Overview of project appraisal


This paper is the outcome of Australian, state and territory governments agreeing to consult to develop a more sophisticated and consistent framework to assess and evaluate major infrastructure projects. Introduction A project appraisal process helps a government make good choices in terms of its goals. It starts with a clear understanding of the role of the project in addressing the key problems preventing achievement of goals specified in a broader integrated transport and land use plan. Projects should ideally be targeted at addressing the most important problems identified in broader transport plans. Good project appraisal also requires the full exploration of reform and investment options to address the key problems to ensure that the project solution provides the best return for society’s scarce resources. Cost–benefit analysis (CBA) is the primary appraisal tool at the options assessment and project prioritisation stages of the appraisal process It is a rigorous, transparent, quantitative method that measures the degree to which individual projects generate net benefits (benefits minus costs) across Australia, and allows comparison and ranking of options and projects. CBA sits within a broader planning and appraisal framework designed to ensure that projects: Flow from good strategic-level planning and assessment Are closely aligned with high-level national, state and territory goals Are aimed at addressing priority problems that are preventing goals from being achieved, and Adopt the best solution, based on a sound assessment of a wide range of potential options for solving the identified problems. The best practice transport planning and appraisal framework in Australia is defined jointly by the National guidelines for transport system management in Australia (NGTSM 2006) and Infrastructure Australia’s Better infrastructure decision-making (IA 2013a). The NGTSM is currently being updated and revised to: Align with Infrastructure Australia’s framework and guidelines Incorporate the complementary Austroads Guide to Project Evaluation and Guide to Road Transport Planning Provide guidance on important recent developments in tools and techniques that have significant implications for future approaches to transport planning and project appraisal. These include: wider economic benefits (WEBs), productivity metrics, real options analysis, use of computable general equilibrium models, and CBA of active travel, climate change adaptation, maintenance and non-infrastructure initiatives. Non-infrastructure initiatives covers regulatory changes, intelligent transport system projects, and travel behaviour change programs, and be published as website. The NGTSM covers all land transport modes. It sets out a comprehensive framework for integrated transport and land use planning and analytical approaches to transport project appraisal (mostly CBA). The NGTSM update will build on the non-CBA aspects of transport appraisal contained in the current guidelines, particularly the upfront integrated transport and land use aspects of the framework. This paper outlines first the broader appraisal process in which CBA sits, and second CBA itself with the recent developments of wider economic benefits and productivity metrics. &nbsp

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Analysis and Policy Observatory (APO)

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This paper was published in Analysis and Policy Observatory (APO).

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