CE 403 - Topic 2 - Typical Infrastructure Planning Steps

TYPICAL INFRASTRUCTURE
PLANNING STEPS
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Learning Objectives
§ Economic objectives of infrastructure

§ Principles of infrastructure planning
§ Steps involve in infrastructure planning
06/09/16 Infrastructure Planning 3

ECONOMIC OBJECTIVES OF
INFRASTRUCTURE PLANNING

Economic Objectives
§ Improved standard of living and economic

development are frequently referred to in
infrastructure investment decision-making
§ Improving standard of living is closely related to
the economic objective of improving economic
welfare
§ Objective of economic development depends
upon the priorities of seven economic objectives

7 Economic Objectives - Definitions
§ Total employment
► Total number of remunerative jobs at either national
or a sub-national geographically defined area (such
as state, city)
§ Productivity
► Value of production of marketed goods and services
per hour worked
► Items with no market values like time savings, and
leisure are not included in the definition of productivity

7 Economic Objectives – Contd.
§ Economic growth
► Increase in total production valued at market-
determined prices
► For example, real Gross National Product or the
gross product of some sub-national geographically
defined area

7 Economic Objectives – Definitions (Contd.)
§ Increased economic welfare

► When a change (such as investment in transportation
infrastructure) yields economic benefits to both
individuals and firms – whose economic value
exceeds the economic costs of achieving them
► Cost – All economic benefits and living standards
forgone as a result of the investment in question
► Economic welfare accounts for items for which there
is no market but people are willing to pay to acquire
them
• Time savings; Leisure time; Improved health and
environmental conditions

7 Economic Objectives – Definitions (Contd.)
§ Distribution of income
► Share of total output and income obtained by groups
at different levels of income
► Place a value on the fairness of the division of output
§ Regional transfers
► Transferring the value of production or economic
welfare from one region to another
§ Sectoral transfers
► Shifting wealth or economic activity from one industry
to another

Infrastructure Projects – Selection Criteria
Project Selection Ranking and

Objective
Criterion Rationing Criterion
Growth in total Any project that creates Projects creating the
employment employment most employment
Growth in Any project with a higher Projects with the
productivity rate of return than that highest rate of
being realized in the return
private sector
Economic Any project with a Project with the
growth positive rate of return highest rate of
return

Infrastructure Projects – Selection Criteria (Cont.)
Ranking and Rationing

Objective Project Selection Criterion
Criterion
Economic Any project with a positive Projects with the highest
welfare net present value net present value or the
highest net present value
per dollar of capital
invested
Distribution Any project with a higher Projects with the highest
of income rate of return than the net benefit or highest net
social discount rate, where present value per dollar
benefits and costs to per capital invested, where
lower-income groups are benefits and costs to
weighted more highly than lower-income groups are
those to higher-income weighted more highly
groups Infrastructure Planning
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Infrastructure Projects – Selection Criteria (Cont.)
Objective Project Selection Criterion Ranking and Rationing Criterion

Regional Any project with a positive Projects with the highest net
transfers net present value where present value or highest net
benefits and costs beyond present value per dollar of
regional boundaries are capital invested, where benefits
not counted and costs beyond regional
boundaries are counted
Sectoral Any project with a positive Projects with the highest net
transfers net present value present value or highest net
(assuming the social present value per dollar of
discount rate) where capital invested, where benefits
benefits and costs to other and costs to other sectors are
sectors are not counted not counted

Economic Objectives – Contd.
§ Economic welfare is best served through

selection of projects based on benefit-cost
analysis
§ Many infrastructure projects are implemented
without benefit-cost analysis
► There is implicit understanding that the benefits will
exceed the costs from a national income standpoint

PRINCIPLES OF

Infrastructure Planning - Principles
§ Objectives and values change over time

► Several examples of programs implemented with full
public support but in later years have been reversed
► Example, dams constructed for flood control and
other water resource objectives, destroyed to return
to their original state for environmental purposes such
as migratory channels for fish

Infrastructure Planning – Principles (Contd.)
§ Different infrastructure systems need to be

integrated
► For example, within a highway right of way, physical
facility carries automobiles, public transit vehicles,
goods movement vehicles, pedestrians, and bicyclists
► Water and waste distribution systems, power and
telecommunications systems, and storm water
distribution systems are also included

