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Agenda item 4 Identification of Investment Priority Needs to Improve Transport Operations

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Title: Agenda item 4 Identification of Investment Priority Needs to Improve Transport Operations


1
Agenda item 4Identification of Investment
Priority Needs to Improve Transport Operations
  • UNECE TEM and TER Master Plan Methodology for
    Selection, Evaluation and Prioritization of
    Transport Projects

Dimitrios Tsamboulas, Assoc. Professor National
Technical University of Athens, External
Consultant, TEM and TER Master Plan
2
Necessity of the Evaluation Methodology for
Projects Prioritization
  • Evaluation is a complex exercise when it comes to
    a group of projects either related or
    constituting segments of a transport corridor/
    network or located in different regions/
    countries.
  • If projects are also competing for scarce
    financial resources, evaluation and subsequently
    prioritization becomes even more difficult.

3
Scope of TEM and TER Master Plan Methodology
  • To assist the evaluation/prioritization at the
    strategic level (on network not on project level)
  • To function as a decision tool, structured in
    three levels (identification, assessment and
    prioritization) and employing
  • criteria reflecting societal values,
  • priorities and available resources (mainly
    financial) of countries concerned,
  • viability of projects to secure loans and
    possible private funds.

4
Possible Benefits of TEM and TER Methodology
  • Identification of the priority projects for road,
    rail, combined transport infrastructure along
    multi-national transport corridors, which will
    encompass the priorities at
  • Regional
  • National
  • Transnational (e.g.cross-border)
  • Assist involved countries to achieve
  • interconnection - interoperability of national
    and trans-national networks (regardless of being
    within the considered area or at a broader
    neighbouring ones)
  • access to those networks

5
Outputs of the Methodology
  • Projects prioritization and categorization to
  • Support elaboration of a medium and long-term
    investment strategy in the countries concerned,
    with national funds, subsidies from EU/donors and
    loans
  • Encourage the realization of projects that have
    good chances of implementation and fall within
    the objectives of the respective governments and
    international agencies in case of funding from
    them.

6
Phases of TEM and TER Master Plan Methodology
  • PHASE A Identification
  • PHASE B Forecasting
  • PHASE C Evaluation
  • PHASE D Prioritisation

7
Identification Phase
  • Identification of the projects, that worth
    further analysis and evaluation, consists of
    three levels
  • Relevance
  • Readiness
  • Viability

8
Project Relevance
  • relevance level, expresses relevant importance
    of a project within a group of projects, under
    international perspective, using generic
    criteria
  • Related to international transportation policies
    and agreements
  • Related to national transportation policies and
    objectives
  • Dealing with elimination of cross-border
    transportation problems (bottlenecks, missing
    links etc.)

9
Project Readiness
  • readiness level, concerns maturity of project
    in terms of planning and evidence of authorities
    commitment for implementation, using generic
    criteria
  • Related with project status (existing studies,
    allocation of work among the responsible
    stakeholders, time plan for elaboration)
  • Related with planning organizations and
    implementation authoritys commitment to the
    project

10
Project Viability
  • viability level, concerns expected
    transportation, economic and social benefits of
    project, using generic criteria
  • Related to financial and economic impacts and
    benefits
  • Related to societal and environmental impacts and
    benefits
  • Related to traffic impacts and benefits
  • for projects passing all identification levels,
    the following TEMPLATES will be completed.

11
TEMPLATE 1 Identified Projects
12
TEMPLATE 2A Road and related infrastructure
Project Fiche
13
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14
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15
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16
TEMPLATE 2B Rail and related infrastructure
Project Fiche
17
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18
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19
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20
TEMPLATE 2C Maritime/port Fiche
21
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22
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23
Forecasting Phase
  • Large-scale plans that include international
    projects and often conflicting but urgent
    political and social priorities, consultants,
    authorities and modelers are often asked to
    elaborate forecasting issues within a short time
    period
  • The idea of not using any formal model due to
    the above mentioned limitations- means that
    empirical heuristic approaches will be applied.
    They are formed and refined through observations,
    analogies, discussions, experimentations and
    mistakes/ corrections, emphasizing the use of
    readily available data.
  • Forecasting is on a macro level

