex of outdoor swimming pools combined with restaurants to organize
events of National Economic University is important and helps to meet the needs of students
for physical education more conveniently as well as increase revenue, improve the
university's reputation, the financial expenses used for renting a swimming pool elsewhere
are also reduced. The restaurant is the highlight combined with the swimming pools project
is the perfect place to organize events for the university as well as guests who come to book

a table can enjoy the beautiful scenery and delicious food here.
II.

-

Alternative project 1: National 4 seasons swimming pool

Type: 4-season swimming pool, covered indoor pool.
+ The project includes 2 types of swimming pools.

1. Basic tank: Stratify the depth from 1m2 to 1m8. Suitable for children as well.
2. Standard tank: maximum depth 1m8. Suitable for teaching and practicing for
students including 10 swimming lanes with a wide width each lane is 2.5m
-

Services offered:
+ Clean water source, swimming pool is cleaned twice a day.
+ Sale and rental of life jackets, life jackets, swimming goggles.
+ Vending machines provide products such as water, snacks.
+ Support learning and physical training for students and lecturers in the school.
+ Sell tickets to guests who need to use the swimming pool.
+ Ticket selling terms:

3. Staff and students of National Economics University: 30,000 VND/time


4. Outside customers: 45,000 VND/time
+ Partners: Stores that sell food, drinks, and home appliances that
environmentally friendly, and suitable for a healthy lifestyle. (Go Eco Hanoi,
Zero Waste Hanoi, Green Living, Clever Changes,...)

+ Customer care services:
5. Allow membership registration and monthly/yearly payment: members will receive
discount vouchers for swimming on special occasions.
6. Consulting + designing a nutritious diet / drink for members through text messages,
emails.
7. Allows scanning QR codes to accumulate points every time you go to the swimming
pool (5 points / time), exchange points for rewards,...
8. Gifts for the customers:
a. For customers who have accumulated 50 points or more: a discount voucher of VND
20,000 when shopping at stores: Go Eco Hanoi, Zero Waste Hanoi, Green Living,
Clever Changes, The Bamboo.
b. For members from 5 months or more: Send gratitude gifts on some special
occasions.
9. Customer care and support service 24/24 via fanpage, hotline.
-

Location: the project is located on campus, near the EBBA Institute of Business
Management.

-

Travel time: Save time, near the bus stop.


B/C TABLE 1
Primary benefits

Primary cost

With market price

Non market price

With market price

Non market price

- Revenue and profit

- Bringing customers

- Construction cost - Opportunity cost to

for NEU from this

closer to a green

- Operation cost

business project.

lifestyle and healthy

- Maintenance cost purposes.

- Cutting the rental

diet by linking with

-Equipment

-Impacts on people

costs.

stores doing business

purchase costs.

nearby the

use land for other

in this area.

construction: air

- The assurance of

pollution, noise

water quality, safety

pollution

and hygiene.
- Create more jobs for
the residents.
- Save travel time for
most of the NEU

students and lecturers.
- Promoting the spirit
of sports, specifically
swimming activities of
students and people
around the project
area.
- Improve the
reputation for NEU.

A. Measure cost benefit with market price
❖ Market-priced benefits:
- 1 year construction project (from 2021); The project is run into operation from 2022.


- The project attracts an average of 450 visitors/day; Average time using the service is 150
minutes (equivalent to 2.5 hours);
- Expected service price:
Staff and students of National Economics University: 30,000 VND/time
Outside customers: 45,000 VND/time
- Reduce the cost of renting an outdoor swimming pool for the school annually by
300,000,000 VND/year.
- Revenue from swimming pool service is 405,000,000 VND/month.
- Revenue from the project's beverage and fast food business: 10,800,000 VND/month
- Revenue from swimwear rental service: 2,700,000 VND/month
- Benefits from reducing the cost of using transportation to learn to swim in the pool outside
for students & faculty 216,000,000 VND/year
❖ Cost with market price:
Initial investment cost (it includes labor cost and is at full employment):
● Swimming pool construction cost: 1,300,000,000 VND

