Project Formulation & Cost-Benefit Analysis (CBA)

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ABSTRACT

His Excellency the President of Sri Lanka has emphasized through his

“MahindaChintanaya‟ – Vision for the Future” Program that the benefits emanating from

massive development taking place in the country as a whole should substantially reach

the peasant farming community and their off-springs as much as the urban community.

Also “MahindaChintanaya” advocates, and encourages the participation of local private

sector construction companies in the realization of this objective. Thus the construction of

the Kadigawa Bridge across Deduru-Oya with necessary improvements to the access

roads with the help of Local Bank Funding is indeed an endeavor simultaneously

fulfilling many aspects of His Excellency‟s Vision.

The proposed Project is “Vital Connectivity Improvement of Puttalam&Kurunegala

Districts by Construction of Two Lane Bridge across Deduru-Oya at Kadigawa and

Its approaches, which has been a long felt need for at least over 3 decades. Political

Authorities too have identified the importance of this vital link for the development

of this remote and isolated area.

The management of Valence Engineering Services(Pvt) Ltd having experience in local

infrastructure development works over 2½ decades decided to participate in this program

by selecting construction of the Kadigawa Bridge and its approaches which consists of

two lane concrete bridge and walk ways on either side.

The proposal is to affect the connectivity of Kadigawa on the right bank of Deduru-Oya

after construction of this bridge to Ujekele junction on the left bank, then achieving a vital

connectivity link to Katugastota-Kurunegala-Puttalam road and Kurunegala-Chillaw road.

This bridge is at half way point, between present two crossings across Deduru-Oyaviz the

bridge at Nikaweratiya and the one near Chillawdownstream.The distance apart between

the two existing bridges is nearly 50km.

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Contents ABSTRACT ERROR! BOOKMARK NOT DEFINED. 1. PROJECT PLANNING 4

1.1 Introduction 5

1.2 Background 6

1.3 Description of Project Area 7

1.4 Important of the Project 8

1.5 Project concept 9

1.6 Expected Benefits 15

1.7 Problem Tree Approach 16

2. PROJECT IDENTIFICATION 17

2.1 Approaches To Project Identification 18 2.1.1 Resource –based Approaches 18 2.1.2 Market –based Approaches 18 2.1.3 Basic need-based Approaches 18 2.1.4 Government policy or priority 18

2.2 Sources for Project Concepts 19 2.2.1 Technicians 19 2.2.2 Planners and policy makers 19 2.2.3 Entrepreneurship 19 2.2.4 Political leadership 19 2.2.5 Donors and foreign missions 19

2.3 Priority Areas for Identification of Project Concepts/Ideas 20 2.3.1 Creating employment 20 2.3.2 Foreign exchange earning 20 2.3.3 Promotion of private investments 20 2.3.4 Regional development 20 2.3.5 Industrial development 21

2.4 Feasibility studies 22 2.4.1 Commercial 22 2.4.2 Financial 22 2.4.3 Environment 22 2.4.4 Technical 22 2.4.5 Economic 22 2.4.6 Institutional 22

3. PROJECT PREPARATION 23

3.1. Logical framework approach in steps 24 3.1.1 Situation analysis 24 3.1.2 Stakeholder 24 3.1.3 Problem and objective analysis of alternatives 24

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3.2. Logical framework matrix (log frame) 26

4. PROJECT APPRAISAL 27

4.1 Social Cost-Benefit Analysis 28 4.1.1 Identifying Project Alternatives 28 4.1.2 Concept of social profitability 28 4.1.3 Social Discount Rate 29 4.1.4 Net Present Value 29 4.1.5 Shadow price 32 4.1.6 Non-valued and non- quantified effects 32 4.1.7 Sensitivity Analysis 34 4.1.8 The Decision 34

LIST OF TABLE

TABLE 1: PROJECT LOCATION 9

TABLE 2: EXISTING ROAD DETAILS 12

TABLE 3: EXISTING STRUCTURAL DETAILS OF CULVERTS – UJEKELE END 12

TABLE 4: EXISTING STRUCTURAL DETAILS OF CULVERTS – KADIGAWA END 12

TABLE 5: IMPLEMENTATION ORGANIZATION AND ITS FUNCTIONS 14

TABLE 6: LOGFRAME MATRIX 26

TABLE 7: DETAILS OF COST AND BENEFITS 28

TABLE 8: OUTCOMES OF THE ALTERNATIVES 28

TABLE 9: PRESENT VALUE OF TOTAL COST 29

TABLE 10: REVENUE, COST AND NET REVENUE OF 29

“VALENCE ENGINEERING SERVICES (PVT) LTD” 29

TABLE 11: REVENUE, COST AND NET REVENUE OF 30

“CONSULTING ENGINEERS AND CONTACTOR (PVT) LTD” 30

TABLE 12: NET PRESENT VALUES OF PROJECT ALTERNATIVES 30

TABLE 13: NEW PRESENT VALUE OF ALTERNATIVES 32

TABLE 14: POSITIVE AND NEGATIVE EFFECT OF PROJECT OF CONSTRUCTION OF TWO LANE BRIDGE ACROSS DEDURU-OYA AT KADIGAWA 33

TABLE 15: SENSITIVITY ANALYSIS 34

Listof Figures

Figure 1:Project Area Map ................................................................................................... 5

