1 Transportation Engineering – 21CV52

Module 4
HIGHWAY DRAINAGE AND HIGHWAY ECONOMICS
Highway Drainage
Objects of highway drainage system
Highway drainage is the process of removing and controlling excess surface and
subsurface water within the roadway of right of way. Adequate drainage is essential for the
protection of the investments made in the highway structure. Therefore design, construction
and maintenance of appropriate highway drainage systems is one of the most important tasks
of a highway engineer. It is important to provide an effective drainage system for all categories
of roads in rural and urban areas in order to prevent early deterioration and failures of various
components of a road including the road pavement.
The measures taken to control the flow of surface water are termed surface drainage and those
measures dealing with ground water in various forms are termed sub-surface drainage. The
highway drainage system thus consists of
i. Surface drainage system
ii. Subsurface drainage system
Objects of surface drainage system of roads
The surface drainage system enables to drain the water from the pavement surface and
the shoulders during the rains and to divert it to the road side drains such that the entry of water
into the pavement layers and the sub grade soil is minimized. During rains, one portion of the
rain water flows along the surface as runoff water and the remaining portion of water percolates
through the soil mass under the action of gravity until it reaches the ground water table.
Removal and diversion of surface water from the roadway and adjoining land is termed
as surface drainage. Surface drainage of the roadway is to be effected with the help of a well
designed and constructed surface drainage system consisting of components such as
1. Camber or cross slope of the pavement surface and the shoulders
2. road side drains
3. cross drainage structures such as culverts and bridges
Objective of subsurface drainage system of roads
Diversion or removal of excess soil-water from the sub grade is termed as subsurface
drainage. The subsurface drainage system enables intercepting the seepage flow of water and
diverting the same away from the roadway to the nearest water course. The subsurface drainage
system also helps in lowering the ground water level well below the sub grade and in
controlling the capillary rise of water.
A small portion of water is retained in the pores of the soil mass and on the surface of
soil particles by surface tension and adsorptive forces which cannot be drained off by normal
gravitational methods and this water is termed as held water. Subsurface water can seep through
the soil mass or hill slide slopes from higher levels and may get into the pavement layers
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including the sub grade. It is desirable to intercepts and divert the seepage flow of water with
appropriate planned subsurface drainage system.
Requirements of highway drainage
1. The surface water from the carriageway and shoulder should effectively be drained off
without allowing it to percolate to sub grade and weaken the soil.
2. ⁠the surface water from the adjoining land should be prevented from entering the
roadway
3. ⁠the side drain should have sufficient capacity and longitudinal slope to carry away all
the surface water collected from the roadway
4. ⁠flow of surface water across the road and shoulders and along slopes should not cause
erosion or form cross ruts
5. seepage and other sources of under-ground water should be effectively intercepted and
drained off by the suitable subsurface drainage system
6. highest level of ground water-table should be kept well below the level of sub grade
preferably by at least 1.2m. If the highest level of ground water level is closer than
1.2m. It is highest level of ground water level is closer than 1.2 m it is desirable to lower
the same with a well planned and laid subsurface drainage system
7. in water logged areas special precautions should be taken, especially if detrimental salts
are present or if flooding is likely to occur.
Importance
1. Excess moisture in soil sub grade causes considerable lowering of its stability
2. the thickness requirements of pavement structure is designed considering the lowest
stability or strength value of the sub grade soil corresponding to the highest possible
moisture content in the soil
3. ⁠if the stability of the sub grade falls below the design value, the pavement is likely to
fail due to sub grade failure
4. excess water on shoulder and pavement edge causes considerable damage to the
pavement structure
5. ⁠stagnation of water on the pavement surface or edge and increase in moisture content
in the pavement layers can cause reduction in strength characteristics of most of the
flexible pavement components materials
6. ⁠in some clayey soil. Variation in moisture content causes considerable variation in
volume of sub grade . Alternate swelling and shrinkage of the supporting layers may
also contribute to pavement failures in the form of cracking
7. ⁠the prime cause of failure in rigid pavement by mud pumping is due to the presence of
excess water in fine sub grade soil

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8. ⁠ineffective and improper surface drainage causes erosion of soil from top of unsurface
roads and slopes of embankment cut and hill side
9. One of the important types of flexible pavement failure due to poor drainage is by
progressively development of undulations on roadway surface in the form of rutting
along the wheel paths of heavy vehicles and formation of waves and corrugations
SURFACE DRAINAGE SYSTEM FOR ROADS
Components of Surface Drainage System
The surface water from the roadway and the adjoining land is to be collected and then disposed
off with the help of surface drainage system. The various components of the surface drainage
system are:
(a) the cross slope or camber of the pavement surface and the shoulders,
(b) the road side drains and
(c) cross drains.
This surface water is collected in longitudinal side drains and then the water is disposed off at
the nearest stream, valley or water course with the help of cross drains and cross drainage
structures. The cross section and slope of the road side drains are designed based on the
estimated flow of surface water. Cross drainage structures like culverts and small bridges may
be necessary for the disposal of surface water from the road side drains including the water of
the streams crossing the roadway.
Collection of Surface Water
Camber or cross slope
The water from the pavement surface and shoulders is first drained off to the road side drains
with the help of the cross slope or camber. The rate of this cross slope of the pavement or the
carriageway is decided based on:
(i) the type of pavement surface and
(ii) amount rainfall in the region.
The details of the camber and the recommended range of camber for different types of
pavement surfaces are given. The values of camber range from 1 in 25 or 4.0% for earth roads
to 1 in 60 or 1.7% for high type bituminous surface and CC pavements.
The recommended camber cross slope for the earth shoulders ranges from 4.0 to 5.0%
depending on the soil type and rain fall in the region. In rural highways, the water which is
drained from the pavement surface drains across the shoulders and is lead to the road side
drains.
Road side drains
The road side drains of highways passing through rural areas are generally open, unlined or
'kutcha' drains of trapezoidal shape, cut to suitable cross section and longitudinal slopes. These
side drains are provided parallel to the road alignment and hence these are also called

