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Ex post evaluation of investment projects co-financed by the European Regional Development Fund (ERDF) and/or Cohesion Fund (CF) in the period 1994-1999.

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Presentation on theme: "Ex post evaluation of investment projects co-financed by the European Regional Development Fund (ERDF) and/or Cohesion Fund (CF) in the period 1994-1999."— Presentation transcript:

1 Ex post evaluation of investment projects co-financed by the European Regional Development Fund (ERDF) and/or Cohesion Fund (CF) in the period TEN PROJECTS OBSERVED Final Report Evaluation Network Meeting Brussels, 23 November 2012

2 THE TEN PROJECTS 2 IRELAND: M1 Motorway Dublin wastewater treatment SPAIN: Sogama solid waste treatment in Galicia; Wastewater treatment in Ría de Vigo Madrid Metro Line 8 Mediterranean Corridor GREECE: Egnatia Motorway PORTUGAL: Valorsul solid waste treatment in Lisbon ITALY: Port of Gioia Tauro Water supply in Palermo

3 INVESTMENT COSTS AND EC CO-FINANCING 3 PROJECT TOTAL INVESTMENT COSTS EC CO- FUNDING EC CO-FUNDING RATE Port of Gioia Tauro473 M61.9M13% Water supply in Palermo120 M44 M37% M1 Motorway787 M 301 M38.2% Dublin waste water treatment296 M157 M53.1% Egnatia Motorway7,053 M3,091 M43.8% Urban solid waste treatment in Lisbon366 M137 M37.38% Waste water treatment in Ria de Vigo172 M118 M68.6% Madrid metro line518 M393 M76% Mediterranean Corridor759 M531 M70% Solid waste treatment in Galicia275 M100 M36.3% *Note: prices are expressed in constant terms (Euro 2011)

4 CONCEPTUAL FRAMEWORK 4 WHAT: What kind of long term contributions can be identified for different types of investment in the field of environment and transport infrastructure? WHEN: What is the minimum and average time needed for a given long term contribution to materialise and stabilise? What are these time spans for different types of investment in the field of environment and transport infrastructure? HOW: How are these long term contributions generated for different types of investment in the field of environment and transport infrastructure, i.e., what is the causal chain between certain short term socio- economic returns and long term returns from investment? Appropriateness to the context Project design Forecasting capacity Project governance Managerial response Economic development Direct welfare and economic growth Endogenous dynamics Quality of life Social cohesion Environmental effects Territorial cohesion Institutional learning Social happiness and wellbeing Effects stabilised In the short run In the long run Effects not yet stabilised


6 LESSONS LEARNT ON THE EFFECTS (1) 6 Gioia Tauro M1 Egnatia Madrid Metro Medcorr Palermo Dublin Ría de Vigo Sogama Valorsul Efficiency of the system Users productivity New business opportunities Change in land use and value Direct users welfare Direct welfare and economic growth

7 Endogenous dynamics: Less important than direct economic growth effects More likely to be secured by transport projects Social cohesion: Side effects in 8 out of 10 projects They can reach significant magnitude if appropriately exploited Environmental sustainability: As expected, environmental projects produce positive environmental effects Their full achievement is hampered by various operational difficulties LESSONS LEARNT ON THE EFFECTS (2) 7

8 Territorial cohesion: Side effects for environmental projects Transport projects have no far-reaching and automatic effects Institutional quality: Low or medium effects for all the projects observed, particularly for environment projects Possible lack of critical mass: major projects are big but few Social happiness: They can be influenced by proactive measures Social (dis)satisfaction can be captured by organised vested interests LESSONS LEARNT ON THE EFFECTS (3) 8

9 The majority of effects appears to have already stabilised, either in the short or long run In some cases effects are not stabilised, but planned investments are expected to improve performance in the future THE TEMPORAL DYNAMICS OF PROJECT EFFECTS 9


