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Italy Turkey Bilateral Cooperation Project

FEASIBILITY STUDIES Methodologies and practices


The real difficulty lies not in developing new ideas, but in escaping escaping from old ones John Maynard Keynes

Italy Turkey Bilateral Cooperation Project

Project Management

Italy Turkey Bilateral Cooperation Project

Why is Project Management Important?


30% of all projects are canceled before completion 30% experience schedule delays 50% exceed original cost estimates 12% completed on time and on budget 1995 - $81 billion spent on canceled technology projects

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Laws of Project Management


Projects progress quickly until they are 90% complete. Then they remain at 90% complete forever. When things are going well, something will go wrong. When things just cant get worse, they will. When things appear to be going better, you have overlooked something. If project content is allowed to change freely, the rate of change will exceed the rate of progress. Project teams detest progress reporting because it manifests their lack of progress.

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General Concepts

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What is a Project?
A project is a sequence of unique, complex, and connected activities having one goal or purpose and that must be completed by specific time, within budget, and according to specification.
Wysocki, Beck, and Crane

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Scoping the Project:


At a minimum, a complete project definition should include the following:
A project champion and executive sponsor. A brief statement the problem or opportunity to be addressed by the project. The project goal. The project objectives. Project assumptions and constraints.

Failure to achieve consensus on the above dooms a project before it starts.

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What is Project Management?


Project management is the process of defining, planning, directing, monitoring, and controlling the development of an acceptable system at a minimum cost within a specified time frame.

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Ongoing routines vs. projects


Ongoing, long term routines:
Broad scope and objectives Long term planning dominant, long term strategies, and functions Flexibility of strategies, tactics and resource utilization Structured decisions, few constraints

Projects:
Fixed duration Limited scope, precise objectives Planning outcomes predictable and precise Control dominant

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Project duration
Short term
1 month to 1 year

Medium term
up to 2 years

Long term
more than 2 Years

Years 0

5... 10

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Project Life Cycle

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Project Life Cycle

Management

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More on Project Life Cycle


A project delivery methodology Process for maintaining schedules, cost control, and technical innovation on projects

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Overlap of Project Processes


Level of Activity

Implementation

Planning & Scheduling Concept & Selection Terminating

Monitor & Control

Time Time

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Typical Sequence of Events During the Project Life Cycle


Concept Initial proposal Feasibility and risk assessment Acceptance Conceptual phase

Objectives and master plans

Activity and resource plan

Scrutiny of Resource contracts

Planning phase

Implementation monitoring and control

Project review and revision

Implementation phase

Handover

Evaluation and Follow up

Completion

Termination phase

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Consideration of concept

Feasibility study

Assessment Decision to proceed Owners invite expression of interest

Owners evaluation and report Contractors final report Termination and handover Monitoring and coordination of work by owner Regular project reviews and (if required) revisions Project execution by contractors monitored and coordinated by owners Owners establish project management and coordination Contractors resource, activity plans and schedules Finalize master plans, finance, activity and resource plans

Contractors express interest and qualify for tenders Contractors reconnaissance and feasibility study Contractors submit proposals, specifications and quotations Consideration of submissions and quotations Negotiations with potential contractors Agreement between owners and contractors

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Concept Development

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Conceptualization
Starting with the seed of an idea, an awareness of need or a desire for some major development or improvement. Preliminary goals are considered and ideas on costs, potential benefits, feasibility and scope receive initial consideration, possibly with ideas on problem areas, alternative approaches and ways of overcoming difficulty

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Concept Development:
Setting the Goals Test the concept by questioning:
1. Exactly what should be achieved? 2. Which outcomes are important (need), which are desirable but less important (wants)? 3. What should not be included (unwanted)? 4. How could the project vision best be achieved? 5. How long will it take to achieve results and when would it be sensible to start? 6. How much will it cost and who would pay for it? 7. What opposition might be encountered, why, and from whom (impediments?

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Concept Development:
Considering Methodology Alternative ways of achieving project objectives may come up for consideration. It is a good idea to explore each of these rather dismiss any less attractive options.

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Concept Development:
Seeking Acceptance and Support
1. Invest time and money to identify stakeholders and their concerns even when plans are tentative, this saves time and resources later (Laufer 1997). Identify potential stakeholders early and, when possible, get them involved. Marshal support from the true believers, enthuse peers and immediate superiors to provide encouragement and basic help. Show benefits in realistic but attractive terms Dont play down difficulties or problems; assess the risks and show ways of overcoming them.

2. 3.