Figure 2: An Earlier Foundation Stone For The Construction of Bridge - 1979 ................. 6

Figure 3: Satellite Map of Kadigawa Bridge Project ........................................................... 7

Figure 4:Proposed Bridge Location ..................................................................................... 9

Figure 5 :Crossing The Yodha-Ela .................................................................................... 10

Figure 6:Difficulty of The Traveling At Rainy Period on The Existing Approaches ....... 10

Figure 7:Project Sites ......................................................................................................... 13

Figure 8:Problem Tree ....................................................................................................... 16

Figure 9: Project Identification Process ............................................................................. 21

Figure 10:Objective Tree ................................................................................................... 25

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1. Project Planning

-

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1.1 Introduction

The proposed project comes with in the Kobeigane and Rasnayakapura Divisional

Secretaries divisions in Kurunegala District in North Western province.

Legend

Connecting Road

Proposed Bridge

Figure 1: Project Area Map

The majority of the public in the area is a farming community living under poor

infrastructure facilities in an underdeveloped countryside and they have been waiting for

a long period to receive benefits of development undertaken by successive governments.

The key to realization of the dream of development will be the proper improvement of

accessibility to the area, which is the primary objective of the implementation of this

project.

The development of proper accessibility to the area will bring the benefits such as the

ability to send the agricultural products of coconut, vegetables, paddy etc to suburb cities

like Nikaweratiya, Kuliyapitiya, Puttalam, Chillaw& even Kurunegala with lesser cost

and less travel time, the products such like clay bricks can reach easily to suburb cities

and the income to producers will increase and consumer can buy at a reduced price,

living standards will improve to higher levels by the entrance to good schools, health

care facility at urban hospitals, easy access to obtain administration services from

government & local government institutes, more participation in social interactive events,

access to parks & esplanades , sports etc. and, evacuation &temporary relocation facility

at a disaster situation (such as the flash flood during December 2012)

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Also the successful implementation of the project will bring forth sharing of benefits

accrued through development programs undertaken at other areas as a whole equally to

the local community due to improved accessibility.

1.2 Background

The need for another bridge at a suitable location across Deduru-Oya bi-furcating the

existing two crossings at Nikaweratiya& near Chillaw has long been felt by the

authorities. This is well illustrated by the fact that the 1st foundation stone has been laid as

far back as 1979 by the Government at that time.

Thereafter few more foundation stones too have been laid. But the present Government

under the leadership of His Excellency, the President MahindaRajapaksha has instructed

the political authority and the administration that this important need of the local people

and the benefits that will accrue to the public at large by the construction of this bridge at

Kadigawa should not be delayed any further. Accordingly the Secretary to the Ministry of

Ports & Highways under whose purview the subject matter comes decided to execute this

project under presently operating local bank funding scheme.

Figure 2: An Earlier Foundation Stone for the Construction of Bridge -

1979

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1.3 Description of Project Area

The Administrative & Provincial details of the project area are as listed below.

Province: North Western

District: Kurunegala

DS Division: Kobeigane, Rasnayakapura

EE Division: Maho

Road: Rasnayakapura-Kadigawa-road (provincial road)

Electoral area: Nikaweratiya&Bingiriya

Figure 3: Satellite Map of Kadigawa Bridge Project

Kadigawa is situated on the right bank of Deduru-Oya and physically lies on an extreme

edge of Kurunegala District bordering Puttlam District. A cluster of provincial roads

connect Kadigawa to Rasnayakapura, Nikaweratiya, Andigama, Pallamaetc in this way

Kadigawa is connected to Katugastota-Kurunegala-Puttalum trunk road. For political

administration Kadigawa is amalgamated to Kurunegala District.

Ujekele junction(Boraluwewa)is on the left bank of the Deduru-Oya and lies on the

extreme of Kurunegala District politicall& administrative district too is the same. From

Ujekele junction(Boraluwewa) roads are leading to Kobeigane,Bopitiya&Bingiriya thus

connecting to Kurunegala-Chillaw trunk road.

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1.4 Important of the Project

Even as far back as 1979 the Political Authorities and RDA have identified the

construction of the Kadigawa Bridge to be an important task to be fulfilled for the

upliftment of the area inhabited mainly by an under-privileged farming community.

Unfortunately, the onset of the civil disturbances in the North and East not long after,

withheld many though important locally funded projects, such would have been the case

for this project especially it being not qualified for donor funding enlistment as the

connecting roads at that time were not much recognized.

Even after the peace being established island-wide priority has been given much for

North & East and much neglected deep-southern roads and bridge projects. This

particular project being in the North Central Province easily could get sidelined unless a

close scrutiny is made on the fact that the vital connectivity improvement contributed by

this link roads and the bridge is overwhelmingly positive.

Few of the important benefits the local community would be endowed with are listed

below.

After the 75/1 bridge at Nikaweratiya, the only other bridge across Deduru-Oya is No 78/3 Bridge

along Peliyagoda-Puttalum road not very far from Chillaw.

The distance is around 50km between them. The proposed Kadigawa Bridge essentially

lies midway from each of the above bridges and will serve immensely for the people

living on either side of the river by substantial reduction of travel/transport distance after

completion of this bridge.

