PAD - LGED

isks as insufficient capacity of LGED to manage project implementation in 26 districts, poor
quality of engineering design execution of the civil works, delays and cost overruns caused by
weak capacity of the implementation agencies in procuring and managing contracts and
overseeing their execution; unmitigated environmental and social impacts due to weak
management capacity; and aggravation of road accidents. The later category of risks relate to the
overall weak governance in the country and in the sector, including inefficient allocation and use
of resources in rural road maintenance and asset management and weak internal accountability
and integrity mechanisms and insufficient citizen oversight. The detailed risk assessment is
presented in Annex 4. A Governance and Accountability Action Plan for the project is included
in Annex 6.
VI.
APPRAISAL SUMMARY
A. Economic Analyses
53. A cost-benefit analysis has been carried out for each of the main investments components
of the project: (i) Improvement of Upazila and Union Roads; (ii) rehabilitation and periodic
maintenance (including PBMC), (iii) GCM improvement; and (iv)Rural Waterways
improvement. The roads, GCMs, and ghats (river jetties) were selected based on an agreed set of
socio-economic criteria and the selection methodology (described in Annex 7), including
physical and social (poverty, population and needs) considerations, aims to maximize the impact
on rural accessibility.
54. The economic analysis of the roads component was thus carried out for both the road
improvement and the RPM component. Similarly, the economic analysis for the GMCs and ghats
was carried out jointly as these investments are highly complementary. The economic analysis
for the rural waterways improvement component was carried out for the improvement of the
selected Turag River extension. The table below presents the economic analysis summary of all
components.
55. Conclusion. The results from the economic analysis confirmed the justification of the
selected investments. The results from the sensitivity analysis show that these results are
reasonably robust even given reductions in benefits and increases in cost. Therefore, it can be
concluded that economic viability from the investments is feasible with a weighted average
EIRR of 62 percent. Detailed economic analysis can be found in Annex 8.
Component
Financial
Component
Cost (US$
Million)
Table 3: Economic Analysis Summary
Total
Length
(km)
EIRR
NPV
(US$
Million)
NPV per
unit
financial
cost
Sensitivity Tests
(Switching values)
Cost
Increase
Benefits
Decrease
UZR Improvement 108.8 734 41% 348 3 118% 54%
UNR Improvement 37.0 497 84% 295 12 168% 65%
Rehabilitation and Periodic
Maintenance (RPM)
153.0 979 64% 199 6 146% 60%
PBMC 14.0 167 40% 8 1.4 136% 42%
RWT 1.5 20 15.4% 0.07 0.3 45.00% 20%
GCMs and ghats 6.8 50 GMCs 292% 946 25 1582.07% 82.64%
14