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longitudinal drains. On plain terrain with embankments the longitudinal drains are provided on
both sides beyond the toe of the embankment. However if the road passes through sloping
terrain (with cross slope more than 4.0 %) the longitudinal drain may be provided on one side
only beyond the toe of the embankment along the higher side of the slope. The water on the
lower side of the road will continue to drain away towards the natural valleys.
In cuttings, the longitudinal drains are installed on either side of the formation. But in places
where there is restriction of space, construction of deep open drains may be undesirable. This
is particularly true when the road formation is in cutting. In such cases drainage trenches of
suitable depth and cross section are dug and properly filled with layers of filter material
consisting of coarse sand and gravel to form the 'covered drain' as shown in Fig.

On urban roads because of the limitation of land width and also due to the presence of foot
path, dividing islands and other road facilities, it is necessary to provide underground
longitudinal drains. Water drained from the pavement surface can be carried forward along the
under-ground longitudinal drains installed between the kerb and the pavement for short
distances. This water may be collected in catch pits at suitable intervals and lead through under-
ground drainage pipes. Section of a typical catch pit with grating to prevent the entry of rubbish
into the drainage system of urban roads is shown in Fig.
Drainage of surface water is all the more important on hill roads. Apart from the drainage of
water from the road formation, the efficient diversion and disposal of water flowing down the
hill slope across the road and that from numerous. cross streams is an important part of hill
road drainage system. If the drainage system on hill road is not adequate and efficient, it will
result in complex maintenance problems.

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Design Aspects of Surface Drainage System

It is necessary to estimate the quantity of water expected to flow into each element of the
surface drainage system so as to design the cross section requirements of the road side drains
and the cross drains. The method of analysis for the estimation of maximum quantity of water
for the design of the component of surface drainage system is called 'hydrologic analysis'. Once
the quantity of water is decided, the next step is design requirements of the cross section and
longitudinal slope of the drains. The method of analysis and design of these details are covered
under 'hydraulic analysis and design'. Thus the design of surface dramage system may be
divided into two phases:
(i) Hydrologic analysis
(ii) Hydraulic analysis
HYDROLOGIC ANALYSIS
Objective and Principle
The main objective of hydrologic analysis is to estimate the maximum quantity of water Q
expected to reach the component of the drainage system under consideration, such as the road
side drain. A portion of the precipitation during the rain-fall in filtrates into the ground water
and a small portion gets evaporated. The remaining portion of water which flows over the
surface is termed as run off. Various factors affecting the runoff are
(a) intensity or rate of rainfall
(b) type of soil
(c) moisture content in the soil
(d) topography of the area and
(e) type of ground cover like the type of pavement surface, vegetation on tbe adjoining land
etc.
The surface drainage system is to be designed to drain away the surface run-off water reaching
each component, such as the roadside drains and the cross drains. The following four steps are
to be followed:
(a) to collect the details of rain fall in the area including intensity, duration and frequency
of occurrence of storm
(b) to find drainage area from where water is likely to flow in
(c) to determine the run-off and maximum rate of run-off for the area under consideration
using any of the accepted approaches
(d) to estimate the peak quantity of run-off water reaching the component of the drainage
system to be designed
Estimation Quantity of Run-off Flowing into the Drain
'Rational formula' is widely used to estimate the peak run-off ,water for highway drainage.
The Rational formula, in its simplest form is given by the equation:

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Q = CiAd where
Q =run-off, m3/sec
C= run-off coefficient, expressed as a ratio of run-off to rate of rain fall
i = intensity of rain fall, mm/sec
Ad = drainage area in 1000 m2
It may be noted that the above expression is dimensionally not balanced. As per Rational
Formula, the quantity of run-off flowing into the drain depends upon the run-off coefficient,
intensity of rain fall and the total drainage area.
Run-off coefficient, C
The value of runoff coefficient C depends mainly on the type of surface and its slope. The C-
value may be taken as
(a) 0 8 to 0·9 for bituminous and cement concrete pavement
(b) 0.35 to 0.70 for gravel and WBM pavement
(c) 0.40 to 0.65 for impervious soil
(d) 0.30 to 0.55 for soil covered with turf
(e) 0.05 to 0.30 for previous soil
Drainage Area, Ad
The drainage area from which the surface water is expected to flow to a side drain is determined
with the aid of a contour map or by studying the topography of the drainage area. This area is
expressed in units of 1000 square metre to obtain the value of Ad to be used above equation
When the drainage area, Ad consists of several types of surfaces with different values of run-
off coefficients C1, C2, C3, .... and if their respective areas are A1,A2, A3, .... , the weighted
average value of run-off coefficient, C is determined from the equation:
𝐴1𝐶1+𝐴2𝐶2+𝐴3𝐶3
C= 𝐴1+𝐴2+𝐴3

Design value of rainfall intensity, i

The design value of the rain fall intensity is to be determined for the expected duration of storm
and frequency of occurrence. Therefore the inlet time for the storm water to flow from the
remotest point in drainage area to the drain inlet is estimated using the given Chart. The time
for water to flow through the drain between the inlet and outlet points is determined based on
the allowable velocity of flow in the drain, which generally ranges from 0.3 to 1.5 m/sec,
depending on soil type. In the case of surfaced drains and pipe drains higher velocity of flow
is permitted.

