An alternative approach to project selection : the infrastructure prioritization framework

Abstract

Governments must decide how to allocate limited resources for infrastructure development, particularly since large financing gaps have been projected for the coming decades. Social cost-benefit analysis (SCBA) provides sound project appraisal and, when systematically applied, a basis for prioritizing projects. However, in some instances, capacity and resource limitations make extensive economic analyses across full project sets unfeasible in the immediate term. This paper responds to a need for expanding the available set of tools for project selection by proposing an alternative prioritization approach that is consistent and systematic, yet pragmatic and feasible within the current resource means of government. The Infrastructure Prioritization Framework (IPF) is a multi-criteria decision support tool that considers project outcomes along two dimensions – social-environmental and financial-economic. When large sets of small- to medium-sized projects are proposed, resources for implementation are limited, and basic project appraisal data (but not full SCBA) are available, IPF can be used to inform the selection of projects by combining selection criteria into social-environmental and financial-economic indices. These indices are used to plot projects on a Cartesian plane, and the sector budget is imposed to create a project map for comparison along each dimension. IPF is structured to accommodate multiple policy objectives; attend to social and environmental factors; provide an intuitive platform for displaying results; and take advantage of available data whilst promoting capacity building and data collection for more sophisticated appraisal methods and selection frameworks. Decision criteria, weighting, and sensitivity analysis should be decided and made transparent in advance of selection, and analysis should be made publicly available and open to third-party review.