Economic Evaluation of BOT Projects

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Economic Evaluation of proposed Barwah-Dhamnod Toll Road by Dr.(Mrs.)Vandana Tare

(Professor, Deptt. of Civil Engg. S.G.S.I.T.S., Indore (M.P) and Er. Raj Mohammad Khan (M.E.
(Civil) Transportation Engg., Indore (M.P).

ABSTRACT
Road Traffic has been growing with very rapid rate, hence the traffic intensity and volume on the
road is high. The present road network is necessary to improve to accommodate the future traffic
and to provide the good riding quality. The development of Infrastructure has been done by the
public sector through the fund collected from taxes, but huge fund are required for modernization
of road network. Due to decreasing financial resources, government is not in position to invest
the funds in those developments. This has brought to focus the need of attracting private
investment in road in India.

The Barwah-Dhamnod road is proposed on B.O.T. system, starts from Barwah on Indore-
Khandwa Road SH-27 and passing through Mandleshwar and joining NH-3 at Dhamnod. The
total length of the road is 63 Kms and road passes through the districts of Khargon and Dhar.
The details of road section Barwah-Dhamnod Road under study were collected through road
inventory survey. The Traffic volume survey & Willingness to pay survey were also conducted
on this road. The analysis of traffic volume data was done by projection up to 15 years. The need
for widening of road from single lane to two lane is justified as per the capacity of road. Based
on the data collection to achieve the toll fixation rates & to estimate the concession period, a
methodology is adopted which includes generation of different module. Each module calculates
the required results.

1-INTRODUCTION
Road Traffic has been growing with very rapid rate i.e. 8 % per annum, hence the traffic
intensity and volume on the road is high. The present road network is necessary to improve to
accommodate the future traffic and to provide the good riding quality. The development of
Infrastructure has been done by the public sector through the fund collected from taxes, but huge
fund are required for modernization of road network.

Due to decreasing financial resources, government is not in position to invest the funds in those
developments. This has brought to focus the need of attracting private investment in road in
India. The funds provided by private sector for improvement of road condition are recovered
from road user by toll tax. After recovery period that particular road section is transferred to
government. This Idea is called as BOT system.

2-DETAILS OF ROAD UNDER STUDY

Barwah-Dhamnod Road starts from Barwah on Indore-Khandwa Road SH-27 and passing
through Mandleshwar and joining NH-3 at Dhamnod. The total length of this road is about 63
Kms and passes through the districts of Khargon and Dhar and having mainly plain terrain with
some sections in rolling terrain. Table 1 gives details of roads intersect the proposed road at
locations as under:

Table1: Details of Major road Crossing Proposed Road Section

Kms Roads
Km 0 SH-27 from Indore to Khandwa at km 60+200 at
Barwaha
Km 26 MDR to Balwara
Km 40+800 SH-1 from Mhow to Mandleshwar at Mandleshwar with
km 0
Km 49+200 MDR to Mehatwara at Maheshwar
Km 63 Joins NH-3 at Km 77+200 at Dhamnod

2.1-CRUST DETAILS
The details of road section Barwah-Dhamnod Road under study were collected through Test Pit.
Existing Crust Composition on present road had found as follows.

Thickness Composition
225 mm Subgrade soil
150 mm WBM
75 mm BM+SDBC

2.2-ROAD INVENTORY SURVEY

The details of road section were collected through road inventory survey. In this survey details of
Terrain classification, land use, villages, Formation width, Carriageway type-width- condition of
road, Details of cross roads, Tree distance No. of Trees etc. has been collected for every kms.

2.3-TRAFFIC VOLUME SURVEY

Traffic Volume survey was carried out at Km 2 near Barwah to know the volume of various
categories of vehicles plying on the road. Format for Traffic Volume survey is also prepared.
Table 2 gives the details of Traffic volume Survey in terms of Average Daily Traffic (ADT).

Table 2 : Average Daily Traffic at location km2

Type of Vehicle ADT

Mini Bus 61
Bus 101
Car/Jeep/Van 454
Two Wheeler 2290
Auto Rickshaw 68
LCV 110
2 Axle Truck 202
3 Axle Truck 41
 M Axle Truck 4
Tractor with Trailer 85
Tractor without Trailer 22
Cycle 942
Cycle Rickshaw 1
Hand Cart 7
Animal Drawn (Cart) 202
Others 4
Total Vehicles 4594
Total PCU 5545

2.4-WILLINGNESS TO PAY (WTP) SURVEY

Willingness to pay survey was also done on the Barwah Dhamnod Road to know the opinion of
road users. The survey result reveals that if the road is made two lanes, the traffic from other
roads: Balwara road, Mhow to Mandleshwar road, Mehatwara to Maheshwar road will be
diverted to this road. Apart from this there will also be some generated traffic. The survey also
indicated that if the road is made two lanes then road users would like to pay reasonable toll.

