UNIVERSITY OF GHANA LEGON.

FACULTY OF SOCIAL STUDIES

DEPARTMENT OF ECONOMICS

COST BENEFIT ANALYSIS ON THE BUS RAPID TRANSIT (BRT) PROJECT:

A CASE STUDY OF THE ACCRA – KASOA ROUTE

A GROUP PROJECT SUBMITTED TO THE DEPARTMENT OF ECONOMICS IN

FULFILMENT OF A COURSE REQUIREMENT, ECON407: COST & BENEFIT ANALYSIS II

GROUP 10 MEMBERS

BOATENG ANTHONY 10305920

TETTEH EMMANUEL KWABLAH 10315766

ADDISON GIDEON 10302241

FRANCE-MENSAH NANA APPIAWAH 10305575

APPIAH JAMES 10300524

MAY 2013

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 DECLARATION

We declare that, we as a group have been under the supervision, undertaken he study herein
submitted.

NAMES SIGNATURES DATE

BOATENG ANTHONY ………………….. …..…………

TETTEH EMMANUEL KWABLAH ………………….. .…..…………

ADDISON GIDEON ...……..………… .…..…………

FRANCE-MENSAH NANA APPIAWAH ………………… ..…………….

APPIAH JAMES …………………. ………………

Signature: ……………………………… Date: ……………………

Mr EMMANUEL ADU DANSO

Supervisor

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 DEDICATION

In recognition of their deep appreciation for education and of their love and support, we dedicate
this to our parent.

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 ACKNOWLEDGEMENT

Our foremost appreciation goes to God Almighty for His guidance and protection throughout our
studies.

Besides, this study would not have been possible without the able supervision of Mr Emmanuel
Adu Danso of University of Ghana, Department of Economics. May the Almighty God bless you
and replenish your efforts and time devoted into this study.

Special thanks go to Mr Kojo Antwi of the Ministry of Road and Highway, Department of Urban
Roads, Project Advisory Office and his team for providing us with information and technical
insight to the project.

And also we would like to extend our gratitude to Mrs Korama Ocran of AMA, Bus Rapid
Transit Unit for her information provided.

God bless you all.

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 ABSTRACT

The purpose of this study is to ascertain an economic Cost-Benefit Analysis (CBA) on the
proposed Bus Rapid Transit (BRT) project on the Accra – Kasoa pilot route. A BRT emulates all
the features of a modern rail based mass transit system. The system is one of many possible
intervention government can implement to help curb the problem of traffic congestion in city
associated with emission of carbon dioxide into the atmosphere, these other systems include
underground rail, water transport, tram and monorail systems.

However the BRT system can achieve same result with only a fraction of cost of the other
systems. It involves the integration of the BRT lane into the existing road space.

The study explores all the possible benefit and cost of implementation and operationalization of
the BRT system and to ascertain it whether the project is worthwhile and should to be continued.

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 TABLE OF CONTENT

PAGE

Title …………………………………………………………………………………... i

Declaration …………………………………………………………………………... ii

Dedication …………………………………………………………………………… iii

Acknowledgement …………………………………………………………………… iv

Abstract ……………………………………………………………………………… v

Table of Content …………………………………………………………………….. vi

List of Tables ………………………………………………………………………. viii

List of Figures ……………………………………………………………………… viii

Abbreviations ………………………………………………………………………… ix

Chapter 1 Introduction 1

1.1 Background to the study ………………………………………………. 1

1.2 Justification of the study ………………………………………………. 3
1.3 Objective of the study ………………………………………………….. 4
1.4 Methodology of the study ……………………………………………… 5
1.5 Organisation of the study ……………………………………………… 5

Chapter 2 Element of Project Appraisal 6

2.1 Introduction …………………………………………………………. 6

2.2 Institutional Appraisal ……………………………………………… 6
2.3 Financial Appraisal …………………………………………………. 10
2.4 Technical Appraisal ………………………………………………… 13
2.5 Socio-cultural Appraisal …………………………………………….. 15
2.6 Economic Appraisal ………………………………………………… 17
2.7 Environmental Appraisal …………………………………………… 18
2.8 Conclusion ………………………………………………………….. 18

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Chapter 3 Element of Cost and Benefit 19

3.1 Introduction …………………………………………………………. 19

3.2 Element of Benefit …………………………………………………. 19
3.3 Element of Cost ……………………………………………………... 27
3.4 Conclusion ………………………………………………………….... 31

Chapter 4 Project Evaluation 32

4.1 Introduction …………………………………………………………… 32

4.2 Choice of investment criteria and justification ……………………… 32
4.3 Evaluation Parameter ………………………………………………… 34
4.4 Computation …………………………………………………………. 35
4.5 Conclusion …………………………………………………………….. 36

Chapter 5 Conclusion and recommendation 37

5.1 Introduction ……………………………………………………………… 37

5.2 Summary conclusions …………………………………………………… 37
5.3 Recommendations ………………………………………………………. 38
5.4 Limitation of the study …………………………………………………… 39
5.5 Conclusion ………………………………………………………………... 40

APPENDIX A – Project Model Design …………………………………………….. 41

APPENDIX B – Map of the Accra- Kasoa Route ………………………………….. 42

REFERENCES ………………………………………………………………………. 47

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 LIST OF TABLES

1.1 BRT Breakdown ……………………………………………………… 2

2.1 Project cost component ………………………………………………… 11

2.2 Project Financing ………………………………………………………. 12

3.1 Breakdown of the estimated Revenue Generation ……………………. 20

3.2 Breakdown of the estimated value of travel time saved ………………… 21

3.3 Component of Estimated value of Jobs to be created …………………… 25

3.4 Cost of the Project ……………………………………………………….. 28

3.5 Estimated Maintenance Cost Project …………………………………..... 29

4.1 Computations A Using NPV Criteria ……………………………………. 35

LIST OF FIGURES

1.1 Urban Demography Problem in 1985 and 2000 …………………………… 2

1.2 Road space Usage (CBD -Kasoa) …………………….................................. 4

2.1 Institutional arrangements for the 1st and 2nd year ………………………….. 9

2.2 Institutional arrangements for the 3rd year and beyond …………………….. 10

3.1 A hypothetical example on congestion ……………………………………... 23

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 ABBREVIATIONS

AFD------------------------------------Agence Francaise de Development

BCR------------------------------------Benefit Cost Ratio

BRT------------------------------------Bus Rapid Transit

CBD------------------------------------Central Business District

CO2-------------------------------------Carbon Dioxide

CUT------------------------------------Center for Urban Transport

DR--------------------------------------Discount Rate

DUR------------------------------------Department of Urban Road

EMP------------------------------------Environmental Management Plan

ESMP----------------------------------Environmental Social Management Framework

GAMA---------------------------------Greater Accra Metropolitan Assembly

GEF-------------------------------------Global Environment Facility

GHG------------------------------------Green House Gases

GOG------------------------------------Government of Ghana

GPRTU---------------------------------Ghana Private Road Transport Union

IDA-------------------------------------International Development Bank

MILGRE-------------------------------Ministry of Local Government, Rural Development and Environment

