The importance of conventions: A critical evaluation of current practice in social cost benefit analysis
This research project comprised of a critical evaluation of current methods used by project planners and evaluators in the public and third sectors to quantify social benefits and costs. The study sought to evaluate current methods to see if it is possible to develop alternative quantification models/frameworks for quantifying these costs and benefits, thus broadening the choice of available quantification frameworks to project management professionals.
Who is the intended audience?
This research will be of interest to project planners and evaluators in the public and third sector, but may have wider implications in terms of stakeholder management more broadly.
Why is it important?
This study is important because when planning or evaluating projects in the public and third sectors cost benefit analysis is used as a core tool in determining whether a project represents value for money. This can determine whether a project goes ahead in the first place or is repeated in the future, thus impacting how public and third sector bodies use their scarce financial resources.
To carry out this cost benefit analysis is a straightforward process where costs and benefits are easily quantified, e.g. the cost of an apprenticeship which leads a young person into sustained employment. However, public and third sector projects are often more complex and the social costs and benefits are not as clear or direct. Evaluators of these projects must, therefore, find alternative ways to quantify these costs and benefits.
We hope this review assists how this quantification currently occurs, what are the advantages and disadvantages of current methods/models/frameworks, and could alternatives be developed to improve how we evaluate these projects in future
Who took part in the research?
This study was conducted through a systemic review of existing academic and business literature which included a critical evaluation of current methods used by project planners and evaluators in the public and third sectors to quantify social benefits and costs. By evaluating current methods it hopes to see if it possible to develop alternative quantification models/frameworks for quantifying these costs and benefits, thus broadening the choice of available quantification frameworks to project management professionals.
What did we discover?
This research reflects on current practice in cost benefit analysis, specifically how evaluators quantify social costs and benefits. The report focuses primarily on the public and third sectors. Using the French L’économie des conventions (Economics of Conventions) School, the research argues that traditional economic evaluations should not claim objectivity. Such claims are not just unrealistic, but impossible.
What is clear from the study is that project evaluation as a whole remains an under-researched area, and many public and third-sector projects remain under-/un-evaluated. Far too often, nobody is left after project closure to evaluate the long-term benefits of public and third-sector projects. This area will provide countless opportunities for future research, especially how frameworks such as SROI work in practice, and how we might yet overcome the challenges The Economics of Conventions poses.
What were the main challenges?
- Identifying relevant business and academic literature.
- This research challenges the existing assumptions and practices surrounding how we ‘ought’ to evaluate projects. It encourages readers to re-think evaluation from first principles and seek to find new ways to evaluate public/third-sector projects and programmes in the future”.