TRANSPORTATION

Economic
ENGINEERING I Evaluation of
Transport
Projects
ING. ANALISSA ICAZA
 Keywords and meaning

Net present value: valor presente neto

Present value of benefits: Valor presente de los beneficios
Present value of costs: Valor presente de los costos
Vehicle operating cost: Costos de operacin vehicular
Economic surplus production: Excedentes economicos de
produccion
Discount rate: tasa de descuento
 ECONOMIC AND SOCIAL EVALUATION OF
TRANSPORT PROJECTS

The economic evaluation of transport projects is performed to

find out the feasibility of investing in a transport project.

It is necessary to analyze the project benefits and costs, by

using economic indicators to decide whether the investment is
viable or not, and which of the many options is the most
profitable.
ECONOMIC AND SOCIAL EVALUATION OF
TRANSPORT PROJECTS

VOC
Flow Benefits Benefits

Rescue
Value

Years

O+M
O+M (routine) O+M
Initial (routine) (routine)
investment Special Cost flow
Deferred
Maintenance
investment
 COSTS

The costs of a construction Maintenance (routine and

project include: special)
Investment Routine
Acquisition of right of way General Cleaning
Construction: Sealing cracks
Earthmoving Patch
Drainage work Signaling
Structures (bridges) Special
Lighting Pavement replacement
Pavement Seal pavement
Equipment
other
Studies, design,
management
QA quality control
 COSTS

Deferred investment
 BENEFITS

VEHICLE OPERATING COSTS (VOC)

VOC Bi = VOCwo/pi VOCw/pi

Bi= Expected profit in

the year i and VOC
VOC wo/p savings
$
VOC =

VOC
VOC w/p

Years
 BENEFITS

Economic surplus production Q1, Q2 = quantity marketed before

and after improvement

P1, P2 = equilibrium price before

and after improvement.
ECS
E1, E2 = Balancing supply and
demand.

OFERTA 1= supply curve before

the road improvement.

OFERTA 2= supply curve after the

road improvement

Bprod: ESP2 ESP1

 PUBLIC INVESTMENT

Financial cost (FC): cost based on market prices "on demand"

Economic cost (EC): actual cost of producing a good or service
"shadow price.

EC =
+

T = Tax
S = Subsidy
 VALUE OF MONEY OVER TIME

Discount rate: represents the opportunity cost (r) of a

resource
 ECONOMIC INDICATORS

Net present value (NPV): indicator of how the money invested

behave over time
NPV = PVB PVC

where:

PVB = =0 (1+)

C
PVC = =0 (1+)
 ECONOMIC INDICATORS

Cost benefit ratio: the relationship between benefits and costs

B/C =

Economic internal rate of return (EIRR ) or Internal rate of
return (IRR)

NPV

IRR