This document discusses Korea's experience achieving value for money in infrastructure projects. It outlines Korea's process for appraising infrastructure projects, which includes conducting background studies, policy and economic analyses, and assessing environmental and social factors. The policy analysis examines factors like employment effects, project financing risks, and environmental impacts. It also evaluates regional economic impacts and ensures balanced regional development. The appraisal process aims to select projects that provide the highest social and economic benefits relative to costs.

1. VALUE FOR MONEY IN INFRASTRUCTURE –
KOREAN EXPERIENCE
October 10, 2023
OECD SOUTHEAST ASIA REGIONAL PROGRAMME (SEARP)
7TH OECD REGIONAL POLICY NETWORK MEETING ON
SUSTAINABLE INFRASTRUCTURE

2. VALUE FOR MONEY IN INFRASTRUCTURE – KOREAN
EXPERIENCE
2
Appraisal
Mechanism
(Preliminary Feasibility
Study)
Environmental and
social factors in the
appraisal

3. Achieving value for money in infrastructure investment: PROCESS
3
3
-legal eligibility
-urgency
-concreteness
of project plan

4. 4
Achieving value for money in infrastructure investment: CRITERIA
Project proposal
• Review of statement of purpose
• Collect socio-economic, geographic,
and technical data
• Brainstorming (Other Alternatives)
• Issues raised
Background study
• Conditions for implementation
(Consistency with higher-level
plan and policy directions)
• Policy effects
(Employment, environment, safety,
betterment of living conditions)
• Project-specific evaluation item
Policy analysis
• Demand analysis
• Cost estimation
• Benefit estimation
• Cost-benefit analysis
• Sensitivity analysis
• Financial analysis
Economic analysis
• Overall feasibility
• Policy suggestion
Analytic Hierarchy Process
• Regional backwardness index
analysis
• Regional economic impacts
Balanced regional
development analysis

5. 5
Project sector Environmental value assessment items
Road & Rail
(Transportation)
• Air pollution reduction (including greenhouse gases) benefits
• Noise reduction benefits
• Water pollution reduction benefits
• Environmental cost savings benefits from electrificationprojects
Harbor/Port
• Environmental cost-saving benefits in the logistics network
• Environmental cost-saving effects from reduced transportation distance
• Environmental cost-saving effects from fuel conversion
Water Resources • Water quality improvement benefits from improved water usage
Environmental Facilities
• Water environment improvement benefits
• Odor improvement benefits
• Greenhouse gas and air pollution reduction benefits
• Water resource saving benefits
Land & Urban Development • Benefits from urban parks and green areas
Energy & Resource Development
• Air pollution improvement benefits
• Greenhouse gas reduction benefits
Note:Appliedconsideringthe characteristicsof individualprojectsin the actualfeasibilitystudy.
Source:KDI, "A Study onIncorporationof EnvironmentalValuesin FeasibilityAssessments,"2022..
Assessing social and environmental factor in feasibility appraisal:
ECONOMIC ANALYSIS

6. 6
Assessing social and environmental factor in feasibility appraisal:
POLICY ANALYSIS (1)
Financing risk
Policy Analysis
Project-specific
factors
External conditions, e.g.
acceptance by local residents
Internal conditions, e.g. coherence
with higher-level plans
Conditions to
implement
Employment effect
Impact on betterment of life
Environmental impact assessment
Safety assessment
Policy effect
(social values)
Other project-specific item

7. 7
Assessing social and environmental factor in feasibility appraisal:
POLICY ANALYSIS (2)
Financing risk
Policy Analysis
Project-specific
factors
External conditions, e.g.
acceptance by local residents
Internal conditions, e.g. coherence
with higher-level plans
Conditions to
implement
Employment effect
Impact on betterment of life
Environmental impact assessment
Safety assessment
Policy effect
(social values)
Other project-specific item

8. 8
Achieving value for money in infrastructure investment: STRUCTURE
Economic Analysis Policy Analysis
Policy effect (social values)
Internal
conditions,
e.g.
coherence
with
higher-level
policies
Employment
effect
Impact
on
betterment
of
life
Environmental
impact
assessment
Safety
assessment
Regional
economic
impacts
Regional
backwardness
analysis
Level 1
Level 2
Level 3
AHP
Balanced Regional
Development Analysis
Other
project-specific
item
Financing
risk
Conditions to implement
Project-specific
factors
External
conditions,
e.g.
acceptance
by
local
residents
(Capital Area: 60~70%)
(Non-capital Area: 30~45%)
(Capital Area: 30~40%)
(Non-capital Area: 25~40%)
(Non-capital Area: 25~40%)
Project Implementation Status Quo
Alternatives

9. 9
Achieving value for money in infrastructure investment:
LESSONS LEARNED

10. THANK YOU