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The time of concentration or the duration of storm for design may be taken as the of the sum
of inlet time and the time of flow through the drain. The frequency of occurrence of the storm
or the 'return period’ may be taken as 5, 10, 25 or 50 years. From the chart the chart the design
value of the rainfall intensity, i is found corresponding to the duration of storm and the selected
value of frequency.

Design value of run-off, Q

Thus with the estimated value of C, i and Ad the design value of run-off, Q for the longitudinal
side drain is determined :
Q = C i Ad
HYDRAULIC DESIGN
Hydraulic Design Elements of Drains
Once the design runoff Q is determined the next step is the hydraulic design of drain. The side
drains and partially filled culverts are designed based on the principles of flow through open
channels.

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If Q is the quantity of surface water (m3 /sec) to be removed by a side drain and V is the
allowable velocity of flow (m/sec) on the side drain, the area of cross section A of the channel
(m3) is found from the relation:
Q = AV
The velocity of unlined channel must be high enough to prevent silting and it should not be too
high as to cause erosion. The allowable velocity of flow depends on the soil type of the open
side drain. The desirable values of velocity of flow are, 0.3 to 0.5 m/sec for sand and silt, 0.6
to 0.9 for loam, 0.9·to 1.5 for clay, 1.2 to 1.5 for gravel and 1.5 to 1.8 m/sec for good soil
covered with well established grass.
The velocity of flow of water along the drain depends on its longitudinal slope. Assuming
uniform and steady flow through channel of uniform cross section and slope, 'Manning's
formula' is Used for detennining the velocity of flow or the longitudinal slope which is given
by:
1 2 1
𝑉= 𝑅3𝑆 2
𝑛
Here, V = average velocity of flow, m/sec
n = Manning's roughness coefficient
R= hydraulic radius m (which is equal to cross section area of flow divided by wetted
perimeter)
S = longitudinal slope of channel
The roughness coefficient values depend on the type of soil in unlined channels. For ordinary
earth the value of roughness coefficient n= 0.02 whereas for earth with heavy vegetation, or
grass the value of n = 0.005 to 0.1. In lined channels, the roughness coefficient depends on the
type of lining. For well finished concrete, the value of n= 0.013 and for rough rubble and riprap,
n = 0.04.
The slope S of the longitudinal drain of a known or an assumed cross section and depth of flow,
may be determined using Manning's formula for the design values of velocity of flow V,
roughness coefficient n and hydraulic radius, R.
Hydraulic Design Data
The following data are to be collected for the design of road side drain:
(i) Total road length and width of land from where water is expected to flow, on the stretch
of the side drain
(ii) Run-off coefficient of different types of surfaces in the drainage area and their
respective areas ( such as paved area, road shoulder area, turf surface, etc.)
(iii) Distance from farthest point in the drainage area to the inlet of the side drain along the
steepest gradient and the average value of the slope
(iv) type of soil of the side drain, the value of roughness coefficient and the allowable
velocity of flow in the drain.

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(v) Rain fall data including average intensity and frequency of recurrence of flood
Design Steps
Simplified steps for the design of longitudinal road side drain are given below
(a) The frequency of return period (such as 10 years, 25 years etc.) is decided , based on
finances available and desired margin of safety for the design of the drainage system
(b) The values of coefficient of run-off C1, C2, C3 etc. from drainage. areas AI, A2, A3
etc. are found and the weighted value of C is computed
(c) Inlet time, T 1 for the flow of storm water from the farthest point in the drainage area
to the drain inlet along the steepest path of flow is estimated from the distance, slope of
the ground and type of the cover.
(d) Time of flow along the longitudinal drain, T2 is determined for the estimated length of
longitudinal drain, L up to the nearest cross drainage or, water course. For an allowable
velocity of flow, V in the drain , time T2 = L/V
(e) The total time T for inlet flow and flow along the drain is taken as the time of
concentration or the design value of rain fall duration, T= T1 + T2
(f) from the rainfall intensity, duration, frequency curve, the rainfall intensity, i is found in
mm/sec corresponding to the durations T and the frequency of the return period
(g) the total area of drainage Ad is found in units of 1000 m2
(h) the run-off quantity Q is computed = CiAd
(i) the cross-sectional area of flow A Off the drain is calculated =Q/V where V is the
allowable speed of the flow in the drain
(j) the required depth of the flow in the drain is calculated for quantity bottom with side
slope of the drain. The actual depth of the open channel drain maybe increase slightly
to given a free Board. The hydraulic mean radius of flow R is determined.
(k) the required longitudinal slope , S of the drain is calculated using Mannings formula
adopting suitable value of roughness coefficient, n
Cross Drainage Structures
Whenever streams have to cross the roadway, facility for cross drainage is to be provided. Also
often the water from the side drain is taken across by these cross drain in order to divert the
water away from the road side drain to a water course or valley. The cross drainage structures
commonly in use are culverts and small bridges. When a small stream crosses a road with a
linear waterway less than about six metres, the cross drainage structure provided is called
culvert; for higher values of linear waterway, the structure is called a bridge .
The common types of culverts in use are:
Slab culvert, Box culvert, Arch culvert, Pipe culvert
In slab culverts RCC slab is placed over abutments made of masonry and the span is generally
limited to 3m. Box culverts of square or rectangular shape is made of RCC. Arch culverts is

