Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 : construction of Saulkrasti bypass on the Latvian main road A1 : Latvia.
Date: 2020-03-13
Institutions: Directorate-General for Regional and Urban Policy
Subjects: Cohesion Fund, EU financing, European Regional Development Fund, Latvia, cost-benefit analysis, economic development, project evaluation, project of common interest, quality of life, report, road building, trans-European network, transport policy

Ex post evaluation of major projects supported by the 
European Regional Development Fund (ERDF) and Cohesion 
Fund between 2000 and 2013 

Construction of Saulkrasti bypass on 
the Latvian main road A1 

Latvia 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Directorate-General for Regional and Urban Policy 
Directorate Directorate-General for Regional and Urban Policy 
Unit Evaluation and European Semester 

Contact: Jan Marek Ziółkowski 

E-mail:  REGIO-B2-HEAD-OF-UNIT@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Ex post evaluation of major 
projects supported by the 
European Regional 
Development Fund (ERDF) and 
Cohesion Fund between 2000 
and 2013 

Construction of Saulkrasti bypass on 

the Latvian main road A1 

Latvia 

Directorate-General for Regional and Urban Policy 

2020 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Manuscript completed in 2018 

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Luxembourg: Publications Office of the European Union, 2020 

ISBN 978-92-76-17417-2 
doi: 10.2776/495002 

© European Union, 2020 
Reuse is authorised provided the source is acknowledged.  
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14.12.2011, p. 39). 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This  report  is  part  of  a  study  carried  out  by  a  Team  selected  by  the  Evaluation  Unit, 
DG  Regional  and  Urban  Policy,  European  Commission,  through  a  call  for  tenders  by 
open procedure No 2016CE16BAT077. 

The consortium selected comprises CSIL – Centre for Industrial Studies (lead partner, 
Italy),  Ramboll  Management  Consulting  A/S  (Denmark),  Significance  BV  (The 
Netherlands), TPLAN Consulting (Italy).  

The Core Team comprises: 
•  Scientific Director: Massimo Florio (CSIL and University of Milan); 
•  Project Manager: Silvia Vignetti (CSIL);  
•  Scientific Committee: Ginés de Rus, John Nellthorp, Emile Quinet;  
•  Task managers: Silvia Vignetti (CSIL), Gerard de Yong (Significance), Roberto Zani 
(Tplan), Emanuela Sirtori (CSIL), Xavier Le Den (Ramboll), Julie Pellegrin (CSIL); 
•  Thematic Experts: Gianni Carbonaro (CSIL), Enrico Bernardis (Tplan), Mario Genco 
(CSIL),  Eric  Kroes  (Significance),  Kim  Ruijs  (Significance),  Barry  Zondag 
(Significance). 

A network of National Correspondents provides the geographical coverage for the field 
analysis. 

The  authors  of  this  report  are  Kristīne  Malnača,  Chiara  Pancotti,  and  Gatis  Kristaps. 
The  authors  are  grateful  to  all  the  project  managers,  stakeholders  and  beneficiaries 
who provided data, information and opinions during the field work.  

The authors are grateful for the very helpful insights from the EC staff and particularly 
to Mariana Hristcheva, Daria Gismondi, Jan Marek Ziółkowski, Jerome Glantenay and 
other  members  of  the  Steering  Group.  They  also  express  their  gratitude  to  all 
stakeholders  who  agreed  to  respond  to  the  team’s  questions  and  contributed  to  the 
realisation of the case study. The authors are responsible for any remaining errors or 
omissions. 

Quotation is authorised as long as the source is acknowledged. 

Cover picture source: Authors’ own picture taken on 28/11/2017. 

