Evaluation of projects
Summary and aggregate results for the years ended June 2016 to June 2018
The FRDC’s RD&E Plan 2015–20 ended on 30 June 2020 and a new R&D Plan 2020–25 took effect on 1 July 2020. Under FRDC’s Evaluation Framework, FRDC required an aggregate summary of 60 completed ex-post RD&E evaluations for investments that were completed under the RD&E Plan 2015–20 and the FRDC’s associated annual impact assessment program. This summary report presents the aggregate results for the 2015/16, 2016/17 and 2017/18 FRDC evaluation of randomly selected samples of individual projects along with a selection of other summary results demonstrating the performance of FRDC’s investments under the RD&E Plan 2015–20.
Individual impact assessments
The evaluations completed for each annual series of impact assessments followed general evaluation guidelines that are now well entrenched within the Australian primary industry research sector including RDCs, CRCs, state Departments of Agriculture, and some universities. The approach includes both qualitative and quantitative descriptions that are in accord with the impact assessment guidelines of the CRRDC (2018). The evaluation process involved identifying and briefly describing project objectives, activities and outputs, outcomes, and impacts. The principal economic, environmental and social impacts were then summarised in a triple bottom line framework.
Some, but not all, of the impacts identified were then valued in monetary terms. Where impact valuation was exercised, the impact assessment used benefit cost analysis as its principal tool. The decision not to value certain impacts was due either to a shortage of necessary evidence/data, a high degree of uncertainty surrounding the potential impact, or the likely low relative significance of the impact compared to those that were valued. The impacts valued are therefore deemed to represent the principal benefits delivered by the project. However, as not all impacts were valued, the investment criteria reported for some individual investments potentially represent an underestimate of the performance of that investment.
The real, undiscounted, aggregate benefit and cost cash flows from each annual series of impact assessments for each FRDC program within each of the three evaluation samples (2015/16, 2016/17 and 2017/18) were extracted, integrated and updated such that all past and future cash flows were expressed in 2019/20 dollar terms using the implicit price deflator for gross domestic product (Australian bureau of Statistics, 2020). Cash flows then were discounted to the year 2019/20 using a 5 per cent discount rate as required by the CRRDC impact assessment guidelines.
The aggregate present value of benefits (PVb) and present value of costs (PVC) then were used to estimated aggregate investment criteria for each evaluation sample (2015/16, 2016/17 and 2017/18), each FRDC program across all three evaluation samples (Environment, Industry, Communities, People and Adoption), and for all FRDC programs across all three evaluation samples in total. Further investment criteria were estimated for the total investment and for the FRDC investment alone and for different time periods up to 30 years from the last year of investment across all 60 FRDC RD&E investments included in the aggregate analysis (2018/19).
Investment criteria reported included the net present value (NPV), benefit cost ratio (BCR), internal rate of return (IRR) and the modified IRR (MIRR). The PVb for the FRDC investment was estimated by multiplying the total PVb for each program area by the FRDC proportion of real, undiscounted investment in each program and then aggregating by sample year. The FRDC proportion of real investment varied from 26.4 per cent in the Adoption Program in the 2017/18 sample to 100 per cent for both the People Program in the 2016/17 sample and the Communities Program in the 2015/16 sample.
Aggregate investment criteria by program
Table 16 shows the aggregate investment criteria for the total investment for each of the five FRDC program areas addressed by the RD&E Plan 2015–20 across all three years of evaluations.
The Industry Program performed best with an estimated aggregate BCR of 8.32 to 1 and a NPV of approximately $173.06 million. This was expected as the individual project analyses focused on the valuation of economic impacts and industry related RD&E investments tended to have a greater number of the more significant economic impacts (in terms of impact magnitude). The People Program had the second highest performance with an estimated BCR of 5.05 to 1.
Results for individual program areas should be interpreted with some caution because of small sample sizes. Based on the sample selection criteria in each of the annual series of impact assessments and FRDC’s system of project program allocation 28 out of 60 projects contributed to the costs and benefits for the Environment Program, 31 projects contributed costs and benefits for the Industry Program, nine projects contributed costs and benefits for the Communities Program, six projects contributed to the costs and benefits for the People Program, and 10 out of 60 projects contributed to the costs and benefits for the Adoption Program. This occurred because some projects were allocated across multiple FRDC program areas.
For example, a project may have been classified as 80 per cent Environment, 20 per cent Industry. In this case the project would be categorised as an ‘Environment’ project within the impact assessment sample, however 80 per cent of the projects estimated benefit and costs cash flows would be attributed to the Environment Program and the remaining 20 per cent would be attributed to the Industry Program. Thus, the one project from the evaluation sample would have contributed to the final investment criteria estimated for both the Environment and the Industry Program.
Total investment (30 years, 5 per cent discount rate) across all three samples:
nc: not calculable.
An IRR may not be calculable where the relevant cash flows result in multiple possible solutions for the IRR.
Specifics of the assumptions underpinning the estimation of benefits for each program can be found in the individual project evaluation reports for each sample year available from FRDC.
Aggregate investment by sample year
Table 17 shows the aggregate investment criteria for the total investment for each of the three annual evaluation samples completed to date. The results show that, based on the representative random samples evaluated each year, FRDC has demonstrated positive and consistent performance with BCRs between 4.18 and 5.71 to 1. Further, these investment criteria are likely to represent a lower bound of the FRDC’s RD&E performance as a number of impacts identified across the 60 individual project evaluations were not valued in monetary terms.
Total investment (30 years, 5 per cent discount rate):
Over the period 2017 to 2019, there were 60 randomly selected FRDC RD&E investments completed in the years ended June 2016 to 2018 (20 each year) have been subjected to impact assessment to meet the following FRDC evaluation reporting requirements:
- Reporting against the FRDC RD&E Plan 2015–20 and the Evaluation Framework associated with FRDC’s Statutory Funding Agreement with the Commonwealth Government.
- Annual reporting to FRDC stakeholders.
- Reporting to the CRRDC.
The 60 individual RD&E projects evaluated had a total investment of $58.38 million (present value terms) and generated estimated total benefits of $281.89 million (present value terms). This gave a NPV of $223.51 million, weighted average BCR of 4.83 to 1, an IRR of 15.64 per cent and a MIRR of 5.24 per cent over 30 years using a 5 per cent discount rate.
When aggregate results were estimated by FRDC program area across all three evaluation samples the analysis showed that all five FRDC program areas (Environment, Industry, Communities, People and Adoption) had positive investment criteria with BCRs ranging from 2.08 to 1 for the Communities Program to 8.32 to 1 for the Industry Program. Also, aggregate results estimated by evaluation sample (2015/16, 2016/17 and 2017/18) demonstrated that FRDC has had positive and consistent performance with BCRs between 4.18 and 5.71 to 1. Further, the investment criteria are likely to represent a lower bound of the FRDC’s RD&E performance as a number of impacts identified across the 60 individual project evaluations were not valued in monetary terms.
based on the random sample selection process these results are considered to be largely representative of the performance of the FRDC RD&E investment portfolio for investments completed in the years ended June 2016 to 2018 under the FRDC’s RD&E Plan 2015–20. The results show that FRDC has consistently delivered benefits to fisheries and aquaculture industries and the broader Australian community. Further, the results are consistent with the average performance of the Australian RDCs with an estimated weighted average BCR of 4.5 to 1 (Agtrans Research, AgEconPlus and jav, 2016) and should be viewed positively by government, fisheries and aquaculture industries, other stakeholders, and FRDC management.