Guidlines for the choice of economic public infrastructure projects

Abstract

This article provides guidelines for selecting public infrastructure projects based on economic criteria. Project evaluation, selection and prioritisation criteria are listed, followed by a description of the way in which the result of each evaluation technique should be interpreted. Criteria that should be adhered to in the selection of mutually exclusive projects and the prioritisation of functionally independent projects in order to maximise net social benefit in the long run are supplied. Application of the proposed investment decision rules is illustrated through the use of examples. Two techniques are proposed that can be used as additional decision-making instruments when evaluated projects show similar degrees of long-term economic viability.