 
 
 
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY .................................................................................... 5 

OVERALL APPROACH AND METHODOLOGY .................................................................... 5 

MAIN PROJECT FEATURES ...................................................................................... 6 

PROJECT PERFORMANCE ........................................................................................ 7 

MECHANISMS AND DETERMINANTS ........................................................................... 9 

CONCLUSIONS .................................................................................................. 10 

1.  PROJECTS DESCRIPTION ........................................................................ 11 

2.  ORIGIN AND HISTORY ............................................................................ 23 

2.1 

2.2 

2.3 

BACKGROUND ......................................................................................... 23 

FINANCING DECISION AND PROJECT IMPLEMENTATION ........................................... 25 

CURRENT PERFORMANCE AND OTHER INVESTMENT NEEDS ....................................... 29 

3.  DESCRIPTION OF LONG-TERM EFFECTS .................................................. 32 

3.1 

3.2 

3.3 

3.4 

3.5 

3.6 

KEY FINDINGS ......................................................................................... 32 

EFFECTS RELATED TO ECONOMIC GROWTH ........................................................ 34 

EFFECTS ON QUALITY OF LIFE AND WELL-BEING .................................................. 35 

EFFECTS ON THE ENVIRONMENTAL SUSTAINABILITY .............................................. 37 

EFFECTS RELATED TO DISTRIBUTIONAL ISSUES ................................................... 38 

TIME-SCALE AND NATURE OF THE EFFECTS ........................................................ 38 

4.  MECHANISMS AND DETERMINANTS OF THE OBSERVED PERFORMANCE . 40 

4.1 

4.2 

4.3 

4.4 

4.5 

RELATION WITH THE CONTEXT ...................................................................... 40 

SELECTION PROCESS ................................................................................. 42 

PROJECT DESIGN ...................................................................................... 43 

FORECASTING CAPACITY ............................................................................. 44 

PROJECT GOVERNANCE ............................................................................... 45 

4.6  MANAGERIAL CAPACITY .............................................................................. 48 

4.7 

PROJECT BEHAVIORAL PATTERN ..................................................................... 48 

5.  FINAL ASSESSMENT ............................................................................... 51 

5.1 

5.2 

5.3 

5.4 

5.5 

PROJECT RELEVANCE AND COHERENCE ............................................................. 51 

PROJECT EFFECTIVENESS ............................................................................ 51 

PROJECT EFFICIENCY ................................................................................. 52 

EU ADDED VALUE ..................................................................................... 52 

FINAL ASSESSMENT ................................................................................... 53 

6.  CONCLUSIONS AND LESSONS LEARNED ................................................. 55 

ANNEX I. METHODOLOGY OF EVALUATION ................................................... 57 

ANNEX II. 

EX-POST COST-BENEFIT ANALYSIS REPORT ........................... 66 

ANNEX III. LIST OF INTERVIEWEES ............................................................. 85 

REFERENCES ................................................................................................. 87 

Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

LIST OF ABBREVIATIONS  

B/C 

CBA 

Benefit/Cost ratio 

Cost-benefit analysis 

DG REGIO 

Directorate-General for Regional and Urban Policy 

EC 

EIA 

ENPV 

ERDF 

ESIF 

ERR 

EU 

EUR 

FNPV/C  

FNPV/K 

FRR/C 

FRR/K 

FS 

GDP 

GHG 

HGV 

LSR 

NPV 

MoF 

MoT 

NUTS2 

O&M 

TEN-T 

ToRs 

VAT 

VOC 

VOT 

European Commission 

Environmental Impact Assessment 

Economic Net Present Value 

European Regional Development Fund 

European Structural and Investment Funds 

Economic Rate of Return 

European Union 

Euro 

Financial Net Present Value of the investment 

Financial Net Present Value of national capital 

Financial Rate of Return on investment 

Financial Rate of Return on national capital 

Feasibility Study 

Gross Domestic Product 

Greenhouse Gas 

Heavy goods vehicle 

Latvia State Road 

Net Present Value 

Ministry of Finance 

Ministry of Transport 

Nomenclature of Territorial Units for Statistics 

Operating & Maintenance  

Trans-European transport networks 

Terms of References 

Value Added Tax 

Vehicle Operating Cost 

Value of Time 

4 

 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

EXECUTIVE SUMMARY 

This  case  study  illustrates  the  story  of  the  construction  of  Saulkrasti  bypass 
on  the  Latvian  State  main  road  A1  connecting  Riga  to  the  Estonian  boarder 
(further  called  major  project),  a  major  infrastructure  investment  co-financed  by  the 
EU  over  the  programming  period  2000-2006.  More  specifically,  this  is  an  ex-post 
evaluation assessing the long-term effects produced by the project and disentangling 
the  mechanisms  and  determinant  factors  that  have  contributed  to  producing  these 
effects. The analysis draws from an ex-post Cost-Benefit Analysis (CBA)1 and from an 
extensive  set  of  qualitative  evidence,  both  secondary  (technical  reports,  official 
reports,  press  articles,  books  and  research  papers)  and  primary  (interviews  with  key 
stakeholders and experts have been carried out in the period from November 2017 to 
March 2018 2).  

