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Project selection and prioritisation

Context

This area of work supports countries in the implementation of the second and eighth pillar of the OECD Recommendation of the Governance of Infrastructure (2020). It encourages them to 1) apply rigorous project appraisal and selection processes that pay due consideration to social and economic efficiency and take into account the full asset cycle; 2) base infrastructure decision-making on data, by putting in place systems ensuring a systematic collection of relevant data and institutional responsibility for analysis, dissemination, and learning.

USE OF A FORMAL PROCESS TO EVALUATE VALUE FOR MONEY IN INFRASTRUCTURE PROJECTS IN OECD COUNTRIES (2020)

Why is this important?

In achieving specific policy goals, selecting projects among the many identified investment possibilities presents countries with a big challenge. Embedding evidence-based project selection and prioritisation processes in government decision-making ensure value for money, affordability of infrastructure projects for the public budget and users, and minimal sustainability risks. These methodologies are indispensable to improve the investment decision-making process to ensure accountability, clarity and transparency.

•  Evidence-based infrastructure decision-making maximises accessibility and quality of infrastructure services. For a sound technical appraisal process, cost-benefit analysis methodologies require consideration of both monetised and non-monetised impacts.

•  Supplementing cost-benefit analysis with other methodological tools to accommodate multiple objectives and uses has become increasingly important. This helps duly consider strategic policy goals and impacts that are difficult or even impossible to quantify (e.g., gender equality, inclusiveness, resilience).

•  Infrastructure projects often generate broader, indirect economic benefits that are not considered in standard cost-benefit analysis. Integrating these wider economic impacts in project decision-making, in particular for non-marginal or transformative projects can facilitate better-informed decision-making.

•  Using robust, independent evidence-based analysis ensures that the decision on the delivery mode is grounded in value for money and optimal allocation of risk between the parties. It prevents institutional, procedural, fiscal or accounting biases for any particular delivery mode.

METHODOLOGIES USED BY OECD COUNTRIES TO ASSESS INFRASTRUCTURE PROJECTS (2020)