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,
External Consultant, TEM and TER Master Plan
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.
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.
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 transnational networks (regardless of being within the
considered area or at a broader neighbouring ones)
access to those networks
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.
Phases of TEM and TER
Master Plan Methodology

PHASE A – Identification

PHASE B – Forecasting

PHASE C – Evaluation

PHASE D – Prioritisation
Identification Phase

Identification of the projects, that worth
further analysis and evaluation, consists of
three levels:

Relevance

Readiness

Viability
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.)
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
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.
TEMPLATE 1 – Identified Projects
TEMPLATE 2A – Road and related infrastructure Project Fiche
TEMPLATE 2B – Rail and related infrastructure Project Fiche
TEMPLATE 2C – Maritime/port Fiche
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
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
Evaluation Phase

Selection of Criteria – 3 hyper-criteria
 CLUSTER A: Socio-economic return on investment (C )
A
 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
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
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).
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).
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).
Quantification of Criteria -1
1. Degree of urgency
A: Immediate requirement (in the next 2
2005), B: Very urgent (between 2005 and
Urgent (between 2010 and 2015), D: May be
for some years (between 2015 and 2020),
reconsidered later (after 2020)
years-until
2010), C:
postponed
E: To be
2. Cost effectiveness
A: Excellent (IRR more than 15%), B: Very good (1315%), C: Good (10-13%), D: Acceptable (4,5-10%), E:
Low (less than 4,5%)
3. Relative investment costs (costs/GDP)
(see nomograph next)
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
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
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
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
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
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
Criteria Scores


A value is 5 (the highest) in terms of score.
Respectively for value E, is 1 (the lowest).
 
Therefore: C Ji  1,5
where:
J = A, B or C and
i = 1,….,5
The template for criterions scores is TEMPLATE 3.
TEMPLATE 3 Project Criteria Scores
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:
WJi  0,1
where:
J= A, B or C and
i = 1,….,5
C
and
5
W
J  A i 1
Ji
1
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.
Table I An example of Pair-wise Comparison
matrix
W1
W2
…
WN
W1
W2
…
Standardised score wi =
WN
(I)
' raw' score..wi
 ' raw' scores
TEMPLATE 4 Project Criteria Weights
Projects Total Score/
Performance -1

To derive the project’s total score in each
country we use the following relationship:
T.S.Project/Country =
C
5
C
J  A i 1
where:
CJi  [1,5]
WJi  [0,1]
J = A, B or C and
i = 1,….,5
TSProject/Country  [1,5]
Ji
*WJi
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
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
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
priority category I.
If the project scores 3-4 then it
category II.
If the project scores 2-3 then it
category III.
If the project scores 1-2 then it
category IV.
then it belongs to
belongs to priority
belongs to priority
belongs to priority
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.
Example of Evaluation
Methodology (Applied for a
TEM project)
Greek Project:
Egnatia Motorway
Section: Komotini - Vanianos.
Example steps

Complete Project Fiche – see next
Derive Criteria Scores

Use default set of Criteria Weights



Derive Project Total Score
Prioritize Project
TEMPLATE 2A – Road and related infrastructure Project Fiche
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 project’s implementation is characterized as A: immediate
requirement.
CA1=5
2. Cost effectiveness
Based on the data of TEMPLATE 2A, the project’s cost
effectiveness is characterized as A: Excellent (IRR higher
than 15 %).
CA2=5
Criteria Scores-2
3. Relative investment costs (costs/GDP)
Based on the data of TEMPLATE 2A, country’s GDP and Figure 1
the project’s relative investment cost is characterized as C.
CA3=3 (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 project’s level of transport
demand is characterized as B: present traffic from 10000 to
14000 vpd.
CA4=4
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 %
Criteria Scores-3
5. Financing Feasibility
In the viability study of the project, and according to expert’s
opinion, the project’s financing feasibility is characterized as B:
Very Good.
CA5=4
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 project’s relative importance of international
demand of passenger traffic is characterized as E: less than 7
% of total traffic.
CB1=1
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 project’s 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 expert’s opinion the project’s alleviation of bottlenecks
is characterized as A: Satisfactory.
CB3=5
Criteria Scores-5
9. Interconnection of existing networks
Based on expert’s opinion the project’s interconnection of
existing networks is characterized as A: Missing Link.
CB4= 5
10. Technical interoperability of network
Based on expert’s opinion the project’s technical interoperability
in the network is characterized as A: No interoperability
problems.
CB5=5
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.
CC2=5
13. Regional and International Cooperation
The regional cooperation (since there is no international
cooperation) is characterized as A: Satisfactory.
CC3=5
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.
CC2=3
See TEMPLATE 3 completed next..
TEMPLATE 3 Criteria Scores
TEMPLATE 4 Criteria Weights
Project’s 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)
TEMPLATE 5 Project Total Score
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.
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 project’s
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.
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
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.
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
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 project’s “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)
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)
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),
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),
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).
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;
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