Mining & Mineral Economics

Cost-Benefit Analysis & Work Study

The benefit–cost ratio for project screening, plus work-study standard time and the shift output it implies.

PART 1

Topic Breakdown & Traps

The Engineering Principle

Cost-benefit analysis screens projects by the benefit–cost (B/C) ratio — present value of benefits over present value of costs; a project is acceptable when B/C ≥ 1. Work study sets a standard time for a task: the observed time is adjusted by a performance rating to a basic time, then inflated by allowances. Standard time fixes the achievable shift output.

The Core Formula Matrix

Benefit–cost ratio:

B / C = \frac{P V _{b e n e f i t s}}{P V _{cos t s}}

(accept if

\geq 1

).

Standard time:

S T = (observed \times rating) \times (1 + allowance)

.

Shift output:

units = \frac{shift time \times efficiency}{S T}

The ‘IIT Traps’

⚠
B/C ≥ 1 to accept. Below 1 the costs outweigh the benefits.
⚠
Rating first, then allowances. Basic time = observed × rating; standard = basic × (1+allowance).
⚠
Rating > 100 % speeds up the basic time relative to observed.

PART 2

Progressive 3-Tier Question Suite

Q1BASIC1 Mark · MCQ

A project has PV of benefits

\

12\ \text{M}

an d P V o f cos t s

8 M

. Its benefit–cost ratio is:

Q2MEDIUM2 Marks · NAT

An operation is observed at

5 min

, rated at

120%

, with

10%

allowances. The standard time is ______ min. (Round off to two decimal places.)

min

Q3HARD2 Marks · NAT

With a standard time of

6.6 min/unit

, a

480 min

shift at

90%

efficiency produces ______ units. (Round off to two decimal places.)

units