Project Formulation & Cost-Benefit Analysis (CBA)

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 1.

ERROR! BOOKMARK NOT DEFINED. 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 2.1.1 2.1.2 2.1.3 2.1.4

Approaches To Project Identification Resource –based Approaches Market –based Approaches Basic need-based Approaches Government policy or priority

18 18 18 18 18

2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5

Sources for Project Concepts Technicians Planners and policy makers Entrepreneurship Political leadership Donors and foreign missions

19 19 19 19 19 19

2.3 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5

Priority Areas for Identification of Project Concepts/Ideas Creating employment Foreign exchange earning Promotion of private investments Regional development Industrial development

20 20 20 20 20 21

2.4 2.4.1 2.4.2 2.4.3 2.4.4 2.4.5 2.4.6

Feasibility studies Commercial Financial Environment Technical Economic Institutional

22 22 22 22 22 22 22

3.

3.1.

3.1.1 3.1.2 3.1.3

PROJECT PREPARATION 23 Logical framework approach in steps Situation analysis Stakeholder Problem and objective analysis of alternatives

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24 24 24 24

3.2.

Logical framework matrix (log frame)

4.

4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.1.6 4.1.7 4.1.8

26

PROJECT APPRAISAL 27 Social Cost-Benefit Analysis Identifying Project Alternatives Concept of social profitability Social Discount Rate Net Present Value Shadow price Non-valued and non- quantified effects Sensitivity Analysis The Decision

28 28 28 29 29 32 32 34 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: District: DS Division: EE Division: Road: Electoral area:

North Western Kurunegala Kobeigane, Rasnayakapura Maho Rasnayakapura-Kadigawa-road (provincial road) 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

Bridge

NCP

Kurunegala Rasnayakepura/KobeiganeD.S.Division

Left bank access

NCP

Kurunegala RasnayakepuraD.S.Division

Right bank access NCP

Location

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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ďƒź

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

Kadigawa

2.m

Ujekele

2.5

Existing Road Length Condition From

To

River bank River bank

Polonthalawa junction Ujekele junction

Length in m

2200

Poor

575

Poor

Table 2: Existing Road Details Culvert No (Starting from River Bank)

Culvert Type

Span /m

Width /m

Reduced Level /m

1 2 3

Hume pipe Hume pipe Box

1 1 2.5

2.4 2.4 2.4

99.1 99.1 96.7

Condition

Poor Poor 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

1 2 3 4

Hume pipe Box Hume pipe Hume pipe

1 1.5 1 1

2.4 2.4 2.4 2.4

99.1 104.5 103.8 105.1

Condition

Poor Poor Poor Poor

Table 4: Existing Structural Details of Culverts – Kadigawa End

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ďƒź 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

1

Pre-qualified contractor with relevant membership of ICTAD & NCASL

Functions  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

Problems in distribution Transportation time is high

High Travel Cost

Environment Pollution (water and noise) Poor value of land

Death and Injuries

Time waste

Less combination with urban areas

Flood

No essential infrastructure facilities

No Transport Facilities

Late distribution of agricultural good Cocoanut) Road Situations

(Vegetable, paddy and

Non Development Area

Late distribution of industrial goods (Clay Bricks)

Other Alternatives Ways

No safety area

Figure 8: Problem Tree

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2.

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Project Identification

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 Design Engineer (H/O)

Data

Project Office (H/O)

Design Submit to RDA

Site Office Approved Conceptual Drawings Preparation of BOQ & Estimate

Approval of Design by RDA Approved Construction Drawings

Rate negotiation & sign of agreement with RDA 

Final Drawings & Specs     

Preparation of work programme Work orders Resources schedules Sub contractor rates

Work Implementation &  Progress Monitoring

 

Progress Claims Progress Reports

Figure 9: Project Identification Process

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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 deduru- oya 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.

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Project Preparation

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

Improvement the delivery system.

High OppoutunitiesOf Employment

Vital connectivity Improvement

Improved Transport Facilities

Reduction of Transport/Travel Time

Increase the Land Value of Either Side

Increase of Level of Living Standards

Providing Essential Infrastructure Facilities.

Figure 10: Objective tree

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3.2.

Logical framework matrix (log frame)

Narrative Summary

Objective Verifiable Indicators

Information Sources

Risk & Assumptions

Wider objective

- Reduction of transport/travel time

-Data from RDA Data from the police department (wellpothuwewa)

-Passengers continue to use the previous routine around the bridge

-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.

-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

-Operation permit issued.

-Records of RDA

-No any political interference.