Peasant farmers produce such as paddy, coconut and vegetables can reach suburb cities like

Nikaweratiya, Kuliyapitiya, Puttlam, andChillaw and even Kurunegala which is a major city with

much ease, thus serving the customer with a fresh & quality product at a lesser price.

Another income generating avenue is clay brick burning and the product will reach cities

and the consumer at a reduced price.

sand mining along the river is a local industry, (with approval of the PradeshiyaSabha)

sand as a construction material will reach developer/consumer at a much lower cost

Last but not the least, the peasant farming community which comprises the majority of

the population and more importantly their off-springs will be exposed to higher levels of

living standards; entrance to good schools etc. and improved health care at urban

hospitals too will be available for them. Central and local government administrative

institutes can be accessed easily. More participation in social interactive events, access to

parks and esplanades, sports will be of easy access to younger generation.

During heavy flood such as the present one (December 2012) evacuation and temporary

relocation etc. can be done much more expeditiously.

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1.5 Project concept

Project title:- Vital Connectivity Improvement of PuttalamandKurunegala

Districts by Construction of a Two Lane Bridge across Deduru-Oya at Kadigawa

Fund provider - Hatton National Bank PLC

Sector: - Ground Transport

Type of proposal: - On Going Project

Project Location

Site

Province District Location

Bridge

NCP Kurunegala

Rasnayakepura/KobeiganeD.S.Division

Left bank access

NCP Kurunegala

RasnayakepuraD.S.Division

Right bank access NCP Kurunegala

KobeiganeD.S.Division

Table 1: Project Location

Figure 4: Proposed Bridge Location

Land Requirement for the Project

Sufficient space is available for on both sides of the propose access road.

Bridge site is bare land owned by the Government.

People who own lands (if to be acquired) are willing to handover land with a

Minimal cost as the completion of the road and the bridge is a long felt need.

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General Sector Information

The approach roads are designed to confirm to Geometric Design STD of Roads (RDA

specification for highway designs) and is designed to accommodate 70km/hr speed traffic

flow. The bridge design is confirming to BS-5400.Afree board of 0.9m is kept above

recent flash flood (2012 December) which is observed to be highest for decades recorded.

Living on the either side of Deduru-Oya banks the average income of the local village

community is just around or below poverty level.

Main income generation is by farming, paddy and coconut cultivation, brick burning,

employment in NLDB farms. Presently, during very dry period people cross the river by a

barrel barge towed manually. Motor cycles, elders, sick persons, children all use this

mode of river crossing. During the rainy season even the access road become a muddy

pool of water and impossible to travel and cross -over.

Figure 5: Crossing the Yodha-Ela

Figure 6: Difficulty of the Traveling at Rainy Period on the Existing

Approaches

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Project Objectives

Vital connectivity Improvement of Puttlam and Kurunegala Districts.

Reduction of transport time taken by local public living on either banks of

Deduru-Oya around Kobeigane and Rasanayakepura Divisional Secretary

Divisions.

Re-activation and up liftment of Micro Economy in the area.

Improvement to area's service delivery system.

Increase the land value of either side of Deduru-Oya bank proximity.

Increase of level of living standards of the peasant farming community in and

around the area by giving them highest level of accessibility to recent

development programs undertaken in surrounding environment.

Participation of local community by way of employment during the project, thus

gaining and acquisition of income and skills.

Improving the living standard of the people.

Providing essential infrastructure facilities.

Creation of a better living environment by providing vital connectivity with a

bridge & new road, eliminating isolation and remoteness.

The development of the area would benefit all communities, in and around the

project area as the transport problem has a common impact on the community

which consist of people of all races in the country

Specified Problems to be Addressed By the Project

Improving the accessibility and mobility of the people in the area and proper

connectivity to the road network.

Expected Project Outputs

Transport operators serving the community in and around Kadigawa area as well

as the consumers and purchasers in suburb cities immediately connected will be

benefitted directly.

Government and private sector and other social service agencies operating or

serving this area will also be benefited.

Commuters, and transporters served by this connecting link road (and the bridge)

will benefit through low cost and faster transport services. Local peasants will

have enhanced access to economic opportunities and other available social

services and avoid backwardness due to isolation and remoteness from other parts

of the country.

Project procedure

Identify the project areas including limit of right of way, for access roads and

exact bridge location. Carry out detailed topographical survey incorporating all related geographical

features and others 7yyhu5 of vital importance.

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Identify the entire project within the proposed section including structure locations

primarily the bridge & culverts, connectivity details of roads and locations of by

roads etc. Study the collected information and analyze technically the field requirements and

prioritize the need for effective implementation. Identify the direct and indirect benefits. Prepare a feasibility report comprising of civil work cost estimate. Feasibility report also shall consist of preliminary design calculation construction

drawings and any other related information.

