7/30/2019 Infra Structure Example Road Project Economic Analysis

1/3

Appendix-III

An example of Infrastructure Sector Project

Economic/Financial Analysis (ROAD PROJECT)

The project is designed to construct 20 KMs Road. The following statistical

information has been collected to undertake financial/economic appraisal of theproject:

Year-wise Phasing of Capital Cost:

Year (Million Rs.)

1 603.50

2 691.50

Total 1295.00

Annual Recurring Cost: 1 % of capital cost

Implementation Period: 24 months

Source of Financing: Federal PSDP

Distance without project: 25 K.M

Distance With Project: 20 K.M

Average Daily Traffic (ADT)

Mode of Transport ADT (Base Year)

Motor Cycle 100Car/Jeep 3950Mini Bus/Pickup 1525Bus 403Tractor Trolleys 500Trucks 187

Traffic Growth: Traffic growth rate per annum of 2 % during construction periodand 5%, 4%, 3% and 2% for the first, 2nd, 3 rd and 4th five yearsrespectively over the life of the project has been assumed.

Based on the above growth rates, the traffic projections are given at Annex-1.

Proposed Toll TaxMode of Transport Proposed Toll Tax (Rs.)

Car/Jeep 20.00Mini Bus/Pickup 30.00Bus 80.00Trucks 100.00

7/30/2019 Infra Structure Example Road Project Economic Analysis

2/3

Based on the above toll, the revenues are also given atAnnex-1.

Life of the Project: 20 Years after completion

Replacement Cost: Five times of the O.M Cost after every five years.

Opportunity cost of capital: 12%

Financial Benefits: Average daily projected traffic into proposed toll rates

Result of financial analysis:The financial analysis of the project has beenundertaken and are paced in the following annexes:

Financial Analysis(FIRR,NPV & BCR) Annex-2Sensitivity Analysis, 10% cost over-run(FIRR,NPV & BCR) Annex-3Sensitivity Analysis, Benefits delayed(FIRR,NPV & BCR) Annex-4Break-even toll tax Annex-5

Economic cost: The financial cost has been converted into economic cost bydeducting taxes and duties from the traded cost and the non-traded cost has beenmultiplied by the standard conversion factor(SCF). Details are given at annex-6.

Economic Benefits: Per vehicle economic benefits have been worked out andgiven atAnnex-7.The value of savings in travel time,VOC and reduction in distantcehave been assumed as under:

A. Savings in Travel Time:

Mode of Transport Value of T. Time

Rupees/Hour

Car 150Pickup/wagon 120Bus 350Truck (Light) 120Truck (Medium) 150Truck (Heavy) 175

The details of the benefits on account of savings in Travel Time are given atAnnex-8.

B. Savings in Vehicles Operating Cost (VOC):

Without Project With Project

Vehicle Speed VOC Speed VOC Savings

Type km/hr Rs/km km/hr Rs/km Rs/km

Car 50 11.50 70 10.50 1.00

Wagon 40 9.68 60 8.40 1.28

Bus 35 19.79 55 17.76 2.03

Truck (all types) 30 20.81 50 18.71 2.10

http://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-1.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-2.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-3.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-4.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-5.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-6.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-7.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-8.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-8.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-1.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-2.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-3.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-4.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-5.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-6.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-7.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-8.xls

7/30/2019 Infra Structure Example Road Project Economic Analysis

3/3

The details of savings in VOCfor are given atAnnex- 9. (The benefits on account ofMotor Cycle and Tractor Trolleys have not been taken into account being a traffichazard)

C. Benefits on account of 5 k.ms reduction in distance (Annex-10)

Result of Economic Analysis:The economic analysis of the project has been

carried out and are given in the following annexes;

Economic Analysis(EIRR,NPV & BCR) Annex-11Sensitivity Analysis, 10% cost over-run(EIRR,NPV & BCR) Annex-12Sensitivity Analysis, Benefits delayed(EIRR,NPV & BCR) Annex-13

http://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-9.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-10.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-11.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-12.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-13.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-9.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-10.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-11.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-12.xlshttp://var/www/apps/conversion/tmp/scratch_2/Infrastructure%20Examples/Annex-13.xls