KOTI - Korea Transport institute

The Korean government is institutionalizing an investment appraisal system that requires the evaluation of state projects through various stages such as conception-phase feasibility assessment, preliminary feasibility analysis, feasibility evaluation, design development & construction document, and ex-post evaluation. The actual decisionmaking process for project implementation, however, is focused on preliminary feasibility analysis, thus making it difficult for each competent ministry or agency to properly execute the functions of their own feasibility evaluations. In an effort to improve investment efficiency in traffic facilities, the Ministry of Land, Infrastructure and Transport has recently been pursuing a policy aimed at raising the effectiveness of feasibility evaluation and intensifying mid-project assessment. As a way to increase the effectiveness of feasibility appraisal, the National Integrated Transport Efficiency Act stipulates that the costs for outsourcing relevant services be publicly announced. Yet, the government has so far applied the “standards regarding payment related to construction technology services,” which are based on the Construction Technology Promotion Act, in paying for such services. With regard to this practice, the Traffic Facility Investment Evaluation Association raised an issue, pointing out that the “standards” had been set too low for the transport sector. In order to address this problem, the association has come up with a new “(draft) proposal for feasibility evaluation outsourcing costs.” Before posting the proposed costs, it is necessary to deal with the overlapping functions between the feasibility evaluation scheme for state projects and the feasibility analysis system based on the Construction Technology Promotion Act. There is also a need to readjust the levels of outsourcing costs. This study presents a solution devised through analysis of the adequacy of the proposed outsourcing costs and the “payment standards for construction technology services” as well as through questionnaire surveys of experts and the operation of a task force team. I expect that estimation of reasonable outsourcing costs for traffic demand prediction and feasibility evaluation services through the cost posting system will contribute to enhancing investment efficiency in traffic facilities. I also hope that the outcome of this study will help improve the effectiveness of feasibility evaluation, thereby contributing to enhancing the efficiency of traffic facility investments and raising the level of reliability of traffic demand predictions.