Project activities

End

Average Road

Width / m

Existing Road Length

Condition

From

To

Length in

m

Kadigawa 2.m River

bank

Polonthalawa

junction

2200 Poor

Ujekele 2.5 River

bank

Ujekele

junction

575

Poor

Table 2: Existing Road Details

Culvert No

(Starting from

River Bank)

Culvert

Type

Span /m

Width /m

Reduced

Level /m

Condition

1 Hume pipe 1 2.4 99.1 Poor


3 Box 2.5 2.4 96.7 Poor

Table 3: Existing Structural Details of Culverts – Ujekele End

Culvert No

(Starting from

River Bank)

Culvert

Type

Span /m

Width /m

Reduced

Level /m

Condition


2 Box 1.5 2.4 104.5 Poor



Table 4: Existing Structural Details of Culverts – Kadigawa End

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Some photo graphs about current situation in project site:

Figure 7: Project Sites

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Environmental Impact on Physical, Biological, Social ,Cultural or

Aesthetic Status

Implementation of the project has no negative impact on the environment.

Implementation Arrangement

The implementation agency is the Road Development Authority who will

employ a competent reputed pre-qualified local contractor to carry out the

works on Design & Built basis

Organization with overall responsibilities

Road Development Authority

Functions of the organization with overall responsibility

Planning, Designing, Managing, monitoring and evaluation, coordinating,

progress- control and remedy all the projects in general comes under RDA

Authority of the Organizing With Overall Responsibility

Planning and preparation of Engineer‟s estimate for development of category A

& B class of roads and bridges in the island

Awarding tenders

Project implementation

Supervision

Payment of progress bills

Implementation Organization and Its Functions

No Organization Functions

1 Pre-qualified contractor with relevant

membership of ICTAD & NCASL

Identify a bridge project

Prepare project proposal

(preliminary)

Negotiate with bank for funding

Conduct topographical survey after

approval

Submit survey plans & data

Submit design to RDA

Agree to rates

Sign agreement

Implementation

Completion & handover

Table 5: Implementation Organization and Its Functions

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1.6 Expected Benefits The expected benefits from this project for the local community are listed below.

After the 75/1 bridge at Nikaweratiya the only other bridge across Deduru-Oya is

No 78/3 Bridge along Peliyagoda-Puttalum road not very far from Chillaw.

The distance is around 50km between them. The proposed Kadigawa bridge

essentially lies midway from each of the above bridges, once completed this bridge

will serve immensely for the people living on either side of the river by substantial

reduction of transport distance.

Peasant farmers produce such as paddy, coconut and vegetables can reach suburb

cities like Nikaweratiya, Kuliyapitiya, Puttalam, &Chillaw and even Kurunegala

which is a Provincial city with much ease, thus serving the customer with a fresh &

quality product at a lesser price.

Another income generating avenue is clay brick burning and the product will reach

cities and the consumer at a reduced price.

Sand mining along the river is a local industry, (with approval of the

PradesiyaSabha) sand as a construction material will reach developer/user at a much

lower cost.

Last but not the least, the peasant farming community which comprises the majority

of the population and more importantly, their off-springs will be exposed to higher

levels of living standards; entrance to good schools etc. and improved health care at

urban hospitals too will be available for them. Central and local government

administrative institutes can be accessed easily. More participation in social

interactive events, access to parks and esplanades, sports will be of easy access to

younger generation.

In a situation of heavy flood such as the most recent one (December 2012)

evacuation and temporary relocation etc. can be done much more expeditiously and

efficiently.

For the local Authority the following benefits may be listed.

Satisfaction and fulfillment that the local constituents have been served well

Easing of financial burden of temporary rectification measures and welfare costs especially

after heavy rains & floods.

Peace & tranquility, acceptance instead of criticism & protests from constituents who will

enjoy easy & comfortable travel and transport.

Enhance Income/ Tariff to Local Authority owing to increased and multiplied business

establishments, residential buildings, amusement parks etc. along with elevation of living

standards of local community with improved accessibility & connectivity.

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1.7 Problem Tree Approach

Figure 8: Problem Tree

No

Transport

Facilities

Death and Injuries

Problems in distribution

Environment Pollution (water and noise)

Time waste

High Travel Cost

Poor value of land

Flood

Late distribution of industrial goods (Clay Bricks)

No safety area

Late distribution of agricultural good (Vegetable, paddy and

Cocoanut)

Road Situations Non Development Area

Other Alternatives Ways

Less combination with urban

areas

No essential infrastructure facilities

Transportation time is high

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2. Project Identification

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2.1 Approaches to Project Identification

All approaches to the project identification are usually based on the availability of

resources, availability of markets & fulfillment of needs.

2.1.1 Resource –based Approaches According to that resource based identification of this project starts by examining existing

domestic factors such as land , labor , raw materials & technology. For this

purpose government promised to give enough land for the project. And labour

have taken from china. Local and foreign technology used for the project. With

the direction of RDA, HNB provide fund for the project. At the same time it is

also necessary to examine the production potential specially factor market

potential. Availability of human and other resources and the availability of raw

materials also checked through the sector and regional surveys.

2.1.2 Market –based Approaches Assessing opportunities available for raw materials and other human capital are the main

need for the Kadigawa project. So it is important to make sure the availability of

inputs over the project periods. So these identifications achieved by conducting

market surveys.

2.1.3 Basic need-based Approaches The need based approach basically depends on the needs of the people and the

society. Transport is one of the important infrastructure facilities for the

society. But in this place people don‟t have a proper transport facility

because of the bad condition of the sand roads, weather problems and the

sudden variation of the river level. So these situations become severe

problems to the society. In addition fulfilling the basic need of the society

is a key responsible for all. According to above problem this project has

identified the basic need.

