Case 6: Although the use of mobile communication devices by motor vehicle driver

Question

Case 6:

Although the use of mobile communication devices by motor vehicle drivers is a dangerous practice, studies have shown that up to 80% of motor vehicle accidents in in Bubble Country are caused by this practice. Surveys have shown that even though drivers recognize that this is a dangerous practice, they cannot resist the temptation of using the devices. The surveys also found that individuals who regularly use their mobile devices while driving do not consider fines to be deterrent. The percentage of accidents attributable to driver distraction caused by the use of mobile communication devices has been increasing by 2% per year. A risk assessment has shown that the risk of having an accident for a driver using their mobile devices is 15%. Public opinion research suggests that the public is more concern about this issue than drinking and driving and would like the government to address it. Last year there were 20,000 motor vehicle accidents attributed to driver distraction in Bubble Country because of mobile communication device use.

In order to address the issue, the government of Bubble Country is considering a policy that will force car makers to install remote equipment in all cars to ensure that mobile communication devices cannot be used when driving. Such equipment is already available and it will cost car makers $12 to install such equipment in each car. The policy will also make it illegal to use a mobile communication device while driving and individuals found doing this will be given a fine of $800.

Part I:

Based on what you’ve learnt from this course, and your understanding of project evaluation,

A) Describe or summarize what you understand the issue to be (5)

B) What do you think should be the objective and sub-objectives? (5)

C) Do you see a rationale for public sector involvement? Explain (5)

D) Discuss the potential benefits? Be comprehensive (10)

E) Discuss the potential cost? Be comprehensive (10)

F) Are there any external impacts? Explain (5)

G) Identify the stakeholders and describe who are the winners and losers? (10)

Part II:

With the information above and any additional information you can find and your own reasonable assumptions, undertake a rough cost benefit analysis

A) How will you quantify and monetize all your identified (10)

1) Costs

2 ) Benefits

3) What time frame will you use and why?

B) With a spreadsheet estimate (30)

1) The Present Value Cost – Economic

2) The present Value Benefits – Economic

3) Discuss any qualitative costs and benefits

C) With the following criteria, determine whether the project is economically feasible (10)

1) Net Present Value Criteria

2) Benefit Cost Ratio

Explanation / Answer

A) The main issue in the given case is the issue of safety for the driver and the others. This is caused by use of mobile phones while driving. The level of negligence and incidents of accidents are steadily rising every year and there has to be some steps taken to reduce this.

B) The objective should be to reduce the percentage of accidents caused by driver distraction. The current growth rate is 2% YoY. The objective should be reduce it and bring it to a negative value by the next few years. The sub objective will be implementing policies, practices, regulations and rules to make sure that the objective (mentioned above) can be achieved.

C) Yes. There is a reason for public sector involvement and it makes sense. The public sector institutes have a sole purpose of serving the people of the locality. This includes safety and security. When a negligent driver uses mobile phone while driving, he/she puts the others in danger too. This could result in damage of property, death of individuals, and other serious repercussions. The public sector owes a duty of responsibility to reduce such risk in the local environment. This is why it is rationale for them to get involved.

D) The benefit of installing the remote equipment is that it will force the people of Bubble Country to stop using mobile phones in their vehicle. This will lead to lesser distraction during driving and most likely the number of accidents caused by use of mobile phones will drastically reduce.

E) The potential costs associated with the installation of device include economic and social costs. Economically this means that during the commute (busy traffic hours) the number of calls will be less and thus the telecom companies will have reduced profit. This would also mean reduction in income for government through taxes. The social cost involves the fact that during commute people will become unreachable. Thus any information, be it urgent or otherwise, will be delayed when it comes to delivery of the message.

F) The external impact will be that the issues such as drinking and driving will become a major concern for public safety. Currently the people of the country consider mobile phone use while driving to be the biggest concern. This will shift focus from there to other issues.

G) The stakeholders are the people of country, the government and the mobile phone companies. The winners are the people and the government while the loser is the mobile phone companies.

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