Group - 6 Dr.

Ashwin Mahalingam
Hemanth H – CE16B030 Associate Professor (BTCM)
Devendran R – CE18M034 Department of Civil Engineering
Ankit Gupta – CE18M062 IIT Madras, Chennai-36
 Mini Project 1 Report

The Report summarises the findings of the detailed analysis on two infrastructure projects, one in water supply
sector and the other in transportation sector. The methodologies used in analysing the economic feasibilities
of different alternative plans have been explained in detail. Discussions have been presented based on a
wholistic approach by taking into consideration the background of other social, environmental, political,
technical and legal feasibility issues as well. Recommendations and suggestions on how to carry out the
projects have been proposed with the least risk alternatives in mind.

The project seeks to deliver water to an elevation of 110 m. After a detailed assessment of the site, three
feasible options have been put forth namely:

Plan A - Pumping directly from a stream at an elevation of 100 m.

Plan B - Diverting water from an upstream location on the stream via a canal.
Plan C - Building a diversion dam to raise the water level by 5 m and use a canal of reduced length.

Available Data:

An illustrative sketch of the site is depicted in the figure below:

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The monthly water requirements are listed below:

Plan A - Pumping Station:

Capacity = 15*Q*H, where Q is the flow rate and H is the gross head in m.

The station has to be designed for the highest flow rate of 15 cum/s while the gross head is fixed.

Q = 15 cum/s and H = 10 m.

Design Capacity = 2250 kW.

Investment Cost = Rs 1200/kW * 2250 kW = Rs 27,00,000

Month Number of Flow Capacity=15QH=150Q Energy (Capacity*Number of

Days (Q) (kW) Days* 24 hours/day) (kWh)
April 30 3 450 324000
May 31 6 900 669600
June 30 10 1500 1080000
July 31 15 2250 1674000
August 31 13 1950 1450800
September 30 8 1200 864000
Total 6062400

Annual Operations and Maintenance cost = Rs 0.1/kWh * 6062400 kWh = Rs 6,06,240.

The present worth (PW) of this investment is therefore Rs 27,00,000 + Rs 6,06,240 * (P/A, 8%, 25) = Rs
27,00,000 + Rs 6,06,240 * 10.674 = Rs 91,71,005.76

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Plan B - Canal:

For a given canal capacity, its cross-section and cost decrease with increasing slope. The minimum length of
canal corresponding to a slope of 0.0001 is 10 km measured from the intake point on the stream to the point
of delivery. The slope of the stream is 0.001 as depicted in the above figure. An increase in slope requires a
longer canal in order to reach far enough upstream.

Listed below are the canal costs:

Since a flow of 15 cum/s has to be achieved in the month of July, only the rightmost column of the above table
will be used for design. Moreover, the slope of the canal cannot be equal to the slope of the river as that would
imply that they would never meet. From the geometry of the site, it was found that:

Length of canal = Gross height / (slope of river - slope of canal) ----- (1)

Slope of river = 0.001 and Gross height = 10 m

Slope of canal Length (from 1) in Cost per km Cost = Cost per

km km*Length
0.0001 11.11111 210000 2333333
0.0002 12.5 154000 1925000
0.0003 14.28571 123000 1757143
0.0005 20 95000 1900000
0.001 NA NA NA

The canal with slope of 0.0003 turned out to be the most economical option. The Present Worth of this
investment is Rs 17,57,143, which is significantly lower than that of the pumping station.

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Plan C - Diversion Dam + Canal

A diversion dam can be used (which will raise water level by 5 m) in conjunction with a canal.

Cost of diversion dam = Rs 5,00,000

Here, Slope of river = 0.001 and Gross height = 5 m

Slope of canal Length (from 1) in Cost per km Cost = Cost per

km km*Length
0.0001 5.555556 210000 1166667
0.0002 6.25 154000 962500
0.0003 7.142857 123000 878571.4
0.0005 10 95000 950000
0.001 NA NA NA

The canal with slope of 0.0003 turned out to be the most economical option. The Present Worth of this
investment is Rs 8,78,571.4 + Rs 5,00,000 = Rs 13,78,571.4, which is lower than the previous scenario.

A graphical representation of the cost comparison is presented in a bar chart given below.

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Discussions:

The cost comparison chart given above clearly indicates that PLAN C is the more economically feasible
option, however the economic feasibility of a plan alone does not guarantee the overall success of a project.
There are several other considerations that come into picture. For instance,

➢ The Social Impact caused due to the construction of a dam that displaces several villages near the
locality of the project must be evaluated.
➢ The Environmental Impact associated in the damage caused to flora, fauna and the ecological system
must be addressed.
➢ The Legal feasibility of the project is a major concern as the acquisition of the farmlands and native
lands for construction of a dam will not be welcomed by the local public.
➢ The Political willingness for the project can make or break the project as the construction period of a
dam is generally longer than that of a canal or pumping station and hence the political parties may not
encourage it if it cannot be completed within the elections.
➢ The Technical expertise required to construct a dam, irrespective of the mode of delivery be it PPP,
EPC, is quite high and the central government may not be willing to place trust on the local
municipality in delivering the project.
➢ The Financial feasibility of a project with such complications listed above becomes a difficulty as
all the financers who are aware of the risks involved may not be willing to invest in the project.

