HIGHWAY PLANS APPRAISAL &

ECONOMIC ASSESSMENT

UNIVERSITY OF NAIROBI
TRANSPORTATION PLANNING II
LECTURE 4
 INTRODUCTION
• Once a transportation plan has been finalized and the demand
along each of its highway links has been established, a process must
be put in place that helps identify the best solution for each
individual proposal within the highway network.
• Each project must therefore be subject to an appraisal. The aim of
the highway appraisal process is therefore to determine the
economic, societal and environmental feasibility of the project or
group of projects under examination.
• The process enables highway planners to decide whether a project
is desirable in absolute terms and also provides a means of
choosing between different competing project options, all of which
have the ability to meet the stated goals and objectives of the
project sponsors.
 Steps of Highway Appraisal
(1) Problem recognition. The decision-maker determines that a problem exists
and that a decision must be reflected on.
(2) Goal identification. The decision-maker details the desired result or out- come of
the process.
(3) Identification of alternative highway schemes. Different potential solutions
are assembled prior to their evaluation.
(4) Information search. The decision-maker seeks to identify characteristics
associated with the alternative solutions.
(5) Assessment of information on alternative highway schemes. The information
necessary for making a decision regarding the preferred option is gathered
together and considered.
(6) Selection of preferred highway scheme. A preferred option is selected by the
decision-maker for implementation in the future.
(7) Evaluation. The decision is assessed a period of time after its implementation in
order to evaluate it on the basis of its achieved results.
 Methods of Highway Appraisal
The scheme appraisal process for highway
schemes can be broken down broadly into two
sections:
• economic evaluation
• environmental assessment.
 ECONOMIC EVALUATION
• For a given set of goals and policies, different
number of alternative transport plans can be
formulated. The cost of these plans may vary,
and so also the benefits that are likely to
accrue from them.
• Economic analysis is a procedure to select
only those schemes that result in the greatest
benefit from the resources available.
 ECONOMIC EVALUATION OBJECTIVES
Economic evaluation :
(i) Determines whether the plan under
consideration is worth investment at all.
(ii ) Ranks schemes competing for scarce resources
in order of priority.
(iii) Compares mutually exclusive schemes and
select the most economic.
(iv) Assists in phasing the programme over a time
period depending upon the availability of resources
 ECONOMIC EVALUATION
• Engineering economics provides a number of
techniques that result in numerical values termed
measures of economic worth.
• These, by definition, consider the time value of
money, an important concept in engineering
economics that estimates the change in worth of
an amount of money over a given period of time.
• Computations are performed on the costs and
benefits associated with each highway option in
order to obtain one or more measures of worth
for each.
METHODS OF ECONOMIC EVALUATION
The methods of economic evaluation are broadly categorized as
A. RATE OF RETURN METHODS
• Benefit/cost ratio (B/C)
• First year rate of return method
DISCOUNTING CASH FLOW METHODS
• Net present value (NPV)
• Equivalent Uniform Annual Worth(EUAW)
• Internal rate of return (IRR).
 ECONOMIC EVALUATION
• In economic analysis, financial units (CURRENCY) are used as the tangible basis of
evaluation.
• With each of the above ‘measure of worth’techniques, the fact that a quantity of
money today is worth a different amount in the future is central to the evaluation.
• Within the process of actual selection of the best option in economic terms, some
criterion based on one of the above measures of worth is used to select the chosen
proposal.
• When several ways exist to accomplish a given objective, the option with the lowest
overall cost or highest overall net income is chosen.
• While intangible factors that cannot be expressed in monetary terms do play a part in
an economic analysis, their role in the evaluation is, to a large extent, a secondary one.
• If, however, the options available have approximately the same equivalent cost/value,
the non-economic and intangible factors may be used to select the best option.
• Economic appraisal techniques can be used to justify a scheme in absolute terms, in
which case the decision is made on the basis of whether the project is ‘economically
efficient’ or not.
• A negative net present value or a benefit/cost ratio less than unity would indicate an
inefficient scheme where society would end up worse off with the scheme than without
it.
 Costs of Transport Projects
Broadly classified as
(i) Capital cost of initial construction
(ii) Costs of delays to vehicles during the period of construction
(iii) Maintenance costs.
 The capital cost of providing transport facility should be estimated
accurately, and should include land costs and ancillary costs. Cost of traffic
control and lighting installations and administration should also be
included.
 When a large programme of construction of a transport facility is
undertaken, it is inevitable that a good deal of disturbance is caused to
the operation of vehicles. Any significant delays caused tothe vehicles in
this respect should be added to the capital cost.
 The maintenance costs are of a recurrent nature and represent the
expenditure to keep the assets in a tolerably good condition in the future
years. The impact of the new scheme on the existing transport network
should be evaluated in determining the maintenance costs.
 Benefits of Transport Projects
Broadly categorized as:
(i) Benefits to the existing traffic by way of reduce
operating costs, savings in travel time and reduction
in accidents.
(ii) Benefits to the generated traffic.
(iii) Benefits to traffic diverted from other routes.
(iv) Benefits to the traffic operating of other roads
(and railways) where reduction in traffic has been
caused by the opening up of the new facility.
 Savings in time
• The upgrading of a highway installation will invariably reduce travel time as well as
improving the reliability of transport services. For transport users, time has some
connection with money.
• The degree of correlation between the two depends primarily on the manner in
which the opportunities made possible by the increased availability of time are
utilised.
• In general, analyses of the value of time-savings within the cost-benefit framework
focus on distinguishing between travel for work and travel for non-work purposes.
Non-work time includes leisure travel and travel to and from work.
• Within developed economies, the value of working time is related to the average
industrial wage plus added fringe benefits, on the assumption that time saved will
be diverted to other productive uses.
• There is no broad agreement among economic evaluation experts regarding the
valuation of non-work time. Since there is no direct market available that might
provide the appropriate value, values must be deduced from the choices members
of the public make that involve differences in time
 Reductions in vehicle operating costs
• This constitutes the most direct potential benefit derived from a new or upgraded
highway project and is one easiest to measure in money terms.
• While the users are the initial beneficiaries of these potential reductions,
circumstances dictated by government policies or competition, or the drive to
maximize profits, might lead to other groups within the broader community having
a share in the ultimate benefit.
• For a highway scheme, the new upgraded project leads to lower levels of
congestion and higher speeds than on the existing roadway, usually resulting in
lower fuel consumption and lower maintenance costs due to the reduced wear
and tear on the vehicles.
• Within a highway cost-benefit analysis, a formula is used which directly relates
vehicle-operating costs to speed. Costs included are both fuel and non-fuel-
based. The higher speeds possible on the new road relative to the existing one
lead to potential monetary savings for each road user.
 Reduction in the frequency of
accidents
• Assessing the economic benefit of accident reduction entails two steps.
• In the case of a highway, this requires comparison of the accident rate on the existing unimproved
highway with that of other highways elsewhere in the country (or abroad) constructed to the higher
standard of the proposed new road.
• Normally, the higher the standard of construction of a highway, the lower its accident rate.
• The second step involves the monetary valuation of the accident reduction.
• Three types of damage should be considered:
 Property damage
 Personal injuries arising from serious accidents
 Fatal accidents.
• Property damage to vehicles involved in accidents is the most easily measured in money terms.
Valuations can be obtained directly from the extent of claims on insurance policies.
• The cost of serious but non-fatal accidents is much more difficult to assess. Medical costs and the
cost of lost output and personal pain and suffering constitute a large proportion of the total
valuation.
• There is major disagreement on which method is most appropriate for estimating the economic
cost to society of a fatal accident. In recent times, stated preference survey techniques have been
employed to estimate this valuation. In most cases, an average cost per accident, covering fatal and
non-fatal, is employed, with damage costs also accounted for within the final estimated value.
 Benefits to Generated Traffic
• It is proper to consider the full benefits from highway
improvements when dealing with traffic already using the
highway.
• This follows from the reasoning that all those who travelled
before the improvements were carried out must have
placed a value on the trip at least equal to the cost of
travel, and thus they benefit to the full extent when
improvements are made.
• Generated traffic pertains to journeys which were not
worthwhile before the improvements but are worthwhile
after the improvements.
• Benefits to generated traffic are usually assessed at one-
half the change in user costs.
 Benefits of Road Projects
Benefits to Diverted Traffic
Transport improvements attract traffic to the improved
facilities from other routes between the same origin and
destination. The benefits derived by diverted traffic
extent of the change in user costs.
Benefits to Traffic on other Roads
Improvements to a road may cause reduction in traffic on
other roads (and railways), thus resulting in lesser
congestion. There may also be congestion on these roads
as a result of the new scheme. These effects should be
evaluated
 Environmental Effects
• Traffic plans are likely to result in disbenefits caused by adverse effects on
the environment. On the other hand, certain improvement schemes might
be planned with the objective of improving and preserving the
environment.
• In all such cases, it is necessary to evaluate in monetary terms the impact
of the scheme on the environment. The elements that need consideration
are : noise, fumes, vibration, loss of amenity, severance, visual intrusion
etc. these are amenable to quantification in monetary terms, while some
are not.
• Noise is now considered a significant factor in environmental quality. The
annoyance caused by noise is translated into noise costs by considering
questions such as “how much is an individual affected by noise prepared
to pay to get relief from it" or "how much would the sufferer have to
receive monetarily to reinstate his pre-noise level of satisfaction”
• The disbenefits can be assessed by changes in rents and property values.
• More research is needed before all the environmental effects can be
considered in monetary terms.
 Benefits of Road Projects: Comfort and
Convenience

