Proposed methodology for prioritization of investment projects along selected Euro-Asian routes

1. 3rd Expert Group Meeting on Developing Euro-Asian Transport Linkages 27 – 29 June 2005, Istanbul, Turkey Proposed methodology for prioritization of investment projects along selected Euro-Asian routes By the External Consultant Dimitrios A. Tsamboulas Associate Professor Department of Transportation Planning and Engineering School of Civil Engineering National Technical University of Athens (NTUA)

2. Objective • identify project’s prioritization/ categorization, • support elaboration of a medium and long-term investment strategy • encourage the realization of projects that have good chances of implementation • all projects that are on the EATL routes or being extensions of those routes will be considered

3. Phases of Methodology • Three consequent phases • PHASE A – Identification • PHASE B – Evaluation • PHASE C – Prioritisation

4. Identification: the initial screening process will group projects in two groups : • one group with those with secure funding or they are already funded and thus they are priority projects by their nature (category I), and • the other group with the rest that need prioritization • Evaluation projects without committed funding with respect to more specific evaluation criteria • Prioritization of the projects -based on the evaluation results- in order to classify them into four priority levels (Category I, II, III and IV-reserve). • After the completion of project’s prioritization, the identification of the projects that are or are not on the EATL routes will take place.

5. Identification Phase • Identificationof the projects that worth further analysis and evaluationaccording to: • Check whether they have committed funding or not • if a project has secured funding will be automatically placed in priority Category I and will be included in a special list of projects entitled “Projects with secured funding” • if not it will be evaluated in order to be prioritized • Proceed in the following steps for only the non-secured funded projects • Template 1 – identified projects will be completed by the consultants, based on country reports

6. TEMPLATE 1 – Identified Projects

7. Data to be collected • Countries will be requested to further elaborate the list of projects proposed in the country reports in the following manner: • For projects with funding committed (Category I), only additional technical information is needed. • For projects without funding committed, complete additional technical information and evaluation criteria questionnaire. • For newly proposed projects, complete all necessary information, to be reported by filling the respective fiche • Fiches (TEMPLATES 2) to be completed by countries. Then all necessary data will be collected, with the assistance of external consultants

8. Evaluation Phase • Selection of Criteria – two dimensions of criteria • horizontal dimension or CLUSTER A “Functionality/ Coherence” expresses the role of the project in the functionality and coherence of the Euro-Asian Transport Linkages (CA) • vertical dimension or CLUSTER B “Socio-economic Efficiency/ Sustainability” expresses the socio-economic return on investment (CB) • Quantification of Criteria per project- Scores • Weighting/ Hierarchy of Criteria – Delphi/Paired Comparison • Total Performance of Project

9. Selection of Criteria: Horizontal dimension or CLUSTER A 1. Serve international connectivity (reaching a border crossing point or provide connection with a link that is border crossing); (CA1) A: Greatly improves connectivity, B: Significantly improves connectivity, C: Somewhat improves connectivity, D: Slightly improves connectivity, E: Does not improve connectivity. 2. Promote solutions to the particular transit transport needs of the landlocked developing countries; (CA2) The projects provides solution.. A: Greatly, B: Significantly, C: Somewhat, D: Slightly, E: Does not

10. 3. Connect low income and/or least developed countries to major European and Asian markets; (CA3) The projects connects.. A: Greatly, B: Significantly, C: Somewhat, D: Slightly, E: Does not 4. The project crosses natural barriers, removes bottlenecks, raises substandard sections to meet international standards, or fills missing links in the EATL; (CA4) The project crosses natural barriers or removes bottlenecks and/ or missing links in EATL.. A: Greatly, B: Significantly, C: Somewhat, D: Slightly, E: Does not

11. Selection of Criteria: Vertical dimension or CLUSTER B 5. Have high degree of urgency due to importance attributed by the national authorities and/or social interest; (CB1) The project is.. A: In the national plan and immediately required (for implementation up to 2008), B: In the national plan and very urgent (for implementation up to 2010), C: In the national plan and urgent (for implementation up to 2015), D: In the national plan but may be postponed until after 2015, E: Not in the national plan. 6. Pass socio-economic viability test; (CB2) The project is expected to increase traffic (both existing and generated) … A: More than 15%, B: 10-15%, C: 5- 10%, D: less than 5%, E: Will not affect traffic

12. 7. Have a high degree of maturity, in order to be carried out quickly (i.e. project stage); (CB3) Project’s is at stage of… A: Tendering, B: Feasibility study, C: Pre-feasibility study, D: Planning, E: Identification 8. Financing feasibility; (CB4) Projects’ financing feasibility is.. A: Excellent, B: Very Good, C: Good, D: Medium, E: Low 9. Environmental and social impacts; (CB5) The project has potentially has negative environmental or social impacts (pollution, safety, etc). A: No impact, B: Slight impact, C: Moderate impact, D: Significant impact, E; Great impact.