24
Forecasting Results/ Scenarios
  • So, the forecasting phase of methodology provides
    reference transportation demand and supply
    scenarios for use in the evaluation.
  • it does not apply transportation models linking
    socio-economic variables (inputs) and traffic
    levels (outputs), assigned on a network,
  • it is based on readily available data

25
Evaluation Phase
  • Selection of Criteria 3 hyper-criteria
  • CLUSTER A Socio-economic return on investment
    (CA)
  • CLUSTER B Functionality and coherency of the
    network (CB)
  • CLUSTER C Strategic/ Political concerns
    regarding the network (CC)
  • Quantification of Criteria - Scores
  • Weighting/ Hierarchy of Criteria
    Delphi/Pair-wise Comparison
  • Total Performance of Project

26
Selection of Criteria
  • Criteria as developed for the TEM and TER Master
    Plan are presented
  • Most of them, can be used for the
    evaluation/prioritization of the projects
    identified in Euro- Asian Transport Linkages
  • Additional ones might be needed for Euro- Asian
    Transport Linkages, following the Decisions
    reached at the International Euro-Asian
    Conferences on Transport

27
Selection of Criteria -1
  • CLUSTER A
  • Socio-economic return on investment (CA)
  • Degree of urgency (CA1),
  • Cost effectiveness (CA2),
  • Relative investment cost (CA3),
  • Level of transport demand (CA4),
  • Financing feasibility (CA5).

28
Selection of Criteria -2
  • CLUSTER B
  • Functionality and coherency of the network
    (CB)
  • Relative importance of international demand of
    traffic/ passengers (CB1),
  • Relative importance of international demand of
    traffic/ goods (CB2),
  • Alleviation of bottlenecks (CB3),
  • Interconnection of existing networks
    (international level) (CB4),
  • Interoperability of networks (CB5).

29
Selection of Criteria -3
  • CLUSTER C
  • Strategic/ Political concerns regarding the
    network (CC)
  • Border effects (CC1),
  • Political commitment (CC2),
  • Regional and international cooperation (CC3),
  • Historical/ heritage issues (CC4),
  • Economic impact (CC5).

30
Quantification of Criteria -1
  • 1. Degree of urgency
  • A Immediate requirement (in the next 2
    years-until 2005), B Very urgent (between 2005
    and 2010), C Urgent (between 2010 and 2015), D
    May be postponed for some years (between 2015 and
    2020), E To be reconsidered later (after 2020)
  • 2. Cost effectiveness
  • A Excellent (IRR more than 15), B Very
    good (13-15), C Good (10-13), D Acceptable
    (4,5-10), E Low (less than 4,5)
  • 3. Relative investment costs (costs/GDP)
  • (see nomograph next)

31
X1 the min cost of the project type observed in
the country (in million or ). X2 the max
cost of the project type observed in the country
(in million or ) X3 the considered project
cost (in million or ) Countrys GDP given in
million or
ED DC CB BA1 and A5, B4, C3, D2, E1
Figure 1
32
Quantification of Criteria -2
  • 4. Level of transport demand
  • Highways A present traffic more than 14000
    vpd B present traffic from 10000 to 14000 vpd
    C from 6000 to 10000 vpd D from 3000 to 6000
    vpd E less than 3000vpd
  • Border crossings A present traffic more
    than 3500 vpd B present traffic from 2500 to
    3500 vpd C from 1500 to 2500 D from 800 to
    1500 E less than 800 vpd
  • Railways A present traffic more than 140
    trains a day B present traffic from 100 to 140
    trains a day C from 60 to 100 trains a day D
    from 25 to 60 trains a day E less than 25
    trains a day
  • 5. Financing feasibility
  • A Excellent, B Very Good, C Good, D
    Medium, E Low

33
Quantification of Criteria -3
  • 6. Relative importance of international demand of
    traffic (passengers)
  • A more than 30 of total traffic B from
    25 to 30 of total traffic C from 15 to 25
    of total traffic D from 7 to 15 of total
    traffic E less than 7 of total traffic
  • 7. Relative importance of international demand of
    traffic (goods)
  • The same as 6.
  • 8. Alleviation of bottlenecks
  • A Satisfactory, B Adequate, C Medium, D
    Inadequate, E Unsatisfactory