• Comfort and Convenience

Comfort and convenience represent the quality
of service offered by a transport facility and are
difficult to value. But yet they are important
aspects since many road users are prepared to
use a longer route just to derive in comfort and
relaxation. The AASTHO guidelines
recommended arbitrary values for the cost of
discomfort and inconvenience.
 Indirect Benefits
• The most important is the effect on property values.
A good accessibility places a premium on properties
• However, changes in property values are not included in an
economic evaluation of transport schemes, because their
inclusion results in some benefits being double counted.
• There are some kinds of benefits which are passed on by
the road user to the others. The savings enjoyed by the
vehicle owners may be transmitted to other sectors of the
community in various forms. Here also, the indirect
benefits are excluded from the economic evaluation in
order to avoid duplicate accounting.
• The idea is to calculate the total benefits to the community
and not to assess how the benefits are distributed.
 Cost-benefit analysis (CBA)
• The benefit-cost ratio method is one of the widely
used ones for evaluation of highway projects and is the
basis of AASTHO Road-user analysis
• Using this method, any proposal having a positive net
present value is economically sustainable in absolute
terms.
• Where competing project options are being compared,
assuming they are being used in identical capacities
over the same period, the one with the numerically
larger NPV is selected (i.e. the one that is less negative
or more positive).
 Cost-Benefit Analysis
• In this method, the ratio of the net annual benefits to the net annual costs
is determined.
• The benefits are evaluated for a single reference year, which for
convenience can be the first year of operation after construction or the
median year of the analysis period.
• The costs are the equivalent annual charge representing equal
amortization and interest payment (at a specified discount rate) spread
over the economic life of the project. The benefit cost ratio for a particular
project would be:
𝐵 𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑟𝑒𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑦𝑒𝑎𝑟
=
𝐶 𝐴𝑛𝑛𝑢𝑎𝑙 𝐶𝑜𝑠𝑡𝑠

