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TRACECA Appraisal Manual Guidelines for Pre-Feasibility of Transport Projects with Exercises ... PDF

155 Pages·2012·3.1 MB·English
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TRACECA Appraisal Manual Guidelines for Pre-Feasibility of Transport Projects with Exercises and Case Studies A project implemented by TRT Trasporti e Territorio in association with: Alfen Consult, Dornier Consulting, PTV Project Title : Transport dialogue and interoperability between the EU and its neighbouring countries and Central Asian countries Short Name : IDEA (Transport Interoperability and Dialogue between the EU, Caucasus and Asian) Project Number : EuropeAid 2008 / 155-683 Countries : Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Uzbekistan and Ukraine. Bulgaria, Romania and Turkey associated to the project as TRACECA member Contractor Name : TRT Trasporti e Territorio SRL Address : Via Rutilia, 10/8 20141 Milano, Italy Tel. Number : +39-02-57410380 Fax number : +39-02-55212845 E-mail : [email protected] Contact person : Dr. Silvia Maffii / Team Leader Autors of Report : S. Maffii, R. Parolin, M. Brambilla, R. Scatamacchia This Appraisal Manual is prepared by the TRACECA IDEA (February 2012). The IDEA project is implemented by TRT Trasporti e Territorio in association with: Alfen Consult, Dornier Consult, PTV. Table of contents Table of contents Table of contents ................................................................................................. I  List of figures ................................................................................................... IV  List of tables ....................................................................................................... V  List of abbreviations ........................................................................................ VII  1  Introduction ................................................................................................. 1  1.1  Premise .............................................................................................................2   1.2  Project appraisal .................................................................................................2   1.3  The guidelines ....................................................................................................3   2  Project identification .................................................................................... 7  2.1  Overview ...........................................................................................................8   2.2  Project objectives and definition of project solution .................................................. 8  2.3  Definition of the reference or “do minimum” solution .............................................. 10  2.4  Analysis of the demand ...................................................................................... 10  2.4.1  Generalised costs ...................................................................................................... 11  2.4.2  Demand forecast ...................................................................................................... 13  2.4.3  Check list for demand analysis ................................................................................... 14  2.5  Problems ......................................................................................................... 15  3  Financial analysis ....................................................................................... 17  3.1  Overview ......................................................................................................... 18  3.2  Rationale of the financial analysis ........................................................................ 18  3.3  Investment costs, operating costs and revenues .................................................... 19  3.4  Financial discount rate ....................................................................................... 21  3.5  Performance indicators: Financial Return on Investment and Internal Rate of Return .. 22  3.6  Profitability analysis ........................................................................................... 22  4  Economic analysis ...................................................................................... 25  4.1  Overview ......................................................................................................... 26  4.2  Change in transport user benefits ........................................................................ 27  4.2.1  Components of the generalised cost ............................................................................ 28  4.2.2  Consumer surplus and Willingness to Pay (WTP) ........................................................... 28  4.2.3  Transport user benefits: Consumer surplus and the Rule of Half ..................................... 30  4.2.4  Diverted and induced demand .................................................................................... 33  4.2.5  Introduction of completely new modes ........................................................................ 33  4.2.6  Special treatment of unperceived costs ........................................................................ 34  4.3  Change in system operating costs and revenues .................................................... 35  4.3.1  Producer surplus ....................................................................................................... 35  4.3.2  Taxation and Government revenue effects ................................................................... 36  4.4  Change in external costs .................................................................................... 37  4.4.1  Environmental costs .................................................................................................. 38  4.4.2  Air pollution ............................................................................................................. 40  I Table of contents 4.4.3  Noise ....................................................................................................................... 43  4.4.4  Global warming ........................................................................................................ 43  4.4.5  Safety ..................................................................................................................... 44  4.5  Value transfer ................................................................................................... 45  4.6  Project investment costs .................................................................................... 46  4.6.1  From financial to economic costs ................................................................................ 48  4.7  The project appraisal period. ............................................................................... 