2.1.4 Government policy or priority

Relationship of the Project to National Priorities

Implementation of this project will vastly improve the connectivity of number of

townships in the N.C.P. thereby improving mobility, accessibility and

safety of the road users. This will have a positive impact to the upliftment

of the Rural Economy which in turn contributes to the National

Development Programme.

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2.2 Sources for Project Concepts

2.2.1 Technicians Usually the technical officers, administrators and managers of a specific sector are all

well known about the issues, problems, opportunities and trends relevant to the sector.

Therefore in this project most of the local talent and resources have used. Especially

Economists, Financial analysts, Energy specialist, Engineers, Demographers,

Sociologists, Environmentalist, Educators and physical planners all have all an

important role for the project. At the same time labor force and part of technology

have taken from china, so it is also a very strong position to conceive project ideas.

2.2.2 Planners and policy makers These groups of people both at local and national level are a very good source for

identify the project concept. In this project also approaches and models have taken

from other countries towards making certain modifications to suit local needs with the

help of local planners and policy makers.

2.2.3 Entrepreneurship Entrepreneurs and their expertise play a very significant role in project. Because these

are the people who can create new ideas and innovations.The Kadigawe project is

carry on by a private contractor with the influence of the government for the policy

and development directions.

2.2.4 Political leadership In project planning as well as in appraisal politicians play a major role. In this project

approval has got through the cabinet and RDA. In this case provincial council

members especially provincial minister have played a major role in identifying the

project concept. And for some cases we had to get permit ions from some government

base authorities.

2.2.5 Donors and foreign missions In most projects donors also contribute by providing financial and technical assistance

on the basis of grants and loans.In the kadigawe project loans have taken from the

HNB and local authorities. At the same time china provide some technical assistance

to the project.

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2.3 Priority Areas for Identification of Project Concepts/Ideas

2.3.1 Creating employment Most of the employees involve in this project. They are high level employees and

low level employees.

High level employees

Project manager

Engineers

Designers

Surveyors

Surveying helpers

Technical officers

Draft man

Office aide

Supervisors

Low level employees

Labors

Cleaners

2.3.2 Foreign exchange earning Increment in foreign exchange earnings.

2.3.3 Promotion of private investments Sub activities which require for main activities of project can be improve by

promoting private investments.

2.3.4 Regional development Improvement in Project implementing areas and living standard of people.

Ex: Employment

Infrastructure development

Service organizations

Agriculture development

Trade development

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2.3.5 Industrial development Improvement of industries which provide raw materials for the project.

Ex: cement

Granite

Concrete bar

Wood

Data

Approved

Conceptual Drawings

Approved

Construction Drawings

Figure 9: Project Identification Process

Design

Engineer (H/O)

Project Office (H/O) Design Submit

to RDA

Approval of

Design by RDA

Rate negotiation & sign of

agreement with RDA

Site Office

Preparation of BOQ &

Estimate

Final Drawings & Specs

Preparation of work

programme

Work orders

Resources schedules

Sub contractor rates

Work Implementation &

Progress Monitoring

Progress Claims

Progress Reports

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2.4 Feasibility studies

2.4.1 Commercial Commercial Feasibility covers the market side. In this project available inputs have taken

from local and foreign markets. Factor markets are most feasible for these projects

according to this most of raw materials have taken from Colombo market. All the

equipment and machineries have taken from the china factor market.

2.4.2 Financial Through this bridge we expect to cover the part of finance towards making entrance fees.

And the development of proper accessibility to the area will bring the benefits to the

government towards increasing production activities and any other economic activities.

And the fund & loans to implement the project have collected from hatton national bank

and any other local authorities.

2.4.3 Environment Sudden variation of the Deduruoya‟s water level have analyzed successfully,

Safety of the background areas & paddy fields also analyzed with proper plane.

Effects of flood & sudden variations of water level have controlled with the help

of environmental authority.

Feasibility of water cycle also confirmed with the accumulation of the

information about the water system

2.4.4 Technical This project has proposed to implement in Kadigawa. In this place the sudden

variation of river level is a major problem. So measurement of control techniques

will be carried out to solve this problem.

2.4.5 Economic Economic analysis is considered the financial viability as well as the social

impact. The successful implementation of the project will bring forth sharing of

benefits accrued through development programs under taken at other areas as

whole equally to the local community due to improve accessibility.

2.4.6 Institutional Under the „MAHINDA CHINTANAYA –VISION FOR THE FUTURE „program, the

kadigawe bridge across deduruoya has proposed by the government. With the

consultants approval the project has accepted by the Road development authority of Sri

Lanka. The Velence engineering services private Ltd decided to participate in this

program by selecting constructio0n of the Kadigawe Bridge. Presently this project is

operating under the local bank funding system.

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3. Project Preparation

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3.1. Logical framework approach in steps The LFA Process Can be divided into the Following Five Steps

Situational Analysis

Stakeholders Analysis

Problem & Objective Analysis

Analysis Of Alternatives

Activity Planning

These Five Steps are completed. The Project Designers Can Prepare the Logframe

3.1.1 Situation analysis

This Is Describes The Problem Or Situation To Be Addressed By The LFA Process. The

proposed project is vital connectivity improvement of puttalam&kurunagala districs.it is

an important task to be fulfilled the upliment of the area inhabited mainly by an under

privileged farming community such would have been the case for this project especially it

being not qualified for donor funding enlistment as the connecting roads at that time were

not much recognized. The management of valence engineering services(pvt)ltd having

experience in local infrastructure development works over 2.5 decades decided to

participate in this program by selecting construction of the kedigawa bridge.