(𝑅𝑜𝑎𝑑 𝑢𝑠𝑒𝑟 𝑐𝑜𝑠𝑡𝑠 𝑓𝑜𝑟 𝑒𝑥𝑖𝑠𝑡𝑖𝑛𝑔 𝑦𝑒𝑎𝑟 − 𝑅𝑜𝑎𝑑 𝑈𝑠𝑒𝑟 𝐶𝑜𝑠𝑡𝑠 𝑓𝑜𝑟 𝑖𝑚𝑝𝑟𝑜𝑣𝑒𝑑 𝑟𝑜𝑎𝑑) 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑟𝑒𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑦𝑒𝑎𝑟)
𝐸𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡 𝑎𝑛𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡𝑠 𝑓𝑜𝑟 𝑡ℎ𝑒 𝑖𝑚𝑝𝑟𝑜𝑣𝑒𝑑 𝑟𝑜𝑎𝑑 − 𝐼𝑚𝑝𝑟𝑜𝑣𝑒𝑑 𝑎𝑛𝑢𝑎𝑙 𝑐𝑜𝑠𝑡𝑠 𝑓𝑜𝑟 𝑒𝑥𝑖𝑠𝑡𝑖𝑛𝑔 𝑟𝑜𝑎𝑑
 Cost-benefit analysis (CBA)
• The main steps in the technique involve:
• The listing of the main project options,
• The identification and discounting to their
present values of all relevant costs and
benefits required to assess them, and
• The use of economic indicators to enable a
decision to be reached regarding the
proposal’s relative or absolute desirability in
economic terms.
 Cost-benefit analysis (CBA)
• Step 1: Identifying the main project options
 The decision-makers compile a list of all relevant
feasible options that they wish to be assessed
 It is usual to include a ‘do-nothing’option within the
analysis in order to gauge those evaluated against the
baseline scenario where no work is carried out.
 The ‘do-minimum’ option offers a more realistic
course of action where no new highway is constructed
but a set of traffic management improvements are
made to the existing route in order to improve the
overall traffic performance.
 Cost-benefit analysis (CBA)
• Step 1: Identifying the main project options
 The term ‘feasible’ refers to options that, on a
preliminary evaluation, present themselves as
viable courses of action that can be brought to
completion given the constraints imposed on the
decision-maker such as lack of time, information
and resources.
 Finding sound feasible options is an important
component of the decision process.
 The quality of the final outcome can never exceed
that allowed by the best option examined.
 Cost-benefit analysis (CBA)
Step 1: Identifying the main project options
There are many procedures for both identifying and
defining project options. These include:
 Drawing on the personal experience of the decision-
maker himself as well as other experts in the highway
engineering field
 Making comparisons between the current decision
problem and ones previously solved in a successful
manner
 Examining all relevant literature.
BRAINSTORMING
 Cost-benefit analysis (CBA)
Brainstorming consists of two main phases.
Within the first, a group of people put forward, in a relaxed
environment, as many ideas as possible relevant to the
problem being considered. The main rule for this phase is that
members of the group should avoid being critical of their own
ideas or those of others, no matter how far-fetched. This non-
critical phase is very difficult for engineers, given that they are
trained to think analytically or in a judgmental mode (Martin,
1993). Success in this phase requires the engineer’s
judgmental mode to be ‘shut down’. This phase, if properly
done, will result in the emergence of a large number of widely
differing options.
 Cost-benefit analysis (CBA)
• The second phase requires the planning engineer to return
to normal judgmental mode to select the best options from
the total list, analyzing each for technological,
environmental and economic practicality.
• This is, in effect, a screening process which filters through
the best options.
• The option under examination is judged on the basis of
whether it performs better or worse than the conventional
option on each of the listed criteria.
• It is vital that this process is undertaken by highway
engineers with the appropriate level of experience,
professional training and local knowledge in order that a
sufficiently wide range of options arise for consideration.
 Cost-benefit analysis (CBA)
• Step 2: Identifying all relevant costs and benefits
 Many of the benefits of improvements to
transport projects equate to decreases in cost.
 The primary grouping that contains this type of
economic gain is termed user benefits. Benefits
of this type accrue to those who will actively use
the proposed installation. This grouping includes:
 Reductions in vehicle operating costs
 Savings in time
 Reduction in the frequency of accidents.
 Step 2: Identifying all relevant costs
and benefits
Other studies might address in some way a secondary
grouping of benefits –those accruing to ‘non-users’ of the
proposed facility. These include:
• Positive or negative changes in the environment felt by
those people situated either near the new route or the
existing route from which the new one will divert
traffic. These can be measured in terms of the changes
in impacts such as air pollution, noise or visual
intrusion/obstruction.
• The loss or improvement of recreational facilities used
by local inhabitants, or the improvement or
deterioration in access to these facilities.
 Step 2: Identifying all relevant costs
and benefits
• The costs associated with a proposed highway
installation can fall into similar categories.
• However, in most evaluations, construction
costs incurred during the initial building
phase, followed by maintenance costs
incurred on an ongoing basis throughout the
life of the project, are sufficient to consider.
 Step 4: Economic life, residual value
and the discount rate
• A highway project is often complex and long term, with the costs and
benefits associated with it occurring over a long time frame which we
term the life of the project.
• It sets a limit on the period over which the costs and benefits are
estimated, as all must occur within this time slot, be it 25, 35 or even 50
years or more. It is related, in principle, to the expected lifetime of the
project under analysis.
• Given that transport development projects have the potential to be in
service for a very long time, it may seem impossible to set a limit on the
life of the project with any degree of certainty. In practice, however, this
may not give rise to serious problems in the evaluation, as the loss of
accuracy that results from limiting the life of a project to 35–40 years,
instead of continuing the computation far beyond this point, is marginal to
the analyst undertaking the evaluation. The shortened analysis can be
justified on the basis that, in time equivalent terms, substantial costs
and/or benefits are unlikely to arise in the latter years of the project
 Step 4: Economic life, residual value
and the discount rate
• Where this technique is applied after a relatively small
number of years, the project may well have to be
assigned a substantial residual or salvage value,
reflecting the significant benefits still to be accrued
from the project or, conversely, costs still liable to be
incurred by it (a residual value can be negative, as say
for a nuclear power station yet to be decommissioned).
• The difficulty in assigning a meaningful residual value
to a project after so few years in commission results in
this solution being rather unsatisfactory. It is far more
advisable to extend the evaluation to a future point in
time where the residual value is extremely small
relative to its initial value.
 Step 4: Economic life, residual value and
the discount rate
• The costs and benefits occur at different times over
this time horizon.
• Because of this, they cannot be directly combined until
they are reduced to a common time frame. This is
achieved using the discount rate, which translates all
costs and benefits to time equivalent values.
• The actual value used is the social discount rate, given
that the decision-maker is interested in the benefits
and costs to society as a whole rather than to any
individual or group of individuals.
 Step 5; Use of economic indicators to
assess basic economic viability
• Once the two parameters of project life and
discount rate are set in place, these allow all costs
and benefits to be directly compared at the same
point in time.
• The decision-maker must now choose the actual
mechanism for comparing and analyzing the costs
and benefits in order to arrive at a final answer
for the net benefit of each of the project options
under consideration.
 Step 5; Use of economic indicators to
assess basic economic viability
Three techniques used for this purpose:
• Net present value (NPV)
• Internal rate of return (IRR)
• Benefit/cost ratio (B/C).
 The NPV will estimate the economic worth of the project in terms
of the present worth of the total net benefits.
 The IRR will give, for each option under consideration, the rate at
which the net present value for it equals zero,
 The B/C ratio based on the ratio of the present value of the
benefits to the present value of the costs.
For the last two methods, if the options under consideration are
mutually exclusive, an incremental analysis must be carried out to
establish the best performing one in economic terms.
 Step 5; Use of economic indicators to assess
basic economic viability
• All three methods depend on discounting to arrive at a
final answer. All, if used correctly, should give answers
entirely consistent with each other, but the specific
technique to be used varies with the circumstances.
Thus, while the chosen technique is, to a certain
extent, down to the preference of the decision-maker,
it is nonetheless dependent on the type of decision to
be taken within the analysis.
• If the decision is whether or not to proceed with a
given project, the result from the chosen technique is
compared with some predetermined threshold value in
order to decide whether the project is economically
justified.
 Step 5; Use of economic indicators to assess
basic economic viability
• Once a discount rate/minimum acceptable rate of
return is set, any of the above methods will give the
same result.
• Assuming a discount rate of 10%, the project will be
economically acceptable if the NPV of the net
benefits at 10% exceeds zero, if the IRR is above 10%
or if the B/C ratio at 10% exceeds unity.
 FIRST YEAR RATE OF RETURN
• In this simple method, the benefits accuring in the first year of the
scheme's operation alone are compared with the capital costs of
construction.
• The result, expressing the benefits occurring in the first year as a
percentage of the costs, is called the first year rate of return.
𝐵𝑒𝑛𝑒𝑓𝑖𝑡𝑠 𝑜𝑐𝑐𝑢𝑟𝑖𝑛𝑔 𝑖𝑛 𝑡ℎ𝑒 𝑓𝑖𝑟𝑠𝑡 𝑦𝑒𝑎𝑟
FRR =
𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐶𝑜𝑠𝑡𝑠
• The first year rate of return of a possible scheme gives an indication of
its priority when compared with other schemes, and thus assists in the
selection of the most advantageous scheme.
• The priority for different schemes can also be decided on the basis of
the first year rate of return
 NET PRESENT VALUE
• Net present value method is based on the discounted cash
flow (DCF) technique.
• In this method, the stream of costs/benefits associated
with the project over an extended period of time is
calculated and is discounted at a selected discount rate to
give the present value.
• Benefits are treated as positive and costs negative to
compute the net present value is found.
• Any project with a positive net present value is treated as
acceptable.
• In comparing more than one project, a project with the
highest net present value should be accepted.
 Net Present Value
• The net present value is expressed as :
𝐵1 −𝐶1 𝐵1 −𝐶1 𝐵𝑛 −𝐶𝑛
𝑁𝑃𝑉0 =(𝐵0 -𝐶0 )+ + 2 +…..
(1+𝑖) (1+𝑖) (1+𝑖)𝑛