34
Quantification of Criteria -4
  • 9. Interconnection of existing networks
  • A Missing Link, B Natural Barrier, C
    Improve the connection, D No influence, E
    Averse effects on rest of network
  •  
  • 10.Technical interoperability of network
  • A No interoperability problems, B Minimal
    interoperability problems, C Tolerable
    Interoperability problems, D Serious
    interoperability problems, E Unsolvable
    interoperability problems
  •  

35
Quantification of Criteria -5
  • 11.Border effects
  • A No border problems, B Minimal border
    problems, C Tolerable border problems, D
    Serious border problems, E Unsolvable border
    problems
  •  
  • 12.Political commitment
  • A Strong, B High, C Medium, D Adequate,
    E Low
  •  
  • 13. Regional and international cooperation
  • A Satisfactory, B Adequate, C Medium, D
    Inadequate, E Unsatisfactory
  •  

36
Quantification of Criteria -6
  • 14. Historical/ heritage issues
  • A No effects, B Minimal effects, C
    Tolerable/ Reversible effects, D Serious
    effects, E Irreversible effects
  •  
  • 15. Economic impact
  • A Strong impact, B High impact, C Medium
    impact, D Low impact, E No impact
  •  

37
Criteria Scores
  • A value is 5 (the highest) in terms of score.
    Respectively for value E, is 1 (the lowest).
  • Therefore
  • where
  • J A, B or C and
  • i 1,.,5
  • The template for criterions scores is TEMPLATE 3.

38
TEMPLATE 3 Project Criteria Scores
39
Weighting/ Hierarchy of Criteria
  • Country experts fill TEMPLATE 4 with proposed set
    of weights, using Pair-wise Comparison Matrix.
  • The sum of criteria weights should be 1.
  •  
  • Therefore and
  • where
  • J A, B or C and
  • i 1,.,5

40
Pair- wise Comparison
  • Pair-wise comparison approach is a scaling
    approach.
  • Only one question to be answered is is this
    criterion more important than the other?.
  • This means that the pair-wise comparison matrix
    (see Table I next) can be filled with zeros and
    ones, where one represents is more important.
  • By adding these values over the column, a measure
    is obtained for the degree to which a criterion
    is important compared to all other criteria, if
    finally these measures are standardised (see
    Formula I next), a set of criteria weights is
    created.

41
Table I An example of Pair-wise Comparison matrix
Standardised score wi (I)
42
TEMPLATE 4 Project Criteria Weights
43
Projects Total Score/ Performance -1
  • To derive the projects total score in each
    country we use the following relationship
  • T.S.Project/Country
  • where
  • CJi ? 1,5
  • WJi ? 0,1
  • J A, B or C and
  • i 1,.,5
  • TSProject/Country ? 1,5

44
Projects Total Score/ Performance -2
  • For Total Score per Project, we use Country/
    Spatial Weights (SW).
  • SWCountry of projects length in the
    country/ total projects length.
  • So the Total Score per project will be
  • T.S.Project T.S.Project/Country SWCountry

45
Prioritization Phase
  • Implementation of prioritization phase in three
    levels
  • Technical (direct application of the methodology,
    which provides the scores for projects)
  • Compliance with legal biding commitments that set
    priorities (e.g. TEN-T network for EU member
    states) then corrective actions are needed for
    the priorities
  • Financial capability of the country (comparison
    with 1,5 of GDP per year), which will force some
    projects to shift implementation over time

46
Technical Prioritization Phase of the TEM and
TER Master Plan
  • The combination of the criteria scores and
    priorities places each project in one of the four
    priority categories.
  • If the project scores between 4-5 then it belongs
    to priority category I.
  • If the project scores 3-4 then it belongs to
    priority category II.
  • If the project scores 2-3 then it belongs to
    priority category III.
  • If the project scores 1-2 then it belongs to
    priority category IV.

47
TEM and TER Master Plan Priority Categories
  • I projects, which may be funded and implemented
    rapidly, including on-going projects up to 2010.
  • II projects requiring some additional
    investigations for final definition before likely
    financing, or planned for implementation up to
    2015
  • III projects requiring further investigations
    for final definition and scheduling before
    possible financing, or planned for implementation
    up to 2020.
  • IV projects to be implemented in the long run,
    including the projects where insufficient data
    exists.

48
Example of Evaluation Methodology (Applied for a
TEM project)
  • Greek Project
  • Egnatia Motorway
  • Section Komotini - Vanianos.