§ Infrastructure planning involves not only the

provision of the physical plant but also its
operation and management
► Challenges inherent in infrastructure projects planning
• Satisfying demands for services; Solving problems related to
the services; Taking account of water, land, air and ecological
resources
• These challenges relate to initial installation and then to its
functioning in a system
§ Planning of infrastructure is vital to the economic
future of a country – Both for economically
advanced countries and developing nations
§ Infrastructure is expensive, so the planning

process must be thorough
► Public works – Major capital investments, strain
budgets and taxing capabilities
► Need to improve and strengthen organizations and
processes whereby public works are identified,
planned in myriad details, constructed, and
maintained and operated

§ Many different levels of government are involved

► Planning, implementation and operation of
infrastructure involves organizations at national,
regional, and local levels; at economic sector and
project levels
► In developing nations, implementation of major
infrastructure projects involve assistance from
international financial and technical institutions

§ Public participation in planning is vital

► Affected by beneficial and adverse effects of the
projects should be involved in planning
► Special public interest groups and individuals
§ Financial considerations are usually an
important component of infrastructure planning
for both publicly and privately financed
infrastructure projects

§ Planning should involve a systematic and logical

process
► Physical, environmental, social and political setting in
which the planning take place differs from one
location to another
► Adopting a general approach and detailed
methodologies should recognize that diversity of
issues and constraints exist for different projects
► Planning techniques adopted successfully on projects
of various types can serve to guide planning of
projects in future
• Appropriate modifications to suit new set of conditions

§ Infrastructure planning may involve the

formulation of alternative plans to meet different
objectives, and a methodology of trade-offs to
select an acceptable plan
► An acceptable plan is intersection of a number of sets
of feasible alternatives that meet various criteria of –
environmental, economical, financial, legal, technical,
social, political and institutional

Screening Alternative Plans
Environmentally Feasible Plan
Institutionally
Feasible Plan
Economically
Feasible Plan
Politically Financially
Feasible Plan Feasible Plan
Socially Feasible Legally Feasible Plan

Plan
Technically Feasible Plan
§ Many factors are involved in a successful project

► Government sponsors determines the attractiveness
of project after consideration of a number of factors
• Engineering feasibility
• Economic and financial viability
• Environmental and socio-economic impacts
• Legal and institutional constraints
• Political acceptability

§ Infrastructure planning is an interdisciplinary

process
► Professionals involve in planning should recognize
the interdisciplinary nature of planning in this field
► In addition to functional effectiveness; effects on
health and safety of those affected by the project;
planners must also consider the adverse
environmental, social and economic impacts of the
project
► Political, institutional, legal and financial nature that
will determine whether the project is acceptable and
can be implemented successfully should also be
accounted

§ There is a need for a strong national role in

infrastructure planning
► Allocation of funds and establishment of the
regulatory framework for infrastructure decisions
§ Projects may have multiple purposes and
multiple objectives
► Special methods of assessment have been evolved
for multipurpose and multiunit projects

§ A successful project frequently requires the

support of elected and agency officials
► Despite favorable results of analyses by planners, the
support of legislators and government agency
decision-makers will still be necessary for a
successful project
► Planning must take account of the legislative process
and the role of political leaders and constituencies at
national, regional and local levels
► Must take account of assigned roles of the pertinent
governmental agencies at each of the levels

STEPS

Infrastructure Planning Steps - Types
§ Rational planning
§ Planning sequence applicable to major
infrastructure projects
§ Programming and budgeting process of a public
works agency

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§ How do you go about buying, say gadget like

mobile, camera or household items like furniture
or personal items like jeans or big budget items
like car, bike and so on?
§ Discuss the process involved in making the
buying decision?

Planning Procedure – Theoretical Basis
§ Theoretical basis for many planning procedures

is embedded in the “reasoned choice” model of
individual or group decision making
§ The steps would be as follows
§ Problem recognition
► Individual determines that a problem state exists and
that a decision must be considered
§ Goal identification
► Individual specifies a priori the purpose of the
decision

§ Contd.
§ Option generation/identification
► Individual thinks of potential alternative solutions to
the problem at hand
§ Information search
► Individual seeks information, either about what
additional options might be available or about
properties of one or more of the options under
consideration

§ Contd.
§ Assessment of option information
► Individual consciously considers the information they
have about the different options
► On the basis of this information, individual forms
preferences for some options relative to others
§ Choice
► Individual selects one of the decision options for
purposes of future behavioral enactment

§ Contd.
§ Post-decision evaluation
► Individuals reflects on the decision after the option
has been enacted, then evaluates the decision (and
the decision process) in light of the outcomes that
have resulted

Rational Planning Steps
§ Problem diagnosis
► Define the problem and gather the baseline data
► Planning is about future and diagnosis of problems
must involve assessment of future states
► Baseline study of the area is required to describe the
nature of the status quo
► For instance, baseline study of major transportation
project will involve
• Population types and distribution; Reasons for travel and
present infrastructure provisions
• Areas of wildlife protection; Hot spots of social dislocation
and patterns of migration

Rational Planning Steps – Contd.
§ Problem diagnosis – Contd.

