CHAPTER 14.
ECONOMIC ANALYSIS
14.1 INTRODUCTION
Economic Analysis of an infrastructure project is undertaken to ascertain the importance and
benefits of the project to the society at large. The road project has been proposed for
improvement/widening in order to provide higher speeds as well as better riding quality to the
traffic on this corridor. These improvements will result in reduction in the travel time as well as
the vehicle operating costs of the passengers/cargo/vehicles. There is a cost attached to the
improvements provided. These are the initial improvement cost, environmental and social cost as
well as the maintenance cost which are anyway required to keep the improved facility in good
condition. Since the infrastructure projects are social projects, it is important to justify its need
from the perspective of the community.
The present study envisages the use of following tools for undertaking economic analysis of the
implementation of improvement proposals on the said project Corridor:

IRC: SP-30 combined with updated Road User Cost Study RUCS-20011, hereafter
referred as RUCS and

Highway Development and Management model hereafter referred as HDM-42.
Both the tools are independent in evaluation, though the approach to analysis is the same – ‘with
and without project comparison’ – and also the input data is same. The RUCS VOC model in
conjunction with IRC: SP-30 is developed for Indian conditions and hence cannot be adapted to
other countries, whereas an HDM-4 (Version 1.3) model is designed to be used in a wide range
of environments. Configuration of HDM-4 provides the facility to customize system operation to
reflect the norms that are customary in the environment under study. Default data and calibration
coefficients can be defined in a flexible manner to minimize the amount of data that must be
changed for each application of HDM-4.
14.2 SECTIONING OF PROJECT CORRIDOR
Taking into account the traffic homogeneous sections as identified in Chapter 4 and construction
of bypasses and realignments along the project corridor, it has been divided into 9 sub sections
for economic analysis. Details of these sections are given in Table 14-1 and Fig 14-1. For
completeness of the bypass in the first section which begins from a junction on NH-8B, the
1
Updated Road User cost study, Final Report Volume-1 Traffic and Transportation Division, Central Road Research
Institute, New Delhi 2001
2
HDM-4 is an analytical tool for engineering and economic assessment of road investments and maintenance.
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section from km 111 to km 114.3 of NH-8B has been considered as a link which connects the old
starting point (on the corridor) to new starting point on the corridor as shown in the figure below.
Table 14-1: Details of Road Sections
Traffic
Sections
Section 1:
JetpurJunagadh
(km 0.0-km
26.8)
Section 2:
JunagadhKeshod
(km 26.8 –
km 63.8)
Section 3:
Kshod-Gadu
(km 63.8 - km
100.7)
Section 4:
GaduSomnath
(km 100.7km 127)
Corridor/ Sections
Corridor: Jetpur-Somnath
Sub section 1: Start point
Proposed Jetpur Bypass to End
Point of Jetpur By pass
Sub section 2: Jetpur Bypass
end point to start point of
Proposed Junagadh Bypass 1(
missing link)
Sub section 3: Start point of
Propsed Junagadh Bypass 1 (to
missing link) to end of Junagadh
Bypass 1 (Dhoraji Junction)
Sub section 4: Start of Existing
Junagadh Bypass 2 to end of
Junagadh Bypass 2 at railway
crossing
Sub section 5: Start of
realignment Junagadh Bypass 2
at railway crossing to end of
realignment of junagadh bypass
2
Sub section 6: End of
realignment of junagadh bypass
2 to Start of Keshod Bypass
Sub section 7: Start of Keshod
Bypass to End of Keshod
Bypass
Sub section 8: End of Keshod
Bypass to Gadu NH 8E junction
Sub section 9:Gadu NH 8E
junction to Somnath
Total Length of the Corridor
Existing
Chainage (kmkm)
Length
(Km)
Design/Proposed
Chainage(km-km)
Length
(Km)
0
7.36
7.36
0
4.76
5.533
7.36
25.35
18.0
4.76
23.3
18.54
25.35
26.63
1.28
23.3
25.12
1.82
26.63
34.00
7.37
25.12
32.4
7.28
34.00
43.10
9.10
32.4
40.6
8.2
43.10
65.98
22.88
40.6
63.6
23.0
65.98
79.48
13.50
63.6
75.0
11.4
79.48
101.9
22.43
75.0
97.15
22.15
101.9
127.6
25.70
97.15
122.73
25.58
127.60
123.49
3
The first section ends at km 4.76 and an additional 0.765km has been added as an approach of flyover. Thus the
total section length sums to 5.53 km.
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Figure 14-1: Sectioning of Project corridor for Economic analysis
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14.3 APPROACH AND METHODOLOGY
A Life Cycle Analysis has been adopted to undertake the economic analysis of the proposed
improvement project. The tangible benefits have been assessed following the approach of
“without the project,” i.e.- the base case and “with the project” scenario. The benefits are:

Savings in vehicle operating costs (VOC);

Savings in travel time costs due to reduction in congestion and higher travel speeds as a result of
improved roads/construction of bypasses- both in terms of capacity as well as riding quality;

Savings in maintenance costs.
Once the benefits are estimated, the investment made towards road improvement and
construction of bypasses, along with the annual investments towards routine and periodic
maintenance have been compared with it to arrive at the following indicators:
i) Economic Internal Rate of Return (EIRR)
ii) Net Present Value (NPV)
iii) Net Present value to Cost Ratio (NPV/C)
14.4 CONSTRUCTION AND ANALYSIS PERIOD
The analysis period is considered as 30 years including three years of construction period. It has
been proposed that over this period of time, the existing 2-laned facility would be upgraded to 4lane divided carriageway with paved shoulders. The widening /construction works are expected
to get initiated in 2010, and carry on till the end of 2012; therefore the construction cost phasing
has been distributed as 30%, 40% and 30% over the stated three year period.
14.5 PROJECT COST
The project improvement cost, at financial prices, has been estimated as presented in Table 14-2
below:
Table 14-2: Details of Project Cost
Sl. No.
1
2
3
4
5
Description of Item
Construction Cost
Estimation purpose (5% on Total
Construction Cost)
Contingency (3% on Total Construction
Cost)
Project Preparation and Supervision 3% (on
construction cost an contingency)
Total Contingencies
Total Social, Environment Cost
Total Project cost (excluding escalation)*
Total Amount (in millions)
7197.66
359.88
215.93
233.204
809.02
3086.79
11093.46
* A conversion factor of 0.9 has been used to covert the financial prices to economic prices.
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14.6 COMMON INPUTS FOR RUCS AND HDM-4
14.6.1 Standard Conversion Factors
In an economic analysis exercise the prices used are in economic terms. That is to say that all
the distortions in prices relating to labour wages, capital market, transfer payments need to be
corrected. For the purpose of economic analysis, financial prices have been converted to
economic prices using a factor of 0.9, as recommended by the World Bank.
14.6.2 Unit Costs for Vehicles
A unit cost database has been prepared for new vehicle price, replacement of tyres and tubes,
petrol/diesel/engine oil, body-building costs of vehicles, etc. with the help of manufacturers,
retailers and other similar sources. In order to convert these prices to economic ones, taxes and
duties have been deducted, since they form transfer payments only.
14.6.3 Traffic data
For each road section, traffic level is specified in terms of Average Annual Daily Traffic (AADT)
flow. Traffic data has been derived from the primary surveys conducted by the consultants. A
detailed analysis on derivation of section- wise traffic has been presented in Chapter 4.
14.6.4 Road Deterioration
The rate of pavement deterioration is directly affected
demand of certain level of traffic), together with the
standards of maintenance applied to repair defects on
raveling, potholes, etc., or to preserve the structural
surface treatments, overlays, etc.).
by the design of the pavement (to meet
quality of construction followed by the
the pavement surface such as cracking,
integrity of the pavement (for example,
The existing pavement roughness has been recorded during the primary survey, using
ROMDAS. As a standard practice, in both `without project’ and ‘with project’ scenarios, periodic
maintenance in the form of a 50 mm overlay has been assigned every fifth year of the project.
Since the project involves capacity augmentation due to provision of a 4-lane facility in place of
the existing 2-lane, it is likely that there will be a lower level of permissible deterioration in
roughness in the ‘with project’ case as compared to the ‘without project’ case. While running the
HDM-4 model for economic evaluation, the calibration to the road deterioration and work effects
(RDWE) exercise has been carried out for the sensitive parameters, viz. (i) roughness-ageenvironment, (ii) cracking initiation, (iii) cracking progression and (iv) rut depth progression. While
defining the improvement options, efforts have been made to calibrate the deterioration
parameters with Consultant’s past experience elsewhere. Table 14-3 presents the deterioration
parameters used in the model:
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Table 14-3: Calibration Parameters for Pavement Deterioration
Parameter
Without project
With project
Initiation
Progression
Initiation
Progression
All Structural Cracking
0.8
Wide Structural Cracking
0.67
1.3