49  4.8  Constant prices, common currency and base year .................................................. 50  4.9  Treatment of values over time ............................................................................ 50  4.10  The problem of evaluation in cross-border projects ................................................ 51  4.11  Flows of benefits and costs ................................................................................. 52  4.12  Social discount rate ........................................................................................... 53  4.13  Decision criteria ................................................................................................ 54  4.14  Social analysis of costs and benefits ..................................................................... 56  4.15  Problems ......................................................................................................... 58  5  Risk assessment ......................................................................................... 69  5.1  Overview ......................................................................................................... 70  5.2  Sensitivity analysis ............................................................................................ 71  5.3  Probability distribution of critical variables ............................................................ 72  5.4  Calculation of the distribution of the performance indicators and evaluation of acceptable levels of risk ..................................................................................................... 73  5.5  Risk mitigation .................................................................................................. 75  5.6  Problems ......................................................................................................... 75  6  Case studies ............................................................................................... 77  6.1  Foreword ......................................................................................................... 78  6.2  Construction of additional berths ......................................................................... 79  6.2.1  Introduction ............................................................................................................. 79  6.2.2  Traffic and terminal servicing time .............................................................................. 79  6.2.3  Project benefit .......................................................................................................... 80  6.2.4  Optimum timing of the project (with three berths) ........................................................ 84  6.2.5  Conclusion ............................................................................................................... 85  6.2.6  Further remarks ....................................................................................................... 86  6.3  Electrification of a railway line ............................................................................. 87  6.3.1  Introduction ............................................................................................................. 87  6.3.2  Traffic ..................................................................................................................... 87  6.3.3  Costs of diesel fleet renovation (reference solution) ...................................................... 87  6.3.4  Costs of electrification ............................................................................................... 88  6.3.5  Results .................................................................................................................... 88  6.4  Paving gravel road ............................................................................................ 92  6.4.1  Introduction ............................................................................................................. 92  6.4.2  Investment and maintenance costs ............................................................................. 92  6.4.3  Traffic ..................................................................................................................... 92  II Table of contents 6.4.4  Benefits from reduced generalised costs ...................................................................... 93  6.4.5  Other benefits .......................................................................................................... 95  6.4.6  Project performance .................................................................................................. 96  6.5  Investment in a railway line and modal shift ......................................................... 97  6.5.1  Introduction ............................................................................................................. 97  6.5.2  Traffic analysis ......................................................................................................... 98  6.5.3  Investment costs ...................................................................................................... 98  6.5.4  Project benefits ........................................................................................................ 99  6.6  Social analysis ................................................................................................ 105  6.6.1  Introduction ........................................................................................................... 105  6.6.2  Solution ................................................................................................................. 105  Appendix 1: Glossary ...................................................................................... 107  Appendix 2: Value of Time (through SP) ........................................................ 111  Appendix 3: Suggested solutions to problems ................................................ 117  References ..................................................................................................... 142  III List of figures List of figures Figure 1 - 1: Components of the Guidelines ............................................................. 5 Figure 2 - 1: Structure of the technical solutions analysis ........................................... 8 Figure 3 - 1: Structure of the financial analysis ....................................................... 19 Figure 4 - 1: Structure of the economic analysis ..................................................... 27  Figure 4 - 2: Transport demand curve ................................................................... 29  Figure 4 - 3: Consumer surplus without the project ................................................. 30  Figure 4 - 4: Consumer surplus with the project ..................................................... 31  Figure 4 - 5: Change in consumer surplus .............................................................. 