Preparation of Feasibility– cum-Preliminary Design for 4/6 Laning of Jetpur-Somnath section of NH 8D, Package No: NHAI/DBFOII/DPR/02 / VOLUME I:
MAIN REPORT
CHAPTER 14. ECONOMIC ANALYSIS
14.1 INTRODUCTION
Economic Analysis of an infrastructure project is undertaken to ascertain the importance and benefits of the project to the society at large. The road project has been proposed for improvement/widening in order to provide higher speeds as well as better riding quality to the traffic on this corridor. These improvements will result in reduction in the travel time as well as the vehicle operating costs of the passengers/cargo/vehicles. There is a cost attached to the improvements provided. These are the initial improvement cost, environmental and social cost as well as the maintenance cost which are anyway required to keep the improved facility in good condition. Since the infrastructure projects are social projects, it is important to justify its need from the perspective of the community.
The present study envisages the use of following tools for undertaking economic analysis of the implementation of improvement proposals on the said project Corridor:
· IRC: SP-30 combined with updated Road User Cost Study RUCS-2001[1], hereafter referred as RUCS and
· Highway Development and Management model hereafter referred as HDM-4[2].
Both the tools are independent in evaluation, though the approach to analysis is the same – ‘with and without project comparison’ – and also the input data is same. The RUCS VOC model in conjunction with IRC: SP-30 is developed for Indian conditions and hence cannot be adapted to other countries, whereas an HDM-4 (Version 1.3) model is designed to be used in a wide range of environments. Configuration of HDM-4 provides the facility to customize system operation to reflect the norms that are customary in the environment under study. Default data and calibration coefficients can be defined in a flexible manner to minimize the amount of data that must be changed for each application of HDM-4.
14.2 SECTIONING OF PROJECT corridor
Taking into account the traffic homogeneous sections as identified in Chapter 4 and construction of bypasses and realignments along the project corridor, it has been divided into 9 sub sections for economic analysis. Details of these sections are given in Table 14-1 and Fig 14-1. For completeness of the bypass in the first section which begins from a junction on NH-8B, the section from km 111 to km 114.3 of NH-8B has been considered as a link which connects the old starting point (on the corridor) to new starting point on the corridor as shown in the figure below.
Table 141: Details of Road Sections
Traffic Sections / Corridor/ Sections / Existing Chainage (km-km) / Length (Km) / Design/Proposed Chainage(km-km) / Length (Km)Corridor: Jetpur-Somnath
Section 1: Jetpur-Junagadh
(km 0.0-km 26.8) / Sub section 1: Start point Proposed Jetpur Bypass to End Point of Jetpur By pass / 0 / 7.36 / 7.36 / 0 / 4.76 / 5.53[3]
Sub section 2: Jetpur Bypass end point to start point of Proposed Junagadh Bypass 1( missing link) / 7.36 / 25.35 / 18.0 / 4.76 / 23.3 / 18.54
Sub section 3: Start point of Propsed Junagadh Bypass 1 (to missing link) to end of Junagadh Bypass 1 (Dhoraji Junction) / 25.35 / 26.63 / 1.28 / 23.3 / 25.12 / 1.82
Section 2: Junagadh-Keshod
(km 26.8 – km 63.8) / Sub section 4: Start of Existing Junagadh Bypass 2 to end of Junagadh Bypass 2 at railway crossing / 26.63 / 34.00 / 7.37 / 25.12 / 32.4 / 7.28
Sub section 5: Start of realignment Junagadh Bypass 2 at railway crossing to end of realignment of junagadh bypass 2 / 34.00 / 43.10 / 9.10 / 32.4 / 40.6 / 8.2
Sub section 6: End of realignment of junagadh bypass 2 to Start of Keshod Bypass / 43.10 / 65.98 / 22.88 / 40.6 / 63.6 / 23.0
Section 3: Kshod-Gadu
(km 63.8 - km 100.7) / Sub section 7: Start of Keshod Bypass to End of Keshod Bypass / 65.98 / 79.48 / 13.50 / 63.6 / 75.0 / 11.4
Sub section 8: End of Keshod Bypass to Gadu NH 8E junction / 79.48 / 101.9 / 22.43 / 75.0 / 97.15 / 22.15
Section 4: Gadu-Somnath
(km 100.7- km 127) / Sub section 9:Gadu NH 8E junction to Somnath / 101.9 / 127.6 / 25.70 / 97.15 / 122.73 / 25.58
Total Length of the Corridor / 127.60 / 123.49
Figure 141: Sectioning of Project corridor for Economic analysis
14.3 APPROACH AND METHODOLOGY
A Life Cycle Analysis has been adopted to undertake the economic analysis of the proposed improvement project. The tangible benefits have been assessed following the approach of “without the project,” i.e.- the base case and “with the project” scenario. The benefits are:
· Savings in vehicle operating costs (VOC);
· Savings in travel time costs due to reduction in congestion and higher travel speeds as a result of improved roads/construction of bypasses- both in terms of capacity as well as riding quality;
· Savings in maintenance costs.