49
Example steps
  • Complete Project Fiche see next
  • Derive Criteria Scores
  • Use default set of Criteria Weights
  • Derive Project Total Score
  • Prioritize Project

50
TEMPLATE 2A Road and related infrastructure
Project Fiche
51
(No Transcript)
52
(No Transcript)
53
(No Transcript)
54
Criteria Scores-1
  • 1. Degree of urgency
  • In the socio-economic evaluation of the project,
    as included in the feasibility study, and
    according to governmental priorities, the
    projects implementation is characterized as A
    immediate requirement.
  • CA15
  • 2. Cost effectiveness
  • Based on the data of TEMPLATE 2A, the projects
    cost effectiveness is characterized as A
    Excellent (IRR higher than 15 ).
  • CA25

55
Criteria Scores-2
  • 3. Relative investment costs (costs/GDP)
  • Based on the data of TEMPLATE 2A, countrys
    GDP and Figure 1 the projects relative
    investment cost is characterized as C.
  • CA33 (or 2,8 from Figure 1 directly -see
    example next)
  • 4. Level of Transport Demand
  • Based on the data of TEMPLATE 2A, the level of
    transport demand is 14000vdp, therefore the
    projects level of transport demand is
    characterized as B present traffic from 10000 to
    14000 vpd.
  • CA44

56
X1 110 million X2 200 million X3 159
million GDP 136.300 millions
Therefore (X1/GDP) 0,08 (X2/GDP) 0,15
(X3/GDP) 0,116
57
Criteria Scores-3
  • 5. Financing Feasibility
  • In the viability study of the project, and
    according to experts opinion, the projects
    financing feasibility is characterized as B Very
    Good.
  • CA54
  • 6. Relative importance of international demand of
    traffic (passengers)
  • Based on the data of section 1, the relative
    importance of international demand of passenger
    traffic is 5,2 (500/9500) therefore the
    projects relative importance of international
    demand of passenger traffic is characterized as
    E less than 7 of total traffic.
  • CB11

58
Criteria Scores-4
  • 7. Relative importance of international demand of
    traffic (goods)
  • Based on the data of section 1, the relative
    importance of international demand of freight
    traffic is 33,33 (1500/4500) therefore the
    projects relative importance of international
    demand of freight traffic is characterized as A
    more than 30 of total traffic.
  • CB2 5
  • 8. Alleviation of Bottlenecks
  • Based on experts opinion the projects
    alleviation of bottlenecks is characterized as A
    Satisfactory.
  • CB35

59
Criteria Scores-5
  • 9. Interconnection of existing networks
  • Based on experts opinion the projects
    interconnection of existing networks is
    characterized as A Missing Link.
  • CB4 5
  • 10. Technical interoperability of network
  • Based on experts opinion the projects
    technical interoperability in the network is
    characterized as A No interoperability problems.
  • CB55

60
Criteria Scores-6
  • 11. Border effects
  • The project is a one-country one, therefore
    regarding the border effects is characterized as
    A No border problems.
  • CC1 5
  • 12. Political Commitment
  • The political commitment is characterized as A
    Strong.
  • CC25
  • 13. Regional and International Cooperation
  • The regional cooperation (since there is no
    international cooperation) is characterized as A
    Satisfactory.
  • CC35

61
Criteria Scores-7
  • 14. Historical/ heritage Issues
  • According to the Environmental Impacts Study
    of the project, there are no effects on
    historical heritage, therefore the project scores
    A No effects.
  • CC4 5
  • 15. Economic Impact
  • According to the socio-economic study of the
    project, it is expected to have a C Medium
    Impact.
  • CC23
  • See TEMPLATE 3 completed next..

62
TEMPLATE 3 Criteria Scores
63
TEMPLATE 4 Criteria Weights
64
Projects Total Score
  • In this case, it is only one country so spatial
    weighting was not necessary
  • Based on methodology described earlier the
    calculation of Total Score is presented in
    TEMPLATE 5. (It is the weighted sum of criteria
    scores or else TEMPLATE 5 is the result of
    multiplying TEMPLATES 3 and 4)

65
TEMPLATE 5 Project Total Score
66
Technical Prioritization of Project
  • The Project Total Score is
  • T.S. 4,32
  • Therefore the project belongs in Priority
    category
  • I projects, which may be funded and
    implemented rapidly, including on-going projects
    up to 2010.