MMDAs--------------------------------Metropolitan Municipal District Assemblies

MOT------------------------------------Ministry Of Transport

MRH------------------------------------Ministry Of Road and Highways

NPV-------------------------------------Net Present Value

PAD-------------------------------------Project Appraisal Document

PAO-------------------------------------Project Advisory Office

PIM-------------------------------------Project Implementation Management

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PPI--------------------------------------Potential Pareto Optimality

RAP-------------------------------------Resettlement Action Plan

RPF-------------------------------------Resettlement Policy Framework

UPTUs---------------------------------Urban Project Transport Units

UTAC----------------------------------Urban Transport Advisory Committee

UTP------------------------------------Urban Transport Project

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Over the past two decades, various countries around the world have come up with new and
ingenious ways of tackling issues associated with urbanization which include traffic
congestion at the major capital hub of the country. One of such systems is the provision of
devoted lane that delivers fast, comfortable, reliable, safe and cost effective urban mobility,
the Bus rapid transit system. The Bus Rapid Transit (BRT) system historically started in
1970’s in several Brazilian cities including Curitiba. Curitiba developed the first model for
BRT systems. Although their initial experiences were highly successful, the system was not
replicated in other cities because planners assumed that these systems were unique for
conditions of Brazilian cities. Twenty years later, BRT gained momentum with planners in
Bogota successfully replicating the system with several innovations. Bogota’s success
influenced the spread of the system as major public transport in cities like Delhi in India,
Jakarta, Indonesia (2004), all in Asia and also in Africa, the city of Lagos- Nigeria (2008)
and Johannesburg-South Africa (2009).

Owing to high population in the capital, Accra( about 5 million), coupled with the expected
population growth in the Greater Accra Metropolitan Assembly (GAMA), i.e. the population
is likely to double in 15-20 years, and the increasing number of vehicles in Accra, it is
estimated that this is likely to increase to five folds in 15-20yrs as a result of improved
economic well-being, continuous urban sprawl and reducing population density has made
the implementation of the BRT system crucial to easing the traffic condition in Accra.
(Source: PAD page 1 DUR)

Statistics at the Department of Urban Roads indicate that approximately 10,000 vehicles
enter the central area of Accra and the Ring Road during the morning peak hours, and on a
typical weekday, 270,000 vehicular trips are made into and out of the Accra central area.
The figure1.1 shows the Urban Demographic problem in (GAMA) in 6th march 1985 on the
left and 4th February 2000 on the right.

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Figure 1.1 Urban Demography Problem in 1985 and 2000

Source: Department of Urban Roads

The Bus Rapid Transit (BRT) forms part of the urban transport project and involves the
creation of dedicated bus routes from Kasoa in the Central Region to the Central Business
District (CBD). Estimated to cost US$95 million, it is aimed at reducing vehicular traffic on
the stretch. The BRT will serve a radial arterial route running from the outskirt of Accra to
the Central Business District. It is expected to service over 16,000 peak hour passenger
journeys per direction of travel with bus frequencies of 200 buses per hour at peak periods.
New large buses will replace the existing small buses in the corridor and overall travel time is
expected to be 30 minutes compared with over an hour today.

The project stretches from Kasoa in the Central Region, through Mallam Junction,
Kaneshie, and the Graphic Road to the Central Business District (CBD) in Accra and will
cover a total distance of 22km. There will be Origin Terminals at Kasoa, Gbawe, Awoshie,
Santa Maria and Darkuman. The destinations include Kaneshie, UTC, TUC, and Kwame
Nkrumah Circle. A total number of 12 service routes will be provided. The BRT project will
be constructed in three phrases as shown in the Table 1.1 below.

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Table 1.1: BRT Breakdown

PHRASE Description Length
(km)
LOT 1 Construction of a flyover on the railway -
line and expansion of the Odaw Bridge
on the Graphic road.
LOT 2 Construction of bus lanes from Graphic 22
Road to the Obetsebi-Lamptey Circle
through to the First Light.
LOT 3 Construction of deports, terminals and -
bus stops.
Total 22

The project will be funded by the World Bank, Agence Francaise de Development (AFD),
International Development Bank (IDA) and Global Environment Facility (GEF).

1.2 JUSTIFICATION OF STUDY

In the wake of the current traffic congestion in Accra metropolis which hinders the free
vehicular flow within the Metropolis, the BRT is seen as an alternative to an extensive road
transport systems which is characterized by long waiting periods and travel times,
unscheduled time of departure and arrival, poor quality bus terminal and stops, poor air
quality, increased emissions of Green House Gas (GHG) and old, uncomfortable, poorly
maintained and low capacity vehicles. The BRT system will allow higher capacity with less
land use, less environmental impact and lower cost. It is believed to be environmentally
friendly, saves cost of transportation, decrease traffic congestion, pollution and ensure easy
movement of passenger and goods.

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Information available indicates that Taxi and Cars that carry only 26% of the in bound
passengers to the CBD, utilize a combined total of 55% of the road space, whilst “Trotro”
(mini Buses) and Buses carry 68% of the in bound passengers, only use 32% of the road.
Hence the rational to undertake the BRT project to provide not only efficient road use but
also other benefit mentioned earlier. This is illustrated in figure 1.1 below.

Figure 1.2 Road space Usage (CBD -Kasoa)

Source: Department of Urban Roads

1.3 OBJECTIVE OF THE STUDY

The aim of the study is to ascertain the economic profitability of the proposed BRT project
by using the traditional cost benefit analysis, with the Accra – Kasoa route as a case study,
taking into account the impact to the Ghanaian economy.

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1.4 METHODOLOGY OF THE STUDY

This section includes sources of data and method of data analysis.

1.4.1 SOURCES OF DATA

The data for this study was obtained largely from secondary sources particularly; the
Ministry of Roads and Highway (MRH), Department of Urban Road (DUR), The World
Bank Project Appraisal Document (PAD), and Accra Metropolitan Assembly (AMA) and
personal interviews to be conducted to collect the needed data.

1.4.2 METHOD OF ANALYSIS

Owing to the fact that the BRT Project is being initiated by Government, with the motive to
improve welfare among its citizenry, the appropriate investment criteria chosen is the Net
Present Value (NPV). The NPV is the difference between the Present value of benefits and
the present value of the costs of the project and also the Benefit Cost Ratio (BCR).

1.5 ORGANISATION OF THE STUDY

The study will be organized into five chapters. Chapter one looks at the general introduction
consisting of background of the project, justification of the study, objective of the study and
methodology of the study. Chapter two gives attention to the element of the project appraisal
comprising of technical, institutional, economic, social, financial and environmental
appraisal. Chapter three concentrates on the element of cost and benefit of BRT project.
Chapter four takes a look at the evaluation of the project. The final chapter summarizes the
major findings of the study, including the limitations of the study and recommendation for
policy considerations.

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CHAPTER TWO
2.0 ELEMENT OF PROJECT APPRAISAL
2.1 INTRODUCTION
This section will take a critical look at the systematic process of investigating and reasoning
(conceptually and quantitatively) in order to make an informed and rational choice of the
viability or otherwise of the project in question. The appraisal will include; technical,
institutional, financial, economic, socio-cultural and environmental appraisal.

2.2 INSTITUTIONAL APPRIASAL

Institutional or organizational appraisal as it referred in some books considers the evaluation
of the project management structures to the project. It takes into account the legislative
framework and also ascertains whether the implementing institutions is adequately staffed to
execute the propose project being undertaken by the government. The BRT will be
implemented by the Department of Urban Road (DUR) a subsidiary of the Ministry of Road
and Highway (MRH).

The DUR has dedicated an outfit known as the Project Advisory Office (PAO) in the short
term to perform the function of the Center for Urban Transport (CUT).

The following represents detailed institution and framework that will aid in the successful
implementation and sustainability of the project.

I. Government of Ghana (GOG) has formed an Urban Transport Advisory Committee

(UTAC) to ensure adequate key technical inputs, multi stakeholder consultation,
collaboration, coordination, and information dissemination for urban transport policy
development and implementation. Specific responsibilities include:
a. advising on a common policy and regulatory framework for urban
transportation in Ghana, including target dates for each Metropolitan
Municipal District Assembly (MMMDAs) to pass related regulatory
instruments;

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b. advising Ministry of Local Government Rural Development and Environment

(MLGRDE) on directives to be issued to Metropolitans, Municipals, Districts
and Assemblies (MMDAs) in implementing urban transport policies and
regulations;
c. providing guidance for the set-up and operationalization of CUT and Urban
Project Transport Units (UPTUs); and
d. Reviewing progress made towards achieving the project’s objectives, and
make recommendations for its efficient implementation.

II. Ministry of Transportation (MOT) will have the overall sector responsibility for this
project in close collaboration with Ministry of Local Government, Rural
Development and Environment (MLGRDE). MOT will provide the urban transport
policy framework and carry out project activities related to the setting and
enforcement of the urban passenger transport operator, safety standards, vehicle and
driver standards. MOT will also arrange for the annual audit of the project.

III. DUR (under the MOT) will be the main implementing agency for the project. DUR
will have direct responsibility for project management (including procurement,
safeguards management, financial management, monitoring and evaluation). DUR’s
finance department will oversee all eligible expenditures under the project, in
accordance with systems and procedures acceptable to IDA. It will work in
accordance with the Financial Procedures Manual established for the on-going IDA
financed Road Sector Development Program and ensure robust internal control
arrangements for the project. DUR will also have responsibility for contract
administration of traffic management and BRT infrastructure components of the
project.

IV. MLGRDE has overall responsibility for the regulation of passenger transport in the
urban areas falling under the jurisdiction of MMDAs. MLGRDE (working in close
collaboration with MOT) will ensure that the MMDAs are adequately mandated and

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resourced to undertake their responsibility in the regulation and delivery of urban

transport services. Specific responsibilities include:

a. Overall regulation of urban passenger transport;

b. Collecting and analysing environmental indicators for urban transport;
c. Supporting DUR in ensuring implementation of the Environmental Social
Management Framework (ESMP), Resettlement Policy Framework (RPF),
Environmental Management Plan (EMP) and Resettlement Action Plan
(RAP).
d. Undertaking an Urban Development Plan and a Strategic Environment
Assessment for greater Accra metropolitan area.

V. A PAO has been established within DUR, with key staff, office facilities, and support
services. While the line management of the project will be carried out by the DUR on
behalf of the MOT, the PAO will report to the Director of DUR for all operational
and management issues. Specific responsibilities include:
a. Providing advisory services to the institutions and operators involved in the
implementation of the project; and
b. Providing advisory services in planning, management and regulation of urban
passenger transport. The PAO will form the nucleus of the proposed CUT.

VI. UPTUs will be strengthened to develop the authority and the capacity of MMDAs in
the domain of planning and regulating local passenger transport services at a pace
they can absorb and with support from the project.

A Project Implementation Manual (PIM) will be prepared by DUR (with PAO/CUT support) for:

 institutional coordination and day-to-day execution of the project;

 disbursement and financial management;
 procurement;
 environmental and social guidelines;
 monitoring, evaluation, reporting and communication;

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 such other administrative, financial, technical

 Organizational arrangements and procedures as shall be required for the Project.

The DUR (with PAO/CUT support) will prepare an Annual Work Plan and Budget containing
all eligible expenditures and the percentage of financing of each contract, identified by source.
The Procurement Plan would indicate the source of financing for each contract and the Interim
Financial Report would be adjusted to include the additional information.

(Source: PAD for urban Transport Project page 16-18)

Figure 2.1 Institutional arrangements for the 1st and 2nd year.

(Source: PAD page 58)

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Figure 2.2 Institutional arrangements for the 3rd year and beyond

(Source PAD: page 59)

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2.3 FINANCIAL APPRIASAL

This appraisal focuses on ensuring that sufficient funds are made available to cover the entire
cost of the project. It goes on to study the expected income with respect to the sources and
use of the income. It is an assessment of the already spelt out financial plan which comprises
the total cost of the initial investment (made up of the cost of constructing the BRT),
operational cost, maintenance cost, expected income and sources of funds.

The BRT project is not profit motivated thus not interested in recouping the initial
investment. The project is socially oriented and is concerned with the mobility of people to
and fro the central business district.

2.3.1 INVESTMENT COST

From the financial plan, the total cost of the investment would comprise cost of construction,
maintenance cost. As shown in the table 2.1 below.

Table 2.1: The Project Cost Components

COMPONENT COST (US$m)

Institutional development 14.3
Traffic management 31.0
Pilot bus Rapid Transit (BRT) system 46.0
Integration of transport and Urban development 2.0
Monitoring 1.5
TOTAL 94.8*
* Revised cost from US$90m – US$94.8m

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2.3.2 SOURCES OF FUNDS

The project is jointly financed by the government of Ghana, the word bank, Global
Environmental Facility and the Agence Francaise de Development (AFD). As indicated
in table 2.2 below.

Table 2.2 PROJECT FINANCING

Funding Source Amount (US$m) Status

World bank 45.0 signed

Global environmental facility 7.0 signed
Agence Francaise de development 27.0 AFD Board
(AFD)
Government of Ghana 15.8 MTEF
TOTAL 94.8 -
(Source: PAD)

2.3.3 EXPECTED INCOME

In the initial assessment of the project, the expected income that will be generated was
essentially based on the fares that will be charged per the usage of the road. It was estimated
that 69,400,000 passengers will be using both the feeder and that truck routes on the ratio of
peak sections to the volume of total trip which was 1 to 4. Annual revenue based on the old
fare which was 3000 cedis (old currency) was estimated to be 208,200 million cedis (old
currency) which is equivalent to US$23.13 million

(Source: PAD UTP, [Link] 75)

However based on the current prices of fare along the route due to fuel price increases, the
estimated income that will be generated from the project will be Gh₵ 69,120,000

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2.4 TECHNICAL APPRIASAL

This is an in–depth study to ensure that a project is soundly designed, appropriately

engineered and follows accepted standards. Put another way, such an appraisal determines
whether the pre-requisites of a successful project have been covered and good choices have
been made with regards to Location, Duration, Capital/Labour intensiveness, Ticketing
System, and other factors such as availability of required professionals, technicians and
workers.

The proposed pilot BRT project is a 22kilometre public transport network stretching from
Kasoa to the central business district in Accra. The rationale for choosing such a location (i.e.
Accra-Kasoa road) is due to the fact that during working hours, an estimated number of
8,000 to 10,000 vehicles troop in and out of the CBD. Such situation usually creates heavy
traffic jam and delays movement within the CBD hence slowing down economic activities.
Hence the construction of the BRT would significantly reduce traffic congestion and allow
free flow of vehicular activities in and around the CBD in order to fuel economic activities.

The construction of the project was initially estimated to have duration of five (5) years
spanning from September 2007 to June 2012. However due to external shocks, the project
has suffered some setbacks with regards to the LOT 2 which involves construction of bus
ways. Speaking to Mr Kojo Antwi, a member of the PAO team, he indicated that the main
factor hampering the progress of work was the fact that the initial project design did not
foresee the construction of the bus way to be along the location of utility lines (water and
electricity) hence the need to relocate both lines before the commencement of LOT 2.

With regards to the capital/labour intensiveness, a detailed analysis cannot be made due to
data limitations with regards to the number of capital inputs and manpower employed on the
site. However, a project of this nature usually requires a harmonious combination of both
capital and labour inputs. Labour availability and accessibility is somewhat easier with
regards to the location of the project site. The capital input availability and its accessibility is
dependent on the flow of funds from the various institutions i.e. (GOG, IDA and GEF)

The BRT buses have a capacity of 80-100 passengers during peak periods per bus. The
estimated number of BRT buses to ply the route is 366, however for start 300 buses will be in

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operation. The will four drivers per bus two drivers for the first shift of eight hours and the
other two for another eight hours shift.

The pilot accra-kasoa route will provide 12 service on the stretch. There will also be eight
station

Due to the political sensitivity nature of the project, information with regards to cost
component of input was difficult to obtain.

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2.5 SOCIO-CULTURAL APPRIASAL

This type of appraisal examines the sustainability of the project when there are changes in
government. Furthermore it assesses whether the project is in line with government
programme or agenda and or if the cultural setting conflicts with the objectives of the
project.

The key development objective of the urban transport project is

 To improve mobility in areas of participating MMDAs through a combination of

traffic engineering measures, management improvements, regulation of the public
transport industry, and implementation of a BRT system, and
 To promote a shift to more environmentally sustainable urban transport modes and
encourage lower transport-related GHG emissions along the pilot BRT corridor in
Accra”.

From the objectives above, the project is intended to improve mobility of goods and
passengers through reduction in travel time and vehicle operating cost, and to improve
road safety standards. Thus it doesn’t conflict the cultural settings.

The construction of LOT 1 of the proposed BRT and other projects were featured in the
2013 budget statement. (Paragraph 502)

“In collaboration with the Ministry of Local Government and Rural Development,
the Ministry continued with the Urban Transport project with the objective of
reducing congestion on our roads”.

The BRT project is in line with the government policy of achieving

“80% of all trips in the Urban Area Should be done through public Mass Transit System”
hence the BRT project can play a significant role in achieving this stated objective.

(Source: presentation made by Mr. Kojo Antwi on the BRT)

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Therefore the BRT project is line with the objectives of government and has not been affected by
the changes in governance since it started under the previous administration and being continued
by the current administration.

A survey of 3,000 households coupled with another survey of travel diaries focusing on
school children, market women, and women at maternal health clinics along the pilot BRT
corridor was carried out to study travel patterns of the inhabitants of Accra and establish
baseline data. The findings of the study indicated that the project will benefit the following
groups: children, disabled, women and elderly by responding to their mobility needs. This
project also seeks to provide enhanced and safe emergency access to market places, health
clinics and hospitals with focus on maternal health.

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2.6 ECONOMIC APPRIASAL

It involves a systematic process for examining and analysing all costs and benefits
associated with meeting the objectives of the project. It is a key tool for achieving value for
money and satisfying requirements for decision accountability. It further considers the
effects of the project on the economy as a whole, thus providing the required information to
policy makers at various levels within the government. The economic appraisal takes into
account the costs and benefits of the project valued at efficient prices (constant prices) other
than market prices used in financial markets. Inflation, depreciation, taxes, subsidies,
interest rates and sunk costs are excluded from this appraisal.

This project is expected to increase and upgrade the urban road network of the Ghanaian
economy. The proposed benefits associated with the project include: Reduction in vehicle
operating cost, transport cost savings from diverted freight traffic, time savings, increased
revenue generation to local authorities, increased employment, Increased mobility in the
municipality, reduced vehicular emissions to the environment, travel cost savings, improved
health and good air.

The proposed costs of this project include: Cost of the project, capital reconstruction costs
associated with vehicle operation and travel time, Investment costs based on design,
resettlement cost and utilities relocation cost, demolition of properties and relocation of
utilities, cost of environmental mitigation measures, Supervision cost and cost of
implementation of the project.

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2.7 ENVIRONMETAL APPRAISAL

Environmental appraisal looks at the impact of the project on the environmental conditions.
This may include effect of the weather pattern, the bio-system living organism and the
overall effect on the ecosystem. More specifically the Environment appraisal will focus more
on the emission of GHG which tends to reduce air quality.

One of the key developmental objectives of the project is “to promote a shift to more
environmentally sustainable urban transport model and encourage transport related GHG
emission along the BRT corridor in Accra”. GEF is committing a total of US$5.5million to
evaluate the pre BRT emission and Post BRT emission levels.

The BRT is an environmentally friendly transport system due to the fact that it will reduce
the number of vehicles in plying the route, thus reducing the emission of Carbon dioxide
(CO2) and result in improved air quality.

2.8 CONCLUSION
To sum it up it evident that the BRT project is has the adequate institutional arrangement for
it implementation, it is economically feasible, environmental friendly, technically sound,
financial viable and will enhance the social wellbeing of the inhabitants within the
metropolis’ in question.

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CHAPTER THREE

3.0 ELEMENT OF COST AND BENEFIT

3.1 INTRODUCTION

This section takes into consideration the cost and benefit that will be derived as a result of the
construction and operationalization of the project. This chapter will be organized in three
broad sections, attention will first be given to the benefits accrued to the BRT project and
later proceed to the cost incurred as a consequence of undertaking the project and finally
conclude.

3.2 ELEMENT OF BENEFIT

The benefits of the proposed BRT project can be seen as the advantages that will be owned to
its beneficiaries. The benefit of the BRT will be divided into four major parts which include;
Real Direct Tangibles Benefit, Real Direct Intangibles Benefit, Real Indirect Tangibles
Benefit and Real Indirect Intangible benefits.

3.2.1 REAL DIRECT TANGIBLE BENEFIT

The direct tangible benefit of the project refers to benefits that are in line with the objective
of the project and are tangible because they can be quantified in monetary terms. The
Direct Tangible benefits of the Bus Rapid Transit include; Travel cost savings, revenue
generation and decrease in travel time spent on the Accra- Kasoa stretch.

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A. REVENUE GENERATION
After the BRT project has been constructed, it has the capacity to generate revenue
from buses fares. For simplicity purpose we assume that the fares charged by the
BRT buses will equal the fares charged by private commercial vehicles plying the
Kasoa – CBD route. The current fare charged by the “Trotro” drivers as at April 9th
2013, is Gh₵1.60. With estimated passengers of 43,200,000 per year the total
revenue estimated per year is about Gh₵69,120,000. As indicated in table 3.1
below.

Table 3.1: Breakdown of the estimated Revenue Generation.

Morning peaks Off peaks Evening peak Total

(5:30-9:30am) (9:30am -4:00pm) (4:30-9:30pm) passenger/Bus

passengers/ 160A (½* 80) 40B 160 400

bus/day

Total number Total Total Total income

of buses passengers/day passenger/ year expected/year
In GH₵
300 (300*400 ) 120,000 120,000*360C= 69,120,000
43,200,000 (43,200,000*1.60)

Assumptions

A.
was based on the fact that during peak period either morning or evening the bus will
be full and there might be two bus trips (2*80)=160
B.
during off peak period the value 40 was arrived based on expectation of ½ the peak
period capacity of the buses
C.
Implies the number of days in the year to be 360 not 365 because of low capacity
expected during weekends and holidays.

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B. REDUCTION IN TRAVEL TIME SPENT

One of major concern of the current transportation system in Accra especially
computing from Kasoa and its environs which include Awoshie, Gbawe, to the
Central Business District is the fact that time spent is enormous particularly on peak
periods on weekdays where it takes an hour if not more to commute from Kasoa-to-
CBD, compared to about 30minutes of the Buses of the BRT when implemented.
The decrease in time savings can be measured by using the hourly minimum wage
rate as a proxy, given the estimated total passenger/year derived earlier to be
43,200,000 and assuming 50% of theses total number of passenger works in the
formal sector. Hence the value of travel time saved per year is GH₵6,048,000. The
breakdown is shown in the table below.

Table 3.2: Breakdown of the estimated value of travel time saved.

Minimum wage as at Hourly minimum Value of 30 mins Formal sector
2012 wage value saved workers
4.48A 0.56B 0.28 0.5D
(4.48/8)
Total value of travel saving per year
0.5*0.28*43,200,000C= GH₵6,048,000

Assumptions

A
The minimum wage rate was used as a measure for the value of time spent by
passengers.

B
0.56 was derived by dividing the minimum wage by the total number of hours which is
8hours.
C
43, 200,000 was based on the computation used earlier in revenue generation

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D
If 50% of the total passengers were works in the formal sector where minimum wage

is applied

C. TRAVEL COST SAVINGS

Travel cost saving was merged in revenue generation given we assumed the BRT
fares will be equal to the current mini bus fares. But usually in practice the cost of
the BRT fare is usually lower than the fare of non BRT buses plying the same route.
Hence can be seen as one of the major benefits resulting from the providing a
dedicated route from the Central Business District in Accra to Kasoa in the Central
Region.

3.2.2 DIRECT INTANGIBLE BENEFITS

This category of benefit denotes benefits that are parallel with the project objectives but
cannot be quantified. The direct intangible benefit of the proposed BRT project includes;
improved air quality, reduction in road congestion on the stretch, reduction in accident,
improved comfort, reliability and safety.

A. IMPROVED AIR QUALITY

The poor quality of mini buses in the system has led to the sharp increment in the
emission of GHG gases such as Carbon monoxide and Carbon dioxide (CO2) into
the atmosphere, hence reducing air quality. The BRT buses do not only have high
capacity but are also environmentally friendly in terms of gas emissions. The
regular servicing of the BRT buses will also help reduce the level of gas emissions.
The implementation of the BRT will help reduce cars on the case study stretch due
to high capacity, hence reducing the emission level.

B. REDUCTION IN ROAD CONGESTION

Information available at the DHV in 2004 suggests that more than 70% of all roads
in Accra are congested. Given this background information and the knowledge that
the BRT system has the capacity to commute 16,000 passengers in one direction
with 200 Buses (80 passengers per Bus), compared to the private cars with an

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average of two passengers (not 5 passenger because such cars usually carry only
one passengers maximum two passengers), the bus will carry 80 passengers (which
is equivalent to 40 private cars), reducing traffic congestion on the road.
Figure 3.1: A hypothetical example on congestion
(A) (B)

The buses in (B) above have the same capacity as the vehicles in (A). Approximately, each
vehicle in (A) has a total of 2 passengers on board. A total of 150 vehicles are therefore
required to carry 300 passengers. The 300 passengers can however, be fitted into 3 buses
with a capacity of 100 passengers each. These will therefore foster the faster transportation of
passengers and commodities, hence reducing road congestion.

C. REDUCTION IN ACCIDENT
Owing to the fact that the BRT buses have high capacity and quality, frequent
vehicular breakdowns causing road accident will fall to the barest minimum. The
provision of dedicated routes from CBD to Kasoa will also help reduce accidents on

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the stretch, that is there will be no competition by other road users (i.e. non- BRT
Buses).

D. IMPROVED COMFORT
The BRT system is a mass transit system that delivers fast, comfortable, reliable
safe and cost effective urban mobility. In order to ensure improved comforts of
passengers, the seat of the BRT Buses are designed to allow more space and
exclusive right-of-way lanes, unlike the mini buses that affords limited space for
passengers hence the BRT system improves passengers comfort.

E. IMPROVING RELIABILITY AND SAFETY

BRT system will incorporate into it, one of benefit of a modern rail-based transit
system i.e. an organized schedule system which means that buses departs at
stipulated time and at strict regular intervals say every 15 or 20 minutes whether the
buses are full or not, when compared to current situation of buses departing unless
it is fully loaded with passengers, thus, this can help passengers plan their own
personal schedule and journeys, all things being equal, it results in improved
reliability.

The safety of travellers is assured in that there will be strict adherence to getting on
and off the buses.

3.2.3 INDIRECT TANGIBLE BENEFITS

An indirect tangible benefit of a project is said to be advantage accrued which is
consistent with the aims of the BRT and also can be value using the market prices
available. The indirect tangible benefit of the proposed project is the creation of Job as a
result of construction and implementation of the project.

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A. JOB CREATION
Just like any other construction work, it needs workers which include engineers,
foremen, and heavy equipment operators etc. to be engaged in the actual
construction of the Fly-over, expansion of the Odaw Bridge, construction of Bus
ways, depot, terminal and bus stops at vantage point mention earlier. The second
group for which employment will be needed will constitute those employed after
the completion of the project which includes bus drivers, ticketing service
personnel, cleaning service, traffic police/ warden to prevent encroachment on the
route the buses ply. The will four drivers per bus two drivers for the first shift of
eight hours and the other two for another eight hours shift and with the total of 300
buses hence 1200 drivers.
The total value of jobs to be created is estimated to be Gh₵6,626,000.

Table 3.3 Component of Estimated value of Jobs to be created in GH₵

Quantity Salaries/ Total Salaries Total
person/month /month salaries/year
Drivers 1200 450A 540000 6,480,000
Ticketing 26B 250C 6500 78,000
Cleaners 50D 150E 7500 90,000

Total 1276 850 554,000 6,648,000

Assumption
A.
“450” was ascertained based on information gathered from the GPRTU branch of
Nkrumah circle on the average salary of bus driver with license D is between
GH₵400-GH₵500 per month. Hence an average of GH₵450 is used.
B.
“18” was arrived at based on information that the ticketing personnel at the post is
likely to be two persons, given 13 terminal and bustops all inclusive, 2*13=26.
C.
“250” was based on the current National Service wage per month of GH₵240. To
make room for errors we assumed GH₵250.

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D.
The size of the cleaner service was based on the ratio 1:6 i.e. 1 cleaner is to 6 buses
since the cleaning of the buses will not be done all day.
E.
150 was based on an informal interaction between a cleaner of Jean Nelson Aka Hall
of the University of Ghana, in April 2013, she posits that her salary is between 100
and 200, hence the average of 150 being used

NB

Speaking to Mr Kojo Antwi he stated that such services like the cleaning services and ticketing
will be given on contract by the government hence the contractor is likely to determine the
amount to pay for such services.

3.2.4 INDIRECT INTANGIBLE BENEFITS

The indirect intangible benefit of the planned BRT talks about the secondary benefit that
is as result of the implementation of the project, such benefits are not in line with the
project objectives, which cannot be quantified in monetary terms. Such benefits comprise
of increase Ridership.

A. INCREASE IN PATRONAGE
The BRT will enjoy increase patronage given the benefit such as reliability, more
comfort, fast means of transportation compared to the current situations and the
possibility of lower fares.

3.3 ELEMENT OF COST

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At this section we will devote our attention to the component of the cost that is to be incurred
as a result of the on-going phase and yet to be constructed lots of the project and the overall
operational cost. The cost of the proposed BRT will be arranged into four major components.
This comprises of the following; Direct Tangible Cost, Indirect Tangible Cost, Direct
Intangible Cost and Indirect I intangible Cost.

3.3.1 DIRECT TANGIBLE COST

Direct tangible cost pertains to cost incurred as a direct result of implementing the project
and furthermore such cost incurred can be valued. The direct tangible cost includes; The
Construction Cost of the project.

A. COST OF CONSTRUCTION AND IMPLEMENTATION

The cost of construction applies to the cost incurred in putting up the project. This
cost includes the cost of the actual construction work of the project, Institutional
cost, monitoring cost etc. As shown in the table 3.1 below.
The cost ascertained is the base cost and it excludes support to the Kumasi
Metropolitan Assembly, and Ejisu Juaben District Assembly.

COMPONENT Base COST (US$m) ALT

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Table
A. 3.4 Cost ofDevelopment
Institutional the Project 11.6
 Support to MOT 1.3
 Support to MLGRDE 1.5
 Support to MMDAs 1.8
 Support to PAO/CUT 4.0
 Support to Bus operator 1.0
 Support to DUR 1.5
 Support to MTTU 0.5
B. Traffic engineering, management and safety 25.9
 Traffic mgmt. in Accra MMDAs 11.2
 Area-wide TSC, Accra 8.0
 Traffic enforcement & education 1.5
 Design & supervision 1.2
C. Development of a BRT system 46.0
 BRT infrastructure including interchanges & 40.5
traffic management
 Design & supervision 4.0
 BRT public consultation 1.0
 Operationalizing BRT 0.5

D. Integration of urban development & 2.0

transport planning
E. Outcome monitoring 1.5
 Transport and social impact indicators 0.8
 Environment impact indicators 0.5
 Capacity development indicators 0.2
Contingencies 5
Total 92

3.3.2 INDIRECT TANGIBLE COST

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This component of cost deals with cost incurred that are not a primary to the execution of
the proposed Bus Rapid Transit but nonetheless can be valued since it can be quantified
in monetary terms. This cost includes maintenance cost.

A. MAINTENANCE COST
This applies to the cost that will be incurred to preserve the project on yearly basis.
The maintenance cost will include cost associated with bus way maintenance,
terminal and modal interchanges and stations. The total maintenance cost is US$
1,230,000 in a year. The maintenance cost estimated in the pre-feasibility study of
the project is shown in table 3.5 below.

Table 3.5 Estimated Maintenance Cost Project.

MAINTENANCE COST Cost per unit Quantity Total (US$)
Bus way US$20,000km/lane/year 22km 440,000
Terminal and modal US$150,000/location/year 5 750,000
interchanges
Stations US$5,000/station/year 8 40,000
Total US$175,000 - 1,230,000
SOURCE: PAD page 74

The figure in the table above was based on the initial investment analysis in the Project Appraisal
Document.

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3.3.3 DIRECT INTANGIBLE COST

This deals with the aspect of cost that is suffered during the construction of the project.
Quantifying such cost can be difficult if not impossible, since there exists no market
value for such. The intangible cost to be sustained as a result of the project includes; Air
and Noise pollution and Congestion during construction.

A. AIR AND NOISE POLLUTION

The huge machines such as caterpillars, excavators, cranes, tractors etc. will emit a
lot of dust and Carbon dioxide (CO2) into atmosphere during construction. This will
go a long way to negatively affect the health conditions of the people within the
area of construction. Air-borne diseases such as Tuberculosis, Asthma are likely to
be prevalent due to the pollution of the air.

As a result of the use of the heavy duty machine stated above, a lot of noise will
also be created during the period of the construction. This will therefore adversely
affect the serenity and conduciveness of stay within the construction zone.

B. ROAD CONGESTION
Also as a result of the construction of the bus way, there will be a diversion of
traffic to alternative routes. This transient measure aimed at mitigating the side
effect of the project will however create congestion and eventually increase travel
time during the period of construction.

3.3.4 INDIRECT INTANGIBLE COST

The indirect cost component constitutes cost sustained not as a direct implementation and
operationalization of the BRT of which ascribing monetary values will be impossible if
not difficult. One of such cost associated with the BRT is low patronage for the private
commercial vehicles.

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A. LOW PATRONGE OF MINI BUSES (TROTO)

As a result of increased ridership for the BRT, it consequently implies that the mini
bus patronage will reduce given the advantages associated with the BRT system.

3.4 CONCLUSION
Despite the enormous benefits that the BRT system promises when fully implemented it also
has substantial amount of cost both direct and indirect associated with the construction
maintenance and the overall implementation of the project.

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CHAPTER FOUR

4.0 PROJECT EVAULATION

4.1 INTRODCTION

Project evaluation seeks to ascertain the economic feasibility of the project using selected
criteria. That is assessing the project in terms of efficiency, effectiveness, significance and
impact of the project activities taking into account the objective of the project. Efficiency of
the project takes into account the costs and benefits associated with the project, effectiveness
here considers the extent of achievement of the project objectives and the significance refers
to the contribution of the project to society.