Once the benefits are estimated, the investment made towards road improvement and construction of bypasses, along with the annual investments towards routine and periodic maintenance have been compared with it to arrive at the following indicators:
i) Economic Internal Rate of Return (EIRR)
ii) Net Present Value (NPV)
iii) Net Present value to Cost Ratio (NPV/C)
14.4 Construction and Analysis Period
The analysis period is considered as 30 years including three years of construction period. It has been proposed that over this period of time, the existing 2-laned facility would be upgraded to 4-lane divided carriageway with paved shoulders. The widening /construction works are expected to get initiated in 2010, and carry on till the end of 2012; therefore the construction cost phasing has been distributed as 30%, 40% and 30% over the stated three year period.
14.5 Project CosT
The project improvement cost, at financial prices, has been estimated as presented in Table 14-2 below:
Table 142: Details of Project Cost
Sl. No. / Description of Item / Total Amount (in millions) /1 / Construction Cost / 7197.66
2 / Estimation purpose (5% on Total Construction Cost) / 359.88
Contingency (3% on Total Construction Cost) / 215.93
Project Preparation and Supervision 3% (on construction cost an contingency) / 233.204
3 / Total Contingencies / 809.02
4 / Total Social, Environment Cost / 3086.79
5 / Total Project cost (excluding escalation)* / 11093.46
* A conversion factor of 0.9 has been used to covert the financial prices to economic prices.
14.6 COMMON INPUTS for RUCS AND HDM-4
14.6.1 Standard Conversion Factors
In an economic analysis exercise the prices used are in economic terms. That is to say that all the distortions in prices relating to labour wages, capital market, transfer payments need to be corrected. For the purpose of economic analysis, financial prices have been converted to economic prices using a factor of 0.9, as recommended by the World Bank.
14.6.2 Unit Costs for Vehicles
A unit cost database has been prepared for new vehicle price, replacement of tyres and tubes, petrol/diesel/engine oil, body-building costs of vehicles, etc. with the help of manufacturers, retailers and other similar sources. In order to convert these prices to economic ones, taxes and duties have been deducted, since they form transfer payments only.
14.6.3 Traffic data
For each road section, traffic level is specified in terms of Average Annual Daily Traffic (AADT) flow. Traffic data has been derived from the primary surveys conducted by the consultants. A detailed analysis on derivation of section- wise traffic has been presented in Chapter 4.
14.6.4 Road Deterioration
The rate of pavement deterioration is directly affected by the design of the pavement (to meet demand of certain level of traffic), together with the quality of construction followed by the standards of maintenance applied to repair defects on the pavement surface such as cracking, raveling, potholes, etc., or to preserve the structural integrity of the pavement (for example, surface treatments, overlays, etc.).