67
Advantages of the TEM and TER Master Plan
Methodology
  • saves time and money in project evaluation
    procedure
  • Identification phase excludes weak projects
    from the beginning
  • Uses readily available data
  • has the ability to measure a multinational
    projects performance, shared by more than one
    region/country, by introducing spatial weights.
  • the easiness in each application, renders the
    methodology useful for the decision makers in
    countries with different levels of development.

68
How to use this methodology for the Euro-Asian
Transport Linkages - 1
  • Adopt the same 4 phases and three levels (for
    Prioritization Phase - D) procedure, in more
    simplified form
  • Use a sub-set of the introduced criteria
    (depending on data availability and what it was
    collected from the requested information from the
    focal points in each country)
  • Employ the same method for scores and weights
  • Introduce additional criteria, that are related
    to objectives/guidelines of Euro-Asian Transport
    Linkages

69
How to use this methodology for the Euro-Asian
Transport Linkages - 2
  • Additional criteria should be based on the
    following
  • Projects considered constitute segments of the
    major Euro-Asian corridors, within recognized
    UNECE/UNESCAP networks
  • For projects to be considered, consensus exist
    from all countries that they contributed to
    improvement of specific Euro-Asian transport
    routes, as decided by the Euro-Asian Transport
    Linkages initiative
  • Projects considered would enhance the quality of
    infrastructure to meet international standards
  • projects would address needs to overcome
    time/cost bottlenecks.

70
How to use this methodology for the Euro-Asian
Transport Linkages- 3
  • Projects will contribute to
  • Safe and environmental-friendly sustainable
    conditions of transport operations
  • Facilitation of international traffic
  • Maximizing use of existing infrastructure

71
How to use this methodology for the Euro-Asian
Transport Linkages- 4
  • Data needs
  • Already provided by countries (name and location
    of projects, transport, mode, type of project,
    project status, expected starting date, expected
    completion date, project cost, IRR value,
    expected funding sources)
  • Existing technical status of projects corridor
  • Average annual daily traffic for road (average
    annual daily traffic for private cars, trucks,
    buses), for rail (trains/day for passengers/mixed
    trains and freight trains)

72
How to use this methodology for the Euro-Asian
Transport Linkages- 5
  • Data needs
  • GDP of country
  • Special infrastructure (terminals, freight
    villages) along the agreed Euro-asian routes
    names, location, technical and volume
    characteristics
  • Ports located at the agreed Euro-Asian routes
    characteristics, volumes (in no. ships, TEUs,
    tons of general cargo)

73
How to use this methodology for the Euro-Asian
Transport Linkages- 6
  • CRITERIA CLUSTER A
  • Socio-economic return on investment (CA)
  • Degree of urgency (CA1),
  • Cost effectiveness (CA2),
  • Relative investment cost (CA3),
  • Level of transport demand (CA4),

74
How to use this methodology for the Euro-Asian
Transport Linkages- 7
  • CRITERIA CLUSTER B
  • Functionality and coherency of the network
    (CB)
  • Relative importance of international demand of
    traffic/ passengers (CB1),
  • Relative importance of international demand of
    traffic/ goods (CB2),
  • Alleviation of bottlenecks and missing links
    (CB3),
  • Interconnection of existing networks
    (international level) (CB4),

75
How to use this methodology for the Euro-Asian
Transport Linkages- 8
  • CRITERIA CLUSTER C
  • Strategic/ Political concerns regarding the
    network (CC)
  • Political commitment (CC2),
  • Regional and international cooperation (CC3),
  • Economic development impact (CC5).

76
Benefits from the usage of the TEM and TER
methodology for the Euro-Asian Transport Linkages
(I)
  • Increase of the capacity and output of the
    existing infrastructure through cost-effective
    technical and administrative means prior to
    introducing major capital investments
  • Promotion and facilitation of public-private
    partnership (PPP) schemes for the development of
    transport in the Euro-Asian context

77
Benefits from the usage of the TEM and TER
methodology for the Euro-Asian Transport Linkages
(II)
  • Provide to countries another level to assist
    decisions in prioritising their transport
    investment plans the strategic level, i.e
    whether a project bears a priority for the routes
    of Euro-Asian Transport linkages
  • It does not alter the national priorities for
    transport infrastructure investments

78
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