► Data may be collected for demographic forecasting,
predicting changes in land use patterns or the
prediction of infrastructure capacity limitations
► People who will work in and administer the region
(Public servants and community leaders) are the most
useful source of problem definitions
► Extracting information is not easy; techniques for
information extraction
• Interviews, brainstorming sessions; and workshops

§ Goal articulation
► Possible to plan without well defined goals; Planning
in well developed areas is merely a process of
incremental changes to existing plans
► However, in developing countries with rapid social
change – Industrialization increasing in volume and
diversity, populations expanding in inappropriate
places and infrastructure becoming quickly
overwhelmed
► In these circumstances, it is important to think
carefully about goals of infrastructure planning
• Why are we doing it and what do we hope to achieve?

§ Goal articulation – Contd.

► Goals are abstract statements concerning what the
plan hopes to achieve in the long term
► Goals exist in tentative form before problem diagnosis
phase but become precisely articulated when the
baseline data is analyzed and problems to be
addressed are clear
► Goals must be translated into operational objectives
which can be measured and used to evaluate the
merits of alternative planning solutions.

§ Forecasting
► Using baseline data and trends, to forecast the
planning requirements at some future date
► Degree of forecasting to predict the impacts of the
natural development of the status quo
► For example, predict traffic congestion, urban blight or
electricity shortages
► Techniques like trend analysis and scenario building
will be required to test the likely impact of alternative
forms of new infrastructure
► Uncertainty attached to forecasts depending on the
timescale and dynamics of social change
• Probability analysis to take account of the uncertainty

§ Design of alternatives
► Create plan alternatives (scenarios) to satisfy the
forecast requirements and the goals
► Design of plan alternatives heavily dependent on
team experience
• Planning team has to search for indicators of likely solutions
that would satisfy the requirements
► Design solutions constrained by simple technical
issues like soil type, minimization of route length,
design of alternatives is close to formal engineering
design
► Issues like multi-modal, socio-political pressures
make design of alternatives more ambiguous

§ Plan testing
► Evaluate the degree to which each plan alternative
fulfils the goals and to select a preferred option or
options
► At completion of design, the alternatives should be
revisited to test for coherence and conformity to the
goals, objectives and constraints
► Objectives must be stated in such a manner to enable
comparisons to be made between plans
• Techniques – Checklist or formal weighted methods

§ Plan testing – Contd.

► Planning team need to determine whether any
constraints need to be applied
• Constraints on cost may not have been stated in the goal
articulation phase but may serve to eliminate some options at
the plan testing phase
► Constraints could also be less tangible but not the
less powerful
• Whose constituency the infrastructure appear in?
• Perhaps local tribal custom is violated by one alternative but
not by another
• Is the scheme feasible given the difficult legislative changes
required?

§ Evaluation and choice

► Economic & financial evaluation
► Environmental evaluation
§ Economic evaluation
► Assess the economic efficiency of the proposed plan,
usually in terms of cost-benefit analysis
§ Financial evaluation
► Assess the capacity of the proposed plan, or parts of the
proposed plan, to generate profits to a private investor
§ Environmental evaluation
► Assess and mitigate the potential environmental and social
impacts of the proposed plan
§ Wide range of approaches to evaluation are

available, but only a few are commonly used
§ Some form of cost-benefits analysis (CBA) is
used to evaluate economic efficiency together
with simple environmental impact assessment
(EIA)
§ Methods that attempt to trade off technical,
social and monetary attributes are rarely used
► 3 possible reasons

§ 3 possible reasons - Contd.

