Scheme Appraisal for Highway Projects 49The three primary user benefits listed above are normally estimated relative
to the without projector ‘do-nothing’ situation. The definition and description
of the without project scenario should be such that it constitutes an entirely
feasible and credible course of action. Let us examine each of these benefits in
some detail.
Reductions in vehicle operating costs
This constitutes the most direct potential benefit derived from a new or
upgraded highway project. It is often the most important one and the one easiest
to measure in money terms. While the users are the initial beneficiaries of these
potential reductions, circumstances dictated by government policies or compe-
tition, or the drive to maximise profits, might lead to other groups within the
broader community having a share in the ultimate benefit.
For a highway scheme, the new upgraded project leads to lower levels of
congestion and higher speeds than on the existing roadway, usually resulting in
lower fuel consumption and lower maintenance costs due to the reduced wear
and tear on the vehicles.
Within a highway cost-benefit analysis, a formula is used which directly relates
vehicle-operating costs to speed. Costs included are both fuel and non-fuel-
based. The higher speeds possible on the new road relative to the existing one
lead to potential monetary savings for each road user.
Savings in time
The upgrading of a highway installation will invariably reduce travel time as
well as improving the reliability of transport services. For transport users, time
has some connection with money. The degree of correlation between the two
depends primarily on the manner in which the opportunities made possible by
the increased availability of time are utilised.
In general, analyses of the value of time-savings within the cost-benefit frame-
work focus on distinguishing between travel for work and travel for non-work
purposes. Non-work time includes leisure travel and travel to and from
work.Within developed economies, the value of working time is related to the
average industrial wage plus added fringe benefits, on the assumption that time
saved will be diverted to other productive uses. There is no broad agreement
among economic evaluation experts regarding the valuation of non-work
time. Since there is no direct market available that might provide the appro-
priate value, values must be deduced from the choices members of the public
make that involve differences in time. Studies carried out in industrialised coun-
tries have indicated that travellers value non-working time at between 20% and
35% the value attributed to working time (Adler, 1987). Less developed
countries may, however, set the valuation at a lower percentage. In the worked
example presented in section 3.3.6, an average value for time savings is used