4. 5.

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Concept Development:
Seeking Acceptance and Support
1. 2. 3. 4. 5. Be realistic about costs and risks but stress benefits. Picket the heights, get support from top people in as many areas as possible. Anticipate oppositions and be forewarned, think why proposals might attract opposition, and from whom, and prepare a rational defense. Dont gloss over problems; be factual and, of course, honest. A project cannot work on a basis of false information. Support proposals with logical framework structures showing major assumptions on which the project proposals are based and what results would be verifiable.

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Concept Development:
Cushioning the impact of variance, adjustment and revision Because of the close relationship between time, cost and quality, it is prudent to allow for variance (up to 10%) in total time and cost by way of insurance against the unexpected.

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FEASIBILITY STUDIES
EU procedures for the evaluation of plans and programmes are related not only to the capacity of using EU funds, but also to assess the results carried out (quality of public works realized) For Regional Operational Programme an intermediate evaluation has to be prepared by the independent evaluator on the capacity of the regional administration to achieve main targets. Some of these targets are directly related on projects characteristics which has to be set in FS

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FEASIBILITY STUDIES
FS could be defined as:

A tool for transforming the initial projectproject-idea into a


specific hypothesis of intervention, through the identification, the specification and the comparison of two or more alternatives directed to achieve the defined objectives, by producing a set of information helping the Public Authority to take the final decision decision

Italy Turkey Bilateral Cooperation Project

FEASIBILITY STUDIES
Project Life Cycle
Programming Evaluation Identification

FS Implementation Implementation Implementation Financing Financing Planni Planning

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FEASIBILITY STUDIES
FS could be considered as a powerful tool to support decisions, providing a logical framework to help policy makers to identify best possible choices FS could support and enforce political decisions and convince stakeholders However, the final decision lies on political authorities

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FEASIBILITY STUDIES
The aim of FS is to assist the public authorities in increasing the effectiveness in the use of financial resources for public work Specific aspects will not be tackled by this presentation Guidelines, such as: Threshold of application Fields of application Procedures for the application But some aspects will be showed within the presentation of the Italian normative framework and in case histories

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FEASIBILITY STUDIES
The index according to Italian framework
Preparatory analyses and project types
General information Supply and demand analysis Management models Definition of project alternatives

Financial feasibility
Economic and social analysis
Cost Cost-Benefit Analysis (CBA) Multicriteria Analysis (MCA)

Technical feasibility Environmental impacts

Administrative procedural analysi Risk analysis and sensitivity Executive summary Difference between medium size and large projects CheckCheck-list for the evaluation

Italy Turkey Bilateral Cooperation Project

Italy Turkey Bilateral Cooperation Project

GUIDELINES FOR FEASIBILITY STUDIES


The legislative basis of feasibility studies can be found in:
Art. 4 of Law 144/1999 (pdf, 110 Kb) ,which requires feasibility studies for works with a total cost of more than 10.3 million Art. 6 of Law 166/2002 (pdf, 117 Kb) , which revises the framework law for public works (Law 106/1977), confirming the central role of feasibility studies and extending their purpose UVAL provided technical support and monitoring of the state of progress and planning developments for the feasibility studies co-financed under resolutions 106 and 135/1999, preparing periodic reports for the CIPE The objective of feasibility studies is to transform a project idea into a specific plan, identifying and comparing alternatives with a view to developing different approaches to satisfying a need and implementing the original idea. The creation of an information set enables the competent government authorities to take well-founded, justified decisions in allocating resources for public investments. Such studies also enable the early identification of obstacles to the implementation of investment programmes and thereby accelerate the subsequent design and implementation process.

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Feasibility and Risk Assessment

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The project proposal


As the idea becomes established, it may be necessary to seek approval from principals or other parties who might, in some way, be affected by the project. In such cases, a project proposal will usually be prepared, setting our rationale, proposed methods, estimated costs, benefits and other details.

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Feasibility and Risk Assessment:


The initial proposal
The purpose of the initial proposal is:
1. 2. 3. 4. To introduce the concept To test the reactions of potential stakeholders To elicit support To establish a basis for feasibility assessment

The initial proposal explains the background, need, purpose of project and offers a broad outline of expected costs and benefits.