► Ignorance on part of planning team: Very few
planners would be familiar with the use of multicriteria
methods despite their great power to disaggregate
complex planning issues
► Planners are reluctant to utilize method that is not
immediately transparent to the client and other
stakeholders
► It is often a government requirement to submit all
infrastructure proposals to economic and
environmental evaluation using standardized forms of
CBA and EIA

§ CBA – First used in 1930s and fully developed

as an evaluation tool by 1950s
§ It is based on welfare economics
§ It calculates the ratio between the present value
of benefits and the present value of costs
expressed in monetary terms
§ End result of the analysis is benefit-to-cost ratio
that should exceed some predetermined figure
greater than 1.0

§ EIA not precise as CBA and not required to meet

predetermined criteria
§ EIA is a systematic attempt to describe the
possible environmental and social impacts of the
plan and how those impacts could be mitigated
by plan changes

§ Often wise to perform financial evaluation when

it is clear that plan may best be implemented
using private capital
§ Often use similar data that was gathered for the
economic evaluation but with different objectives
§ EA – To reveal net social benefit
§ FA – To demonstrate that private profit can be
made

§ Implementation
► Prepare a final report and put in place
recommendations for the next stages of development
► Final report may be submitted for comment by
stakeholders prior to freezing the plan
► Necessary to conduct a formal environmental impact
assessment which may repeat some of the steps of
the planning process, but directed towards the more
limited requirements of the relevant environmental
legislation
► Political authorization may be required, enabling
legislation may need to be drafted

§ Implementation – Contd.
► Projects could be funded through
• Public funds – Project will enter a pipeline for funding where
other factors may be used to assess its merit in relation to
other infrastructure proposals
• External loan or grant providers for consideration
• Open to private sector for BOT offers

Major Infrastructure Projects Planning Steps
§ Preliminary (or reconnaissance) report – First

stage
§ Feasibility report – Second stage
§ Final design and preparation of contract
documents – Third stage
§ Construction – Fourth stage
§ Operation – Fifth stage

Introduction
§ Comprehensive series of studies and approvals

before authorisation and implementation
► Major engineering projects - Very large
► Project in developing countries that can’t be
implemented with internal resources, technical and
financial assistance sought from internal aid agency
§ Feasibility report - Important product of these
studies
► Technical and other studies – Descriptions
► Investment and annual costs - Estimates

Preliminary Report
§ Consists of office studies, field studies and

preparation of report
§ Office studies
► Maps and photographs – Topographic maps, land
surveys, aerial photographs
► Information on environmental conditions, population
and socio-economic data
► To initially determine the general arrangements of the
project components, capacity of the project or the
services, and the cost

Preliminary Report – Contd.
§ Field reconnaissance and surveys

► Supplement and confirm office studies
► Suggest changes in the layouts and estimates
► Topographical surveys, geological and soil
investigations, and other field measurements
► Principal personnel involved in the study
• Engineers and geologists
• Architects
• Environmentalists
• Specialists for the specific types of relevant infrastructure
facilities

Preliminary Report – Contd.
§ Answer the following questions:

► Is it a feasible project?
► What are the approximate estimates of capacity and
cost?
► What additional studies are needed to confirm
feasibility?

Feasibility Report
§ Feasibility report provides the basis for an

examination by decision-makers in a
government agency to determine whether a
project should be implemented and/or financed
► Should contain enough information to permit a
decision on whether or not to implement the project
§ Level of engineering detail is higher than for a
preliminary report but lower than needed for
detailed design

Feasibility Report – Contd.
§ Comprehensive feasibility report – Contents

► Description and analyses of the data
► Confirmation of construction feasibility based on field
and laboratory investigations
► Analysis of construction methods
• Sources of construction material; access to the project site;
management of traffic patterns; diversion of water during
construction etc.
► Analyses to determine the principal quantities of
construction, a reliable cost estimate, and discussions
of the design criteria
► Construction schedule showing the timing and costs
of project features

Feasibility Report – Contd.
§ Contents – Contd.
► Financial analyses projecting the year-by-year costs,
revenues, and subsidies
► Economic analyses of the project, if appropriate – If
sponsor is a government agency
► Plans for financing construction, and for managing the
construction and operation
► Institutional and legal requirements
► Assessments of the environmental and social impacts
of construction and operation, and other impact
studies if required.

