Improving Transport Project Appraisals
In the Islamic Countries
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the goal of saving public resources and shifting the risk of ex-ante forecasting to the private
investor. If phase 1 and/or phase 2 are delegated to private party, the latter has to select one of
the certified consultants to prepare the necessary studies.
There are cases in which the certified consultants working for the private investors prepare
their own studies based on their own model for traffic studies, but the MRUD-affiliated
Construction and Development of Transport Infrastructures Company (CDTIC) performs its
own studies as well, e.g. in order to decide how to set a minimum threshold of traffic to be
guaranteed to the investor. Such minimum threshold is used to provide compensation payments
to the private operator in case traffic turns out lower than expected.63
After the external certified consultants (appointed either by the public sector for government-
based projects, or by the private investors for PPP projects) have submitted the detailed project
design, the final approval of the project depends on a review of the appraisal. Such review is
carried out by different groups of experts depending onwhether the project belongs to the PBO’s
list of priority “national projects” or not, as illustrated in the initial graph and as will be explained
in the next paragraph under the quality review section.
In the urban transport subsector, the governance structure is characterised by a large role played
by municipalities, particularly after the 1997 local-level governance transformation, under
which Iranian cities have gained larger autonomy and responsibilities64 . Municipalities are
today in charge of the whole urban transportation systems (metro and bus lines, etc.), with the
Ministry of Interior in a supervisory and coordinating role65. Each city with more than 500,000
inhabitants needs to develop its own Transport Development Masterplan66. These strategic
documents are usually prepared by consultants appointed by the municipality67.
In this field, a lacking coordination between the level of urban transportation masterplans and
the level of transport operators has been noted in the literature (Döge and Arndt, 2013). In order
to tackle this issue, the article by Döge and Arndt (2013) proposed the introduction of a Local
Public Transport Plan, defining standards and goals for local public transport operators in line
with the Transport Development Masterplan. Such innovation, if implemented, could define
standards for infrastructural investments as well (e.g. in terms of environmental aspects or
socioeconomic effects), thus having an impact on project appraisal practices in urban transport.
63 See Note 5 of the PPP Act. It states that during the operating period of freeways, if the annual revenue earned by operation
services is less than eighty five percent (85%) of the annual revenue predicted in the income expenditure report
appended to the contract, the difference maximum up to twenty five percent (25%) of the anticipated revenue will be
paid to the investor from the earning of freeways.
64 Shafiei, Z., 2017. The role of participation in Iran after the shift in urban governance in 1997, in Dienel, H. et al. (Eds.),
Citizens’ Participation in Urban Planning and Development in Iran, Routledge, p. 28.
65 Merely suburban railways are managed by RAI.
66 See for example Tehran Traffic and Transportation Organization, 2013. An overview of Tehran Transportation Master
Plan .
67 For Tehran, the consultants were the Tehran Comprehensive Transportation and Traffic Studies Company (TCTTS) and
the Transport and Traffic Organization (TTO), who also cooperated for the elaboration of Mashad and Esfahan Transport
Development Masterplans. Source: Döge, N. and Arndt, W., 2013, The Local (Public) Transport Plan as an Approach to
optimize Urban Public Transport Planning in Iran, Technische Universität Berlin Research Report.