1. 1 Cohesion Policy 2007 - 13 Adam Abdulwahab Evaluation network meeting Brussels, 21 September 2009 Ex post evaluation of cohesion policy programmes 2000-2006 co-financed by the European Fund for Regional Development (Objective 1 and 2) Work Package 10 “Efficiency: Unit Costs of Major Projects”

2. 2 Cohesion Policy 2007 - 13 Overview of ToR - 1 Scope: sample of ERDF major projects Task 1: Literature review Task 2: Infrastructure projects –Definition of “units” –Estimated unit costs and completion times –Actual unit costs and completion times –Analysis of cost overruns and time delays –Role of ex ante risk assessment

3. 3 Cohesion Policy 2007 - 13 Overview of ToR - 2 Task 3: Productive investment projects –Costs of job created –Comparability of different cost per job figures –Estimated costs of jobs created –Actual costs of jobs created Task 4: Spreadsheet –Indicative benchmark ranges –Tool for further data input

4. 4 Cohesion Policy 2007 - 13 Practical Limits Data availability => smaller sample (altogether 96 projects) Data quality –Difficulty of determining costs of components –Variations are higher than expected Reasons: –Modifications of projects –Projects were not necessarily monitored in same structure as they were approved

5. 5 Cohesion Policy 2007 - 13 Results of Literature Review No public unit cost database –One exception: ROCKS (World Bank) only roads and very limited European relevance No generally agreed definitions of unit costs for infrastructure projects Widespread “Optimism Bias” Job creation costs are determined only for (active) labour policy interventions

6. 6 Cohesion Policy 2007 - 13 Sector snapshot - Rail Cost range (literature): 2.8 to 8.6 mEUR/km Sample –Project length: 8.9 km to 1,435 km –Unit cost: 0.3 to 49 mEUR/km Main reasons for cost overruns: environmental issues, statutory authorities, work suspensions Main reasons for delays: funding and construction

7. 7 Cohesion Policy 2007 - 13 Sector snapshot - Roads Cost range (literature): –Single carriageway: 0.7 to 2.0 mEUR/km –Dual carriageway: 2.7 to 8.7 mEUR/km –Dual carriageway, 3-lane: 36.4 to 91.3 mEUR/km Sample –Project length: 5.3 km to 144.2 km –Unit cost: 1 to 50 mEUR/km Main reasons for cost overruns: design complexity, environmental issues, statutory authorities Main reasons for delays: site preparation and construction

8. 8 Cohesion Policy 2007 - 13 Sector snapshot – Urban transport Cost range (literature): –Metro: 27 to 300 mEUR/km (highest: 483 mEUR/km) –Tram: 2.5 to 64 mEUR/km Sample –Project length: 4 km to 22 km –Unit cost: 5 to 120 mEUR/km Main reasons for cost overruns: permits/consents, procurement factors Main reasons for delays: funding and planning

9. 9 Cohesion Policy 2007 - 13 Sector snapshot – Water & Wastewater Sample not comparable to literature Cost range (literature): –Water treatment: 100 to 3800 EUR/m 3 /day –Water supply: 370 to 6800 EUR/m 3 /day Sample (relative homogeneity) –Project length: 85 km to 94 km –Unit cost: 0.75 to 2.11 mEUR/km Main reasons for cost overruns: design changes Main reasons for delays: site preparation, funding, permits/consents

10. 10 Cohesion Policy 2007 - 13 Productive Investment Projects Difficulty to determine employment effects Mainly determined by –Capital/labour ratio of industry –Technological characteristics Decision based on CBA not on job creation  Measuring cost of jobs creation is futile and will be discontinued

11. 11 Cohesion Policy 2007 - 13 Thank you for your attention