Evaluation of Low Volume Roads

1
Evaluation of Low Volume Roads

• Rodrigo Archondo-CallaoSenior Highway Engineer,
  ETWTRJanuary 10, 2008

The World Bank
2
World Bank Technical Paper No. 496
3
Road Transport
Tracks
Roads
Highways
4
Functional Classification
5
Primary Road Network

• Roads with 2 or more lanes
• Paved roads
• Traffic greater than 500 AADT
• Long distance traffic
• Essentially serves an economic function
• Focus is the reduction of transport costs

Cost Benefit Analysis (CBA) using the HDM-4 model
6
Secondary Road Network

• Road with 1.5 to 2 lanes
• Unpaved roads or paved roads
• Traffic less than 500 AADT
• Medium distance traffic
• Economic and social function
• Focus is the reduction of total transport costs,
  measuring also the social impact

Cost Benefit Analysis (CBA) using RED model or
HDM-4 model
7
Tertiary Road Network

• Roads with 1 to 2 lanes
• Unpaved roads and tracks
• Traffic lower than 50 AADT difficult to measure
• Short distance traffic
• Essentially serves a social function
• Focus is the social impact, measuring the
  efficiency of the investments and/or a
  multi-criteria index

Cost Efficiency Analysis (CEA) or Multi- Criteria
Analysis (MCA)
8
Analytical Instruments

• Cost Benefit Analysis (CBA)
• Net Present Value
• Cost Efficiency Analysis (CEA)
• Total Beneficiary Population per Investment
• Multi Criteria Analysis (MCA)
• Priority Index

9
Cost Benefit Analysis (CBA)
Total Society Costs
Road User Costs
Government Costs
Improve Standard
CBA
10
Comparison of Alternatives with CBA

• To compare project alternatives, the Net Present
  Value is used to select the optimal alternative
  (the one with higher NPV) and to eliminate
  project that are not economically feasible
  (NPVlt0)
• The Internal Rate of Return (IRR) or the
  Benefit/Cost and NPV/Investment ratios are not
  recommended to compare project alternatives

Alternatives NPV 0.03.76.75.5
Project
Optimal AlternativeHigher NPV
CBA
11
Comparison of Projects with CBA

• To compare the economic priority of projects, it
  is recommend the use of the indicator NPV per
  Investment or a budget constraint optimization
  algorithm, such as EBM-32 contained on the HDM-4
  and RED models.

PRIORITY
Selected Alternative OverlayReseal Overlay
NPV / Investment 8.45.2 2.1
Projects
CBA
12
Projects Eligibility with CBA

• To define if a project is eligible, it is
  recommended to utilize the NPV (NPV gt 0) or the
  IRR (IRR gt x), at a given x discount rate.

NPV IRR 42.2 25 25.4 17 -5.5 9
Projects
Eligible
Not Eligible
CBA
13
Cost Efficiency Analysis (CEA)

• It compares the cost of interventions with its
  predicted impacts and it is used in the
  situations where the benefits cannot be measured
  in monetary terms, or where the measurement is
  difficult.
• It includes provisions that (a) the objectives of
  the intervention are indicated and are clearly
  part of a ampler program of objectives (such as
  reduction of the poverty) and (b) the
  intervention represents the smaller cost
  alternative of obtaining the indicated
  objectives.
• It produces efficiency indicators such as Total
  Beneficiary Population per Investment.

CEA
14
Comparison of Alternatives with CEA

• To compare project alternatives, the investment
  cost is used to select the optimal alternative
• The selected alternative will be the one with the
  lowest investment cost that will provide the road
  all-weather access

Alternatives Investment 2.03.71.75.5
Project
Optimal AlternativeLower Investment
CEA
15
Comparison of Projects with CEA

• To compare the economic priority of projects, it
  is recommended the use of the efficiency
  indicator Total Beneficiary Population per
  Investment

Alternative withLowest Cost ResurfaceGrading
Resurface
Total BeneficiaryPopulation / Investment
2014 5
PRIORITY
Projects
CEA
16
Projects Eligibility with CEA

• To define if a project is eligible it is
  recommended to define a minimum acceptable
  efficiency indicator Total Beneficiary Population
  per Investment

Total Beneficiary Population per Investment
2014 5
Projects
Eligible
Not Eligible
CEA
17
Projects Eligibility with CEA
CEA
18
CEA Indicators

• Investment Cost per Total Beneficiary Population
• 100 US per person
• Total Beneficiary Population per Investment Cost
• 0.01 persons per US
• Total Beneficiary Population per Investment Cost
  in thousands of dollars
• 10 persons per 1,000 US

CEA
19
Multi Criteria Analysis (MCA)

• It adopts criteria such as traffic, proximity to
  educative, health, and economic centers, which
  receive weights (points) concerning their
  perceived importance.
• The added number of the points that each section
  receives is computed simply adding the points
  assigned for each criterion, or with the use of a
  more complex formula.

MCA
20
Multi Criteria Analysis Example

• Inhabitants benefited per km
• Percentage of extreme poverty
• Productive area
• Average traffic
• Functional classification
• Location in the optimal network
• Number of health centers
• Number of schools
• Existence of public transport
• Environmental feasibility

MCA
21
Multi Criteria Analysis Example
MCA
Factor Value / Maximum Value