Italy Turkey Bilateral Cooperation Project

Feasibility and Risk Assessment:


Investigating Feasibility
1-Existing data
2-Scope, objectives and assumptions 3-Strategy outline 4-Financial analysis 5-Assessment of return on investment and effort 6-Risk assessment 7-Sources of project support 8-Technological assessment 9-Political analysis 10-Environmental impact assessment 11-Sociological impact assessment and stakeholder identification 12-Project management structure and administration 13-Project resources

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Feasibility and Risk Assessment:


Investigating Feasibility (2)
When a decision for action is reached, practicalities, feasibility and risk are reexamined in greater detail, usually with the benefit of a structured feasibility study. This will offer recommendations as to how the project should proceed, the scale and form it should take, its scope, duration, objectives and so on.

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Feasibility and Risk Assessment:


Conducting Feasibility Studies
Get as much information as possible before commencing the study Make a study plan- who to see, what questions to ask, where to go, what to see- and revise it regularly Test preconceived ideas and prejudices; listen to opinions but test their validity Dont become wrongly influenced or caught up in someones bandwagon Differentiate between fact and opinion Be aware of the nature and strength of deeply held opinions and feelings that might result in opposition or delay in completing the project Obtain and record facts wherever possible Be aware of possible risks, consider their consequences and how these difficulties might be overcome Dont be afraid to consider alternatives; give an honest and unbiased opinion

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Feasibility and Risk Assessment:


what should be covered in the feasibility report
Identifying Information Title Place and date of study Composition of the study team Terms of reference and study objectives Executive Summary Brief description of study activities Summary of conclusions Summary of recommendations Body of the report Contents List of annexes and exhibits Terms of reference Detail of investigation

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Feasibility and Risk Assessment:


what should be covered in the feasibility report (2)
Conclusions Conclusions relating to feasibility, consequences, benefits, likely costs, anticipated problems, hazards and possibility of failure in any area, assessment of success probabilities, possible alternatives Recommendations Recommendations to proceed Proposed project duration How to proceed Draft project objectives for each area of the project Resources that will be required Project financing Management and staffing Framework for project control and review The purpose and objectives of key jobs

Italy Turkey Bilateral Cooperation Project

Feasibility and Risk Assessment:


what should be covered in the feasibility report (3)
Annexes and exhibits Master charts of proposed project events Copies of relevant data Maps, charts, tables and so on Draft position descriptions for key personnel Financial estimates and cash flow prediction Threat and risk assessment

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Risk Management

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Feasibility and Risk Assessment:


Risk Management There is an element of risk in all projects. In some, the risks are minimal, while others are highly risk-prone Risk management is: The formal process by which risk factors are systematically and continuously identified, assessed, managed, and mitigated

Italy Turkey Bilateral Cooperation Project

Feasibility and Risk Assessment:


Risk Management
All team members should be responsible for identifying potential risks Most problems can be anticipated and avoided Solutions can be prepared in advance A problem resolved in advance is far simpler to resolve than one that occurs unexpectedly Reduces stress to team members

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Feasibility and Risk Assessment:


Risk Management

Risk management takes place in four stages:


1. 2. 3. 4. Risk Identification Risk Assessment Risk Analysis Risk Elimination

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Feasibility and Risk Assessment:


Risk Identification

Risks may stem from:


1. The project itself
For example decisions on method, specification, technology, finance,

2. Unplanned occurrences
Some of which may be insurable, related to accident,

3. External causes
Related to political situations, environment or economic down-turn.

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Feasibility and Risk Assessment:


Risk Identification Consequences of a risk range between minimal and traumatic, affecting either:
1. Project outcome and achievement of objectives: the project will fail partly or completely 2. Duration: that is serious time overrun and late completion 3. Cost: Excessive Cost

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Feasibility and Risk Assessment:


Risk Identification

Techniques of risk identification:


1. 2. 3. 4. 5. History research (hindsight review) Check lists Project simulations Brainstorming Feasibility study

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Feasibility and Risk Assessment:


Risk Volume and Impact
High Impact 80% Impact; 20% Volume

Medium and Low Impact 20% Impact; 80% Volume

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Feasibility and Risk Assessment:


Risk Assessment

Risk assessment takes account of:


1. 2. 3. 4. The nature of possible risks The probability of risk The consequences of risk Means, costs and consequences of minimizing or underwriting risks

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Feasibility and Risk Assessment:


Risk Analysis

Risk analysis has greater reliance on logic and more systematic planning; it includes alternative tactics and methods to reduce the consequences of trauma during project implementation and quantification of risks and consequences to influence strategic decisions.

