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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

PIARC Committee C9 on Economic and Financial Evaluation has prepared this report to present an up to date description and analysis of the methodologies used by PIARC member countries and international agencies for economic evaluation of road projects, the range and valuation of the impacts considered, and how the evaluations are accepted and used in decision making processes. The methodologies covered by this report are, in general, those used for evaluating capital investments at the project level. This work is an expansion and update of a 1997/98 PIARC survey and report on the same topic.

This report does not cover generic information on the purpose of economic evaluation, methods for economic evaluation, merits of the various evaluation methods, and methods of valuing impacts. That information is covered in the earlier report referred to above and in more detail in many other publications.

The report considers the purpose and scope of evaluations in member countries, including how the evaluation assists government policies and decision making. Methods of evaluation adopted by member countries are reviewed. There is a wide range of methods used. Almost all countries use Cost Benefit Analysis (CBA) in some
form as a component of the evaluation, often in conjunction with Multi-Criteria Analysis (MCA), or with an environmental or socio-economic analysis. Some countries use Life Cycle Cost Analysis (LCCA) to select pavement type.

The range of impacts (elements of cost and benefit) included in road evaluations are tabulated for PIARC member countries that have responded. All countries include road user time costs, vehicle operating costs and most include accident costs in their evaluations. In nearly all countries these benefits are monetised. Externalities are often not monetised.

Estimation methods for valuing road user and other impacts are tabulated, and the process used by each country for including social and environmental impacts and other externalities in the evaluation framework is documented. There is a wide range of approaches.

Cost and benefit unit values for road user impacts are tabulated and compared graphically, and for environmental impacts they are tabulated. The unit values vary significantly between countries. The economic indicators (NPV, BCR, IRR, FYRR, etc) used to measure the worth of a road project are listed, together with the discount rates
and evaluation periods.