Improving Transport Project Appraisals
In the Islamic Countries
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and literature in common and attempts to bridge the two practices have been done, each school
still has its own additional literature and practitioners16.
Still, other relevant methodologies exist. The strengths and weaknesses of different evaluation
methods are discussed in what follows. While these methods show greater disadvantages if
compared to CBA in the context of project evaluation, they are not mutually exclusive, as can be
best observed in the case of CBA frequently incorporating features of qualitative analysis or
complemented by Multi-Criteria Analysis (MCA). A project appraisal system can thus foresee the
use of different analyses according to specific purposes, which need to be explored . Nevertheless,
it must be recognised that without an intellectual honesty granted by a unitary perspective, the
decision process may be tended to pick up the approach more favourable to one project rather
than another.
If compared to other quantitative methods, for example general equilibrium and input-output
models, the CBA shows more advantages to investigate the details required to isolate the impact
of an individual project. CBA theoretical foundations lie in microeconomics, and the data used
are at project level, while macro-economic modelling needs aggregate values such as aggregate
expenditure on infrastructures, GDP growth, GDP elasticity to infrastructure expenditures for a
given territorial unit (e.g. region, country, EU).
General equilibrium and input-output models are typically used to assess the impacts of
investment programmes, normally modelled as an exogenous shock to the economy which
generates direct, indirect and induced (“wider”) impacts on aggregate indicators, such as GDP.
These indicators can offer decision-makers a more convincing narrative while promoting
policies pursuing economic objectives in terms of regional development and growth. However,
they may be a distorted measure of social welfare, for example they do not reflect externalities
and all opportunity costs (see UK Department of Transport, 2016 for a comprehensive
discussion about the differences between welfare and GDP measures).
Like CBA, Cost-Effectiveness Analysis (CEA) is a method used for the evaluation of a project’s
effects at the micro level. CEA differs from CBA not only in that it does not measure benefits in
monetary terms (the non-monetary valuation of benefits in CEA is based on the strong
assumption that all options considered deliver the same benefits), but also that the goal is more
policy-specific. CEA is in fact usually aimed at identifying the possible alternatives for achieving a
goal, the related costs and at choosing the most effective option. As such, CEA can take two
forms:
 Cost minimisation: an analysis of which alternative can be implemented at the lowest costs;
monetising of non-monetary effects is not needed here. This method is only suitable for
comparing alternatives which have more or less the same effects other than costs, which is
not the case in this ex post evaluation.
16 Among divergences between PE and GE there is the fact that the PE approach precludes consideration of ‘indirect or
multiplier’ effects. In contrast, the GE framing involves a high level of aggregation and models direct and (to some extent)
indirect effects transmitted through a chosen number of input and output markets along with the intervention
expenditures.