𝑁𝑃𝑉0 Net present value in year 0

𝐵𝑡 Value of benefits in year t
i discounted rate per annum
n number of years for which the return is to be
calculated
 NET PRESENT WORTH
• The present worth of a given cash flow that has
both receipts and disbursements is referred to as
the net present worth (NPW).
• The use of an interest rate in an economic
evaluation is common practice because it
represents the cost of capital. Money spent on a
transportation project is no longer available for
other investments.
• Therefore, a minimal value of interest rate is the
rate that would have been earned if the money
were invested elsewhere.
 NET PRESENT WORTH
TRANSPORTATION
𝑁 𝑅𝑛 𝑆 𝑁 𝑀𝑛 +𝑂𝑛 +𝑈𝑛
NPW= 𝑛=1 (1+𝑖)𝑛 +(1+𝑖)𝑛 − 𝑛=0 (1+𝑖)𝑛 − 𝐶0
𝐶0 initial construction cost
n a specific year
𝑀𝑛 maintenance cost in year n
𝑂𝑛 operating cost in year n
𝑈𝑛 user cost in year n
S salvage value
𝑅𝑛 revenues in year n
N service life, years
 NET PRESENT WORTH OF A SINGLE
PAYMENT OVER YEARS
If a conversion of a time stream of costs and revenues into a
single number: the NPW.

The term 1/(1 + 𝑖)𝑛 is known as the present worth factor of

a single payment and is written as P/F - i - N, where P is the
present value given the
future amount F, and N is the years of service life
 Internal Rate of Return Method
• The internal rate of return is the discount rate
which makes the discounted future benefits
equal to the initial outlay (Capital).
• In other words, it is the discount rate which
makes the stream of cash flows to zero.
 Internal Rate of Return
The NPV equation can thus be modified as below, if 𝐵𝑄 is zero :
𝐵1 −𝐶1 𝐵1 −𝐶1 𝐵𝑛 −𝐶𝑛
𝐶0 = + +…..
(1+𝑖) (1+𝑖)2 (1+𝑖)𝑛
𝐵 −𝐶
= 𝑛𝑖−1 𝑡 𝑡𝑡
(1+𝑖)
𝐶0 Capital cost of investment in year 0
𝐵𝑡 Value of benefits in year t
𝐶𝑡 Costs which occurred in year t
i internal rate of return
n number of years for which analysis is done
• The solution to the above equation is rather tedious and is possible
only by trial and error. With a computer programme the work is
rendered very simple.
 Internal Rate of Return
• If the rate of return calculated from the above formula
is greater than the rate of interest obtainable by
investing the capital in the open market, the scheme is
considered acceptable.
 NET PRESENT WORTH
It is helpful to use a cash flow diagram to depict
the costs and revenues that will occur over the
lifetime of a project. Time is plotted as the
horizontal axis and money as the vertical axis, as
illustrated Below:
 EQUIVALENT UNIFORM ANNUAL
WORTH
Equivalent Uniform Annual Worth （EUAW）
The conversion of a given cash flow to a series of
equal annual amounts is referred to as the
equivalent uniform annual worth (EUAW).
If the uniform amounts are considered to occur at
the end of the interest period, then the formula is:
𝑟(1+𝑟)𝑛
EUAW=NPWX
(1+𝑟)𝑛 −1
Similarly,
r(1+r)n −1
NPW=EUAW( )
r(1+r)n
 Example
For example, if a loan is made for $5000 to be repaid in equal monthly
payments over a 60-year period at 1 percent/month, then the amount is
0.01(1+0.01)60
5000(0.01(1+0.01)60−1)=5,000X0.0225=111.25 EUAW