The existing pavement roughness has been recorded during the primary survey, using ROMDAS. As a standard practice, in both `without project’ and ‘with project’ scenarios, periodic maintenance in the form of a 50 mm overlay has been assigned every fifth year of the project. Since the project involves capacity augmentation due to provision of a 4-lane facility in place of the existing 2-lane, it is likely that there will be a lower level of permissible deterioration in roughness in the ‘with project’ case as compared to the ‘without project’ case. While running the HDM-4 model for economic evaluation, the calibration to the road deterioration and work effects (RDWE) exercise has been carried out for the sensitive parameters, viz. (i) roughness-age-environment, (ii) cracking initiation, (iii) cracking progression and (iv) rut depth progression. While defining the improvement options, efforts have been made to calibrate the deterioration parameters with Consultant’s past experience elsewhere. Table 14-3 presents the deterioration parameters used in the model:
Table 143: Calibration Parameters for Pavement Deterioration
Initiation / Progression / Initiation / Progression
All Structural Cracking / 0.8 / 1.3 / 0.9 / 1.1
Wide Structural Cracking / 0.67 / 1.5 / 0.84 / 1.2
Transverse Thermal Cracking / 0.84 / 1.2 / 1 / 1
Raveling / 1 / 1 / 1 / 1
Pot Hole / 1 / 1 / 1 / 1
Edge Break / 1 / 1
Initial Densification / 1 / 1
Structural Deterioration / 1 / 1
Plastic Deformation / 0 / 0
Roughness Env. Coefficient / 0.43 / 0.26
Roughness Progression / 1 / 1
The pavement deterioration figures, by each section of the existing corridor, in both ‘with’ and ‘without’ project scenarios, as estimated with the help of HDM, has been adopted for RUCS as well.
14.6.5 Road Network
Information on road network has been obtained from field surveys. Table below presents the basic road network data used as input for undertaking the economic analysis of project corridor. In the given list of pavement types, only parameters like carriageway width, number of Lanes, rise and fall (m/Km) are used as inputs to RUCS whereas all the other pavement characteristics form input for HDM-4.
Table 144: Details of Road Section
Description / Traffic Section-I / Traffic Section-II / Traffic Section-III / Traffic Section-IVExisting Pavement Type / Asphalt Mix Over Granular Base / Asphalt Mix Over Granular Base / Asphalt Mix Over Granular Base / Asphalt Mix Over Granular Base
Average Carriageway width (m) / 10 / 10 / 10 / 10
Average Shoulder width(m) (eS) / 1 / 1 / 1 / 1
Number of Lanes / 2 / 2 / 2 / 2
Rise + Fall (m/Km) / 2 / 5 / 8 / 6
Altitude (m) / 102 / 100 / 60 / 15
Deflection (mm) / 1 / 1.1 / 1 / 1.8
Condition at end of year / 2008 / 2008 / 2008 / 2008
Roughness IRI (m/km) / 4.73 / 8.68 / 10.85 / 7.36
Total area of Cracking (%) / 29.15 / 17.30 / 15.51 / 22.85
Ravelling area (%) / 27.15 / 39.70 / 42.63 / 54.63
Number of Potholes (nos/ km) / 4 / 11 / 6 / 5
Edge Break area(m2/km) / 25 / 25 / 25 / 25
Mean rut depth (mm) / 10 / 20 / 15 / 20
14.6.6 Vehicle Fleet data
Vehicle Operating Costs (VOC) is the major component of economic analysis. The primary inputs required by both RUCS and HDM, to estimate the VOCs, are the prices of vehicles, tyre, petrol, diesel, lubricants, crew cost, maintenance cost, vehicle utilization, and other vehicle fleet characteristics as given in Table 14-5.
/ 14-6Final Feasibility-cum-Preliminary Design Report
