Abstract:
Since public infrastructures underpin economic and social development. infrastructure project
development is essential for the sustainable growth of a country\ In many developing countries,
large scale infrastructure projects are undertaken through conventional public procurement, using
bilateral and/or multilateral funding. On the other hand, the financial capacity and practical
project management know-how of the private sector is an attractive option for the government for
the sustainable construction of new infrastructures from the macro aspect. For example an
infrastructure development financed by the private sector is off-balance sheet, enabling the
government to invest more public funds for social projects.
The more popular index used for evaluating the economic feasibility> is the Economic Internal Rate
of Return (EIRR). The calculation of the EIRR does not capture the feasibility or viability of a
project when (he private sector is involved in its development because the realistic financial and
other risks are not sufficiently assessed and incorporated into the analysis. This paper aims to
present a framework to assess the viability■' of public infrastructure projects reflecting the various
risks involved in a project by quantifying and incorporating them to the cash flows and the
financial analysis.