3.1.2 Stakeholder

Beneficiaries – Public , Tourists , Business Men, Farmers

Implementers - Government, RDA, Valence Engineering Service (Pvt) Ltd Local Private

Sector Constructors

Decision Makers – Government

Financiers- Hatton National Bank & China Sub Contractor

3.1.3 Problem and objective analysis of alternatives

The proposed Kadigawabridge essentially lies midway from each of the above

bridges. Once completed this bridge will serve immensely for the people living on

either side of the river by substantial reduction of travel/ transport distance. And

there have another problem that is sudden variation of river level.Peasant farmers

produce such as paddy, coconut & vegetable can reach superb cities avenue is clay

brick burning & the product will reach cities and the consumer at a reduced price

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OBJECTIVE TREE

Figure 10: Objective tree

Vital connectivity

Improvement

Reduction of Transport/Travel

Time

Increase the Land Value of

Either Side

Increase of Level of Living

Standards

High OppoutunitiesOf

Employment

Improvement the delivery

system.

Providing Essential

Infrastructure Facilities.

Improved Transport

Facilities

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3.2. Logical framework matrix (log frame)

Narrative

Summary

Objective

Verifiable

Indicators

Information

Sources

Risk &

Assumptions

Wider objective

-High service level

for passengers &

the society

- Reduction of

transport/travel time

-Data from RDA

Data from the police

department

(wellpothuwewa)

-Passengers

continue to use the

previous routine

around the bridge

Project purpose

-Difficulties of

transportation will

be reduced.

-number of death

will reduced

-Reduce travel costs

and save the time.

-Deaths and serious

injuries will reduced

-Annual survey

made by the Ceylon

transport board.

-Survey department

of srilanka

-Easily connected

with main road

connection.

- Proper

connectivity to the

road network.

Out puts

-Maintenance

workshop

equipped.

Maintenance

routines

established.

-Creating new bus

routine.

-Risk of the sudden

variation of the

water level will be

reduced.

-Maintenance &

bridge testing

method will work

property.

Bus drivers will

reduce the ticket.

-Safety of the

transport will

increase.

-Independent survey

reports.

Police department

reports. (reports

from all police

station from

Kurunegala and

Puttalam)

-New transport

survices will

increase

Inputs/ activities

-Funds for entrance

security system

funds for

maintenance.

Activities

-Develop

maintenance

routines.

-50km of the bridge

will be developed

and equipped.

-Most of transport

services and

maintenance work

shop will be

developed.

-Operation permit

issued.

-Records of RDA

-No any political

interference.

-Resource personals

available.

-Funds are

available.

Table 6:Logframe Matrix

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4. Project Appraisal

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4.1 Social Cost-Benefit Analysis

4.1.1 Identifying Project Alternatives Valence Engineering Services(Pvt) Ltd is a local private sector construction in srilanka,

request the government (road development authority) for permission to improve the

transport facilities in order to build theConstruction of Two Lane Bridge across Deduru-

Oya at Kadigawa. However the government administrators get the idea that this

Construction of Two Lane Bridge across Deduru-Oya at Kadigawa working activities

should rather than taken by the consulting engineers and contactor (Pvt) ltd (CEC) to

improve the transport facilities.

Alternative 1: let “Valence Engineering Services (Pvt) Ltd”

Alternative 2: let “consulting engineers and contactor (Pvt) Ltd”

However there is one more alternative, that is zero alternative which means is not

to construct the bridge project.

4.1.2 Concept of social profitability Details

Alt 1 Alt 2

Annual cost 501,510,622.50 550,372,454.00

Annual revenue 604,728,320.00 590,728,320.00

Loss for family 200,000,000.00 200,000,000.00

Investment cost 2000,000,000.00 2000,000,000.00

Annual operational and maintenance

cost

150,000,000.00 150,000,000.00

Government tax 50%

Assuming 10% worth of each family land

Loss every year = 0.1*200=20 million

Table 7:Details of Cost and Benefits

Outcomes of the Alternatives

Alt 0 Alt 1 Alt 2

Valence engineering (Pvt) ltd 0 51.5 million 0

Consulting engineers and contactor (Pvt) Ltd 0 0 20million

Tax payment for government 0 51.5million 20million

Loses for public 0 -20million -20 million

Total 0 83 million 20 million

Table 8: Outcomes of the Alternatives

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4.1.3 Social Discount Rate Discount rate = 10%

Its approaches, which has been a long felt need for at least over 3

decades.

n=30

𝑫𝑨 =(𝟏 + 𝑷)𝟑𝟎 − 𝟏

𝑷(𝟏 + 𝑷)𝟑𝟎

𝑫𝑨 =(𝟏 + 𝑶. 𝟏)𝟑𝟎 − 𝟏

𝟎. 𝟏(𝟏 + 𝟎. 𝟏)𝟑𝟎

𝑫𝑨 =𝟏𝟕. 𝟒𝟓 − 𝟏

𝟎. 𝟏(𝟏𝟕. 𝟒𝟓)