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generally built using brick or stone masonry or plain cement concrete. Pipe culverts of
minimum diameter 75 cm and made of steel or prefabricated RCC is used when the discharge
is low.
Various types of bridges are in use the choice is based on several considerations including the
span. RCC and pre-stressed concrete bridges are commonly constructed these days.
On less important roads, in order to reduce the construction cost of cross drainage structures,
sometimes submersible bridges or 'cause-ways' are constructed; during the floods the water
will flow over the road at the locations of the cause-ways. The total period interruption to traffic
has however to be kept as low as possible, not exceeding about 15 days in a year. Such roads
where interruption to traffic occur during floods are called ‘fair weather roads’.
SUB-SURFACE DRAINAGE
Changes in moisture content of subgrade are caused by fluctuations in ground water table,
seepage flow, percolation of rain water and movement of capillary water. In sub-surface
drainage of highways, it is attempted to keep the variation of moisture in subgrade soil to a
minimum. However only the gravitational water can be drained by the usual drainage systems.
Lowering of Water Table
The highest level of water table should be fairly below the level of subgrade, in order
that the subgrade and pavement layers are not subjected to excessive moisture. From practical
considerations it is suggested that the water table should be kept at least 1.0 to 1.2 m below the
sub grade. In places where water table is high (almost at ground level at times) the best remedy
is to take the road formation on embankments of height not less than 1.2 to 1.5m above the
ground level. When the formation is to be at or below the general ground level at cutting, it is
necessary to lower the water table so as to keep the sub grade as dry as possible.
If the soil is relatively permeable it may be possible to lower the high water table by
merely construction of longitudinal drainage trenches with drain pipe and filter sand. The depth
of the trenches would depend on the required lowering of water table distance between the
drainage trenches and soil types.

If the soil is relatively less permeable, the lowering of the ground water level may not be
adequate under the centre of the pavement or in between the two longitudinal drainage trenches.
Hence in addition to the longitudinal trench drains, transverse drains have to be installed at

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suitable intervals in order to effectively drain off the water and thus to lower the water table up
to the level of transverse drains consisting of perforated pipes. A typical sketch of sub-surface
drainage system with longitudinal and transverse drains for effective Lowering of water table
in the case of soils with low permeability is shown in Fig.

Control of Seepage Flow

When the general ground as well as the impervious strata below are sloping, seepage
flow is likely to exist. If the seepage zone is at depth less than 0.6 to 0.9 m from the subgrade
level, longitudinal pipe drain in trench filled with filter material and clay seal may be
constructed to intercept the seepage flow. Fig. Above shows the method by which the seepage
line can be lowered to the desired depth.
Control of Capillary Rise
If the water reaching-the subgrade due to capillary rise is likely to be detrimental, it possible to
solve the problem by arresting the capillary rise instead of lowering the water table. The
capillary rise may be checked by providing a suitable capillary cut-off by one of the two
method: namely (i) granular capillary cut-off (ii) impermeable capillary cut-off
Granular capillary Cut-off
A layer of granular material of suitable thickness is provided during the construction of
embankment, between the sub-grade and the highest level of subsurface water table as shown
in Fig. The. thickness of the granular capillary cut-off layer should be sufficiently higher than
the anticipated capillary rise within the granular layer so that the capillary water cannot rise
above the cut-off layer.

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Impermeable capillary cut-off

In this method, an impermeable membrane or a bituminous layer is inserted in the place
granular blankets during the construction of the embankment as shown in above fig.
Design of Sub-surface Drainage System
The size and spacing of the sub-surface drainage system would depend on the quantity of water
to be drained off, the type of soil and tyre of the drain. Mostly this is decided based on
experience and other practical considerations. However proper filter material should be used
for back filling the drainage trenches and also for use in all subsurface drainage systems.

Design of filter material

The filter material used in sub-surface drains should be designed to have sufficient permeability
offering negligible resistance to the flow. The filter material should be designed to resist the
flowing of the fine foundation soil resulting in problems like ‘piping '. Hence the grain size
distribution of the filter material is decided based on these two criteria of permeability and
piping. The procedure for design of filter is briefly discussed here:
(i) On a grain size distribution chart (percent passing Vs particles size on log scale) plot
the grain size distribution curve of the foundation soil
(ii) Find the value of D15 size of foundation material and plot a point of particle size 5D15
of foundation to represent the lower limit of D15 size of filter. This is to fulfill the
condition of aqequate permeability given by,
𝐷15 𝑜𝑓 𝑓𝑖𝑙𝑡𝑒𝑟
𝑠ℎ𝑜𝑢𝑙𝑑 𝑏𝑒 > 5
𝐷15 𝑜𝑓 𝑓𝑜𝑢𝑛𝑑𝑎𝑡𝑖𝑜𝑛
(iii) To fulfil the condition to prevent piping,
𝐷15 𝑜𝑓 𝑓𝑖𝑙𝑡𝑒𝑟
Should be < 5
𝐷85 𝑜𝑓 𝑓𝑜𝑢𝑛𝑑𝑎𝑡𝑖𝑜𝑛

Hence plot a point to represent the upper limits of D15 size of filter given by 5D85 of
foundation.
(iv) Find the size of the perforation in the drain pipe or the gap in the open jointed pipes and
let this be = Dp. Plot a point to represent D85 size of filter given by the size 2Dp

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The shaded area thus obtained represents the region within which the grain size distribution-
curve of satisfactory filter material should lie.
DRAINAGE OF SLOPES AND EROSION CONTROL
Drainage of slopes of embankment, cutting and hill side are of utmost importance to prevent
instability of slopes and slides. Soaking of the slope causes increase in stress and reduction in
strength. Hence an efficient net work of surface drainage system consisting of 'intercepting
drains' and 'sloping drains’ to keep the slopes properly drained. The net work of such drains is
very useful in the case of slopes of hill side, deep cuttings and high embankment.

