1. Project Feasibility Analysis
Transportation Planning
Asian Institute of Technology

2. Contents Components in Feasibility Analysis
Transportation Feasibility Analysis
Transportation Demand Analysis by Elasticity
Economic Feasibility Study

3. Components in Feasibility Analysis
Considerations for Feasibility Analysis
Engineering Feasibility
Construction techniques
Construction plan and stages
Economic and Financial Feasibility
Traffic forecast
Economic and financial evaluation
Environmental Feasibility
Environmental impact
Community impact

4. Components in Feasibility Analysis
Type of Traffic Demand
Existing Traffic
Normal Growth Traffic
Divert Traffic
Shift or Transferred Traffic
Generated or Induced Traffic
Developement Traffic

5. Transportation Demand Analysis by Demand Elasticity
Demand Elasticity with respect to a particular factor is the rate of change of travel demand compared with that factor
Alternative simplified demand analysis method
Unitless. Sensitivity to a factor is easy to understand.
It is, however, difficult to determine in practice.

6. Transportation Demand Analysis by Demand Elasticity
Assume that demand function is linear with the influential factor in the analysis range
Arc elasticity of demand
Demand at x2 D0 D1 X0 X1
Variable
ประยุกต์ใช้ทฤษฎี arc elasticity

7. Transportation Demand Analysis by Demand Elasticity
If demand function is not linear with the influential factor, we assume constant elasticity in the analysis range.
Arc elasticity of demand
Demand at x2 D0 D1 X0 X1
Variable

8. Transportation Demand Analysis by Demand Elasticity
Example A study on a mass transit line showed that the off-peak demand inversely varied with the headway as shown in the table. Find demand elasticity with respect to headway If current headway is 10 minutes and the planner wants to extend it to 12 minutes, determine number of passengers per hour.
Headway (minutes)
Ridership (Pax/hr) 7
10,000 10
8,500

9. Transportation Demand Analysis by Demand Elasticity
Linear relationship
Demand Elasticity at Headway = 10 minutes
If headway increases to 12 minute:
passengers per hour
10000
8500
D=? 7 10 12
Headway

10. Transportation Demand Analysis by Demand Elasticity
Power relationship
Demand Elasticity at Headway = 10 minutes
If headway increases to 12 minute:
passengers per hour
10000
8500
D=? 7 10 12
Headway

11. Transportation Demand Analysis by Demand Elasticity
Conclusions
highly elastic variables include those that when change a little would result in significant change of demand.
A factor of which absolute elasticity value is higher than 1 is considered highly elastic
Advantage
Used in case of low budget, time and information
Disadvantages
Assume all other variables are constant during analysis period.
Suitable for short term evaluation. Long term elasticity is not constant.

12. Economic Feasibility Analysis
Economic Analysis
Comparisons between positive and negative impact.
Assess benefits and loss to all population in the area.
Positive and negative feedback should be tangible and convertible to numbers.
Exclude all monetary revenue.

13. Economic Feasibility Analysis
Economic Costs
Economic costs consists of true value of resource used in producing products and services.
It will exclude taxes and excess profits charged by contractors or service providers
Item
Value
Financial Cost (1)
100
Less 7% value added tax (2) = (1)/1.07
93.46
Profit tax (30% of profits which is 15% of total value) (3)=(2)x0.30x0.15
4.21
Economic costs (4)=(2)-(3)
89.25

14. Economic Benefits from Transport Project
Direct Benefits
Timesaving
Vehicle Operating Cost Saving
Accident Saving
Consumer Surplus
Indirect Benefits
Life Quality
Economic Growth
Environmental preservation
Consumer Surplus is the difference between the willingness to pay and the actual cost paid by the user.

15. Economic Benefits from Transport Project
Cost
D-D shows travel demand which is varied with travel expenses.
When C1 is reduced to C2 demand is up from Q1 to Q2
A part of this benefit was contributed to current and future travelers.
Total Benefits D C1 1 2 C2 D Q1 Q2
Trips

16. Glossary Interest Rate
Ratio between interest and principle after a period of time expressed in percentage, usually calculated in a year or less.
Simple Interest
Compound Interest
Discount Rate
The annual interest divided by the capital including that interest
Minimum Acceptable Rate of Return (MARR)
The minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other projects

17. Economic Feasibility Study Index
Net Present Value - NPV
Benefit-Cost Ratio - BCR
Internal Rate of Return - IRR C0 C1 C2
Cn-2
Cn-1 Cn B1 B2
Bn-2
Bn-1 Bn

18. Net Present Value - NPV
Convert all benefits and costs throughout the project period into present value using proper discount rate.
Find difference between present values of benefits and costs.
NPV > 0 shows economic feasibility.
The higher the NPV, the more attractive the project.

19. Net Present Value - NPV C0 B1 C1 C2 B2 Cn-2 Bn-1 Cn-1 Cn Bn Bn-2
where Bk = Benefits in Year k Ck = Costs in Year k n = Years in analysis i = Discounted rate

20. Benefit-Cost Ratio - BCR
Convert all benefits and costs throughout the project period into present value using proper discount rate.
Find the ratio between present values of benefits and costs
BCR > 1 shows economic feasibility.
The higher the BCR, the more attractive the project.

21. Benefit-Cost Ratio - BCR
Cn-2
Bn-1
Cn-1 Cn Bn
Bn-2
where Bk = Benefits in Year k Ck = Costs in Year k n = Years in analysis i = Discounted rate

22. Internal Rate of Return - IRR
An economic feasibility analysis by determining a discount rate which makes net present value equal zero.
Internal Rate of Return, r

23. Economic Feasibility Analysis
Example
An overpass project capital costs is estimated 9 million baht with additional maintenance costs. It is expected to save time, vehicle operating and accident costs as shown. Providing 20 years project period and use 12% discount, evaluate if this project is feasible using NPV, BCR and IRR.