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Olim Latipov
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Finances & Economics
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Economic Evaluation Methods for Road Projects in PIARC Member Countries

This study has been commissioned by Committee C9 on Finance and Economic Evaluation. The ultimate objective is to compile information from published sources, including existing surveys, and to make recommendations, if possible, on specific and general basis. The following goals have been agreed upon:

a) to assemble information for each participating country on the methodology for economic evaluation of road projects, the elements of cost and unit costs;

b) to analyse and evaluate the differences between the various methods of assessment, to assess the range of cost elements with view of making recommendations for further developments.

The potential for benefits that may exist in assembling information on economic evaluation methods used in member countries and the possible opportunity for agreement on a common framework for economic evaluation was envisioned. It was, however, recognized that the latter aim might prove difficult in practice. Because there
has generally been little dissemination of information on economic evaluation methodologies between member countries, this project was expected to provide an opportunity for obtaining data and discussing the methods in the context of member countries with a view to better decision making.

Compiling information on methodologies used in the different member countries was considered to be useful in the following way. Those countries that consider their methodologies as failure may learn from the successful ones. Those who have difficulties in quantifying or estimating the values of different factors may learn from those who have been successful. Compiling and publishing this type of information will therefore contribute towards a more efficient use of public funds in the member countries.

The study was conducted as a questionnaire survey of all member countries of C9 supplemented with information from available sources. For those countries that did not respond to the questionnaire, information has been obtained entirely from other published sources. The available sources comprised mainly of publications from the
various countries and notably a report, EURET/385/94, commissioned by European Commission DG VII. The latter report provides a description of objectives and sets out appraisal methods and values used in EU member countries.

This report is organized as follows. Chapter 2 gives a brief description of the major methods that may be applied to evaluate road projects. Chapter 3 summarizes the methods for valuing impacts as practiced in member countries. Chapter 4 gives a summary and comparison of existing frameworks of impact assessment in member countries. The potential for harmonization within member countries is briefly discussed in chapter 5 while chapter 6 gives some recommendations on a general basis.

Finally, caution must be taken when interpreting data and comparisons presented in this report. First, the data reported here are as for 1st October 1997 or as stated in graphs and tables. Some of these data may have been reviewed in the mean time. Second, comparisons made between countries are only meant to illustrate the magnitude of variations in absolute terms. One should be aware that the values reported may have been derived through different methods in the member countries, and in many circumstances will contain different components.