Improving Transport Project Appraisals

In the Islamic Countries

Ad 2) Selection criteria

Provided that appraisal results have some influence on the decision-making process, systems

differ as to what extent they use strict selection criteria based on the appraisal results or

combination them with additional information.

A common practice is to combine the results of

different analyses

(technical, economic, environmental) to have a comprehensive information

basis for decision-making. In general, a certain balance shall be guaranteed between objective

and subjective (quantitative and qualitative) evidence in order to have a balanced selection

system.

When a specific methodology for assessing the socio-economic impact is required, well-specified

performance indicators are established with objective rules for selection

. This creates a

transparent and accountable selection mechanism, with poor rooms for manoeuvre and

discretionality. In the case of a CBA, for example, a positive economic NPV, an economic rate of

return (ERR) higher than the adopted social discount rate, and a benefit/cost ratio higher than

1 reflects a positive welfare change for the whole society brought about by the project, which

supports a justification for funding. In the case of a CEA, the project must offer the lowest social

cost among feasible alternatives.

Although it would be difficult in principle to justify a project with a negative economic

assessment,

there could be some flexibility in the way criteria for selection are applied in the

practice

. For example, exceptions can be made when the project has intangible benefits or

positive externalities which could not be reflected in a reasonable measurement, or when a

project holds a positive result in the economic assessment but a too high risk profile or, again,

for a project with a low economic rate but a high strategic importance, for example because its

target specific group of people or territories considered a priority in a perspective of reducing

regional or social disparities.

1.2.7

Follow up and learning in project appraisal

Transport project appraisal is usually performed to provide decision makers with a tool based

on scientific approaches hailing from different disciplines, which explores different options and

scenarios. As such, it is mainly used during the early stage of project preparation, in order to

identify the solution ensuring the largest positive welfare change to society. However, project

appraisal can also serve as a powerful mechanism after project completion for follow-up and

learning. Two practices are worth mentioning: a) monitoring; b) ex-post evaluation.

Table 1.9: Elements of the governance and management aspect

Aspect

Elements included

Completion

review

and

evaluation

Monitoring:

Is basic completion review performed? Do rules exist

regarding obligations and requirements of completion reviews to identify

forecasting errors or managerial problems? Is project appraisal constantly

updated as monitoring and management tool to improve project resilience?

Ex-post evaluation:

Is ex-post evaluation of project carried out? If yes,

when it is usually carried out? Do rules exist on how many years after the