Improving Transport Project Appraisals
In the Islamic Countries
63
Table 2.5: Monetization of time-savings
Trip Purpose Rationale for Valuing Default Value
Business and work trips Cost to employer (1+d)w
Commuting and non-work Empirically observed
value
0.30w(adult)
0.15w(child)
Walking/waiting
 for work trip
 for leisure
Empirically observed
value
1.5x value for trip purpose:
 1.5(1+d)w
 1.5x0.30w if adult
 1.5x0.15w if child
Freight Resource cost approach Vehicle time cost + driver wage
cost +
occupants time
Public transport Resource cost approach Vehicle time cost + driver wage
cost +
occupants time
d = proportion of wages represented by social security etc., w = wage rate per hour plus benefits
Source: World Bank (1998)
According to theWB, demand analysis and future traffic forecasts are among the most important
steps in estimating the benefits of transport projects. The Handbook proposes two
methodologies to forecast future traffic volumes. The simplest approach is to extrapolate
demand data from past trends. The second approach is to model future traffic by relating
demand to explanatory variables such as GDP growth, population growth, or fuel prices.
Other effects discussed in the Handbook are accident reduction, network effects within a mode,
intermodal effects and environmental effects.
The WB also developed guidelines for incorporating social dimensions into projects (see Social
Analysis in Transport Projects: Guidelines for incorporating Social Dimensions into Bank-
Supported Projects). In the guidelines, an analytical framework for transport social analysis is
presented with the following pillars: Social Diversity and Gender; Institutions, Rules and
Behaviour; Stakeholders, Participation, and Social Risks. Next to this framework,
recommendations are made on how social analysis can be integrated in the transport project
cycle.
In “Handbook on Social Analysis” general guidance on incorporating social dimensions in ADB
operations is provided. The Handbook is complemented with a Technical Note on Social Analysis
for Transport Projects to help staff and practitioners prepare and implement social analysis for
transport projects. Apart from key social issues that need to be tackled in transport projects, a
step-by-step approach on conducting a social analysis is presented.
In addition to the forecasting methodologies presented by the WB, the ADB proposes a third
approach in “Guidelines for the Economic Analysis of Projects”, namely household surveys.