● Cost of facilities around the swimming pool: 200,000,000 VND
Annual operating expenses:
● The project employs 50 employees; Monthly salary 6,000,000 VND/labor/month,
including income tax.
● 10% of the workers are unemployed; The value of rest is 1,500,000 VND/worker/month
● The remaining number of employees being employed (not unemployed) is 90%; Salary is
6 000 000 VND/person/month.
* Annual operating cost: 100,000,000 VND/month
 Company income tax rate: 20%


Table of annual revenue:(mil VND)
Sector

REVENUE

Revenue from swimming pool

(405+10.8+2.7+216)*12= 7 614 mil VND/year

services
Benefits from reducing school costs to

300 mil VND/year

rent an outdoor swimming pool

Benefits of reducing the cost of

216 mil VND/year

commuting to the outside swimming
pool for students & lecturers

Revenue from the project's beverage

10.8 * 12 = 129.6 mil VND/year

and fast food business
Revenue from swimwear rental

2.7 * 12 = 32.4 mil VND/year

service

Table of initial investment costs (unit: million VND)
Sectors

INITIAL INVESTMENT
COSTS

Cost of building a swimming pool

1 300

Cost of building other utilities around the swimming pool

200

Table of annual costs (unit: million VND)
Sectors

ANNUAL COST

Labor cost

50*6*12 = 3600

Cost of periodic repair

30*2 = 60

Annual operating cost

100*12 = 1 200

Table of social benefits and costs of the project on both private and social pointview
Year

Benefit Year 1-25

Sectors

Revenue from

Private pointview

Social pointview

(FA)

(CBA)

7 614

0

0

300

0

216

129.6

0

swimming pool
services
Benefits from
reducing the cost of
renting an outdoor
swimming pool

Benefits of reducing
the cost of
commuting to the

outdoor swimming
pool for
students/lecturers
Revenue from the
project's beverage


and fast food
business
Revenue from

32.4

0

swimwear rental
service
Tax income (20 %)

0

2 916 x 20%
= 583.2

Cost

Year 1

Total

7 776/year

1 099.2/year

Swimming pool

1 300

1 300

200

200

Total

1 500

1 500

Labor cost

50*6*12 = 3600

12*50*(0.9*6+0,1*

construction cost
Cost of building
utilities around the
swimming pool

Year
2 - 25

1,5)=3330

Periodic repair costs

60

60

Maintenance Cost

100*12 = 1 200

1 200


Tax income

2 916 x 20% = 583.2

0

Total

4443.2/year

4590/year

Net profit = Revenue – Labor cost – Maintenance cost – Operation cost
= 7 776 - 3 600 - 60 - 1200 = 2 916
=> net profit tax = 2 916 x 20% = 583.2 (mill VND/month)
 NPV
-

Investment cost

 Swimming pool construction cost: 1 300 mil VND
 Cost of facilities around the swimming pool: 200
=> Total investment cost = 1 500 mil VND
-

Annual operating cost

 Labor cost: 3 600 mil VND/ year
 Cost of periodic repair: 60 mil VND/ year
 Annual operating cost: 1 200 mil VND/year
=> Total annual operating cost = 4 860 mil CND/ year
-

Benefit

 Revenue from swimming pool services : 7 614 mil VND/ year
 Benefits from reducing school costs to rent an outdoor swimming pool : 300 mil
VND / year
 Benefits of reducing the cost of commuting to the outside swimming pool for
students & faculty : 216 mil VND/year
 Revenue from the project's beverage and fast food business: 129.6 mil VND/ year

 Revenue from swimwear rental service: 32.4 mil VND/year
=> Total benefit = 8 292 mil VND/ year
=> Net benefit = 8 292 - 4 860 = 3 432 mil VND/year


(unit: million dong)
Year

Nominal net benefit

0

CPI

Real net benefit

100

1

3 432

102

3364,71

2

3 432

104,04

3298,73

3

3 432

106,12

3234,07

4

3 432

108,24

3170,73

5

3 432

110,41

3108,41

6

3 432

112,62

3047,42

7

3 432

114,87

2987,73

8

3 432

117,17

2929,08

9

3 432

119,51

2871,73

10

3 432

121,9

2815,42

11

3 432

124,34

2760,17

12

3 432

126,83

2705,98

13

3 432

129,36

2653,06

14

3 432

131,95

2600,99

15

3 432

134,59

2549,97

16

3 432

137,28

2500,00

17

3 432

140,02

2451,08

18

3 432

142,83

2402,86


19

3 432

143,965

2383,91

20

3 432

146,34

2345,22

21

3 432

148,715

2307,76

22

3 432

151,09

2271,49

23

3 432

153,465

2236,33

24

3 432

155,841

2202,25

25

3 432

158,216

2169,19

r = 4%
=> NPV = 43 452,88 mil VND
B. Cost and benefit measurement without market price:

Benefit

Valuation methods

Value of mil VND/using
the school's swimming
pool service
Annual

Health training for students

Cost of avoidance (Evaluation

and lecturers at the school

through saving on medical
costs)

600

Once


Create comfort and

Cost of avoidance (saving the

initiative about the

cost of renting an external

arrangement of classes,

swimming pool + the cost of

class time of students and

using transportation to study

lecturers

outside)

Create peace of mind for

Contingent valuation method

750

100

students and faculty about
the quality of water in the
pool

Cost

Method

Valued by VND/time using the
swimming pool’s service
Annual

Lost potential

Opportunity cost of other

revenue

projects

III.


-

One time

4900000

Alternative project 2: Complex of swimming pools combined with
restaurants to organize events.
Describe project

Investment capital is estimated at about 50 billion VND.


-

The outdoor swimming pool system of National Economic University includes a
system of 2 swimming pools: the main swimming pool for learning, teaching, practice,


and competition activities for students and lecturers of the university, including 10
swimming lanes with a wide width. each lane is 2.5m; Secondary swimming pool with a
smaller area serves the needs of entertainment, entertainment, and serves both adults
and children. The total area of the entire swimming pool area is 1800m2 and 800m2
around the area including the bathroom and changing areas; rental service business;
warm-up area; and event restaurant area. The height of the tank wall is about 2m with a
maximum water level of 1.8m. The swimming pool has a modern trough system,
reducing waves, reducing the best chemicals for the competition pool. Disinfection
method is to use salt and chlorine.

The swimming pool project of National Economics University will provide the
following main business services:
a. Swimming service: to respond to the needs of swimming, relaxing swimming
for customers.
- Opening time: 5:30-20:00 every day of the week

- Ticket price: + For students: the entrance fee is included in the tuition fee for Physical
Education
+ For outside guests: 45000 VND/person
- Utilities :
+

10-lane swimming pool, width 2.5m/lane in accordance with competition standards
combined with swimming pool area for entertainment and recreation

+

Arrange swimming pool board, sasuke sports game area for entertainment and
training needs


+ Bathroom, changing clothes before and after swimming: providing

clean

water

system, dividing male and female areas, relaxation room after swimming: providing
sitting mattress, snacks, relaxing sound system
b. Swimming lessons
-

Swimming courses and programs are taught directly by swimming instructors of
National Economics University, including: Official swimming courses are held
regularly for all NEU students, for outside guests, for children from all over the world.
6-16 years old; emergency first aid course, drowning prevention and escape skills;

Teaching swimming to competition for students of the swimming club

-

Tuition:
+ For NEU students: tuition fees will be included in the monthly tuition fees paid to the
university.
+ For external customers: ranging from 2.5 - 3.5 million VND/person/key
c. Swimwear and locker rental/selling service

-

When swimming customers need to have suitable swimwear to ensure general
hygiene standards and convenience. But not all customers have swimwear available and
some customers have unintentional swimming needs, so this service will meet the needs
of customers well. Some popular services such as: rental/sale of swimwear, swimming
goggles, swimming floats, snorkels, skateboards, lockers, etc. Prices for services range
from 10,000 VND to 200,000 VND.
d. Pool service combined with restaurant and event organization

-

The event restaurant campus is built right in the swimming pool complex with a
prime location directly opposite the swimming pool area, where one can easily observe
and admire the swimming pool. The restaurant's customers are all students, lecturers,
employees of the National Economic University and customers outside the university.