However the NPW

0.01(1+0.01)60 −1
=111.25( 0.01(1+0.01)60 )=5000
 EUAW
• Formula solutions for values of i and N that
convert a monetary value from a future to a
present time period (P/F – i – N) and from a
present time period to equal end-of-period
payments (A/P – i – N) are tabulated in
textbooks on engineering economics. Table
below lists values of single-payment present
worth factors (P/F) and capital recovery
factors (A/P) for a selected range of interest
rates and time periods
Single-payment present worth factors (P/F)
and capital recovery factors (A/P)
 Basic Principles of Economic
Evaluation
• The amount S to which Kshs. 1 will increase in n years
with a compound interest rate of r
S=(1 + 𝑟)𝑛
• The Present Value A of Kshs. 1 in n years, when
discounted at interest rate r
1
A= = (1 + 𝑟)−𝑛
(1+𝑟)𝑛

• The Present Value A of an annuity Kshs. 1 per year for

n years, when discounted at interest rate r
1−(1+𝑟)𝑛
A=
𝑟
 Basic Principles of Economic
Evaluation
• The amount P per annum for n years at interest rate r
needed to accumulate Kshs. 1 at the end of n years.
(Sinking Fund Factor)
𝑟
P=(1+𝑟)𝑛−1
• The amount P per annum for n years at interest rate r
needed for recovery of capital of Kshs. 1 including
interest rate (Capital recovery Factor)
𝑟(1+𝑟)𝑛
P=(1+𝑟)𝑛−1
• Capital recovery factor represents the amount
necessary to repay Kshs. 1 if N equal payments are
made at interest rate i.
• Present worth A for uniform payments of Kshs. 1 per year for
n years at interest rate r(present worth factor)
𝑟(1+𝑟)𝑛 −1
A=
𝑟(1+𝑟)𝑛
• The inverse of the capital recovery factor is the present worth
factor for a uniform Series
• The NPW of a cash flow is converted to an EUAW by
multiplying the NPW by the capital recovery factor.
 Benefit/Cost EXAMPLE 1
A single lane road 50 km long is to be widened to two lanes at a
cost of Kshs. 80,000,000, 000per km, including all improvements.
The cost of operation of vehicles on the single lane road is Kshs.
120,000 per vehicle km, whereas it is Kshs. 100,000 per vehicle
km on the improved facility. The average traffic may be assumed
2500 vehicles per day over a design period of 20years. The
interest rate is 10per cent per annum. The cost of maintenance is
Kshs. 500,000,000per km on the existing road and Kshs 1
000,000,000per km on the improved road. Is the investment in
the improvement scheme worthwhile?
Annual Road User cost in the median year of analysis
Improved Roads=365daysX50kmx2500veh/dayX100,000Ksh/vehkm
=Kshs. 456.25X1010
Existing road=365daysX50kmx2500veh/dayX120,000Ksh/vehkm
=Kshs.547.5X 1010
Cost of improvement= 50kmX 80,000,000,000=Ksh.400X1010
The capital recovery factor when n=20 and r=10
𝑟(1+𝑟)𝑛
(1+𝑟)𝑛 −1
=0.117 therefore Present cost of improvement
=400x 1010 X0.117=46.8 𝑋1010
Difference in annual maintenance is 50X500,000,000=Ksh 2.5X 𝑋1010
(547.5−456.25)𝑋1010
Benefit/Cost Ratio= =1.85
(46.8+2.5)𝑋1010
Since the ration is greater than 1, the project is worthwhile
 NPV Example 2
A section of road is at present having poor
geometries. The cost of upgrading this road is Ksh.
100,000,000. The road user costs with and without
the improvements, the accident costs with and
without the improvements and the extra
maintenance costs with the improvements are
tabulated below for a 10 year period after the
execution of the improvement programme.
Assuming a discount rate of 10% per annum, is the
project economically justified
Year Road User Costs Accident Costs Extra Cost Benefits Benefits- （9）
of （7） Costs
(1) With Without With Without Maintenan =Col 3- （8）
Improvem Improme Improvem Improveme ce Col 2+Col Col 7-Col
ents（2） nts ents nts （6） 5-Col 4 6
（3） （4） （5） =Bt-Ct
0 -- -- -- -- -- -- -100 -100