11 Appropriateness to the context: All projects provided adapted solutions to populations needs (except the Port of Gioia Tauro) Context influenced project design by imposing constraints in terms of time, space and budget Project design: All transport projects were characterised by efficient and effective designs Environmental projects (particularly 2 out of 5) were adversely affected by budget and time constraint, forecasting mistakes and social pressure, and they lacked the necessary flexibility Financial sustainability: Financial sustainability is completely ensured only for the Palermo water supply and Vigo waste water treatment projects Future financial sustainability is uncertain for seven of the projects assessed LESSONS LEARNT ON THE PERFORMANCE DRIVERS (1) 11

12 Forecasting capacity: 12 LESSONS LEARNT ON THE PERFORMANCE DRIVERS (2) PROJECT Cost overruns Time overrunsOvercapacityUndercapacity Madrid Metro Line Palermo Water Supply Valorsul solid waste treatment Ría de Vigo waste water treatment Sogama solid waste treatment Port of Gioia Tauro Egnatia motorway M1 motorway Dublin waste water treatment Mediterranean Corridor

13 Project governance: Governance is one fundamental factor accounting for project performance It should provide for a clear division of competence and adequate mechanisms to integrate the views of stakeholders Behavioural response: Appropriate behavioural response can palliate deficiencies in terms of design, governance or forecasting but it entails costs Role of the EC: The ECs involvement in the project planning has been highly variable across countries and type of project LESSONS LEARNT ON THE PERFORMANCE DRIVERS (3) 13

14 Drivers are combined in different ways, through project- specific patterns Project design and governance are two legs upon which a project stands: they should both adhere to a precise and specific vision of what the project wants to achieve Timing of effects is more determined by the projects structural features than by specific drivers THE INTERPLAY BETWEEN FACTORS 14

15 Ex-post CBA provided the framework of analysis to disentangle the most crucial aspects of the projects performance and final outcomes This exercise allowed the team to raise different methodological issues and to draw lessons learnt of general interest, concerning the following themes: Project identification Time horizon Counterfactual scenario Demand analysis Social Discount Rates Quantification of costs and benefits Shadow prices LESSONS LEARNT ON EX-POST CBA (1) 15

16 LESSONS LEARNT ON EX-POST CBA (2) 16 THEMELESSON Project identification To be assessed on a case by case basis Criteria to be considered: 1) self-sufficiency and 2) pertinence and timing of the investments Time horizon Appropriate to its economically useful life and long enough to encompass its long term impact A time horizon longer that 30 years seems appropriate in case of long-lived mega projects (e.g. Egnatia motorway) Counterfactual scenario The BAU option should be adopted as counterfactual In some cases, a feasible and realistic do-minimum option would be preferable

17 LESSONS LEARNT ON EX-POST CBA (3) 17 THEMELESSON Demand analysis More complex in transport projects, since they operate in more competitive markets Sensitivity and scenario analysis to test the forecasts Social Discount Rates Adoption of two SDRs (backward and forward) Risk analysis to test the realism of the SDRs Quantification of costs and benefits Aggregate costs and benefits to deal with data limitations Shadow prices Backward and forward and/or region-specific shadow prices could be adopted

18 The ingredients of success for public investment projects 1.The origin of project ideas: entrepreneurialism within government 2.Professionalism as a built-in insurance mechanism 3.Social ownership to cope with civil claims 4.Forecasting and monitoring as learning devices 5.Governments and projects 6.Incentives for success and identity CONCLUSIONS 18

19 RECOMMENDATIONS 19 Provide solid technical design and forecasting Develop sound and reliable cost-benefit analyses Cost-benefit analysis as key input of the selection Promote an independent quality review Make social acceptance part of the process Design responsive governance arrangements Ensure financial sustainability Design solid risk management schemes Develop intrapreneurial teams in public administration Establish a close relationship between project identification and planning Endorse a role of policy advisor for the EC Carry out ex-post evaluation Reward good projects and teams Promote knowledge transfer and sharing of best practice Track project life: a project data warehouse Undertake systematic monitoring Allow restructuring and redesign Identification and formulation Design and selection Implementation Closure

20 Thank you

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