Financial model for highway construction

Infrastructure creation is a must for any city. Daily number of buildings are being build and demolished. Old infrastructure is renewed and new infrastructure emerge. Usually the term “Infrastructure” is much more than what people think and understand. It is assumed that whatever built structure is visible is infrastructure. Roads, railways, flyovers, bridges, metro trains, docks, harbors, airport in counted under infrastructure. What is less known is that the underground networks or something which is not visible is also a part of infrastructure like water and sewer pipelines, electrical and optical cables, conduits which are underground.

Apart from the monetary cost for constructing this infrastructure environmental cost is also involved. Depending in the size and nature of project the environmental considerations varies. This is evident as environmental education is now being given importance in schools and even in higher education. It is important to study the impact of any construction. Impact of highways is discussed in this article.

The highway construction process follows the generic path of acquiring land for building roads, identifying the highways to be built, inviting bids and awarding contracts. Foreign companies are allowed to bid for the construction projects and are awarded contracts subject to security clearances. In the past, most infrastructure projects were awarded on a Build-Operate-Transfer or BOT (Toll) scheme where the operator was responsible for the building and maintenance of the road or highway for a set period of time known as the concession period. During this time, the operator was allowed to collect toll to recover costs and earn revenues. At the end of the concession period, the operator transfers the ownership back to the government.

Another model used by infrastructure highway projects is the BOT (annuity) scheme where the operator is paid annuity semi-annually. Highway projects using the Public-Private-Partnership or PPP model are funded jointly by the government and the private operator. With such a model, the risk is shared jointly by both entities.

Planning and consultation

  • Working on the proposals from state & local governments and regional planning organizations work on choosing a highway corridor and width of land suitable for placing the highway.
  • To do this, they develop a detailed map and compile and analyse a lot of information through information processing cycle on geographic, traffic, and environmental constraints as well as existing development.
  • These departments then host public meetings so that the stakeholders can see the proposed corridor and make comments. Changes are often made due to input received at these public meetings and are sometimes taken back to the public for further input.

Preparation for EIA for a highway project involves several steps, starting from a clear understanding of the development objectives, collection of base-line data, and evaluation of alternatives to overall assessment of the environmental impact of the selected alternative.

Environmental Reviews, surveys and preliminary design

Ø Environmental impact assessment process begins once the highway is registered.

Ø Preliminary field surveys and environmental studies take place. The centre line of the highway is also surveyed.

Ø Designers use this information to create preliminary designs and identify how much land is needed.

Ø Environmental consultants use the centre line to help them identify where sensitive areas might be. Environmentally sensitive areas may include areas of rare plants, endangered species, wetlands, etc.

Ø Based on these studies, environmental conditions are placed on the design, construction and maintenance of the highway and these must be incorporated in the work.

Considering all the impacts and factors involved it is essential that infrastructure & urban growth takes place in harmonic nature. Any adverse impact should be avoided. If the need of having a structure is must then minimal environmental deterioration should take place. Another important factor is keeping in mind the recurring cost for sustainable development.

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Financial model for highway construction

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