The above-mentioned feasibilities are to be assessed not just for the dam project but also for the other
alternatives as well. No project can be completed without a negative impact, however a reasonable trade
off or benefit to cost not just financially but also socially, environmentally must be achieved.

Recommendations:

➢ A Detailed Project Report must be made for all the alternatives of the Water Supply Project not just
by considering the Economic feasibility but also the Social, Environmental, Legal feasibility of the
project.
➢ Engaging all the stakeholders including the local public and NGO’s at the very early planning stages
and getting necessary clearances and permits can ensure smooth completion of the project.
➢ However if there is not sufficient time for detailed planning and the project must be executed right
away, PLAN B – Diverting water from an upstream location via a canal, although a slightly more
expensive option when compared to PLAN C, is recommended as it involves lower risks and hence is
more likely to complete on time and within budget.

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 Mini Project 1 Report

The project aims on converting an existing two-lane roadway to a four-lane freeway, in order to handle the
larger volume of traffic expected from the expansion of a regional airport. Traffic volumes are projected to be
57,000 passenger vehicles and 3,000 trucks per day.

Three plans are being considered for the conversion namely,

Plan A – Addition of 2 new adjacent lanes.

Plan B - Upgradation of the existing 2 lanes and addition of 2 new adjacent lanes.

Plan C – Construction of a new four-lane highway with a new alignment.

The Incremental Analysis methodology was adopted for comparison of the alternatives by measuring how the
Investments and returns perform over a period of time and to come up with the most economical alternative.
The Incremental Rate of Return for multiple alternatives have been measured and compared with the
Minimum Acceptable Rate of Return (MAAR = 8%) to determine the most economically viable option.

The costs common to all plans are given below:

Traffic volume for autos Ta = 57000

Traffic volume for Trucks Tt = 3000
Incremental operating cost (autos): Ia = 18 paise per mile
Incremental operating cost (trucks): It = 54 paise per mile
Value of time savings (autos): Va = 9 paise per minute
Value of time savings (trucks): Vt = 45 paise per minute
Average accident cost: Ac = 3600 Taken as avg. annual cost
MARR M = 8 %
Service Life S = 25 Year

Estimates and calculations for the existing and alternative plans are given below.

2 New
Description Existing Plan A Plan B Plan C
Lanes
Annual Maintenance Cost (Rs./Lane-mile) 4500 3750 8250 3000 3000

Annual Maintenance Cost (RS) 90000 75000 165000 120000 123600

Accident rate (per million vehicle miles), A 4.58 2.5 3.54 2.4 2.3
Annual Money spent on accident,
3610872 1971000 2790936 1892160 1867719.6
A*Ac*L*Ta/1000000
Construction cost (Rs./mile), Cc 0 750000 750000 1950000 2400000

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Net worth of construction cost (Rs) 0 7500000 15000000 78000000 98880000

Reduction in travel time for auto(minutes),
0 2 2 3 5
Ra
Reduction in travel time for trucks(minutes),
0 1 1 3 4
Rc
Annual Money saved from reduction in time
0 3744900 3744900 5617350 9362250
in auto, Va*Ta*Ra/100

Annual Money saved from reduction in time

0 492750 492750 1478250 1971000
in trucks, Va*Ta*Rc/100

Total Annual Money saved from

0 4237650 4237650 7095600 11333250
reduction in time
Incremental operating cost (Auto) 0 37449000 37449000 37449000 38572470

Incremental operating cost (truck) 0 5913000 5913000 5913000 6090390

Total Incremental operating cost 0 43362000 43362000 43362000 44662860

Length (miles), L 10 10 10 10.3

Life, T 25 25 25 25

No of Lanes, N 2 4 4 4 4

The summary of the costs calculated that are used for the comparative analysis is tabulated below.

Description Existing Plan A Plan B Plan C

Net worth of construction cost (Rs) 0 15000000 78000000 98880000
Annual Maintenance Cost (Rs) 90000 165000 120000 123600
Annual Money spent on accident 3610872 2790936 1892160 1867719.6
Total Annual Money saved from reduction in time 0 4237650 7095600 11333250
Total Incremental operating cost 0 43362000 43362000 44662860

The costs analysis of PLAN A is tabulated below,

Year
Cash Flows, Rs.
0 1 2 ... .... 24 25
Construction Cost 15000000
Maintenance Cost 165000 165000 165000 165000 165000 165000
Operating Cost 43362000 43362000 43362000 43362000 43362000 43362000
Accident Cost 2790936 2790936 2790936 2790936 2790936 2790936
Savings -4237650 -4237650 -4237650 -4237650 -4237650 -4237650
Total 15000000 42080286 42080286 42080286 42080286 42080286 42080286

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The costs analysis of PLAN B is tabulated below,