𝑫𝑨 =𝟏𝟔. 𝟒𝟓

𝟏. 𝟕𝟒𝟓

𝑫𝑨 = 𝟗. 𝟒𝟐𝟕

Present Value of Total Cost

The present value of annual operational and

maintenance costs

LKR 1414 million

Investment cost LKR 2000 million

Present value of total costs on the project site LKR 3414 million

Table 9: Present Value of Total Cost

4.1.4 Net Present Value

Revenue, Cost and Net Revenue Of

“Valence Engineering Services (Pvt) Ltd”

Gross revenue: LKR604 million/year*disc.factor 9.427 LKR 5694 million

Annual operational and maintenance cost LKR 1414 million


Total cost LKR 3414 million

Net revenue before tax LKR 2280 million

Tax (50% of net revenue) LKR 1140 million

Net revenue after tax LKR 1140 million

Table 10: Revenue, Cost and Net Revenue Of

“Valence Engineering Services (Pvt) Ltd”

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Revenue, Cost and Net Revenue of

“Consulting Engineers and Contactor (Pvt) Ltd”

Gross revenue: LKR 590 million/year*disc.factor 9.427 LKR 5561million

Annual operational and maintenance cost LKR 1414 million


Total cost LKR 3414 million

Net revenue before tax LKR 2147 million

Tax (50% of net revenue) LKR 1074 million

Net revenue after tax LKR 1074 million

Table 11: Revenue, Cost and Net Revenue of

“Consulting Engineers and Contactor (Pvt) Ltd”

Discount Annual Payment Factor

𝒍𝒊𝒎 𝟏 + 𝒑 𝒏 − 𝟏

𝒑 𝟏 + 𝒑 𝒏

=𝟏

𝒑

In this case, with 10% discount rate the discounted annual payment factor for

the future will be:

=𝟏

𝟎. 𝟏𝟎= 𝟏𝟎

Consequently, the present value for the loss of family’s land in LKR 200

million*10= LKR 2000 million

Net Present Values of Project Alternatives

Alt 0 Alt 1 Alt 2

Valence engineering (Pvt) ltd 0 +1140

Consulting engineers and contactor (Pvt) Ltd 0 0 +1074

Government 0 +1140 +1074

Loses for public 0 -2000 -2000

Net present value 0 +280 +148

Table 12: Net Present Values of Project Alternatives

As we can see, both alternatives have positive net present values. However, alt 1

and alt 2 require the same approach and therefore both cannot be implanted. From

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what so far we have seen so far alternative 1 can be recommended since it has the

highest net present value.

Two decion making criteria other than the NPV can be used in project appraisal

i. Benefit-Cost Ratio (BCR)

ii. Internal rate of return (IRR)

i. Benefit /cost ratio

𝑩

𝑪 𝑹𝒂𝒕𝒊𝒐 (𝑽𝑬𝑪) =

𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝑽𝒂𝒍𝒖𝒆 𝑶𝒇 𝑨𝒍𝒍 𝑩𝒆𝒏𝒊𝒆𝒊𝒕𝒔

𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝑽𝒂𝒍𝒖𝒆 𝑶𝒇 𝑨𝒍𝒍 𝑪𝒐𝒔𝒕𝒔

=𝟓𝟔𝟗𝟒

𝟑𝟒𝟏𝟒

= 𝟏. 𝟔𝟕

𝑩

𝑪 𝑹𝒂𝒕𝒊𝒐 (𝑪𝑬𝑪) =

𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝑽𝒂𝒍𝒖𝒆 𝑶𝒇 𝑨𝒍𝒍 𝑩𝒆𝒏𝒊𝒆𝒊𝒕𝒔

𝑷𝒓𝒆𝒔𝒆𝒏𝒕 𝑽𝒂𝒍𝒖𝒆 𝑶𝒇 𝑨𝒍𝒍 𝑪𝒐𝒔𝒕𝒔

=𝟓𝟓𝟔𝟏

𝟑𝟒𝟏𝟒

= 𝟏. 𝟔𝟐

Both alternatives are accept the project proposal (BCR>1)

ii. Internal Rate Of Return

𝑰𝑹𝑹 =𝑩𝒕 − 𝑪𝒕

𝟏 + 𝑷 𝒊

𝑰𝑹𝑹 𝑽𝑬𝑺 =𝟐𝟓𝟓𝟎

𝟏𝟕. 𝟒𝟓= 𝟏𝟒𝟔. 𝟏𝟑 = 𝟏. 𝟒𝟔

𝑰𝑹𝑹 𝑪𝑬𝑪 =𝟐𝟏𝟒𝟕

𝟏𝟕𝟒𝟓= 𝟏𝟐𝟑. 𝟎𝟒 = 𝟏. 𝟐𝟑

Both alternatives are accept the project proposal (IRR>social discount rate)

Equivalence of project criteria.

