Improving Transport Project Appraisals
In the Islamic Countries
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Figure 5.1: BOT scheme
Source: CDTIC.
Project appraisal is carried out for both government-based and PPP projects. For these two
types of investment, the project appraisal’s structure is similar. The procedure to evaluate the
projects before their implementation is structured in three main phases: 0) Pre-Feasibility; 1)
Feasibility study; 2) Detailed design. The MRUD (with its affiliated organisations) is always in
charge of phase 0. Phases 1 (feasibility study) and 2 (detailed design) are instead under the
responsibility of the MRUD for government-based projects funded directly by the government
annual budget only, while they are usually carried out by the private investor in the case of an
EPCF/DB+F49 or a PPP project. In the latter case, the documentations must be anyway approved
by the MRDU or its representatives.
By contrast, for lease contracts to industries, a fully-fledged project appraisal is not demanded.
The analysis required by the government to private investors is mostly limited to an assessment
of environmental impacts. Accordingly, the present case study, aiming at a review of project
appraisal practices in Iran, will focus on the first two types of investments: government-based
and PPP transport projects.
5.2 Legal basis
Legal requirement
A general legal requirement to carry out project appraisals is in place in Iran and stems from
rules set by the Plan and Budget Organisation (PBO) , the institution tasked with strategic
planning and with preparing the annual national budget. PBO’s obligation to carry out project
appraisals covers all sectors, i.e. it is not transport-specific. It does not specify the appraisal’s
features, nor the methodology to be used: on the contrary, the choice of the methodology to
adopt is up to each organisation in charge of performing project appraisals. In the case of
49 Design, Build and Finance.