Italy Turkey Bilateral Cooperation Project

Feasibility and Risk Assessment:


Risk Analysis

Risk evaluation techniques include:


1. 2. 3. 4. AND, PERT, CPM Decision tree Expected value estimation Sensitivity analysis

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Feasibility and Risk Assessment:


Risk Analysis
Risk Magnitude = (Severity of Impact) 1
minimal

(Probability of Occurrence) 1
not likely

10
catastrophic

10
highly probable

Example: Late delivery of server Severity = 9 (high) Probability = 8 (high) Risk Magnitude = 9 8 = 72

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Feasibility and Risk Assessment:


Risk Analysis

Sensitivity Analysis: in project management, sensitivity analysis concentrates on the effect of risk from changes that might occur during project implementation

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Feasibility and Risk Assessment:


Risk Elimination
It is always cheaper to plan out risks than leave them to be addressed during project implementation.
1. Priority 1 risks: Change the strategy to reduce their probability, contingency plans to deal with their consequences, early warning of the danger, predicting extra-time and extra-budget to cope with complications Priority 2 risks: Minimize the threat in the planning phase by eliminating those that can be removed at moderate cost. Those that cannot be easily eliminated should be dealt with in the contingency plan. Priority 3 risks: The cumulative effect of many low impact difficulties, can become quite serious

2.

3.

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Feasibility and Risk Assessment:


Risk Contingency Table Maintain a running list of problems in a

contingency table
Sort by risk magnitude with most severe on top Focus on those with highest risk magnitude Review and update the list frequently (continuously)

Italy Turkey Bilateral Cooperation Project

Feasibility and Risk Assessment:


Risk Management - Activity
Using the worksheet in your notebook, develop a contingency table for a project you are currently involved with or are familiar with Identify five risks to the project description of the risk who is responsible for resolving potential severity of impact probability of occurrence calculate risk magnitude contingency plan date contingency must be in place

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FS Case Study
The case of the city of KAVALA
Interreg IIIC CITY PORTS project outcome presented in the project meeting held in Bologna June 13th 2005

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Background Information
City of Kavala is a Level 2 pilot in the CITY PORTS project A Survey has been conducted on the existing situation of the infrastructure and administrative framework and the positions of local stakeholders A Feasibility Study has been conducted regarding the logistics issues on the urban transport network and the possible city logistics solutions for implementation

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Greece: the 13 Regions

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The Kavala Prefecture

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Major Infrastructure Projects


The Egnatia Highway (TEN, 1692/96/EC) The New Cargo Port The projected railway connection (New Port)

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The Egnatia Highway (Egnatia Odos)

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The City of Kavala

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The City of Kavala - Main Axes

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The City of Kavala Panoramic View

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Current Situation (1/3)


Special terrain morphology of Kavala city: stretched between mountains and coastal line, with intense hypsometric differences Kavala is not stretched out and there is an overover-concentration of activities in the city center Geographical limitations in the location of services and trade Main generative factor of the traffic and the traffic congestion

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Current Situation (2/3)


The major infrastructure projects (Egnatia Odos, New Port) led to a move of heavy traffic from the city center to the periphery The attractivity of the center has risen for residential activities The Kavala Municipality Police force is not enough for the observation of circulatory regulations on a 24-hour basis. Still the Kavala Traffic Police pays more attention to the National Road policing (Egnatia Odos)

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Current Situation (3/3)


Reorganization of the city logistics patterns is expected to occur in the near future There always is a gap between the theoretical approach and the implementation of the Studies suggestions in practice In the end, it is a matter of political decision to implement all necessary regulations and measures

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Goods Distribution Issues


The center is characterized by a thorough mix of uses, which all pose different needs in the city logistic Residents, retailers, public utilities and commuters share the same space and thus conflicts occur The administration is lacking resources for an efficient monitoring and swift reaction

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Necessary Preconditions
Land Use Policies Parking Policy Public Transportation System

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Land Use Policies


The traffic situation is directly related to the land uses that need to be designed with environmental friendly urban-planning criteria and then to regularly check their compliance Reallocation of premises to less dense areas of Kavala should be encouraged There should be designed freight / service vehicle facilities into building design / planning permissions

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Parking Policy
Parking problem is very critical for Kavala Expansion of the appliance of controlled parking to other roads of the city center Construction of more organized parking spaces Management of the organized parking spaces and guidance of the drivers that are seeking parking spaces

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Public Transportation System


Poor bus / public transport services in certain areas Policies to improve public transport (thicken the city coverage in terms of larger number of bus stops and higher density of bus routes, cheaper tickets, bus lanes e.t.c.) A special transport study should be elaborated

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Stakeholders Analysis - General