-

Fully equipped with modern facilities and techniques such as sound and light

systems; air machine; safety system, exit; portable stage system; curtain system, the
restaurant is a great place that can provide party, event, seminar, and catering services;
event decoration services, taking photos for customers inside and outside the university.
At the same time, the location opposite the swimming pool, which helps to observe the
pool area most conveniently, is a strength that helps the restaurant attract and increase
the number of diners to use the services of the swimming pool complex.


-

Specific service activities of the restaurant are as follows: during the day the
restaurant will serve food services to customers and the period from 4 pm every day will
be the time frame for organizing parties and events. The arrangement of this time frame
is for the most convenience and to avoid affecting the physical education learning of
students in the university and customers outside. To organize an event at the restaurant,
customers need to make an appointment 1-2 weeks in advance to keep up with the
preparation and arrangement progress. The outside restaurant area is arranged with
resort design chairs and tables, with the service of providing drinks at the seat so that
customers can enjoy the view of the pool when it is dark with a brilliant underwater
lighting system. of the swimming pool.

-

This complex of swimming pools and restaurants is expected to bring about the goal
of building the image of the National Economic University, enhancing the image and
position of the NEU university and being a source of profit for the university's
activities.

e. Medical services, care, first aid
-

The swimming pool provides medical care for athletes and students participating in
professional practice and competition and for first aid, first aid, and care in case of an
accident at the pool. The medical room includes a full range of first aid tools and
equipment, provided to students and customers and has medical professionals who
directly care for athletes, students or victims.


B/C TABLE 2
Primary benefits
With market price

Non market price

Primary cost
With market
price

●

To increase

●

To improve the

revenue from the

reputation of NEU

business of

university

swimming pool

●

To increase the

Non market price
● Affect the living
environment of

● Construction
cost
● Maintenance

students and
households

services such as:

initiative and

selling swimming

convenience in

tickets, swimming

organizing swimming ● Operation cost

courses,

lessons ( due to don't

renting/selling

have to depend on

● When the cold

swimwear, …

renting an outside

season comes,

swimming place)

the outdoor

●

To increase

revenue from the

●

To improve the

cost

(dust,noise
pollution,..)-but
not much

swimming pools

restaurant business,

comfort and safety of

aren’t as

organizing events in

NEU faculty and

attractive as the

the swimming pool

students (because of

warm season

complex

on-campus learning)

●

To reduce the

●

To improve the

cost of renting an

health of students,

outdoor swimming

lecturers and

university.

customers in the

●

To reduce the

surrounding area who

cost of renting place

regularly use the

for parties and

university's

events outside

swimming service

●

To minimize

●

Always

travel time costs of

ensuring the quality

students, lecturers,

and standard

outside customers

conditions of the

who want to find

swimming pool

places to eat.

(because this is a

●

To reduce the

swimming pool built

cost of advertising

by NEU university,

and communication

the interests and

for NEU university

health of the students

through events and

and lecturers in the

seminars held at the

university always

restaurant on the

come first)

university's
swimming pool

A. Measure cost & benefit with market price
❖
-

Market-priced benefits:
Construction project in 2 years (2019 & 2020); To be put into operation from the 3rd

year ( 2021)
-

The project attracts 500 visitors/day; Average time using the service -60 minutes;

Estimated service price 45000 VND/person
-

Reduce the cost of renting an outdoor swimming pool for the school every year 300 000

000 VND/year.
- Revenue from swimming pool service is 675 000 000 VND/month.
- Revenue from event and business services of the restaurant: 460,000,000 VND/month
- Other revenue (selling swimwear, rest room,...) : 150 000 000 VND/month
-

Benefits from reducing the cost of using transportation to learn to swim in the pool

outside for students & lecturers VND 450,000,000/year
❖
●

Cost with market price:
Initial investment costs (it includes labor cost and is at full employment):
 Swimming pool construction cost: 25 billion VND
 Cost of building other facilities around the swimming pool: 5 billion VND
 Cost of building an event restaurant: 10 billion VND


 Investment cost for technology 10 billion VND
●

Annual operating costs:
 The project employs 60 workers ; Monthly salary 7 000 000 VND/labor/month,
including income tax.
 Of which, how many 50% of employees are unemployed; The value of rest is 1 500
000 VND/worker/month
 The remaining number of employees being employed (not unemployed) is 50%;
Salary is 7 000 000 VND/person/month.
 Cost of input materials of the restaurant: 250,000,000 VND/month

●

Periodic repair cost: 50,000,000 VND/month

●

Corporate income tax rate: 20%

●

The project is expected to be exploited from year 3 to year 20.