32  Figure 4 - 6: Possible demand curves of a new mode............................................... 34  Figure 4 - 7: Variation in producer surplus ............................................................. 36  Figure 4 - 8: The additional tax revenues ............................................................... 37 Figure 5 - 1: Example of triangular distribution ....................................................... 73  Figure 5 - 2: Example of probability distribution for NPV .......................................... 74  Figure 5 - 3: Example of cumulative probability distribution for NPV .......................... 74 Figure 6 - 1: Port layout in reference solution (left) and project scenario (right) .......... 79  Figure 6 - 2: Estimated traffic [ships/year] ............................................................ 80  Figure 6 - 3: Extent of time benefits with three berths at year 11 .............................. 82  Figure 6 - 4: Graphical depiction of project’s IRR .................................................... 91  Figure 6 - 5: Road alignment and cross-section in reference solution (above) and project scenario (below) ................................................................................................ 92  Figure 6 - 6: Surplus change for trucks ................................................................. 95  Figure 6 - 7: Project plan in reference solution (above), Option 1 (middle) and Option 2 (below). The road corridor is black and the rail line is red (each line depicts a track). ... 97  Figure 6 - 8: Rail line typical cross-section in reference solution (left) and project scenario (right) .................................................................................................. 98  Figure 6 - 9: Change in user surplus for rail travellers (Option 1 with respect to reference solution) ......................................................................................................... 100  Figure 6 - 10: Economic performance of investment options ................................... 102     IV List of tables List of tables Table 1 - 1: Stages of the decision making process ................................................... 4 Table 2 - 1: Costs and benefits with separable projects ............................................ 10  Table 2 - 2: Values of time (Euro, 2010) ................................................................ 12 Table 3 - 1: Outflows and inflows for the profitability analysis ................................... 23  Table 3 - 2: Evaluation of financial return on investment in a motorway project (Million of Euro) ................................................................................................................ 23 Table 4 - 1: Consumer surplus variation for modal shifters ....................................... 33  Table 4 - 2: Values per tonne of CO equivalent emitted (Euro, 2009) ........................ 43  2 Table 4 - 3: Estimated cost per fatality (USD, 2009) ............................................... 44  Table 4 - 4: Example of scheduled investment costs with and without the project ........ 48  Table 4 - 5: Reference evaluation period for the transport sector .............................. 50  Table 4 - 6: Example of costs and benefits over years for a rail project (Meuro) .......... 53  Table 4 - 7: Social discount rate for some countries ................................................ 54  Table 4 - 8: Matrix for the analysis of the distribution of project impacts .................... 56 Table 5 - 1: Significant factors for risk analysis in transport projects .......................... 71  Table 5 - 2: Switching values for the Economic Net Present Value of a motorway project ....................................................................................................................... 72  Table 5 - 3: Example of scenario analysis .............................................................. 72 Table 6 - 1: Investment cost per berth and related timing [Meuro/year]. .................... 79  Table 6 - 2: Annual ship traffic, berth occupancy, ship waiting times and cost of annual waiting time ...................................................................................................... 81  Table 6 - 3: Flow of costs and benefits with three berths [Meuro] .............................. 83  Table 6 - 4: Flow of costs and benefits with four berths [Meuro] ............................... 84  Table 6 - 5: Economic performance with a postponement of one year ........................ 85  Table 6 - 6: Consequence of postponement on the discounted flow of costs and benefits [Meuro] ............................................................................................................ 85  Table 6 - 7: Scheduled costs in reference solution [Meuro/year] ............................... 87  Table 6 - 8: Scheduled costs in project scenario [Meuro/year] .................................. 88  Table 6 - 9: Economic analysis: electrification vs dieselisation [Meuro/year] ............... 89  Table 6 - 10: Traffic growth rates per year [%] ...................................................... 93  V Table of tables Table 6 - 11: Traffic in reference solution and project scenario [vehicles/day] ............. 93  Table 6 - 12: Generalised cost per type of road and net of taxes [Euro/vehicle·km] ..... 94  Table 6 - 13: Benefits yielded per type of vehicle [Meuro/year] ................................. 95  Table 6 - 14: Net benefits and NPV [Meuro] ........................................................... 96  Table 6 - 15: Passenger travel demand [Mpassengers/year] and freight flows [Mtons/year] ..................................................................................................... 98  Table 6 - 16: Economic investment costs [Meuro] ................................................... 99  Table 6 - 17: Economic maintenance costs [Meuro/year] ......................................... 99  Table 6 - 18: Generalised cost [Euro/travel] ........................................................... 99  Table 6 - 19: Change in user surplus [Meuro/year] ............................................... 100  Table 6 - 20 Producer surplus and Government fuel tax revenues [Meuro/year] ........ 101  Table 6 - 21: Estimated external costs benefits [Meuro/year] ................................. 101  Table 6 - 22: Economic analysis of Option 1 [Meuro/year] ...................................... 103  Table 6 - 23: Economic analysis of Option 2 [Meuro/year] ...................................... 104  Table 6 - 24: Costs and benefits yielded by the project [Meuro] .............................. 105  Table 6 - 25: Matrix for the analysis of the distribution of project’s impact ................ 106  VI

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Romania and Turkey associated to the project as TRACECA .. 6.4 Paving gravel road . Finally, the focus of these Guidelines is the economic appraisal.
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