The three project criteria described above will give the same project decision. Here

three project criteria are get same decision that is “accept the project” for both

alternatives

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4.1.5 Shadow price

New Present Value of Alternatives

Alt 0 Alt 1 Alt 2

Valence engineering (Pvt) ltd 0 +1140 0

Consulting engineers and contactor (Pvt) Ltd 0 0 +1074



Compensation for land 0 -100 -100


Table 13: New Present Value of Alternatives

Here Alternative 1 greater that Alternative 2 has a better position in terms of

present value

4.1.6 Non-valued and non- quantified effects Non-quantified effects of a project can generally be described as either social impacts or

environmental impacts. Analyses of such effects are called Social Impact Assessments

(SIA) And Environmental Impact Assessments (EIA). The importance of the EIA and

SIA as an effective tool for the purpose of integrating environmental and social

considerations with development planning. The impacts can be positive or negative.

We should try to identify and describe all such effects if such effects are significant. The

effects can be summarized in the following table, where they are appraised according to

the following symbols.

+++ = very beneficial effect.

--- = very negative effect.

++ = moderately beneficial effect.

-- = moderately negative effect.

+ = slightely beneficial effect.

- = slightely negative effect.

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Positive and Negative effect of Project of Construction of Two Lane

Bridge across Deduru-Oya at Kadigawa

Effects Alt 0 Alt 1 Alt 2

Noise Pollution 0 -- ---

Water Pollution 0 - --

Heavy Transport 0 +++ +

Deforestration 0 - ---

Loses of Land 0 - ---

Increase of level of Living Standards 0 +++ +

Resetteling families 0 +++ 0

Table 14: Positive and Negative effect of Project of Construction of Two

Lane Bridge across Deduru-Oya at Kadigawa

Environmental Impacts

Impacts on river water and soil quality: when constructing Kadigawa bridge

project, there are so many impacts will be occur. To compensate these impacts the

organization should allocate some amount from project finance. Because of the

Kadigawa bridge construction across Deduru-oya, river water can be polluted and

the quality of soil can be reduced.

Impacts on biological environment: the way of life of plants and living beings

which are in the area of bridge construction can be destroyed or collapsed.

Social Impacts

Impacts on people‟s property: Especially the person who lives around the area of

bridge construction loses their own lands.

Impacts on agricultural lands and industrial activities: changes in the employment

pattern.

Cultural conflicts

Impacts on community areas and sites.

Accessibility to commercial areas.

The agricultural land can be abundant because of the intrusion of project in

agricultural lands; the land owners will lose the part of their income. However, the

marketing for these agricultural products will increase through this bridge

construction.

So, the project works are implemented with the concentration on minimizing the social

impacts and the environmental problems such as: dust, deforestation, water pollution.

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4.1.7 Sensitivity Analysis

Alternative 1 Alternative 2

- + - +

Basic calculation +180 +48

Gross revenue ±25% -1244 +1604 -1342 +1438

Operational cost ±10% +39 +321 -93 +189

Investment cost ±10% -20 +380 -152 +248

Loss for family -20 +380 -152 +248

All in four in adverse direction +197 -561

Discount rate ±3% +5112 +1503 +3560 +1398

Table 15: Sensitivity Analysis

4.1.8 The Decision

New Present Value of Alternatives

Alt 0 Alt 1 Alt 2

Valence engineering (Pvt) ltd 0 +1140 0

Consulting engineers and contactor

(Pvt) Ltd

0 0 +1074



Compensation for land 0 -100 -100


Table 13: New Present Value of Alternatives

Positive and Negative effect of Project of Construction of Two Lane

Bridge across Deduru-Oya at Kadigawa

Effects Alt 0 Alt 1 Alt 2

Noise Pollution 0 -- ---

Water Pollution 0 - --

Heavy Transport 0 +++ +

Deforestration 0 - ---

Loses of Land 0 - ---

Increase of level of Living Standards 0 +++ +

Resetteling families 0 +++ 0

Table 14: Positive and Negative effect of Project of Construction

of Two Lane Bridge across Deduru-Oya at Kadigawa

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These two tables give the summary to make an efficient recommendation about the

Project of Construction of Two Lane Bridge across Deduru-Oya at Kadigawa.When

decision makers take the decision about which alternative(Alternative 1: “Valence

Engineering Services (Pvt) Ltd”, Alternative 2: “consulting engineers and contactor (Pvt)

Ltd”) is most suitable and profitable to implement this Kadigawa Bridge Project, They

mainly concentrate on Net Present Values of Alternatives and Non Valued an Non

Quantified Effects of Those Alternatives. In this project Non Valued andNon Quantified

Effects of both alternatives are different. Alt 1 has 5(-) & 9(+), as well as Alt 2 has 11(-)

& 2(+). When we compare the effects of both alternatives Alt 1 is better than Alt2.

Because Alt1 has 5(-) & 9(+). But alt2 has 11(-) & 2(+). Here Alt 1 has more positive

effects than Alt 2. And it has less negative effects than Alt 2.

Next when we see the Net Present Value of both alternatives they have Positive Net

Present Values. But, they differ in numbers. NPV of Alt 1 is +180;NPV of Alt 2 is +48.

When we compare these two alternatives we have accepted alternative 1 can be

recommended since it has the highest Net Present Value than alternative 2.Finally, we

come to conclusion Alt 1 is better to implement the project of Construction of Two Lane

Bridge across Deduru-Oya at Kadigawa.

Documents

Project Formulation & Cost-Benefit Analysis (CBA)