Preparation of Feasibility– cum-Preliminary Design for 4/6 Laning of Jetpur-Somnath section of NH 8D, Package No: NHAI/DBFOII/DPR/02 / VOLUME I:
MAIN REPORT
Table 145: Vehicle Fleet Data
Vehicle Type: / Two Wheelers: / Three Wheelers / Utility Jeep: / New Technology Car: / Standarad Bus / Mini Bus: / LCV: / 2 Axle Truck: / 3 Axle Truck: / MAV (Semi-Articulated): / MAV (Articulated): / Tractor: // Private Bus: /
Base Type: / Two Wheelers / Autos / Old tech Car / Car medium / Bus Medium / Std. Mini Bus / Truck Light / Truck Medium / Truck Heavy / Truck Heavy / Truck Heavy / Tractor:
PCSE / 0.5 / 1 / 1 / 1 / 1.2 / 1.2 / 1 / 1.3 / 1.4 / 1.5 / 1.5 / 1.8
No. of Wheels: / 2 / 3 / 4 / 4 / 6 / 4 / 4 / 6 / 10 / 14 / 14 / 4
No. of Axles: / 2 / 2 / 2 / 2 / 2 / 2 / 2 / 2 / 3 / 4 / 4 / 2
Tyre Type: / Bias- Ply / Bias- Ply / Radial ply / Radial ply / Bias- Ply / Bias- Ply / Bias- Ply / Bias- Ply / Bias- Ply / Bias- Ply / Bias- Ply / Bias- Ply
Base number of Recaps: / 1.3 / 1.3 / 1.3 / 1.3 / 1.3 / 1.3 / 1.3 / 1.3 / 1.3 / 1.3 / 1.3 / 1.3
Retread Cost (%): / 15 / 15 / 15 / 15 / 20 / 15 / 15 / 15 / 15 / 15 / 15 / 15
Annual kilometer (Km): / 19000 / 54000 / 54000 / 48200 / 167500 / 167500 / 71600 / 66900 / 66900 / 61000 / 61000 / 30000
Working Hours (hrs): / 600 / 1800 / 1800 / 1200 / 4800 / 4800 / 2400 / 2200 / 2200 / 2400 / 2400 / 1200
Average Life (years): / 10 / 12 / 15 / 15 / 15 / 8 / 12 / 15 / 15 / 10 / 10 / 12
Private Use (%): / 100 / 10 / 10 / 90 / 0 / 0 / 0 / 0 / 0 / 0 / 0 / 100
Passengers (persons): / 2 / 6 / 6 / 4 / 32 / 14 / 0 / 0 / 0 / 0 / 0 / 1
Work related passenger trips (%): / 79 / 86.1 / 75.5 / 77.6 / 61.2 / 61.2 / 0 / 0 / 0 / 0 / 0 / 0
ESALF: / 0 / 0 / 0 / 0 / 0.42 / 0.3 / 0.3 / 3.13 / 7.9 / 8.32 / 7.5 / 0.1
Operating weight (tons): / 0.2 / 0.6 / 1.4 / 1.2 / 9 / 5 / 8 / 15 / 29 / 37 / 47 / 5
Economic Unit Costs
New Vehicle (Rs.): / 28000 / 154000 / 288000 / 295000 / 1304000 / 1006500 / 457500 / 1274000 / 1635000 / 1823000 / 1823000 / 350000
Replacement Tyre (Rs. ): / 820 / 500 / 1900 / 2000 / 11000 / 4600 / 4600 / 11000 / 11000 / 11000 / 11000 / 5400
Fuel (Rs per litre): / 33 / 24 / 24 / 33 / 24 / 24 / 24 / 24 / 24 / 24 / 24 / 24
Lubricating oil (per litre) / 120 / 120 / 120 / 120 / 120 / 120 / 120 / 120 / 120 / 120 / 120 / 120
Maintenance labour (Rs per hr): / 6 / 3 / 4 / 8 / 6 / 3 / 3 / 4 / 4 / 4 / 4 / 4
Crew Wages (Rs per hr): / 0 / 30 / 0 / 0 / 67 / 34 / 26 / 43 / 52 / 52 / 52 / 30
Annual over head: / 4000 / 13000 / 25000 / 20000 / 175500 / 135500 / 109000 / 267000 / 300000 / 320000 / 320000 / 109000
Annual interest (%): / 12 / 12 / 12 / 12 / 12 / 12 / 12 / 12 / 12 / 12 / 12 / 12
Passenger working time (Rs per passenger hr): / 32.4 / 27.7 / 44.6 / 62.7 / 36.1 / 36.1 / 0 / 0 / 0 / 0 / 0 / 0
Passenger non working time(Rs per passenger hr): / 2.2 / 2.3 / 4.3 / 5 / 3.5 / 3.5 / 0 / 0 / 0 / 0 / 0 / 0
Cargo (Rs per vehicle hr): / 0 / 0 / 0 / 0 / 0 / 0 / 0.9 / 2.8 / 3.6 / 4 / 4 / 0.6
/ 14-8
Final Feasibility-cum-Preliminary Design Report
Preparation of Feasibility– cum-Preliminary Design for 4/6 Laning of Jetpur-Somnath section of NH 8D, Package No: NHAI/DBFOII/DPR/02 / VOLUME I:
MAIN REPORT
14.6.7 Vehicle Operating Cost
Vehicle operating cost (VOC) is a function of Speed, Road roughness, Carriageway, Width/Capacity, Rise and Fall. Per unit VOCs are calculated from the sum of distance related and time related VOCs, which include the following: