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Course Syllabus
Objectives
Understand the processes involved in highway planning, construction,
maintenance and operation
Know the key elements and methods for the economic evaluation of
transportation projects
Be aware of the cost types involved in the planning, construction, and
maintenance of highway infrastructure
Get acquainted with quality control and assurance concepts in the planning,
construction, maintenance and operation of highway infrastructure
Prerequisites: recommended knowledge in
Transportation planning
Microeconomics
Planning & economic evaluation of transportation projects
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Course Syllabus
Course Outline
Introduction
Cost structure of transportation infrastructure
Cost benefit analysis (CBA) for economic evaluation of Transportation
projects
Project management and contracts
Quality control and assurance
Planning & economic evaluation of transportation projects
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Outline
Course Outline - Introduction
Planning concepts
Evaluation concepts and tools
CBA
Multicriteria analysis
Project management and contracts
Quality assurance and control
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning - purposes
Early planning principles, provide connectivity
Then, to provide capacity within reasonably safe standards
Then, provide continued services
Still later, introduce sustainability concept
In general, the purpose of transportation planning has been to ensure, efficient, equitable
and sustainable performance of transportation systems
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – paradigms
Until the early 90’s: predict and provide
Produce demand forecasts
Find engineering solutions that serve the demand and satisfy the objectives
However, it became evident
Increasing and improving quality of supply tend to stimulate growth of demand
(traffic induction)
Demand can’t always be satisfied without
Unacceptable costs of space occupation in urban areas
Unacceptable costs of environmental aggressions overall
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – paradigms
New paradigm: Aim and manage
Aim at the level of performance and quality wished for the network (or system)
Manage the evolution of the system in such a way that those targets will be met
Instead of doing forecasts (free growth of demand), include constraints in the analysis
and find
Provide mobility levels that allow efficient support of social and economic activities
Influence choices of citizens and companies about the mobility of persons and freight in such a way
that the negative impacts of that mobility are within acceptable limits
Infrastructure and technology (Engineers)
Legislation and regulation (Legislators)
Prices, taxes and charges (Economists)
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning framework
Vicious cycle
Transportation – providing access Development
Facilitate movement of goods and Enables Increase in industrial/commercial
services activities
Improves accessibility to work, Increase in personal income
education, etc
Creates
Inhibit
Economic/Environmental impacts Transport/Urban effects
Congestion Produce Growth in trip rates
Infrastructure costs Motorization
Resource degradation (energy, air Changes in mode share
, land Urban expansion
Zegras, 2008
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning
How do we know we are moving in the right direction?
Measures to be increased
Access to mobility
Equity of that access
Appropriate mobility infrastructure
Inexpensive freight transport
WBCSD, 2001
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning
How do we know we are moving in the right direction?
Measures to be reduced
Congestion
Green house gas emissions
Noise
Community disruption
Accidents
Transportation related solid waste
WBCSD, 2001
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – institutional framework
1950s
Modernism
Dominated by engineering principles
Public support highly sought but not at the expense of traffic efficiency, increased costs and delays
Transportation planning = quantifiable process
1960s
Post- modernism
Participation on planning and vice versa
Technical activity serving conflicting positions
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – institutional framework
Common process that served as a basis for most transportation planning efforts
Define goals and objectives
Identify problems
Generate alternatives
Evaluate alternatives
Select optimal alternative
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – conceptual models of decision making
Rational Actor Approach
Assumed behavior
Utility maximization relative to clearly pre-defined goals and objectives
Characteristics
All alternatives considered
Ex-ante comprehensive knowledge of impacts
Accurate evaluation criteria
Ranking and optimality possible
Planning implications
Highly structured and data intensive process
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – conceptual models of decision making
Satisficing Approach
Assumed behavior
Select first alternative to meet minimal acceptability level
Characteristics
Impossibility of generating and comparing all feasible alternatives
Sequential discovery of alternatives
Goal oriented, but adaptive
Constrained rationality
Planning implications
Still data-intensive, but for fewer alternatives (and criteria)
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – conceptual models of decision making
Incremental Approach
Assumed behavior
Problem avoiding (instead of objective-obtaining)
Decisions based on marginal differences
Characteristics
Limited number of alternatives
Limited communication among decision-makers
Focus on marginal differences
No single solution, conceptual problem response
Remedial, not long-term driven
Planning implications
Information requirements limited (minimal alternatives, marginal differences)
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – conceptual models of decision making
Organizational process Approach
Assumed behavior
Organizational structures, communication channels and standard operating
procedures drive decisions
Characteristics
Organizational goals drive choice process
Operating routines define range of alternatives
Organizational propose alternatives
Planning implications
Need to understand:
• Organizational goals and objectives
• Limits to implementation capabilities
Planning & economic evaluation of transportation projects
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Introduction
Transportation planning – conceptual models of decision making
Political bargaining Approach
Assumed behavior
Pluralistic process of conflict and bargaining
Characteristics
Large number of actors with diverse goals, values and interests
Outcomes represent aspect of problem on which agreement can be reached
Controversial decisions are postponed
Planning implications
Broad role for planners
Flexibility may require new information as negotiations produce new alternatives
Expect competing issues to arise
Full information and transparency required
Planning & economic evaluation of transportation projects
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Introduction
Economic evaluation, Why?
Regional and local highway plans
Rank highway projects and compete for scarce resource
Select feasible and most attractive projects
Determine weather a project under consideration is worth investment at all
Evaluate alternative strategies
Stage Vs full construction
Flexible Vs Rigid pavement
Design standards
Alternative policy options on axle loads
Planning & economic evaluation of transportation projects
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Introduction
Basic production and cost concepts
Factors Instruments
Political/legal Strategic
Economic Marketing
The Firm (Human-
Social/demo
graphic oriented Financial
Behavioral)
Operational
Technological Technological
Information – Interpretation - Vision
Planning & economic evaluation of transportation projects
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Introduction
The firm and the client
Is there a relation?
Are they partners?
Are there synergies?
Are they opponents in the economic world?
Planning & economic evaluation of transportation projects
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Introduction
Running a business
Making choices
Planning & economic evaluation of transportation projects
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Introduction
Running a business
Production possibilities frontier
Planning & economic evaluation of transportation projects
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Introduction
Running a business
Use of a production function
The production function predicts what resources are needed to provide different levels of
output
Given prices of the inputs, we can find the most efficient (i.e. minimum cost) way to
produce a given level of output
Planning & economic evaluation of transportation projects
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Introduction
Running a business
Production function
Technology: method of turning inputs (including raw materials, labor, capital, such as
vehicles, drivers, terminals) into outputs (such as trips)
Production function: description of the technology of the firm, maximum output produced
from given inputs
Planning & economic evaluation of transportation projects
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Introduction
Market mechanism
Demand – Supply curves
Planning & economic evaluation of transportation projects
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Introduction
Why do we need to study transportation costs?
Detailed knowledge of transportation costs informs decisions related to
Management of transportation firms
Pricing transportation infrastructure
Investment choices
Equity considerations
Fiscal considerations
Etc.
