Substantiation of transport infrastructure investment

Abstract

All governmental institutions wish to obtain value for money from investment expenditure into transport infrastructure and need a robust technique to make comparisons between alternative schemes. This enables the technique to be used in the preparation of scheme priority lists. In the preparation of the infrastructure capital expenditure section of the Transport Strategic Development Programme, the limit on expenditure prevents all schemes from starting together; consequently those with the best value for money are given greater priority. The Lithuania Ministry of Transport also uses this priority listing. Cost/benefit analysis (CBA) compares the costs of road schemes with the benefits derived by infrastructure users and expresses those benefits in monetary terms. The use of CBA involves the same process as financial appraisal, whose main benefit is that it uses behavioural evaluation (i.e. it represents the real choice of consumers). The limitation of financial appraisal is that it does not cover all the costs and benefits of a scheme but is restricted to those financial effects on the producer. The major criticism of CBA is that it is not comprehensive ? yet financial appraisal is, if anything, even less so CBA itself is only a partial technique; the type used in Lithuania is restricted to measuring value for money over a limited range of road user benefits and excludes non-user or environmental benefits such as noise, pollution, vibration or community severance.