Estimation of Project Benefits

D. Estimation of Project Benefits

1. Traffic-Related Benefits

15. Incremental savings in vehicle operating costs (VOCs) were estimated as follows: (i) normal traffic benefits are calculated by applying the difference between estimated VOCs in the “with” and “without” project cases to incremental changes in normal traffic in the “with” and “without” project cases, and (ii) benefits from generated traffic are calculated by applying half the savings in VOCs for normal traffic to forecast generated traffic.

16. Project benefits from diverted river traffic were not quantified, as was the case at appraisal and project completion. But anecdotal evidence confirmed a preference for both passengers and freight to travel by road instead of boat. Passengers prefer travel by road because (i) the trips are faster, which saves time and money (e.g., the Vientiane-Xayabuli [145 km length]) bus fee costs KN45,000 and takes 3 hours as compared with the boat fee of KN65,000 with 5 hours of travel time); and (ii) road travel allows more convenient stops (i.e., one can find food and drink enroute). For freight, road is the preferred means of transport because it takes more travel time by boat. Also, good ports are not available due to lack of facilities for loading and unloading cargo (e.g., cranes), since there are not too many goods/products for transport and freight volume is not stable. Freight depends on the season,, e.g., mostly agricultural products are transported during the rainy season, timber in the dry season.

2. Savings in Maintenance Costs

17. Lower maintenance costs due to improvement of roads to maintainable conditions were calculated by obtaining the difference between road maintenance costs (i.e., periodic and routine maintenance) in the “with” and “without” project cases. The costs in Table A7.1 were used to calculate the savings in maintenance costs for each road section.

3. Vehicle Operating Costs

18. The calculation of VOCs was based on OEM estimates of (i) assumed roughness values over the life of the road; (ii) traffic volumes, disaggregated by vehicle type; and (iii) unit VOC at each roughness level per vehicle for each vehicle type.

18 Estimates based on: (i) 52%, 26%, 13%, and 9% of cargo traffic being moved by pickups, light trucks, 2-axle trucks, and 3-axle trucks, respectively; and (ii) a load capacity for pickups, light trucks, 2-axle trucks, and 3-axle

trucks of 1.0, 1.5, 4.0, and 6.0 tons, respectively.

Appendix 7

19. In the “without” project case, assumptions on road deterioration were based on calculated roughness values from the Appraisal Report’s road deterioration model. 19 These

were updated for the “with” project case by using raw data from a Ministry of Communications, Transport, Posts, and Construction-financed national road roughness survey in 2003. Roughness values used at postevaluation indicate a slightly higher level of road roughness compared with appraisal estimates, with the largest deviation in road section A. Table A7.6 provides a comparison of average roughness values assumed in the different forecasts.

Table A7.6: Comparison of Roughness Values, 2000–2019

(average, m/km)

Item “Without” Project

“With” Project

Paved Gravel Paved Paved Paved Paved Paved A and B1

A B1 B2 C D 2000

B2, C, and D

8.1 8.3 2.2 2.2 2.2 2.2 2.2 AR/PCR 2001–05 9.2

AR = appraisal report, km = kilometer, m = meter, PCR=project completion report, PPAR=project performance evaluation report. Note: International roughness index (IRI) data for 2003 (with project) was provided for each section by the

Ministry of Communications, Transport, Posts, and Construction based on a national roughness survey of roads. IRI for other years (with project) is based on (i) observations of pavement conditions during the OEM, (ii) 2005 traffic counts and future traffic projections, and (iii) assumed periodic maintenance programs for each road section.

Sources: Project completion report and Operations Evaluation Mission staff consultant estimates.

20. Unit VOCs were reestimated based on constants developed from the VOC estimation module of a highway design and maintenance model calibrated for local Lao People’s Democratic Republic conditions. 20 Constants used were for nine representative vehicles classes in terms of $/vehicle-km for flat terrain adjusted to 2005 prices. 21 The constants used were for

paved and gravel road surfaces, with the primary variable being the assumed road roughness for the “with” and “without” project cases. Table A7.7 presents resulting VOCs by vehicle type for selected roadway roughness values in accordance with the international roughness index

(IRI). 22

The PCR economic analysis assumed that surface roughness values were similar to appraisal estimates for both the ”without” project and “with” project cases.

20 The model was used to analyze ADB. 2004. Roads for Rural Development Project. Manila (Loan 2085-LAO[SF], for $17.7 million, approved on 28 June 2004).

21 The vehicle categories used on the project roads comprised cars/jeeps/taxis, pickups, light buses, medium and heavy buses, light trucks, medium trucks (2-axle), heavy trucks (3-axle), hand tractors, and motorcycles/tuktuks.

22 IRI is used as a performance measure for describing and monitoring pavement condition.

52 Appendix 7

Table A7.7: Economic Vehicle Operating Costs

($ per vehicle-km)

Category

Paved Roads

Gravel and Earth Roads

IRI 10.0 IRI 15.0

Cars/jeeps/taxi 0.141 0.157 0.214 0.162 0.218 0.297 Pickup 0.164 0.188 0.272 0.196 0.278 0.393 Light bus

0.152 0.127 0.156 0.208 Medium and heavy bus

0.213 0.224 0.269 0.232 0.275 0.348 Hand tractor

0.118 0.127 0.127 0.135 0.145 Light truck

0.134 0.171 0.138 0.174 0.221 Medium truck (2-axle)

0.257 0.309 0.433 0.321 0.442 0.587 Heavy truck (3-axle)

0.316 0.366 0.487 0.378 0.496 0.641 Motorcycle 0.045 0.047 0.053 0.054 0.059 0.066

IRI = international roughness index, km = kilometer. Source: Operations Evaluation Mission.

21. Annual VOC savings for normal traffic were then calculated by applying the difference between unit VOC and roughness values for normal traffic in the “without” and “with” project cases to the difference in forecast normal traffic in the “with” and “without” project cases, and estimated distance traveled by vehicle type per year. Annual VOC benefits from generated traffic were calculated by applying half of the VOC savings for normal traffic to forecast generated traffic and estimated average distance traveled by vehicle type per year.