The sloping drains may be provided with lining or pitching or may be filled with gravel. The
water from the sloping drains is collected in catch pits and diverted across through the culverts
at suitable intervals.
The flow of surface water also frequently causes erosion of soil. This may occur on earth slopes
if the cross slope is too steep and also on earth shoulders. Surface treatment and stabilization
of these surfaces are useful for the control of erosion.
Erosion of soil from the slope of cuts and embankments is detrimental to the slope stability.
The erosion depends on several factors such as intensity and duration of rain fall, type and
conditions of soil, height and angle of the slope and climatic conditions. One of the easiest and
effective ways of reducing erosion on slope is by 'turfing'. Under severe erosion conditions the
slopes may be protected by stone pitching, riprap or hand placed rocks. Soil stabilisation
techniques and use of geo-synthetics are also useful.
ROAD CONSTRUCTION IN WATER -LOGGED AREAS
When the subgrade is subjected to soaking condition due to high subsoil water and capillary
rise, the area is considered as water-logged. In extreme cases there may be even flooding for
prolonged periods. In addition to water-logging if the area is infested with detrimental salts like
sulphates, there are additional problems for construction and maintenance of roads in such
areas.
When the problem is one of water-logging only without flooding or presence of detrimental
salts, the following methods may be adopted:

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(a) Depressing the subsurface water level by suitable drainage system

(b) Raising the road level by constructing embankment
(c) Providing a capillary cut off to arrest the capillary rise of water
(d) providing sufficient pavement thickness with thick granular sub-base course in view of
the subgrade conditions
(e) Providing vertical sand drains at suitable spacing and horizontal sand blanket at the top
to ensure rapid drainage of water from the foundation soil
When flooding also is expected for prolonged periods, in addition to the above measures the
road surface may be provided with cement concrete or interlocking cement concrete block
pavement.
When detrimental salts are present in the water-logged area, in addition to the above measures
which may be adopted with greater care and control, superior pavement construction materials
should be used to withstand the detrimental effects of salt. The presence of sulphates has
detrimental effects on cement concrete.
An effective capillary cut-off. below the subgrade and a proper water proofing course on the
pavement surface and preferably on shoulders also would go a long way in sustaining the
detrimental effects of the salts. If the permeability of the foundation soil is low, ( as in the case
of silty and clayey soils) gravitational drainage would be ineffective. In such cases possibility
of using other methods such as electro-osmotic drainage may be considered, if economically
feasible.

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Highway Economics
Introduction
Better highway system provides varied benefits to the society. Improvements in highway
results in several benefits to the road users such as :
• Reduction in vehicle operational cost per unit length of road.
• saving travel time and resultant benefits in terms of time cost of vehicles and the
passengers
• Reduction in accident rates.
• Improved level of service and ease of driving.
• Increased comfort to passengers.
Therefore the level of service of a road system may be assessed from the benefits to the users.
The improvement in road net work also benefits the land owner by providing better
access and consequently enhancing the land value. The cost of improvements in the highway
of land, materials, construction work and for the other facilities should be worked out. From
the point of view of economic justification for the improvements, the cost reductions to the
highway users and other beneficiaries of the improvements during the estimated period should
be higher than the investments made for the improvement. In the planning and design of
highways there is increasing need for analysis to indicate justification of the expenditure
required and the comparative worth of proposed improvements, particularly when various
alternatives are being compared.
The government or any other agency finances highway developments. The funds for
these are generally recovered 1ins the road users in the form of direct and indirect taxations.
Highway Finance deals with various methods of raising and or providing money for the
highway projects.
HIGHWAY USER BENEFITS
General Benefits
Several benefits are brought to highway users and others due to the construction of a new
highway or by improving a highway. Road user benefits are the advantages, privileges or
savings that accrue to drivers or owners through the use of one highway facility as compared
with the use of another. The various benefits due to highway improvement may be classified
into two categories: (i) quantifiable or tangible benefits in terms of market values and (ii) non
quantifiable or intangible benefits.
Quantifiable Benefits
Various benefits which can be quantified include benefits to road user such as reduction in
vehicle operation cost, time cost and accident cost. The other benefits include enhancement
in land value. These are briefly explained below:
Saving in vehicle operation cost is due to reduction in fuel and oil consumption and reduction
in wear and tear of tyres and other maintenance costs. A road with sharp curves and steep grades

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require frequent speed changes; presence of intersections require stopping idling and
accelerating; vehicle operation on road stretches with high traffic volume or congestion
necessitates speed changes and stopping and increased travel time.
Non-quantable Benefits
The non-quantifiable benefits due to improvements in highway facilities include reduction in
fatigue and discomfort during travel, increase in comfort and conveniences and improvement
in general amenities, social and educational aspects, development of recreational and medical
services, improved mobility of essential services and defence forces, aesthetic values, etc..
Motor Vehicle Operation Cost
The factors to be considered for evaluating motor vehicle operation cost would differ
depending on the purpose of the analysis. The vehicle may be classified in different groups
such as passenger cars, buses, light commercial vehicles, single unit trucks combination
vehicles etc., for the purpose of cost analysis. The motor vehicle operation costs depend on
several factors which may be grouped as given below:
• Cost dependent on time expressed as cost per year such as interest on capita
depreciation cost, registration fee, insurance charges, garage rent, driver’s license
salaries etc. as applicable.
• Cost depending on distance driven expressed as cost per vehicle-kilometer. The items
which may be included here are fuel, oil, tyres, maintenance and repairs etc.
• Cost dependent on speed include cost of fuel, oil and tyre per vehicle-km-time-cost of
vehicles, travel time value of passengers, etc.
• Cost dependent on type of vehicle and its condition. Operation costs of larger vehicles
are comparatively higher. The operation cost of old vehicles maintained in poor
condition is also higher.
• Accident costs.
The costs of vehicle operation and time for unit distance may be taken as:
T = a+ (b+c) Speed
Where a = running cost per unit distance, independent of journey time
b= a fixed hourly cost, dependent on speeds
c = the portion of the running cost which is dependent on speed
Therefore the operation costs may be considered to consist various components like
motor fuel cost, lubricating oil consumption, tyre costs, vehicle repair and maintenance,
depreciation, cost due to slowing, stopping, idling and standing delays, costs related to
pavement surface and its condition, grades, curves and traffic volumes. Also the time costs and
accident costs are taken into consideration.

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HIGHWAY COSTS
General
The total Highway Cost for road user benefit analysis is the sum of the capital costs expressed
on an annual basis and the annual cost of maintenance. The total cost for highway improvement
is obtained from the estimate prepared from the preliminary plans. The total cost of each
highway engineering improvement proposal is calculated from the following five components
(i) Right of way
(ii) Grading drainage, minor structures
(iii) Major structures like bridges
(iv) Pavement and appurtenances
(v) Annual cost of maintenance and operation
Computation of total annual highway cost based on summation of the annual cost of
individual items of improvements and their average useful lives is considered to be a proper
and accurate approach.It is difficult to estimate the service lives of highway elements as there
are several variables such as soil, climate topography and traffic. Road life studies enable
estimation of lives of pavements, bridges and other roadway facilities.
Annual Highway Cost
The items to be included while computing annual highway cost are
(i) Administration (a portion) Personal service, building, equipment operation, office,
insurance etc.
(ii) Highway operation Equipment. building vehicle operation including capital costs of
vehicle.
(iii) Highway maintenance
(iv) Highway capital cost : Cost of highway components such as right of way, damage,
earthwork, drainage system. pavement bridges and traffic services depreciation cost and
interest on investment.
(v) Probable life and salvage value at the end of this period.
The average annual highway cost for a road system may be summed up by the formula.
Ca – H + T + M + Cr
where Ca = average annual cost of ownership and operation
H = average cost for administration and management at head quarters
T = average annual highway operation cost.
M = average annual highway maintenance cost.
Cr = average annual capital cost of depreciation of investment

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capital or the capital recovery with return on capital

The annual cost is considered in the economic assessment of highway projects. Instead of
considering the overall cost of a project the annual repayment of a capital loan plus the interest
over a specified period of time of the annual capital cost is considered in the analysis. The first
cost of a capital improvement is converted into equivalent uniform annual cost by the formula:
𝑖(1+𝑖)𝑛
Cr = P [(1+𝑖)𝑛−1]

Where Cr = receipt in a uniform series for n periods to cover P at a rate of interest i

P = first cost of improvement of an element of a highway
i = rate of interest per unit period
n = period of time in number of interest periods
i(1 - i)n
CRF = Capital recovery factor = (1+i)n-1
At the end of the service life of road pavement, some of the items could be assigned some
salvage value. However the salvage value of some other items may be negligible.
The average annual capital cost Cr for a project considering salvage value may be estimated
by the use of the formula (for the capital-recovery with salvage value):
𝑖(1+𝑖)𝑛
Cr = (c – Vs) [(1+𝑖)𝑛−1] + iVs

Cr = (c – Vs) CRF + iVs

Where C = total investment on construction
Vs = salvage value at the end of n years
i = interest rate applicable
n = number of years of expected use of the facility
The compound amount accumulated sum S on the principal sum of proposed improvement cost
or single payment P, including interest rate, i in n years is given by:
s = P ( 1 + i)n
economical proposal among various alternatives, in the analysis for economic justification of
the proposed improvement, it is required to use judgment such as quantitative selection of the
factors in which annual highway cost depends and the estimation of AADT (Annual Average
Daily Traffic) of each class of vehicle considering the normal increase in traffic and the
generated traffic.
Methods of Analysis
The procedure for the economic evaluation of highway projects consists of qualification for
cost component and the benefits arising out of the project and to evaluate by one of the methods
of analysis.

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There are several methods of economic analysis. Some of the common methods are. Annual-
cost Method, Rate-of-Return Method and Benefit-Cost Method.
Annual-Cost Method
The annual cost of each element of capital improvement is found by multiplying by the
appropriate CRF value calculated for the assume life span. The annual cost Cr may be found
using the relation
C1 = P. i(1+i)n = P(CRF)
= (1+i)n-1
Rate-of-Return Method
There are number of variations for the determination of raw of return of a highway
improvement. In the rate of return method, die interest rate at which two alternative solutions
have equal annual cost is found, If the rate of return of all proposed projects are known, the
priority for the improvement could be established.
Benefit Cost ratio Method
Principle of this method is to assess the merit of a particular scheme by comparing the annual
benefits with the increase in annual cost.
Benefit cost ration = Annual benefits from improvement
= Annual cost of the improvement
= R – R1
= H1 – H
Where R = total annual road user cost for axisting highway
R1 = total annual road user cost for proposed highway improvement
H = total annual cost of existing road
H1 = total annual cost of proposed highway improvement
The benefit-cost ratios are determined between alternate proposals and those plans dub are not
attractive are discarded. Then the benefit cost ratios for various increments of added investment
are computed to arrive at the best proposal. hi order to justify the proposed improvement, the
ratio should be greater than 1.0. However, the choice of interest rate would affect the results of
the benefit-cost solutions.
HIGHWAY FINANCE
Basic principle in highway financing is that the funds spent on highways are recovered from
the road users. The recovery may be both direct and indirect.
Two general methods of highway financing are:
Pay-as-you-go method
Credit financing method