1 105.5 126.5 1.1 3.1 1.0 23 22.0 +20

2 110.3 132.2 1.1 3.1 1.0 23.9 22.9 +18.9

3 115.8 138.9 1.2 3.5 1.0 25.4 24.4 +18.3

4 121.6 145.8 1.2 3.7 1.0 26.7 25.7 +17.6

5 127.6 153.0 1.3 3.8 1.0 27.9 26.9 +16.7

6 134.0 161.0 1.3 4.0 1.0 29.7 28.7 +16.2

7 140.7 168.9 1.4 4.2 1.0 31.0 30.0 +15.4

8 147.8 177.0 1.5 4.4 1.0 32.1 31.1 +14.5

9 155.1 186.2 1.6 4.7 1.0 34.2 33.2 +14.1

10 162.9 195.2 1.6 4.9 1.5 35.6 34.6 +13.3

NPV IS POSITIVE, THE PROJECT IS ECONOMICALLY JUSTIFIED SUM

165-100=65
 Assignment Example 3
It is proposed to upgrade an existing single carriageway road to a dual
carriage-way and to improve some of the junctions. The time frame for
construction of the scheme is set at two years, with the benefits of the
scheme accruing to the road users at the start of the third year. As listed
above, the three main benefits are taken as time savings, accident cost
savings and vehicle operating cost reductions. Construction costs are
incurred mainly during the two years of construction, but ongoing
annual maintenance costs must be allowed for throughout the economic
life of the project, taken, in this case, to be 10 years after the road has
been commissioned. The following basic data is assumed for this
analysis:
Accident rates: 0.85 per million vehicle-kilometres (existing
road)
0.25 per million vehicle-kilometres (upgraded road)
Average accident cost: £10000
Average vehicle time savings: £2.00 per hour
Average vehicle speeds: 40km/h (existing road) 85km/h
(upgraded road)
Average vehicle operating cost: ((2 + (35/V) + 0.00005* 𝑉 2 ) /
100) £ per km
Discount rate: 6%
The traffic flows and the construction/maintenance costs for
the highway proposal are shown in the Table below
 EXAMPLE 3
The traffic flows and the construction/maintenance costs for the highway
proposal are shown in the table below
SOLUTION example 3
 Solution Example 3
Accident savings (Yr 7)= (0.85 - 0.25) X10000 X290 = £1740000
Operating cost (existing route) = (2 + 35/40 + (0.00005 X 402 ))/ 100 =
£0.02955 per km per vehicle
Operating cost (upgraded route) = (2 + 35/85 + (0.00005 X 852 )) / 100
= £0.02773 per km per vehicle
Operation savings (Yr 7) = (0.02955 - 0.02773) X290 X10 6
= £527757
Travel time/km(existing route) = 1/40 = 0.025 hours
Travel time/km(upgraded route) = 1/85= 0.011765 hours
Value of savings per veh-km = (0.025 - 0.0117647) X £2.00= £0.02647
Value of time savings (Yr 7) = 0.02647 X 290 X106 = £7676471
Total benefits(Yr 7)= (1740000 + 527757 + 7676471)= £9944228
Total Discounted benefits (Yr 7) = 9944229 / (1.06)7 = 9944229 /
1.50363= £6613480
 Solution Example 3
The value of Discounted Costs:
 Solution Example 3
i)Net present value
To obtain this figure, the discounted costs are subtracted from the
discounted benefits:
NPV = 65,188,612-26,326,133= £38,862,479
ii)Benefit-cost ratio
In this case, the discounted benefits are divided by the discounted
costs as follows:
B C ratio =65.188,612/26,326,133=2.476
iii) Internal rate of return
This measure of economic viability is estimated by finding the discount
rate at which the discounted benefits equate with the discounted
costs. In this example, this occurs at a rate of 28.1%
 Solution Example3
All the above indicators point to the economic strength of the
project under
examination.
• Its NPV at just over £38 million is strongly positive
• B/C ratio at just below 2.5 is well in excess of unity.
• The IRR value of over 28% is over four times the agreed
discount rate (6%).
Together they give strong economic justification for the
project under examination. Knowledge of these indicators for
a list of potential projects will allow decision-makers to
compare them in economic terms and to fast track those that
deliver the maximum net economic benefit to the community
 Assignment Example 4
The Department of Traffic is considering three
improvement plans for a heavily traveled intersection
within the city. The intersection improvement is expected
to achieve three goals: improve travel speeds, increase
safety, and reduce operating expenses for motorists. The
annual dollar value of savings compared with existing
conditions for each criterion as well as additional
construction and maintenance costs is shown in the Table
below. If the economic life of the road is considered to
be50 years and the discount rate is 3%, which alternative
should be selected? Solve the problem using NPW,
EUAW,CBR, ROR
Table 1: Costs and Benefits for Improvement
Plans with Respect to Existing Conditions
Alternative Construction Annual Annual Annual Annual Additional
Cost Savings in Travel Time Operating Maintenace Cost
Accident Benefits Savings
I $185,000 $5000 $3000 $500 $1500
II $220,000 $5000 $6500 $500 $2500
III $310,000 $7000 $6000 $2800 $3000
 NET PRESENT WORTH/VALUE
(1+0.03)50 −1)
𝑁𝑃𝑊𝐼 =-185,000 +(-1500+5000+3000+500)(
0.03((1+0.03)50 )
=-185,000+7000(25.729) = -185,000+180, 103 =-4897

(1+0.03)50 −1)
𝑁𝑃𝑊𝐼𝐼 =-220,000 +(-2500+5000+6500+500)(
0.03((1+0.03)50 )
= -220,000+9500(25.729) =--220,000+244, 425=+24,465

(1+0.03)50 −1)
𝑁𝑃𝑊𝐼𝐼𝐼 =-310,000 +(-3000+7000+6000+2800)(
0.03((1+0.03)50 )
= -310,000+12,8000(25.729) =--310000+329, 331=+19,331
The project with highest NPW is alternative II
 Solving by the EUAW method.
𝑟(1+𝑟)𝑛
EUAW=NPWX
(1+𝑟)𝑛 −1

Note (A/P -3 - 50) =1/25.729 =0.03887.

𝐸𝑈𝐴𝑊𝐼 =-185,000(P/A-3-50) +(-1500+5000+3000+500)
=-185,000(0.0389)+7000=-7190+7000= -190
𝐸𝑈𝐴𝑊𝐼𝐼 ==-220,000(P/A-3-50) +(-2500+5000+6500+500)
=-220,000(0.0389)+9500=-8551+9500=+949
𝐸𝑈𝐴𝑊𝐼𝐼𝐼 ==-310,000(P/A-3-50) +(-3000+7000+6000+2800)
=-310,000(0.0389)+12800=-12050+12800=+750
 Solving by B/C Method
• Compare the BCR of Alternative I with respect to do-nothing (DN)
180,103
𝐵𝐶𝑅1/𝐷𝑁 = =0.97
185,000

244,425
𝐵𝐶𝑅𝐼𝐼/𝐷𝑁 = =1.11
220,000

329,331
𝐵𝐶𝑅𝐼𝐼𝐼/𝐷𝑁 = =1.06
310,000
Compare BCR of Alternative III with respect to Alternative II.
329331−244,425 84,906
= = =0.94
310,000−220,000 90,000
Since BCR is less than 1, we would not select Alternative III.
We reach the same conclusion as previously, which is to select
Alternative II
 Solving by Internal Rate of Return
• In this situation, we solve for the value of
interest rate for which NPW= 0
(1+𝑖)50 −1)
𝐼𝑅𝑅𝐼 =0=-185,000 +(-1500+5000+3000+500)( 𝑖((1+𝑖)50) =185,000/7000=26.428 i=2.6%
Since the IRR is lower than 3% we discard Alternative I.
(1+𝑖)50 −1)
𝐼𝑅𝑅𝐼𝐼 =0=-220,000 +(-2500+5000+6500+500)( 𝑖((1+𝑖)50) =220,000/9500=23.16 i=3.6%
Since IRR is greater than 3%, select Alternative II over DN.