0.9
1.1
1.5
0.84
1.2
Transverse Thermal Cracking
0.84
1.2
1
1
Raveling
1
1
1
1
Pot Hole
1
1
1
1
Edge Break
1
1
Initial Densification
1
1
Structural Deterioration
1
1
Plastic Deformation
0
0
0.43
0.26
1
1
Roughness Env. Coefficient
Roughness Progression
The pavement deterioration figures, by each section of the existing corridor, in both ‘with’ and
‘without’ project scenarios, as estimated with the help of HDM, has been adopted for RUCS as
well.
14.6.5 Road Network
Information on road network has been obtained from field surveys. Table below presents the
basic road network data used as input for undertaking the economic analysis of project corridor.
In the given list of pavement types, only parameters like carriageway width, number of Lanes,
rise and fall (m/Km) are used as inputs to RUCS whereas all the other pavement characteristics
form input for HDM-4.
Table 14-4: Details of Road Section
Description
Existing Pavement Type
Average Carriageway width (m)
Average Shoulder width(m) (eS)
Number of Lanes
Rise + Fall (m/Km)
Altitude (m)
Deflection (mm)
Condition at end of year
Roughness IRI (m/km)
Total area of Cracking (%)
Ravelling area (%)
Number of Potholes (nos/ km)
Edge Break area(m2/km)
Mean rut depth (mm)
Traffic Section-I
Traffic SectionII
Traffic SectionIII
Asphalt Mix
Over Granular
Base
10
1
2
2
102
1
2008
4.73
29.15
27.15
4
25
10
Asphalt Mix
Over Granular
Base
10
1
2
5
100
1.1
2008
8.68
17.30
39.70
11
25
20
Asphalt Mix
Over Granular
Base
10
1
2
8
60
1
2008
10.85
15.51
42.63
6
25
15
Traffic Section-IV
Asphalt Mix Over
Granular Base
10
1
2
6
15
1.8
2008
7.36
22.85
54.63
5
25
20
14.6.6 Vehicle Fleet data
Vehicle Operating Costs (VOC) is the major component of economic analysis. The primary inputs
required by both RUCS and HDM, to estimate the VOCs, are the prices of vehicles, tyre, petrol,
diesel, lubricants, crew cost, maintenance cost, vehicle utilization, and other vehicle fleet
characteristics as given in Table 14-5.
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Table 14-5: Vehicle Fleet Data
New
Technology
Car:
Two
Wheelers:
Three
Wheelers
Utility
Jeep:
Base Type:
Two
Wheelers
Autos
Old tech
Car
Car medium
PCSE
0.5
1
1
No. of Wheels:
2
3
No. of Axles:
2
Tyre Type:
Standarad
Bus
Mini Bus:
LCV:
2 Axle
Truck:
3 Axle
Truck:
MAV (SemiArticulated):
MAV
(Articulated):
Tractor:
Bus Medium
Std. Mini
Bus
Truck
Light
Truck
Medium
Truck
Heavy
Truck Heavy
Truck Heavy
Tractor:
1
1.2
1.2
1
1.3
1.4
1.5
1.5
1.8
4
4
6
4
4
6
10
14
14
4
2
2
2
2
2
2
2
3
4
4
2
Bias- Ply
Bias- Ply
Radial
ply
Radial ply
Bias- Ply
Bias- Ply
Bias- Ply
Bias- Ply
Bias- Ply
Bias- Ply
Bias- Ply
BiasPly
Base number of Recaps:
1.3
1.3
1.3
1.3
1.3
1.3
1.3
1.3
1.3
1.3
1.3
1.3
Retread Cost (%):
15
15
15
15
20
15
15
15
15
15
15
15
Annual kilometer (Km):
19000
54000
54000
48200
167500
167500
71600
66900
66900
61000
61000
30000
Working Hours (hrs):
600
1800
1800
1200
4800
4800
2400
2200
2200
2400
2400
1200
Average Life (years):
10
12
15
15
15
8
12
15
15
10
10
12
Private Use (%):
100
10
10
90
0
0
0
0
0
0
0
100
Passengers (persons):
2
6
6
4
32
14
0
0
0
0
0
1
Work related passenger trips
(%):
79
86.1
75.5
77.6
61.2
61.2
0
0
0
0
0
0
ESALF:
0
0
0
0
0.42
0.3
0.3
3.13
7.9
8.32
7.5
0.1
Operating weight (tons):
0.2
0.6
1.4
1.2
9
5
8
15
29
37
47
5
Vehicle Type:
/ Private
Bus:
Economic Unit Costs
New Vehicle (Rs.):
28000
154000
288000
295000
1304000
1006500
457500
1274000
1635000
1823000
1823000
350000
Replacement Tyre (Rs. ):
820
500
1900
2000
11000
4600
4600
11000
11000
11000
11000
5400
Fuel (Rs per litre):
33
24
24
33
24
24
24
24
24
24
24
24
Lubricating oil (per litre)
120
120
120
120
120
120
120
120
120
120
120
120
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Vehicle Type:
Two
Wheelers:
Three
Wheelers
Utility
Jeep:
New
Technology
Car:
Standarad
Bus
/ Private
Bus:
Mini Bus:
LCV:
MAIN REPORT
2 Axle
Truck:
3 Axle
Truck:
MAV (SemiArticulated):
MAV
(Articulated):
Tractor:
Maintenance labour (Rs per
hr):
6
3
4
8
6
3
3
4
4
4
4
4
Crew Wages (Rs per hr):
0
30
0
0
67
34
26
43
52
52
52
30
Annual over head:
4000
13000
25000
20000
175500
135500
109000
267000
300000
320000
320000
109000
Annual interest (%):
12
12
12
12
12
12
12
12
12
12
12
12
Passenger working time (Rs
per passenger hr):
32.4
27.7
44.6
62.7
36.1
36.1
0
0
0
0
0
0
Passenger non working
time(Rs per passenger hr):
2.2
2.3
4.3
5
3.5
3.5
0
0
0
0
0
0
Cargo (Rs per vehicle hr):
0
0
0
0
0
0
0.9
2.8
3.6
4
4
0.6
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14.6.7 Vehicle Operating Cost
Vehicle operating cost (VOC) is a function of Speed, Road roughness, Carriageway,
Width/Capacity, Rise and Fall. Per unit VOCs are calculated from the sum of distance related
and time related VOCs, which include the following:
Distance Related VOCs:

Fuel Costs

Maintenance Costs – including spare parts and labour

Tyre Cost

Oil Consumption cost
Time-related VOCs

Opportunity Cost of capital

Depreciation Cost

Cost of Crew
The VOCs, in both the approaches, have been estimated using the respective equations.
14.6.8 Value of time
Value of time of Passengers
The value of time of passengers has been estimated for entire project corridor. The estimation of
VOT is based on the data collected on purpose of trip by income category. This matrix gives an
insight into the type of trips being performed by the users of the facility - higher the proportion of
work trips, higher would be average value of time. The assumptions which have been made in
estimation of the VOT are:

The education trips have been assumed to be trips being performed by students, who do not earn;

50% of social and shopping trips have been assumed to be performed by the non-working people.
Willingness to pay for saving time of the non-work trips, has been taken as 20% of wage rate; and

The work trips are the trips being performed for work and business purposes, and the cost to the
society is in terms of the wages being paid plus the overhead costs being incurred by the employer.
The overhead costs have been taken as 20% of the wages.
The above inputs have been used to estimate the VOT of passengers as presented in
Table 14-6.
Value of time of Goods in Transit
Goods in transit cannot be put to any alternative use, therefore, they hold a cost to the society.
This cost is equivalent to the opportunity cost of the value of goods, which is measured by the
average rate of return on capital in a society. In India, it has been set at 12% per annum. The
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value of goods in transit has been estimated for project corridor by each mode of goods’ vehicle,
and has been presented in Table 14-6.
Table 14-6: Value of time
RUCS
Modes
Value of Time of
Passengers
(Rs./passenger hr)
Sc/Mc
Utility Jeep
Car
Mini Bus
3 -wheeler /Auto
Standard Bus
Deluxe Bus
LCV/Tempo
2-Axle Truck
HDM-4
Value of
Commodity Time
(Rs./veh. hr)
26
34
50
28
24
28
(81% of Utility Jeep
(RUCS 1992))
28
3-Axle Trucks
M-axle Trucks
Articulated
M-axle Trucks
Semi Articulated
Tractor
Passenger Work
Passenger Non-work Cargo Holding/
Time
/hour(Rs./passenger hour(Rs./veh.
hour(Rs./passenger
hr)
hr)
hr)
32.4
2.2
44.6
4.3
62.7
5
36.1
3.5
27.7
2.3
36.1
3.5
36.1
3.5
1.4
1.6
0.9
2.8
2.0
2.3
3.6
4
2.3
4
0.1
0.6
14.7 OTHER INPUTS FOR HDM-4
14.7.1 Configuration of model
It is essential to configure the model to local conditions in HDM-4. The configuration of the
model, therefore, includes Traffic flow pattern, Speed-Flow Type, Climatic Zone and Currency.
i) Traffic Flow Pattern
Traffic flow pattern configuration in the model includes defining of the hourly fluctuations in traffic
over the total hours of a year (8760). There are four different kinds of traffic flow conditions
namely, commuter, free-flow, inter-Urban and seasonal which are defined as defaults in the
model. Seasonal traffic pattern has been selected for the project corridor.
ii) Speed- Flow Type
The project corridor, presently two lane, is envisaged to be of standard four-lane configuration in
future. Speed-flow type, for the project has, therefore, been defined for two lane and four lane
configuration with following parameters:
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Table 14-7: Speed Flow Parameters
Parameter
Ultimate Capacity
Free-Flow Capacity
(Proportion at which freeflow condition Ceases)
Nominal Capacity, at which
speed of all vehicle
converge to slowest
Jam Speed Capacity
(Traffic speed at ultimate
capacity)
RUCS
Two Lane
Four Lane
2500 PCU’s
9300 PCU’s
/hr*
/hr
-
HDM-4
Two Lane
1600
PCSE/Lane/Hr
0.2
Four Lane
2000 PCSE/Lane/Hr
0.1
-
-
0.9
0.9
12 Kmph
15 Kmph
12 Kmph
15 Kmph
*Note:-It is for peak hour traffic of 10%
iii) Climatic Zone
The data on climate has been used to configure the climatic zones along the project corridor The
following table describes the climatic zone parameters:
Table 14-8: Climatic Zones Parameters
Parameter
Moisture Classification
Temperature Classification
All sections
Semi-Arid
Tropical
Mean Annual Temp
30oC
Mean Monthly Temp Range
5oC
Mean Monthly Rainfall, mm
50
Days
Temp.>32 oC
Dry Season of the year(fraction of year)
180
0.75
14.7.2 Maintenance Strategy and Cost
Maintenance cost is normally incurred in two phases: Routine Maintenance and Periodic
Maintenance4. The pavement deterioration model forms the base for identification of the years
when the project corridor would require periodic maintenance (as the balance would be routine
maintenance). The years in which periodic maintenance would be required, along with the
maintenance strategy and the cost has been given in the Table 14-9.
4
Routine maintenance takes care of minor cracks on the pavement, by providing a scaling layer on it, whereas, the
periodic maintenance is provided as a roughness corrective layer, which is comparatively thick.
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Table 14-9: Maintenance Strategy and Cost
Year
Do
minimum
Type of maintenance strategy
Project
Scenario
Do minimum
Project
Scenario
Cost of Maintenance (Mill Rs/km)
Do minimum
Economic
Financial
Project Scenario
Economic
Financial
Periodic Maintenance (Scheduled for every fifth year)
2009,
2018,
2014,
2023,
2019,
2028,
2024,
2033,
Overlay with 25
mm BC
Overlay with
50mm BC
153/m2
170/m2
306/m2
340/m2
2029,
2038,
Patching
Patching
75.6/m2
84/m2
75.6/m2
84/m2
Edge-repair
Edge-repair
39.6/m2
44/m2
39.6/m2
44/m2
9000/km/yr
10000/km/yr
2034
Shoulder
Repair
2039
Routine Maintenance (Scheduled for every year)
All years other than
Patching
Patching
stated above
Routine Maintenance (Scheduled for every year)
126/m2
140/m2
126/m2
140/m2
Crack Sealing
Crack Sealing
24/m2
27/m2
24/m2
27/m2
Shoulder
Repair
Shoulder
Repair
9000/km/yr
10000/km/yr
9000/km/yr
10000/km/yr
14.8 PROPOSED IMPROVEMENT OPTIONS
The improvement proposals on the entire project corridor have been studied for the purpose of
Economic analysis. It comprises upgrading the project road from 2L road to 4LPS configuration.
This improvement in width has been considered sufficient to cater to present and future traffic
level. Further to this, two urban stretches, namely Jetpur bypass and Keshod, have been
identified along this corridor as potential locations for bypasses. Site investigation shows that
there is an existing bypass in Junagarh, which has been proposed for realignment. Based on the
traffic demand, these bypasses have been proposed for 4LPS configuration. The details on the
improvement options are given at Table 14-10.
Table 14-10: Existing/Proposed Improvement of Road Works
Jetpur Somnath Corridor
Option
Traffic Section-1
Traffic Section-2 Traffic Section-3
Without Project
Scenario
2LPS
With Project Scenario
Upgraded to 4LPS,
including
construction of Jetpur
construction and
Bypass and Junagarh
realignment of
bypass 1(missing link)
2LPS, 2LPS
Junagarh Bypass
2LPS
Traffic
Section-4
2LPS
Upgraded 4LPS
Upgraded to 4LPS,
Upgraded to
construction of
4LPS
Keshod Bypass
Junagarh Bypass 2
14-12
Final Feasibility-cum-Preliminary Design Report
VOLUME I:
Preparation of Feasibility– cum-Preliminary Design for 4/6 Laning of JetpurSomnath section of NH 8D, Package No: NHAI/DBFOII/DPR/02
MAIN REPORT
14.9 RESULTS OF ECONOMIC ANALYSIS
The economic analysis has been undertaken for the project road by using both, RUCS equations
as well as the HDM-4 model. The results obtained are in terms of the Economic Internal Rate of
Return (EIRR), and Net Present Value (NPV), as presented in Table 14-11 for the project
corridor as a whole.
Table 14-11: Result of Economic Analysis for 30 years
RUCS
Option
HDM-4
NPV (in million Rs.)
EIRR (in %)
3667
15.88
15678
26.34
Without Time
With Time
NPV (in million Rs.)
EIRR (in %)
1609
13.64
The variation in RUCS and HDM-4 result is substantial. This is due to the fact that the RUCs
equations are developed for Indian conditions, whereas the equations in HDM-4 model are
calibrated for the same. For full calibration, enormous data is required, which is difficult to be
made available in the course of the study of this nature. This lead to variation in the results.
However, in both the cases, the project is viable with EIRR being greater that 12%.
14.10 SENSITIVITY ANALYSIS
Any investment is subject to risks and uncertainties. All risks culminate into either increase in
project cost, reduction in benefits or both put together. In order to cover the above stated risks, a
detailed sensitivity analysis, with respect to the sensitive parameters, has been undertaken. The
various sensitivity scenarios considered are as follows:



Sensitivity 1: Base Costs plus 15% and Base Benefits (15% Increase in cost);
Sensitivity 2: Base Costs and Base Benefits minus15% (15% reduction in benefits); and
Sensitivity 3: Base Costs plus 15% and Base Benefits minus 15% (15% Increase in costs and 15%
reduction in benefits).
The results of the sensitivity analysis have been presented in Table 14-12 below.
Table 14-12: Results of Sensitivity Analysis
Option
Without
time
With time
Sensitivity
Case
RUCS
NPV (in
EIRR (in
million
%)
Rs.)
HDM-4
NPV (in million Rs.)
EIRR (in
%)
Base Case
3667
15.88
Sensitivity 1
2430
14.31
Sensitivity 2
1873
14.07
Sensitivity 3
636
12.63
Base Case
15678
26.34
1609
13.64
Sensitivity 1
14441
23.91
389
12.36
Sensitivity 2
12082
23.55
801
12.90
Sensitivity 3
10845
21.35
(1001)
11.04
14-13
Final Feasibility-cum-Preliminary Design Report
VOLUME I:
Preparation of Feasibility– cum-Preliminary Design for 4/6 Laning of JetpurSomnath section of NH 8D, Package No: NHAI/DBFOII/DPR/02
MAIN REPORT
The sensitivity analysis reflects project viability in the worst scenario, with use of both the
approaches of economic analysis.
14.11 CONCLUSION AND RECOMMENDATIONS
The road project, between Jetpur and Somnath is desirable from the society’s point of view.
The project corridor as a whole is found to be economically viable with positive net present
values and EIRR greater than 12%, even in the worst scenario of drop in benefits coupled with
increase in cost. Hence, based on the above results, the project is recommended for immediate
implementation.
14-14