OVERALL APPROACH AND METHODOLOGY 

The  overall  approach  and  methodology  followed  in  the  evaluation  study  is  briefly 
recalled hereafter and more extensively in Annex I.  

The  Conceptual  Framework  delivered  in  the  First  Intermediate  Report  has  been 
developed  to  answer  the  evaluation  questions  included  in  the  ToR,  and  further 
specified  and  organised  in  accordance  with  the  study  team’s  understanding.  In 
particular, there are three relevant dimensions of the analysis:  

•  The ‘WHAT’: this relates to the typologies of long-term contributions that can 
be observed. The Team classified all the possible effects generated by transport 
projects  (including  road,  rail,  and  urban  transport  projects)  under  the  four 
following  categories:  ‘Economic  growth’;  ‘Quality  of  life  and  well-being’  (i.e. 
factors  that  affect  the  social  development,  the  level  of  social  satisfaction,  the 
perceptions  of  users  and  the  whole  population); 
‘Effects  related  to 
environmental sustainability’ and ‘Distributional impacts’.  

•  The  ‘WHEN’:  this  dimension  relates  to  the  point  in  the  project’s  lifetime  at 
which  the  effects  materialise  for  the  first  time  (short-term  dimension)  and 
stabilise  (long-term  dimension).  The  proper  timing  of  an  evaluation  and  the 
role  it  can  have  in  relation  to  the  project’s  implementation  is  also  discussed 
here. 

•  The  ‘HOW’:  this  dimension  entails  reasoning  on  the  elements,  both  external 
and  internal  to  the  project,  which  have  determined  the  observed  causal  chain 
of effects to take place and influenced the observed project performance. To do 
this  the  Team  identified  six  stylised  determinants  of  projects’  outcomes 
(relation  with  the  context;  selection  process;  project  design;  forecasting 
capacity;  project  governance;  managerial  capacity).  The  interplay  of  such 
determinants  and  their  influence  on  the  project’s  effects  is  crucial  to 
understand the project’s final performance. 

1

 Data, hypotheses and results are discussed in Annex II. 

2

 See Annex III for a detailed list of interviewees. 

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

The  methodology  developed  to  answer  the  evaluation  questions  consists  of 
ex-post  Cost  Benefit  Analysis  complemented  by  qualitative  techniques 
(interviews,  surveys,  searches  of  government  and  newspaper  archives,  etc.), 
combined in such a  way as to produce a  project history. CBA is an appropriate 
analytical  approach  for  the  ex-post  evaluation  because  it  can  provide  quantification 
and  monetisation  of  some  of  the  long-term  effects  produced  by  the  project  (at  least 
those also considered in the ex-ante CBA). However, the most important contribution 
of the CBA exercise is to provide a framework of analysis to identify the most crucial 
aspects of the projects’ ex-post performance and final outcome. It is worth noting that 
the  purpose  of  this  evaluation  is  not  to  compare  ex-ante  and  ex  post  CBAs  and  that 
the results of these assessments are not easily comparable, because even if they rely 
on  the  same  principles  and  draw  from  the  established  CBA  methodology,  there  are 
often  important  differences  between  how  the  ex-ante  and  ex-post  assessments  were 
scoped and what data were taken into account. Qualitative analysis on the other hand 
is more focussed on understanding the determinants and causal chains of the delivery 
process  as  well  as  to  assess  effects  that  may  be  difficult  to  translate  in  monetary 
terms.  

MAIN PROJECT FEATURES 

The  project  under  assessment  is  located  on  the  Via  Baltica  Route,  which  is 
part of Transport Corridor N.1 within the Trans-European Transport Network, 
the  most  important  highway  connecting  the  Baltic  States.  In  particular,  the 
project concerns the upgrade of the Via Baltica on the Latvian state main road A1 on 
the  section  passing  through  the  settlement  of  Saulkrasti.  Located  at  45  km  north  of 
Riga, the Latvian’s capital city, Saulkrasti town forms part of a popular and attractive 
area  for  summerhouses  and  holiday  residents.  During  the  summer  season  the  town 
population increases by ten times.  