-Resource personals available.

-Funds are available.

-High service level for passengers & the society

Project purpose -Difficulties of transportation will be reduced.

-number of death will reduced

Out puts -Maintenance workshop equipped.

Maintenance routines established.

-Creating new bus routine.

-Risk of the sudden variation of the water level will be reduced.

Inputs/ activities -50km of the bridge -Funds for entrance security system funds for maintenance.

Activities -Develop maintenance routines.

will be developed and equipped.

-Most of transport services and maintenance work shop will be developed.

Table 6:Logframe Matrix

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4.

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Project Appraisal

4.1Social 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 DeduruOya 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 1 501,510,622.50 Annual cost 604,728,320.00 Annual revenue 200,000,000.00 Loss for family 2000,000,000.00 Investment cost Annual operational and maintenance 150,000,000.00 cost Government tax 50% Assuming 10% worth of each family land Loss every year = 0.1*200=20 million

Alt 2 550,372,454.00 590,728,320.00 200,000,000.00 2000,000,000.00 150,000,000.00

Table 7:Details of Cost and Benefits Outcomes of the Alternatives Valence engineering (Pvt) ltd Consulting engineers and contactor (Pvt) Ltd

Tax payment for government Loses for public Total

Alt 0 0 0 0 0 0

Alt 1 51.5 million 0 51.5million -20million 83 million

Table 8: Outcomes of the Alternatives

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Alt 2 0 20million 20million -20 million 20 million

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

(đ?&#x;? + đ?‘ˇ)đ?&#x;‘đ?&#x;Ž − đ?&#x;? đ?‘ˇ(đ?&#x;? + đ?‘ˇ)đ?&#x;‘đ?&#x;Ž (đ?&#x;? + đ?‘ś. đ?&#x;?)đ?&#x;‘đ?&#x;Ž − đ?&#x;? đ?‘Ťđ?‘¨ = đ?&#x;Ž. đ?&#x;?(đ?&#x;? + đ?&#x;Ž. đ?&#x;?)đ?&#x;‘đ?&#x;Ž đ?&#x;?đ?&#x;•. đ?&#x;’đ?&#x;“ − đ?&#x;? đ?‘Ťđ?‘¨ = đ?&#x;Ž. đ?&#x;?(đ?&#x;?đ?&#x;•. đ?&#x;’đ?&#x;“) đ?&#x;?đ?&#x;”. đ?&#x;’đ?&#x;“ đ?‘Ťđ?‘¨ = đ?&#x;?. đ?&#x;•đ?&#x;’đ?&#x;“ đ?‘Ťđ?‘¨ = đ?&#x;—. đ?&#x;’đ?&#x;?đ?&#x;• đ?‘Ťđ?‘¨ =

Present Value of Total Cost The present value of annual operational and LKR 1414 million maintenance costs LKR 2000 million Investment cost LKR 3414 million Present value of total costs on the project site

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 Annual operational and maintenance cost Investment cost Total cost Net revenue before tax Tax (50% of net revenue) Net revenue after tax

LKR 5694 million

LKR 1414 million LKR 2000 million LKR 3414 million LKR 2280 million LKR 1140 million 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 Annual operational and maintenance cost Investment cost Total cost Net revenue before tax Tax (50% of net revenue) Net revenue after tax

LKR 5561million

LKR 1414 million LKR 2000 million LKR 3414 million LKR 2147 million LKR 1074 million LKR 1074 million

Table 11: Revenue, Cost and Net Revenue of “Consulting Engineers and Contactor (Pvt) Ltd�

Discount Annual Payment Factor đ?&#x;?+đ?’‘ đ?’?−đ?&#x;? đ?’?đ?’Šđ?’Ž đ?’‘ đ?&#x;?+đ?’‘ đ?’? đ?&#x;? = đ?’‘ In this case, with 10% discount rate the discounted annual payment factor for the future will be: đ?&#x;? = = đ?&#x;?đ?&#x;Ž đ?&#x;Ž. đ?&#x;?đ?&#x;Ž 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 Valence engineering (Pvt) ltd Consulting engineers and contactor (Pvt) Ltd

