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Corresponding Author

Darwish, Hassan

Subject Area

Civil and Environmental Engineering

Article Type

Original Study

Abstract

This paper presents a sensitivity analysis of the economic evaluation input parameters of the upgraded rural roads projects that includes construction cost, traffic growth rate and maintenance cost on the output parameters that includes Net Present Value (NPV) and Internal Rate of return (IRR). International experience didn’t specify specific limits or trends for the effect of them on the output parameters. So, the objective of this sensitivity analysis is defining the general trends and rates of effectiveness of each of them. To achieve the study objectives, forty three road sections were selected in four governorates in Upper Egypt; Menia, Fayoum, Assuit and Sohag to perform the sensitivity analysis. Results indicated that the NPV values decrease with the increase of the construction cost for all roads with approximately the same rate. A 5% unexpected increase in the cost causes the NPV to decline by about 0.6%. Roads that have lower positive NPV values may achieve negative NPV values if the construction cost unexpectedly increased by about 25%. The IRR values decreases with the increase of the construction cost. The rate of decrease of the IRR decreases as the construction cost increases. For roads that have IRR lower than 50%, the IRR percentage decreases as the construction cost increases with approximately constant rates. The NPV increases as the traffic growth rate increases; the increase in NPV is approximately constant for smaller growth rates while it is increasable for higher growth rates. The IRR values increases as the growth rate increases with approximately constant rates for all roads. Both of the NPV and IRR have approximately constant values with the change in maintenance cost escalation. The output parameters of the economic evaluation of roads are less sensitive to maintenance cost escalation.

Keywords

Sensitivity analysis; Road Projects; Economic Evaluation; Rural Roads

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