Year
Cash Flows, Rs.
0 1 2 ... .... 24 25
Construction Cost 78000000
Maintenance Cost 120000 120000 120000 120000 120000 120000
Operating Cost 43362000 43362000 43362000 43362000 43362000 43362000
Accident Cost 1892160 1892160 1892160 1892160 1892160 1892160
Savings -7095600 -7095600 -7095600 -7095600 -7095600 -7095600
Total 78000000 38278560 38278560 38278560 38278560 38278560 38278560

The costs analysis of PLAN C is tabulated below,

Year
Cash Flows, Rs.
0 1 2 ... .... 24 25
Construction Cost 98880000
Maintenance Cost 123600 123600 123600 123600 123600 123600
Operating Cost 44662860 44662860 44662860 44662860 44662860 44662860
Accident Cost 1867720 1867720 1867720 1867720 1867720 1867720
Savings -11333250 -11333250 -11333250 -11333250 -11333250 -11333250
Total 98880000 35320930 35320930 35320930 35320930 35320930 35320930

Incremental Analysis

Plan A vs Plan B
Year
Cash Flows, Rs.
0 1 2 ... .... 24 25
Plan A 15000000 42080286 42080286 42080286 42080286 42080286 42080286
Plan B 78000000 38278560 38278560 38278560 38278560 38278560 38278560
Plan B - Plan A 63000000 -3801726 -3801726 -3801726 -3801726 -3801726 -3801726
IRR 3%

Plan B vs Plan C
Year
Cash Flows, Rs.
0 1 2 ... .... 24 25
Plan B 78000000 38278560 38278560 38278560 38278560 38278560 38278560
Plan C 98880000 35320930 35320930 35320930 35320930 35320930 35320930
Plan C - Plan B 20880000 -2957630 -2957630 -2957630 -2957630 -2957630 -2957630
IRR 14%

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Plan A vs Plan C
Year
Cash Flows, Rs.
0 1 2 ... .... 24 25
Plan A 15000000 42080286 42080286 42080286 42080286 42080286 15000000
Plan C 98880000 35320930 35320930 35320930 35320930 35320930 98880000
Plan C - Plan A 83880000 -6759356 -6759356 -6759356 -6759356 -6759356 83880000
IRR 6%

Therefore, Plan A is more economically viable option.

A sensitivity analysis was also performed to estimate the effect of different interest rates.

Sensitivity Analysis
Interest rate PW (Plan B- Plan A) PW (Plan C- Plan A)
1% ₹ 2,07,26,003.63 ₹ 6,49,82,358.43
2% ₹ 1,12,22,832.09 ₹ 4,80,86,000.46
3% ₹ 32,00,016.32 ₹ 3,38,21,671.29
4% -₹ 36,09,132.50 ₹ 2,17,15,206.05
5% -₹ 94,18,684.50 ₹ 1,13,85,994.40
6% -₹ 1,44,01,182.53 ₹ 25,27,260.26
7% -₹ 1,86,96,269.84 -₹ 51,09,277.96
8% -₹ 2,24,17,425.82 -₹ 1,17,25,383.25
9% -₹ 2,56,57,243.73 -₹ 1,74,85,683.68
10% -₹ 2,84,91,580.96 -₹ 2,25,25,051.46

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Discussions:

The cost analysis clearly indicates that Plan A – addition of two new lanes to the existing two-lane roadway
is the most economically viable option. However as discussed in the previous water supply project, economic
feasibility of a project alone cannot be the deciding factor in choosing the most optimum plan. Other
feasibilities that are discussed below must be considered for better decision making. Plan A and Plan B can
be classified as brownfield extension projects where new lanes are added adjacent to the existing project,
whereas Plan C is a greenfield construction project as it involves the construction of a new four lane highway
with a new alignment.

➢ The Legal Challenges faced in land acquisition for a greenfield highway project like Plan C is of
greater magnitude than that of a brownfield project like Plan A or B.
➢ The Environmental Impact associated in the damage caused to flora, fauna and the ecological system
for creating a new alignment as per Plan C will be higher and must be evaluated.
➢ The Political willingness for Plan C might be low as constructing a new four lane highway will take
a much longer period of time and hence political parties may not encourage a project that might not
get completed within the current election cycle.
➢ The Social Impact caused due to a new alignment from Plan C that might pass through farmlands or
households may not be encouraged by the local public and will be difficult to justify when alternate
options like Plan A or Plan B is available.
➢ The Technical expertise required to create a new alignment for Plan C, irrespective of the mode of
delivery be it PPP, EPC, is quite high and the central government may not be willing to place trust on
the local municipality in delivering the project.
➢ The Financial feasibility of a project with such complications listed above becomes a difficulty as
all the financers who are aware of the risks involved may not be willing to invest in the project and
Plan C might not kick off unless other Plans A or B are proved not feasible.

No project can be completed without a negative impact, however a reasonable trade off or benefit to cost
not just financially but also socially, environmentally must be achieved.

Recommendations:

➢ In this scenario Plan A which is the more economically viable when compared to Plan B and Plan C,
also seems to be the more environmental, legal, technical and financially feasible option.
➢ However, if the safety and comfort of the passengers is of top priority and the additional funds required
to execute Plan B can be arranged, then it is advisable to go for Plan B which will be more beneficial
in the longer run.

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