Compute ROR for Alternative III versus Alternative II

(1+𝑖)50 −1)
𝐼𝑅𝑅𝐼𝐼𝐼 =0=-(310,000-220,000) +(12,800-9500)( 𝑖((1+𝑖)50) =90,000/3300=27.27 i=2.7%
Since the increased investment in Alternative III yields an IRR less than 3%, we do
not select it but again pick Alternative II.
 Environmental appraisal of highway
schemes
• While the cost-benefit framework for a highway project
addresses the twin objectives of transport efficiency and
safety, it makes no attempt to value its effects on the
environment.
• Environmental evaluation therefore requires an alternative
analytical structure. EIA assesses:
 The probable environmental impact of the proposal
 Any unavoidable environmental impacts
 Alternative options to the proposal
 Short-run and long-run effects of the proposal and any
relationship between the two
 Any irreversible commitment of resources necessitated by
the proposal.
Environmental Impact Assessment
The minimum information that must be
contained within the EIA:
(1) A physical description of the project
(2) A description of measures envisaged to
reduce/remedy the significant adverse
environmental effects of the project
(3) The data required to both identify and assess
the main effects on the environment of the
project in question
 Environmental impacts forming the
assessment framework
Air quality: The main vehicle pollutants assessed are carbon monoxide
(CO), oxides of nitrogen (𝑁𝑂𝑋 ) and hydrocarbons (HC), lead (Pb), carbon
dioxide (𝐶𝑂2 ) and particulates. Established models are used to predict future
levels of these pollutants, and the values obtained are compared with current
air quality levels.
Cultural heritage: The demolition/disturbance of archaeological remains,
ancient monuments and listed buildings and the impact of such actions on
the heritage of the locality, are assessed under this heading.
Construction disturbance: Though this impact is a temporary one, its effects
can nonetheless be severe throughout the entire period of construction of
the proposal. Nuisances such as dirt, dust, increased levels of noise and
vibration created by the process of construction can be significant and may
affect the viability of the project.
 Environmental impacts forming the EIA
framework
Ecology/nature conservation :The highway being proposed may negatively
affect certain wildlife species and their environment/habitats along the route
corridor in question. Habitats may be lost, animals killed and flora/fauna may
be adversely affected by vehicle emissions.
Landscape effects The local landscape may be fundamentally altered by the
construction of the proposed highway if the alignment is not sufficiently
integrated with the character of the local terrain.
Land use The effects of the route corridor on potential land use proposals in
the area, together with the effects of the severance of farmlands and the
general reduction, if any, in general property values in the vicinity of the
proposed route, are assessed under this heading.
Traffic noise and vibration The number of vehicles using the road, the
percentage of heavy vehicles, vehicle speed, the gradient of the road, the
prevailing weather conditions and the proximity of the road to the dwellings
where noise levels are being measured, all affect the level of noise nuisance
for those living near a road. Vehicle vibrations can also damage the fabric of
buildings.
 Environmental impacts forming the EIA
framework
Pedestrian, cyclist and community effects The severance of communities and
its effect on people in terms of increased journey time and the breaking of
links between them and the services/facilities used daily by them, such as
shops, schools and sporting facilities, are evaluated within this category of
impact.
Vehicle travellers This assesses the proposal from the perspective of those
using it, i.e. the drivers. The view from the road (scenery and landscape), the
driver stress induced by factors such as the basic road layout and frequency of
occurrence of intersections, are assessed within this category on the basis
that they directly affect levels of driver frustration and annoyance leading to
greater risk-taking by drivers.
Water quality and drainage This measures the effect that run-off from a
road development may have on local water quality. Installations such as oil
interceptors, sedimentation tanks and grit traps will, in most instances, min
imise this effect, though special measures may be required in particular for
water sources of high ecological value.
 Environmental impacts forming the EIA
framework
Geology and soils The process of road construction
may destabilize the soil structure or expose hitherto
protected rock formations. These potential impacts
must be identified together with measures to
minimize their effects.
Policies and plans This impact assesses the
compatibility of the proposal with highway
development plans at local, regional and national
level.
Tools to Measure Impacts of Noise and
Emissions
• In US, Environmental Protection Agency (EPA) has developed an emissions-based
model (known as MOBILE) that may be used to evaluate emissions impacts of
alternatives. The results of this model, compared with observed carbon monoxide
concentrations, can be used to determine the relative impact of different project
alternatives on the level of carbon monoxide.
• One approach for quantifying noise impacts is to use the Federal Highway
Administration’s Transportation Noise Model (TNM), a computer program that
forecasts noise levels as a function of traffic volumes and other factors. The
method by which noise impacts are assessed can vary by regulatory agency. For
example, the FHWA will permit one to use the L 10 descriptor, which is “the
percentile noise level that is exceeded for ten percent of the time.” A more
common noise descriptor is Leq , which is the average noise intensity over time.
• A variant of this descriptor may be used by the U.S. Department of Housing and
Urban Development (HUD), where the L eq for each hour is determined but then a
10 dB “penalty” is added to the values from 10 p.m. to 7 a.m.
• Since noise is proportional to traffic speed, the impact of this last type of
descriptor is to favor projects that would not necessarily result in high speeds in
close proximity to populated areas during the evening hours.
 PROJECT APPRAISAL CASE STUDY
• To illustrate the transportation planning process, a
situation that involves a rural road relocation project is
described. Each of the activities that are part of the
project is discussed in terms of the seven-step planning
process previously described.
• This project includes both a traffic analysis and an
environmental assessment and is typical of those
conducted by transportation consultants or
metropolitan transportation organizations. (This
example is based on a study completed by the
engineering firm, Edwards and Kelsey)
 STEP 1: SITUATION DEFINITION
The project is a proposed relocation or reconstruction of 3.3 miles of
U.S. 1A located in the coastal town of Harrington, Maine. The town
center, a focal point of the project, is located near the intersection of
highways U.S. 1 and U.S. 1A on the banks of the Harrington River, an
estuary of the Gulf of Maine. (See Figure 1 below.) The town of
Harrington has 553 residents, of whom 420 live within the study area
and 350 live in the town center. The population has been declining in
recent years; many young people have left because of the lack of
employment opportunities. Most of the town’s industry consists of
agriculture or fishing, so a realignment of the road that damages the
environment would also affect the town’s livelihood. There are 10
business establishments within the study area; 20 percent of the
town’s retail sales are tourism related. The average daily traffic
is 2620 vehicles/day, of which 69 percent represent through traffic and
31 percent represent local traffic.
Figure 1： Location Map for Highways
U.S. 1 and U.S. 1A
 STEP 2: Problem definition.
• The Maine Department of Transportation wishes to improve U.S. 1A, primarily
to reduce the high accident rate on this road in the vicinity of the town center.
The problem is caused by anarrow bridge that carries the traffic on U.S. 1A into
the town center, the poor horizontal and vertical alignment of the road within
the town center, and a dangerous intersection where U.S. 1A and U.S. 1 meet.
The accident rate on U.S. 1A in the vicinity of the town center is four times the
statewide average. A secondary purpose of the proposed relocation is to
improve the level of service for through traffic by increasing the average speed
on the relocated highway.
• The measures of effectiveness for the project will be the
• Accident rate, travel time, and construction cost.
• Other aspects that will be considered are the effects that each alternative
would have on a number of businesses and residences that would be
displaced, the changes in noise levels and air quality, and the changes in
natural ecology. The criteria that will be used to measure these effects will be
the number of businesses and homes displaced, noise levels and air quality,
and the acreage of salt marsh and trees affected.
 STEP 3: SEARCH FOR SOLUTIONS
The Department of Transportation has identified four
alternative routes, as illustrated in Figure below, in addition
to the present route
• Alternative 0—referred to as the null or “do- nothing”
alternative. All routes begin at the same location—3 miles
southwest of the center of Harrington—and end at a
common point northeast of the town center. The
alternatives are as follows:
• Alternative 1: This road bypasses the town to the south on
a new location across the Harrington River. The road would
have two lanes, each 12-ft wide with 8-ft shoulders. A new
bridge would be constructed about one-half mi
downstream from the old bridge.
 STEP 3: SEARCH FOR SOLUTIONS
• Alternative 2: This alternative would use the existing U.S. 1A
into town, but with improvements to the horizontal and
vertical alignment throughout its length and the construction
of anew bridge. The geometric specifications would be the
same as for Alternative 1.
Alternative 3: This new road would merge with U.S. 1 west of
Harrington, and then continue through town. It would use the
Route 1 Bridge, which was recently constructed. Geometric
specifications are the same as those for the other alternatives.
• Alternative 4: This road would merge with U.S. 1 and use the
Route 1 Bridge, as in Alternative 3. However, it would bypass
the town center on a new alignment.
Step 3: Search for Solutions