Final Design and Contract Documents
Preparation
§ Contract documents
► Plans and specifications
• To obtain tenders from qualified contractors
► Responsibilities of the project sponsor and contractor
► Forms to provide information on the contractor’s legal
status and financial capabilities
► Quantities and prices for construction
► Construction methods

Construction
§ Project delivery methods

► Traditional project delivery methods
► Alternative project delivery methods

Operation
§ External engineers and other consultants

employed
► Assist in operation for a limited period
► Train operators
► Prepare manual for operation and maintenance
► Monitor the performance of the various facilities

Project Appraisal Process
§ Process by which the reviewing authority

determines whether the project meets
appropriate criteria for funding
§ Project appraisal focuses on the results of
planning, not the planning process
§ Design of planning process
► Planners need to have sufficient knowledge of the
appraisal process of the funding agencies

Infrastructure Planning Steps – Contd.
§ Programming and budgeting – Infrastructure

planning sequence
§ Programming – Process of prioritizing proposed
projects and developing a single-year or a
multiyear program of projects, usually within a
constrained monetary amount
► E.g. Five-year capital program (what capital
improvements will be designed and constructed over
the time period)

Infrastructure Planning Steps – Contd.
§ Budgeting – Procedure that produce the funding

and authority to incur costs and allocate funds
► Annual legislative authorization for expenditures and
may follow multiyear authorization guidelines
established by the same legislative bodies

Public Agencies Planning Steps
§ Programming and budgeting process of public

agencies
§ Setting program goals and objectives
► Establish clear and measurable statements of what
the agency wants to accomplish to meet its policy
goals
§ Establishing program performance measures
► Set criteria to enable the agency to measure the
progress of program implementation & evaluate
results of its program

Public Agencies Planning Steps – Contd.
§ Assessing needs and identifying projects

► Identify and measure deficiencies, problems and
needs
► Identify alternative solutions to address these needs
► Develop candidate projects
§ Project evaluation
► Evaluate proposed projects according to consistent
criteria

§ Priority setting and program development

► Organize agency’s work into program areas reflecting
distinct objectives and/or types of work
► Identify priorities for each program area consistent
with the agency’s goals and objectives
► Set priorities for projects within (or across) each
program area using criteria that reflect agency goals
and objectives
► Develop fiscally constrained candidate programs
reflecting realistic project budgets and schedules

§ Program trade-offs
► Evaluate what the proposed program will achieve
► Evaluate trade-offs for shifting resources among
program areas or project types
• E.g. Rehabilitation vs. capacity expansion
► Determine levels of resource allocation across
program areas based on agency priorities, including
the results of needs analyses
§ Budgeting
► Develop an expenditure plan based on available
resources and project and program costs

§ Program implementation and monitoring

► Implement the program
► Monitor progress in program delivery
► Track system conditions and performance over time
► Evaluate results in terms of established performance
measures

References
§ Goodman, A.S., and Hastak, M. (2006).

Infrastructure planning handbook – Planning,
engineering, and economics. McGraw Hill, New
York. – Chapter Nos 2 and 3.
§ Parkin, J., and Sharma, D. (1999). Infrastructure
planning. Thomas Telford, London. – Chapter
No. 3.


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TYPICAL INFRASTRUCTURE

§ Economic objectives of infrastructure

06/09/16 Infrastructure Planning 3

06/09/16 Infrastructure Planning 4

§ Improved standard of living and economic

06/09/16 Infrastructure Planning 5

06/09/16 Infrastructure Planning 6

06/09/16 Infrastructure Planning 7

§ Increased economic welfare

06/09/16 Infrastructure Planning 8

06/09/16 Infrastructure Planning 9

Project Selection Ranking and

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Ranking and Rationing

Objective Project Selection Criterion Ranking and Rationing Criterion

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§ Economic welfare is best served through

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§ Objectives and values change over time

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§ Different infrastructure systems need to be

06/09/16 Infrastructure Planning 16

§ Infrastructure planning involves not only the

§ Infrastructure is expensive, so the planning

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§ Many different levels of government are involved

06/09/16 Infrastructure Planning 19

§ Public participation in planning is vital

06/09/16 Infrastructure Planning 20

§ Planning should involve a systematic and logical

06/09/16 Infrastructure Planning 21

§ Infrastructure planning may involve the

06/09/16 Infrastructure Planning 22

Socially Feasible Legally Feasible Plan

§ Many factors are involved in a successful project

06/09/16 Infrastructure Planning 24

§ Infrastructure planning is an interdisciplinary

06/09/16 Infrastructure Planning 25

§ There is a need for a strong national role in

06/09/16 Infrastructure Planning 26

§ A successful project frequently requires the

06/09/16 Infrastructure Planning 27

06/09/16 Infrastructure Planning 28

06/09/16 Infrastructure Planning 29

§ How do you go about buying, say gadget like

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§ Theoretical basis for many planning procedures

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§ Problem diagnosis – Contd.

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§ Goal articulation – Contd.

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§ Plan testing – Contd.

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§ Evaluation and choice