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• In pay-as-you-go method, the payment for highway improvements, maintenance and

operation is made from the central revenue.
• In credit financing method, the payment for highway improvement is made from
borrowed money and this amount and the interests are re-paid from the future income.
In the credit financing system of highway financing, highway improvements are done
with borrowed money. The borrowed amount along with the interest has to be returned
to the provider from the future incomes made.
Distribution of highway cost
The question of distributing highway cost among the Government, road-user and other has
been a disputed task in several countries. Many economists are of the view that the financial
responsibility for roads should be assigned only among the beneficiaries on the basis of the
benefit each one receives.
There are several theories suggesting the method of distribution of highway taxes between
passenger cars and other commercial vehicles like the trucks. However in India the annual
revenue from transport has been much higher than the expenditure on road development and
maintenance. Therefore there is no problem of distributing the highway cost among other
agencies. Also the taxation on vehicles is being considered separately by the states and there
seems to be no theory followed for the distribution of taxes between various classes of vehicles.
Sources of Revenue
The various sources from which funds necessary for highway development and maintenance
may be made available, are listed below:
• Taxes on motor fuel and lubricants.
• Duties and taxes on new vehicles and spare part including tyres
• Vehicles registration tax.
• Special taxes on commercial vehicles
• Other road user taxes
• Property taxes
• Toll taxes
• Other funds set apart for highways
There should be an equitable distribution of revenues available for highways.
Highway financing in India
The responsibility of financing different roads lies with the Central Government, State
Governments and local bodies including Corporations, Municipalities, District Boards and
Panchayats.
Taxes levied by Central Government for highway financing are:
• Duties arid taxes on motor fuel .

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• Excise duty on vehicles and spare parts, tyre etc.

• Excise duty on oils, grease, etc
Taxes levied by the State Governments include:
• Registration fees for vehicles and road tax
• Permits for transport vehicles
• Passenger tax on buses
• Sales tax on vehicle parts tyre etc.
• Fees on driving licenses
Taxes levied by local bodies are mainly the toll tax.
Ever since the introduction of Central Road Fund (CRF) in the year 1929 by taxing motor fuel,
this has been the main source of finance for the State Government to meet the road development
needs, without having to go through the time consuming process of special sanctions each time.
However of late the CRF is also being merged with the general revenue, in March 1976 the
Lok Sabha has passed the resolution Of the Ministry of Transport ensuring the existence of the
CRF separately with the specified objectives. An Amount of not less than 3.5 paise per litre out
of the duty of customs and excise on motor spirit would be set apart towards the CRF for the
road development. While utilizing this fund, greater attention would be given to schemes of
all-India importance. Twenty percent of the fund would be retained by the central Government
as reserve. The fund will also be used for road research schemes, traffic studies, economics
surveys and training arrangements for young engineers. The gross revenue from road transport
in India during the sixth plan period 1978-83, 1980-85 was about Rupees l2,000 Crores
NPV method
The Net Present Value (NPV) method is a tool for analyzing the economic benefit of a
project. It's used to determine whether a project is worth undertaking based on the present value
of its cash flows.
How the NPV method works:
1. Project future cash inflows and outflows
2. Discount future cash flows to the present day
3. Add the discounted cash flows together
4. Subtract the initial investment from the result
5. If the result is positive, the project is accepted
6. If the result is negative, the project is rejected
The NPV method assumes that the project's cash flows will be reinvested at the relevant
discount rate.
The NPV method is used in the Highway Development and Management (HDM 4) Model. This
model generates cash flow streams for travel time costs and VOCs. These streams are then used

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to calculate net economic benefits, which are used to estimate IRRs and NPVs for project
evaluation.
NPV = ⨊(P/ (1+i)t ) – C,
P = Net Period Cash Flow,
i = Discount Rate (or rate of return),
t = Number of time periods, and
C = Initial Investment.
Example:
NPV is the difference between the present value of cash inflows and the present value of cash
outflows over a period of time. It's used to analyze the profitability of a projected investment
or project.
1. An investor invests $500 in property and receives $570 the following year. If the rate
of return is 10%, the NPV is $18.18.
2. A security offers a series of cash flows with an NPV of $50,000. If an investor pays
$50,000 for the security, their NPV is $0. This means they will earn the discount rate
on the security.
3. Dexable Inc. plans a project with an initial investment of $5,000. The company projects
the investment to generate a cash flow of $5,600 in the next year. The NPV assumes a
10% required rate of return and no salvage value at the end of the project.
IRR method
The internal rate of return (IRR) is a method used in transportation benefit-cost analysis. It is
the discount rate that makes the net present value of a project zero. In other words, the sum of
discounted costs is equal to the sum of discounted benefits when discounted by the IRR.
The IRR can be thought of as the constant compound rate of return, which is equivalent to the
actual fluctuating rate of return over the project lifetime.
The IRR rule states that a project or investment should be pursued if its IRR is greater than the
minimum required rate of return or the hurdle rate.
The IRR is uniform for investments of varying types and can be used to rank multiple
prospective investments or projects on a relatively even basis.
IRR: = (Future Value ÷ Present Value)^(1 ÷ Number of Periods) – 1
BOT and BOOT Concepts
Build–operate–transfer (BOT) or build–own–operate–transfer (BOOT) is a form
of project delivery method, usually for large-scale infrastructure projects, wherein a private
entity receives a concession from the public sector (or the private sector on rare occasions) to
finance, design, construct, own, and operate a facility stated in the concession contract. The
private entity will have the right to operate it for a set period of time. This enables the project
proponent to recover its investment and operating and maintenance expenses in the project.

