Road Investment Appraisal with a Modernised HDM-4

Road Investment Appraisal with a Modernised HDM-4

Dr Bernard Obika is a former Senior Transport Specialist at the World Bank in Washington DC., the FCDO and the University of Birmingham UK. He has been the Director for over 50 major private and public sector financed infrastructure and research projects throughout Africa, Asia, UK, South America and elsewhere worldwide, and currently leads the High Volume Transport (HVT) applied research programme at IMC Worldwide, funded by the UK Foreign, Commonwealth & Development Office (FCDO).

Over the next decade, LICs/ LMICs are projected to invest more than US$140 bn per annum on road infrastructure construction and maintenance. The economic viability, technical, financing and maintenance options for many of these investments will be appraised and optimized using HDM-4, a highway development and management software tool.

HDM-4 was initially developed by the World Bank and collaborators in the 1980s. The tool was enhanced substantially in the 1990s by the World Bank, UKAID, the Swedish National Roads Agency, the World Road Association (PIARC), the Asian Development Bank, the University of Birmingham, Transport Research Laboratory UK, the Australian Road Research Board and others. It has become the world’s de facto global reference standard for road investment appraisal trusted by multi-lateral development banks (MDBs), national governments, donors and the private sector. It has been estimated that HDM-4 has been used to appraise approximately US$18 bn of road investment per annum. This translates to potential savings of over US$3.6 bn for a nominal 1% efficiency improvement attributable to the use of HDM-4 over 20 years. However, times have changed, and the software has not.

However, the technical advances in road and vehicle technology over the past 30 years are not sufficiently reflected in HDM-4. There is also a critical need to make it relevant for climate change and the evolving e-mobility trajectories. Updates are required to ensure the software continues to provide a robust decision support system.

Analysis by HVT highlighted the slow but steady decline in use of HDM-4 over the past 10 years. The programme identified challenges with institutional governance and management structures to support necessary upgrades. The research also identified an opportunity to develop the platform to become a more holistic decision support tool that takes into account transport-energy-finance systems to inform investment decisions by central governments.

HVT is currently helping to build the governance and management structures that are required to ensure that HDM-4 continues to be fit for purpose well into the future. It is doing this by developing a robust business plan and brokering collaboration between World Bank and Asian Development Bank, PIARC, FCDO and other donors to fund it. A special purpose vehicle will be established that will be responsible for future sustainable development and management of the decision support system.

Now, the template exists that will ensure that HDM-4 continues to impact positively on road transport infrastructure development and maintenance in LICs/LMICs for decades to come.