4.2 INVESTMENT CRITERIA

The investment criteria used in our analysis are Net Present Value (NPV) and Benefit Cost
Ratio (BCR).

4.2.1 NET PRESENT VALUE (NPV)

It is an investment criterion that measures the difference between the present discounted
values of all direct and indirect benefits and the present discounted values of all direct
and indirect cost. NPV is more applicable in socially oriented projects where emphasis is
not on profit making. Such criterion is mostly used to evaluate government or state
funded projects which are geared towards addressing a particular social need. Here the
impact of a project is not to only cover the direct benefit and cost but it also factors in the
externalities generated by such projects and programs.

The government’s main decision to embark on this project is not profit oriented but rather
to ensure that there is free movement of passengers to and fro the Accra-Kasoa route and
to also protect the environment through the reduction of carbon dioxide emissions, thus
the choice of this investment criterion.

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Mathematically NPV can be expresses as

NPV = Present Value of Benefits – Present Value of Costs

Where, n = period of analysis in years; 50

i = 0...n;
DR =discount rate. 21.6054%

DECISION RULE

If NPV >0, then the project is embarked on relative to the status quo.
However if there are several projects, then we select the project with the highest NPV.

4.2.2 BENEFIT COST RATIO (BCR)

It is also known as the profitability index. The BCR is defined as the present value of an
investment’s future benefit divided by the present value of the total cost of constructing
and or operating the project

BCR =

DECISION RULE

If the BCR is greater than 1, the project is worthwhile, that is the NPV is positive. If it is less
than 1 then the project is not worthwhile and should be rejected. The firm is however
indifferent when the BCR is equal to 1

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4.3 EVALUATION PARAMETERS

The following parameters will be established to compare different stream of benefits and cost
over time.
Discount rate
Exchange rate
Period of analysis
The year of comparison
Inflation

4.3.1 DISCOUNT RATE

The discount rate chosen for the analysis will be the 91days Treasury bill rate. Effective
in January 2013. 21.6054% reason being that if the government were to borrow from the
public to finance this project this would be the interest paid to the public.
(Source: Bank of Ghana website)

4.3.2 EXCHANGE RATE

The exchange rate to be used is GH₵1.96: US$ 1. Effective in January 2013
(Source: Bank of Ghana website)

4.3.3 PERIOD OF ANALYSIS

The period of analysis is set at 50 years. The stream of the benefits and maintenance costs
are expected to commence from 2013 and will be analysed until 2063. All infrastructure
investments are expected to be functional throughout this period.

4.3.4 INFLATION

In this computation we made use of the targeted inflation rate by the Bank of Ghana as at
May, 2013 which is 9%.

Cost of construction in the domestic currency

US$ 92m * 1.96 = Gh₵180,320,000

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Cost of the 300 buses = Gh₵ 64,262,324.00

Total cost = 244,582,324.00

Maintenance cost in the domestic currency

US$ 1,230,000* 2 = 2,410,800

4.4 COMPUTATION

Table 4.1: Computations A Using NPV Criteria

years benefit cost PV of benefit PV of cost

2013 0 244,582,324.00 244,582,324.00

2014 1 81,816,000.00 2,410,800.00 81,816,000.00 1,982,565.79
2015 2 89,005,907.29 2,640,790.32 73,195,647.45 1,785,939.61
2016 3 96,228,792.72 2,892,721.72 65,078,552.90 1,608,814.35
2017 4 104,140,741.42 3,168,687.37 57,918,851.37 1,449,255.95
2018 5 112,807,490.02 3,470,980.14 51,594,527.14 1,305,522.18

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2019 6 122,301,046.44 3,802,111.65 46,000,473.10 1,176,043.58

2020 7 132,700,288.14 4,164,833.10 41,045,959.88 1,059,406.36
2021 8 144,091,617.51 4,562,158.18 36,652,507.56 954,336.95
2022 9 156,569,679.69 4,997,388.07 32,752,093.38 859,688.07
2023 10 170,238,149.00 5,474,138.89 29,285,639.64 774,426.25
2024 11 185,210,590.29 5,996,371.74 26,201,736.00 697,620.48
2025 12 201,611,402.47 6,568,425.60 23,455,557.85 628,432.14
2026 13 219,576,852.14 230,898,147.27 21,007,949.05 18,167,031.70
2027 14 239,256,205.71 7,881,461.50 18,824,642.49 509,960.70
2028 15 260,812,969.61 8,633,352.93 16,875,596.58 459,384.01
2029 16 284,426,248.78 9,456,974.80 15,134,429.32 413,823.39
2030 17 310,292,234.78 10,359,170.19 13,577,934.47 372,781.37
2031 18 338,625,835.85 11,347,435.03 12,185,667.29 335,809.79
2032 19 369,662,462.47 12,429,980.33 10,939,588.94 302,504.97
2033 20 403,659,983.26 13,615,800.46 9,823,760.68 272,503.25
2034 21 440,900,867.53 14,914,747.82 8,824,080.36 245,477.02
2035 22 481,694,532.17 16,337,614.76 7,928,054.79 221,131.19
2036 23 526,379,912.41 17,896,223.21 7,124,602.83 199,199.92
2037 24 575,328,277.92 19,603,522.90 6,403,884.60 179,443.75
2038 25 628,946,317.51 21,473,698.99 5,757,153.12 161,646.94
2039 26 687,679,518.07 887,555,662.71 5,176,625.13 5,494,430.08
2040 27 752,015,865.97 25,766,316.33 4,655,368.41 131,173.41
2041 28 822,489,901.45 28,224,422.90 4,187,203.33 118,163.94
2042 29 899,687,159.92 30,917,032.85 3,766,616.67 106,444.72
2043 30 984,249,036.85 33,866,517.78 3,388,685.98 95,887.79
2044 31 1,076,878,116.84 37,097,383.58 3,049,013.19 86,377.86
2045 32 1,178,344,011.06 40,636,473.97 2,743,666.22 77,811.11
2046 33 1,289,489,751.59 44,513,193.59 2,469,127.39 70,093.99
2047 34 1,411,238,795.76 48,759,752.26 2,222,248.05 63,142.23
2048 35 1,544,602,698.75 53,411,432.62 2,000,208.38 56,879.94
2049 36 1,690,689,518.08 58,506,883.30 1,800,481.81 51,238.72
2050 37 1,850,713,019.98 64,088,439.96 1,620,803.56 46,156.98
2051 38 2,026,002,763.95 70,202,477.13 1,459,142.68 41,579.24
2052 39 2,218,015,149.51 3,414,152,115.18 1,313,677.19 1,662,927.99
2053 40 2,428,345,516.64 84,236,033.75 1,182,772.06 33,740.76
2054 41 2,658,741,400.80 92,272,151.37 1,064,959.52 30,394.43
2055 42 2,911,117,052.31 101,074,914.61 958,921.59 27,379.99
2056 43 3,187,569,340.97 110,717,461.46 863,474.45 24,664.50
2057 44 3,490,395,177.97 121,279,907.29 777,554.57 22,218.34
2058 45 3,822,110,599.82 132,850,010.44 700,206.20 20,014.78
2059 46 4,185,471,672.92 145,523,901.44 630,570.33 18,029.76

