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The BENEFIT Matching Framework is described by Indicators. Indicators were initially formulated in WP2 (deliverables D2) and reviewed/revised throughout the life of the BENEFIT project.

Financial - Economic Indicator: A measure of a country’s productivity

The Financial-Economic indicator (FEI) is built based on international indices published by prominent international institutions.

 

The Financial-Economic Indicator, despite its name, measures more than just the macro-economic and macro-financial context of a country, but more broadly the business environment and can be seen as a proxy of the level of productivity of a country. The Global Competitiveness Index of the World Economic Forum was selected to describe this dimension of the implementation context. The overall “competitiveness index” of the World Economic Forum aims to measure the capacity of the national economy to achieve sustained economic growth over the medium term, controlling for the current level of economic development. It includes predominantly:

  • A macro-economic dimension, capturing the government budget balance, gross national savings, inflation, general government debt and the country credit rating,
  • A financial market development pillar (measuring among others the availability and affordability of financial services, ease of access to loans, soundness of banks, and venture capital availability).

  • But also:

  • Information on supporting contextual elements and policies, including the goods market efficiency, labour market efficiency, technological readiness, market size, business sophistication and innovation in a country.
  • The availability of some basic requirements in terms of education, health of the population and overall infrastructure, as well as
  • Limited business-oriented aspects of the institutional environment (such as property rights, intellectual property protection, efficiency of legal framework in settling disputes, strength of auditing and reporting standards).
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    In this context, a high value of the FEI is supportive of a high Revenue Support Indicator, as implementation context conditions would allow for business initiatives.


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    Institutional Indicator: A measure of a government’s effectiveness

    The Institutional (InI) indicator is built based on international indices published by prominent international institutions.

    The Institutional indicator shows the extent to which the political, legal and regulatory, and administrative context in a country is stable and of a high quality. It includes three dimensions:

    o The “political” sub-dimension “political capacity, support and policies” which is composed by three main governance indicators of the World Bank:

  • Political stability and absence of violence,
  • Control of corruption and
  • Voice & accountability.
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    When combined, these three indicators give a good overview of the general political situation in a country. In short, the political stability and absence of violence basically captures the likelihood of political instability and/or politically-motivated violence, where the voice and accountability reflects a country’s citizens’ ability to participate in selecting their government. Also, the control of corruption index delineates the extent to which public power is exercised for private gain.

    o The “regulatory” sub-dimension “legal and regulatory framework” which is also composed by the World Bank Indicators:

  • Rule of law and
  • Regulatory quality

  • combined with the inverse of the aggregated OECD indicators of:

  • Regulation in energy, transport and communications (ETCR) on the regulatory restrictiveness of markets.
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    The ECTR index of the OECD in reverse represents the extent of liberalization of these markets. Again, these three elements paint a rather comprehensive picture of the judicial and regulatory context of a country. Whilst the rule of law index represents the extent to which agents have confidence in and abide the rule of society, the regulatory quality index captures the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development.

    o The “administrative” sub-dimension “public sector capacity” has only one indicator, namely

  • the government effectiveness developed by the World Bank.
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    This index mainly reflects the level of effectiveness of government in terms of the quality of public service, the quality of civil service, the quality of policy formulation and implementation and the credibility of the government’s commitment to such policies.


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    Reliability – Availability Indicator

    The Reliability/Availability Indicator (IRA) represents the level of physical and operational reliability and availability of the transport service. The quantitative analysis streams identified it as important in reaching traffic and revenue goals.

    Other factors connected to this indicator are: infrastructure type; size (of investment) and location. All of them are considered as decisions taken prior to project award, as are the project’s outcome targets.