Public Organizations and Private Companies The stakeholders analysis proved their awareness on the urban freight issues and the necessity to take measures on these A lot of companies take own initiatives to improve the logistics services of their companies Improvement of transport infrastructure in order to introduce city logistics solutions (alternative roads, parking facilities) Lack of urban freight data

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Stakeholders Analysis - Interviews


All bodies involved in the interviews (100 %) believe that the construction and installation of a logistics center out of the city (with the most appropriate location close to the New Port) would clearly contribute to the improvement of the traffic and transport situation in Kavala

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Stakeholders Analysis Formulation of Scenarios (1/2)


Scenario No1: Formation of a closed city center Traffic prohibition measures for all vehicles in the city center, except only for the means of public transport Scenario No2: Formation of a combined traffic system Circulation of all vehicles in the city center under certain preconditions and strict parking policy Scenario No3: Formation of sub-centers throughout the city with certain connections among them and certain traffic measures

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Stakeholders Analysis Formulation of Scenarios (2/2)


71,43 % of the bodies/institutions involved in transport and logistic issues select the Scenario No2 (that is the formation of a city with a combined traffic system), while the rest 28,57% choose the Scenario No1 (that is the formation of a closed city center)

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Approaches to the distribution issues


The change of the situation requires a new environment combining a flexible relationship and cooperation of the affected institutions (Region, Prefecture, Municipalities, Police, Chambers of Commerce and Technical Chamber, e.t.c.) While not every aspect of the distribution issues can be addressed within CITY PORTS, the pilot will serve as a test-bed for the existing regulations and policies, while assessing the possible locations for technical solutions (e.g. monitoring cameras)

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Towards the formulation of the solution


Need for identification of the local urban traffic Get use of a comprehensive G.I.S. (Geographical Information System) tool available on the Prefecture of Kavala Preparation of the environment to accept new measures on urban freight solutions

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The G.I.S. Observatory (1/2)


The Kavala Prefecture has established a comprehensive G.I.S. within the framework of INTERREG II C TERRA CZM Till today, this G.I.S. (called G.I.S. Observatory) has supported the Kavala Prefecture in pin-pointing illegal construction activities and in elaborating a more precise land use plan This G.I.S. is now being brought to full use for the purposes of INTERREG III B CADSES CITY PORTS

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The G.I.S. Observatory (2/2)


The G.I.S. Observatory will be monitoring and evaluating the transport activities (for passengers and commodities) in the Kavala Prefecture Statistical and qualitative data of transport streams in Kavala will be gathered and integrated into the G.I.S. Observatory It will form the core of the envisaged city logistics solutions

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Pilot Design / Step 1


Land Use Analysis (G.I.S. Observatory)
This Analysis will be based on the following data: Zoning Regulations Land Use Stakeholders Statements

Zones of exceptional goods distribution intensity will be identified (Intensity Zones)

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Zoning Regulations

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Land Use

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Stakeholders (e.g. small retailers) Identifications

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Intensity Zones

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Pilot Design /Step 2


Projection and Visualization of Traffic Flows
Based on the results of Step 1 (Land Use Analysis) and the existing traffic counts, the flow along street axis will be visualized and verified.

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Traffic Flows Classification

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Pilot Design /Step 3


Projection and Visualization of Traffic Regulations
Existing regulations will be introduced to the system and compared to the existing and modeled zones of interest.

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Traffic Regulations (e.g. parking permissions)

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Pilot Design / Step 4


Development of Scenarios
The results of Steps 1 to 3 will be used for testing different scenarios along the lines of the designed city development Taking in account the limited resources of the authorities, it will be possible to select the location of regulations and technical equipment to ensure maximum impact and optimal use of the means available

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Regulations Assessment, Definition of Zones and Urgency of Action

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Expected Benefits & Results (1/2)


Time saved in terms of average journey time (reduction) and average traffic speed (increase) Overall reduction of traffic in the Kavala city centre Quality improvement of the transport systems and the transport infrastructure in general Environmental impact in terms of decreased pollution Employment: Jobs created or safeguarded as a result of supported transport projects

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Expected Benefits & Results (2/2)


A practical and valuable tool for the decision makers Justification for further actions Establishment of links between the different public bodies Better cooperation between transport operators (public and private) and public authorities Improvement of traffic and transport situation in the city

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Thanks for your attention

For any question do not hesitate to contact me Donato Pulacchini Head of ERVET PPP unit and team work coordinator for Technical Assistance under Emilia Romagna ERDF SPD 2000-2006 dpulacchini@ervet.it +39 051 6396546

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