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

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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
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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.

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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.

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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

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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.

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Phases of TEM and TER Master Plan Methodology

• PHASE A Identification
• PHASE B Forecasting
• PHASE C Evaluation
• PHASE D Prioritisation

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Identification Phase

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

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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.)

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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

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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.

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TEMPLATE 1 Identified Projects
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TEMPLATE 2A Road and related infrastructure
Project Fiche
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TEMPLATE 2B Rail and related infrastructure
Project Fiche
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TEMPLATE 2C Maritime/port Fiche
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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

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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

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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

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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

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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).

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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).

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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).

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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)

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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
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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

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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

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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
•  

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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
•  

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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
•  

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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.

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TEMPLATE 3 Project Criteria Scores
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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

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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.

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Table I An example of Pair-wise Comparison matrix
Standardised score wi (I)
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TEMPLATE 4 Project Criteria Weights
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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

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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

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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

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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.

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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.

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Example of Evaluation Methodology (Applied for a
TEM project)

• Greek Project
• Egnatia Motorway
• Section Komotini - Vanianos.

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Example steps

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

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TEMPLATE 2A Road and related infrastructure
Project Fiche
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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

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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

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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
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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

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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

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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

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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

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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..

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TEMPLATE 3 Criteria Scores
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TEMPLATE 4 Criteria Weights
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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)

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TEMPLATE 5 Project Total Score
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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.

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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.

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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

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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.

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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

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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)

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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)

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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),

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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),

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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).

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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

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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

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THANK YOU !