Government Loses for public Net present value

Alt 0 0 0 0 0 0

Alt 1 +1140 0 +1140 -2000 +280

Alt 2 +1074 +1074 -2000 +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 đ?‘Š đ?‘ˇđ?’“đ?’†đ?’”đ?’†đ?’?đ?’• đ?‘˝đ?’‚đ?’?đ?’–đ?’† đ?‘śđ?’‡ đ?‘¨đ?’?đ?’? đ?‘Šđ?’†đ?’?đ?’Šđ?’†đ?’Šđ?’•đ?’” đ?‘šđ?’‚đ?’•đ?’Šđ?’? (đ?‘˝đ?‘Źđ?‘Ş) = đ?‘Ş đ?‘ˇđ?’“đ?’†đ?’”đ?’†đ?’?đ?’• đ?‘˝đ?’‚đ?’?đ?’–đ?’† đ?‘śđ?’‡ đ?‘¨đ?’?đ?’? đ?‘Şđ?’?đ?’”đ?’•đ?’” đ?&#x;“đ?&#x;”đ?&#x;—đ?&#x;’ = đ?&#x;‘đ?&#x;’đ?&#x;?đ?&#x;’ = đ?&#x;?. đ?&#x;”đ?&#x;• đ?‘Š đ?‘ˇđ?’“đ?’†đ?’”đ?’†đ?’?đ?’• đ?‘˝đ?’‚đ?’?đ?’–đ?’† đ?‘śđ?’‡ đ?‘¨đ?’?đ?’? đ?‘Šđ?’†đ?’?đ?’Šđ?’†đ?’Šđ?’•đ?’” đ?‘šđ?’‚đ?’•đ?’Šđ?’? (đ?‘Şđ?‘Źđ?‘Ş) = đ?‘Ş đ?‘ˇđ?’“đ?’†đ?’”đ?’†đ?’?đ?’• đ?‘˝đ?’‚đ?’?đ?’–đ?’† đ?‘śđ?’‡ đ?‘¨đ?’?đ?’? đ?‘Şđ?’?đ?’”đ?’•đ?’” đ?&#x;“đ?&#x;“đ?&#x;”đ?&#x;? = đ?&#x;‘đ?&#x;’đ?&#x;?đ?&#x;’

= đ?&#x;?. đ?&#x;”đ?&#x;?

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

Internal Rate Of Return đ?‘°đ?‘šđ?‘š =

đ?‘Šđ?’• − đ?‘Şđ?’• đ?&#x;?+đ?‘ˇ đ?’Š

đ?&#x;?đ?&#x;“đ?&#x;“đ?&#x;Ž = đ?&#x;?đ?&#x;’đ?&#x;”. đ?&#x;?đ?&#x;‘ = đ?&#x;?. đ?&#x;’đ?&#x;” đ?&#x;?đ?&#x;•. đ?&#x;’đ?&#x;“ đ?&#x;?đ?&#x;?đ?&#x;’đ?&#x;• đ?‘°đ?‘šđ?‘š đ?‘Şđ?‘Źđ?‘Ş = = đ?&#x;?đ?&#x;?đ?&#x;‘. đ?&#x;Žđ?&#x;’ = đ?&#x;?. đ?&#x;?đ?&#x;‘ đ?&#x;?đ?&#x;•đ?&#x;’đ?&#x;“

��� ��� =

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

Valence engineering (Pvt) ltd Consulting engineers and contactor (Pvt) Ltd

Government Loses for public Compensation for land Net present value

Alt 0 0 0 0 0 0 0

Alt 1 +1140 0 +1140 -2000 -100 +180

Alt 2 0 +1074 +1074 -2000 -100 +48

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.

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+

= slightely beneficial effect.

-

= slightely negative effect.

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 Water Pollution Heavy Transport Deforestration Loses of Land Increase of level of Living Standards

0 0 0 0 0 0 0

--

---+ ----+ 0

Resetteling families

+++

+++ +++

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

Basic calculation Gross revenue ±25% Operational cost ±10% Investment cost ±10% Loss for family All in four in adverse direction Discount rate ±3%

Alternative 1 +

Alternative 2 +

+180

+48

-1244 +39 -20 -20

+1604 +321 +380 +380

-1342 -93 -152 -152

+197 +5112

+1438 +189 +248 +248 -561

+1503

+3560

+1398

Table 15: Sensitivity Analysis 4.1.8

The Decision New Present Value of Alternatives Alt 0 0 0

Alt 1 +1140 0

Alt 2 0 +1074

Valence engineering (Pvt) ltd Consulting engineers and contactor (Pvt) Ltd 0 +1140 +1074 Government 0 -2000 -2000 Loses for public 0 -100 -100 Compensation for land 0 +180 +48 Net present value 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 Water Pollution Heavy Transport Deforestration Loses of Land Increase of level of Living Standards

0 0 0 0 0 0 0

--

---+ ----+ 0

Resetteling families

+++

+++ +++

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.

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