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BOT is usually a model used in public–private partnerships. Due to the long-term nature of the
arrangement, the fees are usually raised during the concession period. The rate of increase is
often tied to a combination of internal and external variables, allowing the proponent to reach
a satisfactory internal rate of return for its investment.
Countries where BOT is prevalent are Thailand, Turkey, Taiwan, Bahrain, Pakistan, Saudi
Arabia,
Israel, India, Iran, Croatia, Japan, China, Vietnam, Malaysia, Philippines, Egypt, Myanmar an
d a few US states (California, Florida, Indiana, Texas, and Virginia). However, in some
countries, such as Canada, Australia, New Zealand and Nepal,[2] the term used is build–own–
operate–transfer (BOOT). The first BOT was for the China Hotel, built in 1979 by the Hong
Kong listed conglomerate Hopewell Holdings Ltd.
BOT framework
BOT finds extensive application in infrastructure projects and public–private partnership. In
the BOT framework a third party, for example the public administration, delegates to a private
sector entity to design and build infrastructure and to operate and maintain these facilities for
a certain period. During this period, the private party has the responsibility to raise the finance
for the project and is entitled to retain all revenues generated by the project and is the owner of
the regarded facilities. The facility will be then transferred to the public administration at the
end of the concession agreement, (concession agreement is a contract that gives a company the
right to operate a specific business within a government's jurisdiction or on another firm's
property, subject to particular terms) without any remuneration of the private entity involved.
Some or even all of the following different parties could be involved in any BOT project:
• The host government: Normally, the government is the initiator of the infrastructure
project and decides if the BOT model is appropriate to meet its needs. In addition, the
political and economic circumstances are main factors for this decision. The
government provides normally support for the project in some form (provision of the
land/ changed laws).
• The concessionaire: The project sponsors who act as concessionaire create a special
purpose entity which is capitalised through their financial contributions.
• Lending banks: Most BOT projects are funded to a big extent by commercial debt. The
bank will be expected to finance the project on "non-recourse" basis meaning that it has
recourse to only the special purpose entity and all its assets for the repayment of the
debt.
• Other lenders: The special purpose entity might have other lenders such as national or
regional development banks.
• Parties to the project contracts: Because the special purpose entity has only limited
workforce, it will subcontract a third party to perform its obligations under the
concession agreement. Additionally, it has to assure that it has adequate supply
contracts in place for the supply of raw materials and other resources necessary for the
project.
A BOT project is typically used to develop a discrete asset rather than a whole network and is
generally entirely new or greenfield in nature (although refurbishment may be involved). In a

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BOT project the project company or operator generally obtains its revenues through a fee
charged to the utility/ government rather than tariffs charged to consumers. A number of
projects are called concessions, such as toll road projects, which are new build and have a
number of similarities to BOTs.[3]
In general, a project is financially viable for the private entity if the revenues generated by the
project cover its cost and provide sufficient return on investment. On the other hand, the
viability of the project for the host government depends on its efficiency in comparison with
the economics of financing the project with public funds. Even if the host government could
borrow money on better conditions than a private company could, other factors could offset
this particular advantage. For example, the expertise and efficiency that the private entity is
expected to bring as well as the risk transfer. Therefore, the private entity bears a substantial
part of the risk. These are some types of the most common risks involved:

• Political risk: especially in the developing countries because of the possibility of

dramatic overnight political change.
• Technical risk: construction difficulties, for example unforeseen soil conditions,
breakdown of equipment
• Financing risk: foreign exchange rate risk and interest rate fluctuation, market
risk (change in the price of raw materials), income risk (over-optimistic cash-flow
forecasts), cost overrun risk.
BOOT Framework
The BOOT procurement strategy utilizes project finance to fund large-scale greenfield
infrastructure projects such as local power stations, water treatment facilities and sewage
facilities, or transit infrastructure, etc.

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The BOOT delivery model is different from the BOT (build-operate-transfer) delivery model,
in which the private party does not own the project as an asset; they only receive a concession
to operate it for a period of time.
The BOOT delivery model is different from PPP (public-private partnerships), which refer to
project agreements where a private entity takes over the building and operation of government-
owned infrastructure.
Build-own-operate-transfer is often the best kind of delivery model, in which a private sector
party, or consortium, receives a mandate from a private or public sector client to finance,
design, construct, own, and operate a long-term project.
If you have been awarded a BOOT contract, this means that during that time period, you, the
private party or your consortium, own and operate the facility. Your goal is to recover the costs
of your investment, operations, and maintenance, and also make a profit from your project.
While you manage your contract, you generate profit by charging fees from the users of your
project, and you have the project as an asset.
While the risk is yours, this risk is offset by various government incentives, funding, tax breaks,
money to hire select people (such as unemployment job initiatives), and any other benefits that
the regulatory body sees fit to grant you.
At the end of the contractual period (typically in the order of decades), ownership of the
construction is given back to the state (or federal actor). You may receive a fee for this transfer.

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