Optimum Timing of Project Although a third berth appears well justified, an analysis of the op timum timing for its construction indicates that it is premature to sta the berth now and have it ready in the fourth year To calculate the optimum time for starting the project. the costs of delay--that is. the loss of benefits as a result of the postponement must be compared with the benefits-that is, the reduction in dis counted costs. On the assumption that the project life continues to be twenty-five years and that it will not be replaced thereafter, a postpone- of one year reduces present discounted costs from Rs54.41 million to Rs48.59 million, or by Rs 5.82 million(see columns 6 and 10,table 11 11. At an 8 percent discount rate. the cost reduction is Rs4.5 million.The delay affects the benefits in two ways. First, the benefit of Rs2.33 million in the first year is lost. Second, a further benefit would materialize in the additional year at the end of the project life: its present discounted taluc is Rs1.75 million. The net loss in benefits is thus only Rs0.58 million, compared with a reduction in costs of Rs5.82 million. A postponement of at least one year is therefore well justified. Postponing the project a second year reduces costs by an additional Rs5.19 million(the difference between the totals of columns 10 and 11) while the net loss in benefits would be Rs1.12 million(that is. a loss of 2.67 million in the second year minus additional benefits of Rs1.55 million at the end of the project life). A postponement of at least two years is thus justified. The reduction in discounted costs and benefits for each of the first seven years is shown in table 11-3 This year by year analysis indicates that the project should be start ed in about five years. Postponing it an additional year is not justified since in that year the loss of benefits exceeds the reduction in costs by Rs1.2 million. In this calculation. it has been assumed that the berth will not be replaced at the end of its life. Ifit is to be replaced, however there is a further saving in costs from the delay in replacement although the only impact on benefits is the loss in the e