●

Inflation = 2%, r fix= 4%
Table of annual revenue:(mil VND)

Targets

REVENUE

Revenue from swimming pool services

500x45,000x30x12=8,100 mil VND/year

Benefits from reducing school costs to rent

300 mil VND/year

an outdoor swimming pool

Benefits of reducing the cost of

450 mil VND/year

commuting to the outside swimming pool
for students & faculty

Revenue from event organization services

460,000,000x12= 5,520 mil VND/year

and restaurant business
Other revenue

150,000,000x12 = 1,800 mil VND/year


Table of initial investment costs (unit: million VND)
TARGETS

INITIAL INVESTMENT COSTS

Swimming pool construction cost

25,000 mil VND/year

Cost of building other utilities around the

5,000 mil VND/year

swimming pool
Investment costs for technical technology

10,000 mil VND/year

Cost of building an event restaurant

10,000 mil VND/year

Annual cost table
TARGETS

ANNUAL COST

Labor cost

60.7.12=5,040 mil VND/year

Cost of using periodic repair

50.12=600 mil VND/year

Cost of restaurant input materials

250.12=3,000 mil VND/year

Table of social benefits and costs of the project on both private and social aspects
Year

Benefit Year
3-20

Items

Revenue from

Private pointview (FA) Social pointview (CBA)
(mil VND/year)

(mil VND/year)

8,100

0

0

300

swimming pool
services
Benefits from


reducing the cost
of renting an
outdoor
swimming pool

Benefits of

0

450

5.520

0

Other revenue

1,800

0

Profit Tax (20 %)

0

0.2 x 6,780

reducing the cost
of commuting to
the outdoor
swimming pool
for
students/lecturers
Revenue from
event organization

services and
restaurant
business

= 1.356

Cost

total

15,420mil VND/year

2,106 mil VND/year

Year

Swimming pool

25,000

25,000

1-2

construction cost
5,000

5,000

10,000

10,000

Cost of building
utilities around the
swimming pool
Investment costs
for technical


technology
Cost of building

10,000

10,000

total

50,000

50,000

Labor cost

60x7x12

12.60.(0.5.7+0.5.1.5)=3.0

=5.040

60

Periodic repair

50x12

600

costs

=600

Cost of restaurant

250x12

input materials

= 3,000

Profit Tax

6,780 x 20%

an event restaurant

Year
3 - 20

3,000

0

= 1.356

total

9,966 mil VND/year

6660 mil VND/year

Net profit = Revenue – Labor cost – Recurring cost – Restaurant input cost
= 15,420 - 5,040 - 600 - 3,000 = 6,780
=> Profit tax = 6,780 x 20% = 1,356


 NPV
 Investment cost
 Swimming pool construction cost: 25,000 mil VND
 Cost of building other utilities around the swimming pool: 5,000 mil VND
 Investment costs for technical technology: 10,000 mil VND
 Cost of building an event restaurant: 10,000 mil VND
=> Total investment cost = 50,000 mil VND
 Annual operating cost
 Labor cost: 5040 mil VND/ year
 Cost of using periodic repair: 600 mil VND/ year
 Cost of restaurant input materials: 3,000 mil VND/year
=> Total annual operating cost = 8,640 mil CND/ year
 Benefit

 Revenue from swimming pool services : 8,100 mil VND/ year
 Benefits from reducing school costs to rent an outdoor swimming pool : 300 mil
VND / year
 Benefits of reducing the cost of commuting to the outside swimming pool for
students & faculty : 450 mil VND/year
 Revenue from event organization services and restaurant business: 5,520 mil VND/
year
 Other revenue: 1,800 mil VND/year
=> Total benefit = 16,170 mil VND/ year
=> Net benefit = 16,170 - 8,640 = 7,530 mil VND/year

Year

Nominal net benefit

0

CPI

Real net benefit

100

1

7,530

102

7382.35

2

7,530

104,04

7237.60

3

7,530

106,12

7095.74


4

7,530

108,24

6956.76