Recurrent Expenditure Requirements of Capital Projects: Estimation for Budget Purposes

13 Pages Posted: 20 Apr 2016

Date Written: December 2002

Abstract

This paper examines the issue of estimating recurrent costs associated with capital projects in the investment budget. It is intended to help overcome budget planning problems which give rise to the chronic underfunding of maintenance and operating costs typical in some developing economies. The objective is to provide guidance in the preparation of budget submissions so that information on the future recurrent cost implications of today's capital spending is quantified in a way that supports the authorities in making project selection and budget decisions.

The paper is in three parts. The first part outlines some concepts and definitions involved in measuring recurrent costs. The second part provides stylized examples of individual projects. And the third part presents some rough empirical guidance drawn from a sample of actual investment projects.

This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region - is part of a larger effort in the Bank to improve the management of public finances.

Suggested Citation

Hood, Ron and Husband, David and Yu, Fei, Recurrent Expenditure Requirements of Capital Projects: Estimation for Budget Purposes (December 2002). Available at SSRN: https://ssrn.com/abstract=636300

Ron Hood (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

David Husband

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

Fei Yu

Colby College ( email )

Mayflower Hill
Waterville, MA 04901
United States

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