Alternative Routes for Highway Relocation

 STEP 4: ANALYSIS OF PERFORMANCE
The measures of effectiveness are calculated for each alternative. The results
of these calculations are shown in Table 2 below for Alternatives 1 through 4
and for the null alternative.
• The relative ranking of each alternative is presented in Table 2. For
example, the average speed on the existing road is 25 mi/h, whereas for
Alternatives 1 and 4, the speed is 55 mi/h, and for Alternatives 2 and 3,
the speed is 30 mi/h.
• Similarly, the accident factor, which is now four times the statewide
average, would be reduced to 0.6 for Alternative 4 and 1.2 for Alternative
1.
• The project cost ranges from $1.18 million for Alternative 3 to $1.58
million for Alternative 2.
• Other items that are calculated include the number of residences
displaced, the volume of traffic within the town both now and in the
future, air quality, noise, lost taxes, and acreage of trees removed.
Table 2 Measures of Effectiveness for
Rural Road
Ranking of Alternatives
 Step 5. Evaluation of alternatives
Each of the alternatives is compared with the
others to assess the improvements that would
occur based on a given criterion. In this example,
we consider the following measures of
effectiveness and their relationship to project cost.
Travel time: Every alternative improves the travel
time. As shown in Figure 4, the best is Alternative 1,
followed by Alternative 4. Alternatives 2 and 3 are
equal, but neither reduces travel time significantly.
Figure 4 Travel Time between West
Harrington and U.S. 1 versus Cost
 Accident Factor
Accident factor: Figure 5 shows that the best
accident record will occur with Alternative 4,
followed by Alternatives 1, 3, and 2.
 Step 5: Evaluation of Alternatives
• Cost: The least costly alternative is simply to do nothing, but the dramatic
potential improvements in travel time and safety would indicate that the
proposed project should probably be undertaken. Alternative 3 is lowest in cost at
$1.18 million. Alternative 2 is highest in cost, would not be as safe as Alternative
3, and would produce the same travel time. Thus, Alternative 2 would be
eliminated. Alternative 1 would cost $0.32 million more than Alternative 3, but
would reduce the accident factor by 1.3 and travel time by 4.1 minutes.
Alternative 4 would cost $0.04 million more than Alternative 1 and would
increase travel time, but would decrease the accident factor. These cost-
effectiveness values are shown in Figures 4 and 5. They indicate that Alternatives
1 and 4 are both more attractive than Alternatives 2 and 3 because the former
would produce significant improvements in travel time and accidents.
• Residences: Three residences would be displaced if Alternative 3 were selected;
seven residences would be displaced if Alternative 2 were selected. No residences
would have to be removed if Alternatives 1 or 4 were selected.
 Step 5: Evaluation of Alternatives
• Air quality: Alternative 1 would produce the highest air quality,
followed by Alternatives 4, 3, and 2. The air quality improvement
would result from removing a significant amount of the slow-moving
through traffic from the center of the city to a high-speed road where
most of the pollution would be dispersed.
• Noise: Noise levels are lower for Alternatives 1 and 4.
• Tax loss: Tax losses would be slight for Alternatives 1 and 4,
moderate for Alternative 3, and high for Alternative 2.
• Trees removed: Alternatives 3 and 4 would eliminate 25 and 28 acres
of trees, respectively. Alternative 1 would result in slight losses;
Alternative 2, no loss.
• Runoff: There would be no runoff for Alternative 0, some for
Alternatives1and2,and a considerable amount for Alternatives 3 and 4.
 Step 6: CHOICE OF PROJECT
• From a cost point of view, the Department of Transportation would
select Alternative 3, since it results in travel time and safety
improvements at the lowest cost.
• However, if additional funds are available, then Alterative 1 or 4
would be considered.
• Since Alternative 1 is lower in cost than Alternative 4 and is equal or
better than Alternative 3 for each criterion related to community
impacts, this alternative would be the one most likely to be selected.
• In the selection process, each alternative would be reviewed. Also,
comments would be received from citizens and elected officials to
assist in the design process so that environmental and community
effects would be minimized.
Step 7: Specifications and construction
• The choice has been made, and Alternative 1, a bypass south of
Harrington, has been ranked of sufficiently high priority so that it
will be constructed. This alternative involves building both a new
bridge across the Harrington River and a new road connecting U.S.
1A with U.S. 1.
• The designs for the bridge and road will be prepared. Detailed
estimates of the cost to construct will be made, and the project will
be announced for bid. The construction company that produces the
lowest bid and can meet other qualifications will be awarded the
contract, and the road will be built.
• Upon completion, the road will be turned over to the Department
of Transportation, who will be responsible for its maintenance and
operation. Follow-up studies will be conducted to determine how
successful the road was in meeting its objectives; where necessary,
modifications will be made to improve its performance