Improving Transport Project Appraisals
In the Islamic Countries
100
socioeconomic effects. The resulting governance structure reveals fragmented practices, and no
unitary approach.
While CBA is the most widespread methodology used for appraising infrastructural projects in
Iran, its potential is not fully exploited. As a matter of fact, the analysis is largely focused on
financial aspects, and ample room would exist to develop the assessment of socioeconomic
effects further. The performed economic analysis could be greatly enhanced through the
application of state-of-the-art methodologies for the quantification and monetisation of project
effects. Also, ample room exists to develop CBA guidelines focused on the various transport sub-
sectors providing consistent references values (e.g. the value of time, the social discount rate).
Engagement with stakeholders is foreseen during project appraisal in some cases , i.e. when land
acquisition is needed and when a project has a direct relationship with another infrastructure
or economic activities, but overall the role of stakeholder consultation in the project formulation
stage is limited with respect to international practices.
Policy recommendations
A common system of project appraisal in the transport sector should be developed, enforcing the
general obligation to carry out project appraisals. This can be done by streamlining the adoption
of a common framework to be adopted at MRUD level and detailing the principles, procedures,
methodologies and a set of reference parameters (e.g. the discount rates, the thresholds for IRR)
for all the agencies in charge of project planning and financing.
Such a framework should be conveyed in one single reference document (i.e. project appraisal
manual) in order to provide certainty and easy access to all involved institutional stakeholders
and to possible investors. Providing an English translation of such document and of related
PBO’s Guidelines on project appraisal could further increase accessibility for foreign investors.
Specific templates and guidelines with unit values for key benefits can be then established at
organisation level to reflect the specificities of their operations but sticking to the common
framework adopted for transport.
The starting point for the development of such a framework can be a detailed screening of the
practices currently in place and of the models in use in the different MRUD-affiliated organisations.
Such screening could serve as an analytical basis for further steps. A special temporary
committee on transport project appraisal could be established at MRUD level with
representatives from all its affiliated organisations, aiming to exchange information and
expertise about the adopted approaches and models for appraising infrastructural projects.
A larger emphasis on socioeconomic aspects must be developed against a focus on financial
aspects. Regardless how a project is financed (fully public, through PPPs, etc.), the project
appraisal should demonstrate the desirability of a given project against a set of feasible
alternatives: the rationale for transport project appraisal should thus be re-oriented towards
the ambition to use public funds in such a way that it provides maximum benefit to the Iranian
society.