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    Cost Saving Indicator: A measure of project efficiency

    The Cost Saving Indicator (CSI) is a composite indicator including:


     Ability to construct

  • Level of civil works/ technical difficulty;
  • Capability to construct based on the market position of the contractor with respect to construction or respective project delivery capability (example for rolling stock);
  • Construction risk allocation as per contractual agreement;
  • Assessment of optimal construction risk allocation based solely on the capability to construct.
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     Ability to monitor/control/plan and provide political support of the respective (public) contracting authority

     

     Adoption of Innovation and its successful application

     

     Life Cycle Planning and operation

  • Life cycle planning verification;
  • Capability to operate based on the market position of the operator;
  • Operation risk allocation as per contractual agreement;
  • Assessment of optimal operational risk allocation based solely on the capability to operate.
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    It is evident, based on the above description, that the CSI, in all practical terms, illustrates a measure of a project’s efficiency during construction and operation. In addition, many of its constituent factors are specified before and/or during project award and include all directly involved actors: the constructor; the operator; and the contracting authority. If the project is promoted and implemented on a national level, the Institutional indicator and the Cost Saving Indicator bear limited overlap with reference to the contracting authority, as both indicators address institutional maturity. However, the assessment is based on a different approach and for CSI concerns the ability of the contracting authority to monitor the project and provide the respective political support.

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    Revenue Support Indicator: A measure of transport project integration and ability to generate revenues

    The Revenue Support Indicator (RSI) is a composite indicator that includes:

     

    The level of Coopetition of the new (greenfield) and existing (brownfield) parts of the project. This indicator reflects:

    oThe level of business development scope, designed to attract demand (e.g. airports etc.);
    oThe level of project exclusivity with respect to its position in the transport network (e.g. metros, bridge and tunnel projects, ports airports under certain conditions). Notably, exclusivity may also be contractually induced;
    oThe level at which a transport network supports the project’s exclusivity

     

     

    Revenue sources from:

    o Traffic from new and brownfield operation in relation to:

  • Capability to manage demand
  • Demand risk allocation
  • Assessment of demand risk allocation based on the capability to manage demand
  • Quality of service
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    o Traffic from other transport infrastructure bundled in the project in relation to:

  • Capability to manage demand
  • Demand risk allocation
  • Assessment of demand risk allocation based on the capability to manage demand
  • Quality of service
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    o Other non-transport related activities in relation to:

  • Capability to manage the other activities
  • Risk allocation
  • Assessment of demand risk allocation based on the capability to manage demand
  • Quality of service
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    Overall, it can be appreciated that, the Revenue Support Indicator (RSI) is a measure of the project’s integration and ability to generate revenues.


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    Governance Indicator: A measure of contractual efficiency/effectiveness and flexibility/control

    The Governance Indicator (GI) refers to factors setting the governance scene within a project. In this respect, it is defined by the contractual conditions and the process leading to them. These are determined during the tendering and contract award stage. However, this does not necessarily mean that the GI value remains constant through the contract duration.

    Many parameters of the Governance Indicator (GI) are subject to the level of enforcement and monitoring exercised by the contracting authority. Hence, the value of the GI risks decreasing if proper contract management is not enforced by the contracting authority.

    In addition, the value of the Governance Indicator may change through re-negotiations, with ramifications on other indicators. It should be noted that a renegotiation process will reduce by default the value of some parameters. For example, the parameter “competition between bidders” will be “null” following renegotiations as the process only takes place with the one party that has been awarded the contract.


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    Remuneration Attractiveness Indicator: A measure of project income potential

    The Remuneration Attractiveness Indicator (RAI) represents the various income sources with their assessed risk and potential cost coverage.


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    Revenue Robustness Indicator: A measure of project revenue robustness

    The Revenue Robustness Indicator (RRI) represents the various revenue sources with their assessed risk and potential cost coverage.


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    Financing Scheme Indicator: A measure of project financing cost

    The Financing Scheme Indicator (FSI) reflects an expanded version of the weighted average cost of capital included in the project from both public and private sources (1-WACCad).


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    Contact us

    Dr. Athena Roumboutsos

    University of the Aegean 
    Department of Shipping, Trade and Transport

    Email: benefit@aegean.gr

    Contact Form

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