13. Templates to be completed by the countries • TEMPLATES 2 will be completed by the countries. However a part of them will be completed by the consultants based on readily available information from the country reports and guidelines below and TEMPLATE will be available. • TEMPLATE 2A – Road and related infrastructure Project Fiche • TEMPLATE 2B – Rail and related infrastructure Project Fiche • TEMPLATE 2C – Inland waterways and related infrastructure Project Fiche • TEMPLATE 2D – Ports (sea and inland waterway), Inland container depot/Intermodal freight terminal/Freight village/Logistic centre and related infrastructure Project Fiche • An example follows

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

15. TEMPLATE 2A – Road and related infrastructure Project Fiche(cont.)

16. TEMPLATE 2A – Road and related infrastructure Project Fiche(cont.)

17. TEMPLATE 2A – Road and related infrastructure Project Fiche(cont.) The slightly shadowed cells will be completed by consultants (these are the first and last)

18. TEMPLATE 2B – Rail and related infrastructure Project Fiche

19. TEMPLATE 2B – Rail and related infrastructure Project Fiche(cont.)

20. TEMPLATE 2B – Rail and related infrastructure Project Fiche(cont.)

21. TEMPLATE 2B – Rail and related infrastructure Project Fiche(cont.) The slightly shadowed cells will be completed by consultants (these are the first and last)

22. TEMPLATE 2D – Ports (sea and inland waterway), Inland container depot/Intermodal freight terminal/Freight village/Logistic centre and related infrastructure Project Fiche

23. TEMPLATE 2D – Ports (sea and inland waterway), Inland container depot/Intermodal freight terminal/Freight village/Logistic centre and related infrastructure Project Fiche (cont.) No need to complete Section regarding Cluster A

24. TEMPLATE 2D – Ports (sea and inland waterway), Inland container depot/Intermodal freight terminal/Freight village/Logistic centre and related infrastructure Project Fiche (cont.) The slightly shadowed cells will be completed by consultants (these are the first and last)

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

26. TEMPLATE 3 – Project Criteria Scores (each country complete the relevant column, if so wishes**) Project no:……… * Or provided by the Delphi team when necessary. ** In case country experts disagree with proposed scores, they may fill up the respective column of their country with their proposed scores, providing an adequate justification of the wanted change.

27. Revised Templates • In the following revised Templates 2A, 2B, 2C and 2D are presented. • Section 1 changes for each case • Section 2 remains the same in content

28. Criterion Scores per project • Good communication between the externals and the country experts is necessary. • External consultants could complete TEMPLATE 3 with scores based on provided information by the countries. They will provide explanations –if necessary- on the reasons for changing the scores and return it. • Country representatives will have the opportunity to change the scores, if they are dully justified.

29. Weighting/ Hierarchy of Criteria • Country experts have received TEMPLATE 4 with proposed default set of weights, derived by the consultants, using Delphi method and Paired Comparison Matrix. • The sum of criteria weights should be 1. • Therefore: and where: J= A or B and i = 1,….,5

30. Paired Comparison Method • Paired comparison approach is a scaling approach. • Onlyone question to be answered is “is this criterion more important than the other?”. • This means that the paired comparison matrix (see Table I next) can be filled with zeros and ones, where one represents “is more important”. • Alternatively, a Delphi method could be applied, with experts the external consultant, the UNECE and UNESCAP • 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.

31. TEMPLATE 4 – Criteria Weights (each country complete the relevant column, if so wishes**) * Or provided by the Delphi team ** In case country experts disagree with proposed weights. They may fill up the respective column of their country with their proposed weights providing an adequate justification of the wanted change.

32. Criteria Weights from the Country Experts • Good communication between the externals and the country experts is necessary. • Upon completion of TEMPLATE 4 with default set of criterion weights to be used in the evaluation of project proposals, filled by the consultants, will be communicated to the country experts. • If there is disagreement for the default weights proposed by the consultants, country experts may fill up the respective column of their country with their proposed weights, providing explanations on the reasons for changing the weights and return it.

33. TableI An example of Paired Comparison matrix Standardised score wi = (I)

34. Total Performance of Project • To derive the project’s total score we use the following relationship: • T.S.Project = where: CJi [1,5] WJi [0,1] J = A or B and i = 1,….,5 TSProject [1,5]

35. Prioritization Phase • The combination of the criteria weights and scores puts each project in one of the four priority categories or reserve category. • If the project already has committed funding or is funded, it belongs to priority category I. • If the project scores between 4-5 then it belongs to priority category II. • If the project scores 3 -4 then it belongs to priority category III. • If the project scores 1 -3 then it belongs to priority category IV. • If the project has not pass the pre-selection phase then it belongs to reserve category.

36. Priority Categories • I: projects, which have funding secured and are ongoing or planned and are expected to be completed in the near future (up to2010). • II: projects which may be funded and implemented rapidly (up to 2015). • III: projects requiring some additional investigations for final definition before likely financing (up to 2020). • IV/ Reserve: projects requiring further investigations for final definition and scheduling before possible financing or projects to be implemented in the long run, including the projects where insufficient data existed.

37. After the completion of project’s prioritization, the identification of the projects that are or are not on the EATL routes will take place. This will help to “map” the current and expected status of the infrastructure along the routes.