2.5-BENKELMAN BEAM DEFLECTION STUDY

The Benkelman Beam Deflection test is done on the selected sites and the deflection evaluated
for all the point. Characteristic deflection as evaluated from BBD Test comes out to be 1.427mm

3-METHODOLOGY ADOPTED
Based on the data collection as given above, to achieve the toll fixation rates and to estimate the
concession period, a methodology is adopted which includes generation of different module.
Each module calculates the required results. Following modules have been developed
Module1: TRFFRCS
Module 2: OVLYDES
Module 3: WIDDES
Module4: COSTANAL
Module5: ECONANAL
Module 6: TOLLFIX

MODULE –1 TRFFRCS
In this Module traffic volume has been projected for Badwah Dhamnod Road for the year 2006
considering growth rate 7.5 % per year as per the IRC guideline. Result shows that after 15 years
the traffic is projected up to 16000 PCU per day.

Table 3 : Traffic Projections

Calculation of Cumulative Million Standard Axles (CMSA): CMSA have been calculated by
considering following parameter:
1. Growth rate :7.5 %
2. VDF for plain terrain :3.5
3. Lane Distribution factor :75 %
4. Directional Distribution Factor :100 %
The result for calculation of CMSA for different type of commercial vehicles is found to be 10
MSA.

MODULE 2 OVLYDES
In this module overlay design for the road section has been done. deflection evaluated for all the
point. The average of Characteristic deflection (1.247 mm) of all the point has been taken for the
design of overlay using MSA is 10. Based on the Benkelman Beam survey data following design
thickness have been recommended for overlay of Badwah Dhamnod Road.

Thickness Composition
60 mm D.B.M.
40 mm S.D.B.C.
MODULE 3 WIDDES
In this Module Design of widening has been done. In the road inventory survey it is found that at
some portion central widening is needed due to inadequate ROW and at some portion side
widening can be adopted.Design for widening portion has been done as per IRC: 37-2001 & the
recommended crust thickness for MSA 10 and CBR 7 % are given below:

Layer Composition Thickness (mm)

GSB 230
WMM 250
DBM 60
SDBC 40
TOTAL 580

MODULE 4 COSTANAL
In this module cost analysis has been done for the entire project on the basis of overlay and
widening design as per the rate from MPPWD SOR April 2007. The cost comes out to be Rs 80
lakhs per Km.

MODULE 05 : ECONANAL
In this module Economic Analysis for the proposed road has been done. The construction of
roads brings about a variety of benefits that are enjoyed practically by all sectors of the economy.
Scarcity of resources and competing demands from various sectors are the important features of
a developing economy. It, therefore, becomes necessary to allocate the scarce resources in the
most beneficial manner. In view of above, it is necessary to ensure that the projects selected for
investment are thoroughly evaluated to determine the economic and social benefits offered by
the project and the ease with which the project can be implemented. The economic analysis
involves comparison of project costs and benefits under the “with” and “without” project
conditions and determining the Economic Internal Rate of Return (EIRR) of the project using
discounted cash flow technique. This shows the return, which the society could expect from the
proposed investment during the project life, i.e. analysis period.

Inputs parameter
The main aim to carry out economic feasibility is maximizing the returns on investment by
determining improvement proposals that lead to minimum total transport costs. Economic
evaluation is carried out based on incremental costs and benefits comparing the total net benefits
in “Do Minimum” situation with “With Project” situation. The term “Do Minimum” is defined
as the base strategy for economic analysis i.e. without project situation. The term “With Project”
is defined as widening and strengthening of road. All costs for the economic analysis are given in
economic terms thus ignoring transfers in the form of taxes and duties.
Basic inputs to the model are
Analysis period:20 years
Discount rate:12 %
Construction Period:2 years
Improved Road to be opened to traffic in 2009
Economic Internal Rate of Return (EIRR) for 20 years have been computed with the above
discussed parameters for the road section is 21 % and the Net Present Value (NPV) is 10949.

MODULE: 06 TOLLFIX
In this module the toll rate has been fixed for the proposed Badwah Dhamnod Road which will
be applicable just after the construction period ends & toll started. Toll rates on per km basis for
proposed Barwah Dhamnod Road ( 63 KM) are given below. These rates are to be revised as 7
% increase per year for the 20 year concession period. Figure for the above rate analysis is given
as follows:

Table 3.3 Toll Rates

Sr. No. Description Toll Rates in Rs. Toll Rates in Rs.

per km for proposed road.
1 Private Car , Jeep 0.25 16
2 LCV 0.60 38
3 Empty & Loaded Bus 1.25 79
4 Empty & Loaded 1.50 95
Truck
5 Multi Axle Truck 3.00 189
Trailer

4-CONCLUSIONS
1. The traffic 5545 PCU/day in the year 2006 is exceeding the capacity of single lane i.e. 2000
PCU per day. Hence there is a need to widen the road. The present traffic is also exceeding the
capacity of Intermediate lane i.e. 5000 PCU/day. Hence the road is to be widened up to two
lanes.

2. The result of economic evaluation shows that Internal Rate of Return for the road is more than
the required discount rate of 12%. The Net Present Value is also positive, so it can be concluded
that the road is economically viable for the proposed up gradation & improvements.

3. The Concession period and toll rates have been proposed for the toll road.

4. The developed modules may be used for dealing with similar type of projects