Planning & economic evaluation of transportation projects
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Introduction
What are the important outcomes of Road transport Investment
Reduce congestion
Reduce vehicle
emissions
Assist non-motorized
transport
Reduce travel times
Reduce goods
Reduce accidents
transport costs
Planning & economic evaluation of transportation projects
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Introduction
What are the important outcomes of Road transport Investment
Choose the best investment from competing
alternatives
Improved road asset life
Provide smoother
roads
Reduce maintenance costs
Planning & economic evaluation of transportation projects
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Introduction
Tools for planning and economic evaluation of transportation projects
Cost Benefit analysis (CBA)
Multi-criteria analysis
Planning & economic evaluation of transportation projects
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Introduction
Tools for planning and economic evaluation of transportation projects
CBA
CBA is a public policy decision tool
To facilitate the allocation of resources t their most valuable uses
to assess whether or not the social benefits of a proposed policy or project outweigh
its social cost
Planning & economic evaluation of transportation projects
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Introduction
Tools for planning and economic evaluation of transportation projects
CBA – main steps
Define the referent group
Select the portfolio of project options
Catalogue potential impacts and select measurement indicators
Monetize all impacts
Calculate net present value
Identify the distribution of costs and benefits
Perform sensitivity testing
Make a recommendation
Planning & economic evaluation of transportation projects
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Introduction
Tools for planning and economic evaluation of transportation projects
Multicriteria Decision Analysis
Multiple dimensions A family of Multiple criteria
(consequences, attributes,
characteristics, objectives,
constraints) Points of View
Planning & economic evaluation of transportation projects
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Introduction
Tools for planning and economic evaluation of transportation projects
Multicriteria Decision Analysis
A point of view is whatever aspect, within a certain context, that the decision makers
consider relevant to evaluate the attractiveness of the actions/alternatives
A criterion is an instrument that allows the evaluation of actions/alternatives according
to particular point of view
A pro-active orientation of the decision maker (what are the “objectives” to be
achieved?) – subjective elements
An analytical re-active orientation (what are the characteristics of the
alternatives that affect their attractiveness?) – objective elements
Planning & economic evaluation of transportation projects
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Introduction
Tools for planning and economic evaluation of transportation projects
Multicriteria Decision Analysis – phases
Tow major phases
Problem structuring
Evaluation of actions/alternatives
Planning & economic evaluation of transportation projects
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Introduction
Tools for planning and economic evaluation of transportation projects
• Identification Partial (or local) evaluation E
Objectives (according to each criterion)
Points of view S V
Construction of value
Attributes
T function A
Criteria
• Organization according to a R L
logical framework: construction of U
the value tree U Method of A
• Definition of descriptors: C aggregation
T
(indicators/scales that describe T
the performance of the alternatives I
in each criterion)
U
Global evaluation (considering O
• Operationalization: construction
R all criteria) N
of the matrix of impacts (level of I
performance of each alternative
in each criterion)
N
G
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – project management
Project?
Object
Start Finish
Process
Time
Specification
Resources
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – project management
Project?
Object
Start Finish
Choose the best trajectory
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – project management
The best for whom?
The owner
Objectives
Constraints Project manager
Values
Choose trajectory
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – project management
Is the best strategy for the owner the same for the contractor or for the
funding entity?
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – project management
Developing and Execution
Viability
detailing idea
studies
Idea Object
Start Finish
Birr
5% to 10%
Time
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – contracts
A contract is legally binding exchange of promises or agreement between parties that the
law will enforce
Breach of contract is recognized by the law and remedies can be provided
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – contracts
Classification of a project delivery methods
When the state retains full responsibility for financing
DBB: Design – Bid – Build: full separation between design and building stages, with
independent bids and contracts for each stage. State in charge of all stages after initial
construction
DB: Design – Build: design and build are combined in a single contract, based on a
preliminary design (or even only functional requirements) supplied by the state. Calls
for greater innovation in construction methods, but increases vulnerability of state if it
changes its requirements after selection of the provider. State in charge of all stages
initial construction
DBO: Design – Build – Operate: extension of DB in which the private provider also
retains responsibility for O&M. Early stages financed directly by state, O&M possibly by
user charges, but commercial risk stays with state
Planning & economic evaluation of transportation projects
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Introduction
Project management and contracts – contracts
Classification of a project delivery methods
Provider in charge of financing – sometimes PPP
DBFO ~DBOT: Design – Build– Finance – Operate: extension of DBO in which the
private provider takes the responsibility of obtaining the funds needed to deliver the
project and associated services, and gets his return largely from user charges, thus
assuming commercial risk
In a PPP the public part also frequently bears part of the financial costs (or risks)
Sometimes by taking part of the shares of the concessionaire, sometimes by
bringing some assets into the contract but staying out of that society
Planning & economic evaluation of transportation projects
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Introduction
Quality assurance and control
Highly dependent on the type of contract
Continuous maintenance programs
There needs to be strong institutions that continuously inspect,
assesses and maintain state funded transport infrastructures
Planning & economic evaluation of transportation projects
