"Benefit–cost ratio:
The benefit–cost ratio (BCR) could be calculated in a number of ways.
Consistent with the majority of the state and territory guidelines,
Infrastructure Australia recommends the use of the following formula:
BCR = benefits* / (investment costs + net increase in operating costs)**
* generally represented by the PV of total benefits
** generally represented by the PV of total costs
The benefit and cost measures above are incremental to the base case and
discounted over the evaluation period (i.e. present values).
A BCR equal to or greater than 1 for the central case indicates that the
project has economic merit (i.e. the present value of benefits exceeds the
present value of costs) and is used to rank projects in a budget constrained
environment.
To calculate the BCR, proponents can use costs at P50 or P90 level, or
single point estimates if reliable historical data exist."