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

Agenda item 4 Identification 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,

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

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  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) • Assistinvolved 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 • Identificationof 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 organization’s and implementation authority’s 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. TEMPLATE 2B – Rail and related infrastructure Project Fiche

  14. TEMPLATE 2C – Maritime/port Fiche

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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).

  20. 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).

  21. 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).

  22. 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)

  23. 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 $) Country’s GDP given in million € or $ ED= DC= CB= BA=1 and A=5, B=4, C=3, D=2, E=1 Figure 1

  24. 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

  25. 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

  26. 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

  27. 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

  28. 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

  29. 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.

  30. TEMPLATE 3 ProjectCriteria Scores

  31. 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

  32. Pair- wise Comparison • Pair-wise comparison approach is a scaling approach. • Onlyone 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.

  33. TableIAn example of Pair-wise Comparison matrix Standardised score wi = (I)

  34. TEMPLATE 4 ProjectCriteria Weights

  35. Projects Total Score/ Performance -1 • To derive the project’s total scorein 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]

  36. Projects Total Score/ Performance -2 • For Total Score per Project, we use Country/ Spatial Weights (SW). SWCountry = % of projects length in the country/ total project’s length. • So the Total Score per project will be: T.S.Project = T.S.Project/Country * SWCountry

  37. 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

  38. 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.

  39. 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.

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

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

  42. TEMPLATE 2A – Road and related infrastructure Project Fiche

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