Improving Transport Project Appraisals
In the Islamic Countries
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2.1.4 Content
The assessment of effects in a Social CBA is done on the basis of a number of steps:
1. A good social cost and benefit study does not start with estimating positive and negative
welfare effects of the project (costs and benefits), but first the problem that the project tries
to solve is analysed.
2. After the problem analysis has been carried out, the zero alternative (the world without a
project) must be described against which the project alternatives are set off in order to
estimate the project effects.
3. Then the estimation of the effects can begin. The project effects are estimated in an SCBA
study by comparing the world with a project (project alternative) with the world without a
project (zero alternative). From this analysis, a number of physical effects per year occur (for
example travel time profits). In spatial infrastructure projects, physical project effects are
often estimated based on traffic models, financial analyses (business case) and/or an EIA.
4. As a next step, the analyst tries to monetize all these 'effects on the prosperity of people'
(monetarisation). To monetise the effects, use is made of ‘key-figures. An important example
of a key figure is the 'value of time'. Based on in-depth research, the average value of one hour
of travel time savings has been determined. This average value (key figure) is used in SCBA
studies to value the value of the travel time gains of motorists or train passengers. The result
of this step is that for several years in the future the benefits and costs expressed in terms of
money have been estimated. In the CBA, a distinction can be made between effects that can
be quantified and effects that cannot be quantified. For the latter a score is given by means of
+ and – signs, indicating positive and negative respectively. Effects that can be quantified can
be subdivided in direct effects (e.g. investment costs, travel time benefits), indirect effects
(e.g. employment) and external effects (e.g. noise, safety).
5. The fifth step that the analyst of an SCBA takes is to recalculate the benefits and costs of the
various years in the future with a discount rate to one base year.
6. Subsequently, the executor of the CBA will present the results of the CBA study in a CBA
report. A SCBA report also contains quantitative or qualitative information about effect that
can not be monetised in a responsible manner. Finally, a preparer in a good SCBA report also
adequately reflects the uncertainties surrounding the impact assessments in an SCBA study,
for example by using future scenarios and sensitivity analyses.
Regarding the incorporation of risks and uncertainties, the usual approach is to first determine
the critical success factors and then to map various conceivable developments for these factors.
If there is a connection between these factors, scenarios can be used. It often turns out that
different interpretations can also be plausible within the context of a scenario. Additional
sensitivity analysis is then the designated route. Simulation models can also come in handy to
calculate the consequences of different combinations of success factors. In Annex 3 of
‘International Comparisons of Transport Appraisals Practice’ more information can be found on
project appraisal content in the Netherlands.
I n illustrative example is given on the contents of a CBA. It must be noted that each
project has its own benefits and costs and thus the items mentioned in the figure below are only