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2060 47 4,583,497,392.39 159,406,881.63 567,874.73 16,241.61

2061 48 5,019,494,765.49 174,614,298.14 511,425.04 14,630.80
2062 49 5,497,086,287.99 191,272,502.18 460,596.84 13,179.76
2063 50 6,020,240,041.74 209,519,898.89 414,828.55 11,872.62

767,390,942.65 289,039,749.07
478,351,193.59

2.654966817

NPV = 767,390,942.65 - 289,039,749.07 = Gh₵ 478,351,193.59

Computation Using BCR

Using Total PV of Benefits and cost computed in table 4. 1 above

BCR = = 2.654966817

Justification for computations

Costs
The maintenance cost is US$1,230,000 per year and over the estimated projected life span, the
exchange rate is bound to change and has been adjusted based on adaptive expectation on the
average depreciation of the exchange rate (C/$) for 2010 (january-1.43, December- 1.4725;
2.97% ), 2011 (january1.4865 december-1.9395; 10.3% ) and 2012 (January-1.6395 december-
1.8913; 15.36%). Thus assume the exchange to depreciate by 9.54% yearly.

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The expected life span of the buses is twelve year hence the buses will be replaced every thirteen
years, that is years 2026, 2039 and 2052. The replacement cost of the buses will be affected by
the exchange rate discussed above.

Benefits

Job creation

The index used for adjusting the total salaries for drivers, cleaner and ticketing personnel is the
targeted inflation for 2013 i.e 9%, since salaries varies relatively with inflation rate.

Revenue generation

Bus fares are determined by the fuel price which is an imported commodity. Therefore fuel
prices are influenced by the exchange rate. In our computation bus fare were adjusted with the
exchange discussed above.

Mathematically

Bus fares = ≈ 0.8163Q

Where 1.60 = the current bus fare

1.96= is the current exchange

Q= is the adjusted exchange rate

4.5 CONCLUSION

Based on NPV criterion and applying the Potential Pareto Improvement (PPI) condition, the
project should be continued since the NPV ascertained is positive; the project is therefore
Potential Pareto Efficient. The BCR is also greater than one meaning that, the project is
economically feasible.

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CHAPTER FIVE

5.0 CONCLUSION AND RECOMMEDATION

5.1 INTRODUCTION

This section represent the final part of the study, it seeks to provide a summary of the various
chapters, recommendation for policy considerations and limitations to the study.

5.2 SUMMARY CONCLUSION

This study is basically aimed at ascertaining the cost and benefits of the bus rapid transit
(BRT) on the Accra- Kasoa route. We also sought to find out whether the objectives of
reducing gas emissions and increments in travel time savings can actually be realized after
the implementation of this project.

The BRT is a social intervention initiative of the government of Ghana with funding from
bodies such as the World Bank, Global Environmental Facility and the Agence Francaise de
Development (AFD). The government of Ghana is also supporting with an amount of US$
15.8 million.

We proceeded to look at the various elements of the project’s appraisal, which included
technical, institutional, financial, socio-cultural, economic and environmental appraisal. We
again looked at the various costs and benefits component of the project. Some of the benefits
were revenue generation, reduction in travel time spent, travel cost savings, improved air
quality and job creation, whereas the costs incurred centered on implementation and
maintenance cost, air pollution and road congestion.

Furthermore, we assessed the economic feasibility, effectiveness and efficiency of the project
using the NPV and the BCR investment criteria. Per our estimations the NPV yielded a
positive value whiles the BCR was greater than one.

Finally we concluded by outlining some limitation and recommendations of the BRT pilot
project.

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5.3 RECOMMENDATION

In order for the project to realise it maximum potential and aid policy makers in their
decision of replicating its kind in the other regions of the country, the following suggestion
are put forward.

The BRT system should thus ensure co-operation with the existing Ghana Private Road
Transport Union (GPRTU) as opposed to competing with them. Hence the BRT system can
model the South African example where the Bus drivers trained were former Taxi drivers to
defray the loss of welfare due to low patronage when the system become operational.

There should be strong inter-ministerial, coordination as well as other the relevant bodies to
enhance the work of the project designers by using all available information to ascertain the
cost of implementation.

5.4 LIMITATION TO THE STUDY

A major issue which impeded the progress of our study is the issue of data availability and
accessibility. Gaining access to data from the various ministries and departments became a
rather hectic task .We were redirected from one ministry to another, office to office and in
some cases personnel to personnel in our search for data concerning the pilot BRT project.

Moreover, some specific data concerning the BRT were deliberately made inaccessible to us.
Having made our intentions (i.e. academic purposes only) clear to the personnel in the
various offices visited, we were however denied access to certain amount of data due to
political sensitivity attachment to the project. For instance data with regards to the cost
breakdown in terms of the lots of the pilot BRT project, it was made emphatically clear by
Mr. Kojo Antwi, a member of the PAO, that such data was not going to be made available to
us and also other technical information as well.

In addition, transition in government which triggered a restructuring of the project also posed
a setback to our study.

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The issue of time was also a great drawback to the study. Given the asymmetric nature of our
individual academic time table, it became rather necessary for some group members to skip
lectures in order to make trips with the group in seeking and gathering information.

Finance also became a limitation to our study. Given the limited spending capacity of
students due to their relatively lower income, the cost of travelling in and around the city to
visit the necessary ministries, departments and offices for information added a significant
extra cost to our individual budget.

5.5 CONCLUSION

Using the NPV approach, the BRT project is potentially Pareto efficient. This means that it is
possible to make transfers or compensate those who have been made worse off by this
project .Furthermore, the profitability index is 2.654966817 implying that the present value
of the benefits is 2.654966817 times higher than the present value of the costs incurred.

Therefore from these analysis, the BRT project is efficient, effective and significant to the
Ghanaian economy, thus it is prudent for government to continue with its implementation.

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 GROUP 10
APPENDIX

APPENDIX A: MAP OF THE ROUTE

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 GROUP 10
APPENDIX B: Project Model Design
LOT 1 ODAW BRIDGE EXPANSION AND GRAPHIC ROAD FLYOVER

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LOT 2 CONSTRUCTION OF BUS WAYS

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LOT 3: DEPOTS, TERMINALS AND BUSTOPS

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 GROUP 10

REFERENCE

World Bank. (2007). Urban transport project: Project Appraisal Document (Report No: 39750-
GH)

Government of Ghana Budget Statement and Economic Policy. (2013). Theme: Sustaining
Confidence in the Future of the Ghanaian Economy. (pp. 521)

Bank of Ghana website. For information on exchange rate.

[Link]

Bank of Ghana website. For information on the 91 days Treasury bill.

[Link]

Government of Ghana official website. For information on 2013 inflation rate.-

[Link]
january-2013

Antwi, kojo. (2013). A presentation on the BRT Project on behalf of Center for Urban
Transport, titled: Planned BRT; Opportunities, Challenges and the Way Forward.

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