The  project  consisted  of  the  construction  of  a  20  km  long  bypass  to  divert  long-
distance  traffic  away  from  Saulkrati  town  (including  rehabilitation  of  sections  of  six 
roads  of  state  significance  to  incorporate  the  new  bypass  into  the  existing  road 
network)  as  well  as  the  rehabilitation  of  14.8  km  of  the  existing  road  A1  passing 
through the settlement of Saulkrati (now downgraded to local road V101). Before the 
project implementation the existing road A1 (2 lane carriageway with a speed limit of 
50  km)  was  the  only  road  in  the  full  length  of  the  town  serving  local  traffic,  public 
transport,  as  well  as  international  and  transit  traffic.  As  confirmed  by  traffic  studies 
carried out by the Ministry of  Transport in the mid-Nineties, Saulkrasti town was one 
of the main bottlenecks of Via Baltica in Latvia.   

The  project  forms  part  of  a  multi-stage  scheme  to  rehabilitate  and  upgrade 
the Latvian section of the Via Baltica which was a priority not only at national 
but  also  at  European  Level.  Actually,  the  project  is  in  line  with  both  the  First 
(1996–2000)  and  the  Second  (2001-2006)  Investment  programs  for  Via  Baltica 
prepared  on  the  basis  of  the  Memorandum  of  Understanding  on  the  Development  of 
Via Baltica (signed by the Transport Ministers of the Baltic countries and the European 
Commission).  

The project involved a total initial investment of EUR 130.5 million, in nominal prices, 
42.2%  of  which  co-financed  by  the  Cohesion  Fund  (CF).  The  remaining  investment 
cost was covered by national contribution. In particular, the EU grant co-financed the 
construction  of  the  new  bypass  as  well  as  its  integration  into  the  existing  road 
network, while all the works related to rehabilitation of existing road A1 were financed 

6 

 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

by State Budget of Latvia. The preparatory works were undertaken between 2002  and 
2007  and  the  construction  phase  took  place  between  2005  and  2008,  while  the  new 
bypass was opened for traffic in October 2007. 

PROJECT PERFORMANCE 

Based on the different findings produced by the project analysis, the final assessment 
of the project performance is presented hereafter, along a set of evaluation criteria.  

Project relevance and coherence 

The project was highly relevant in the context where it was implemented and 
in line with the policy goals reflected in strategic documents both at national 
and European levels. Its primary objective was to solve a traffic bottleneck in one of 
the  main  state  road  connecting  Riga  with  the  Estonian  border,  which  negatively 
affected both the travel conditions of long-distance travellers and the quality of life of 
Saulkrasti’s inhabitants and tourists. With the construction of a bypass, the Saulkrasti 
town  was  expected  to  be  relieved  from  traffic  congestion,  thereby  leading  to  a 
reduction in noise, air pollution and collisions.  

Moreover, the project contributed  to the integration of the transport infrastructure of 
Latvia  into  the  European  Transport  network  which  was  one  of  the  main  objectives  of 
both  the  Accession  Partnership  and  the  National  Programme  for  Adaptation  of  the 
acquis.  By  meeting  the  requirements  set  in  these  two  documents  with  regards  to 
transport  network  access  and  inter-connection  the  project  was  given  the  highest 
priority.  

The  project  components  are  coherent  with  all  the  stated  project  objectives. 
The  rehabilitation  of  existing  A1  (including  construction  of  new  wearing  course, 
reconstruction  of  37  bus  stop  platforms,  rehabilitation  of  sidewalks  street  lightning) 
was  indeed  carried  out  in  line  with  the  mobility  and  safety  needs  of  the  municipality 
and  the  bypass  was  constructed  in  order  to  be  integrated  with  the  existing  road 
network and to meet the EU road standards, with particular attention to the necessary 
load-bearing  capacity.  Also,  the  project  is  consistent  with  the  other  phases  of  the 
multi-stage scheme to rehabilitate and upgrade the Latvian part of the Via Baltica, in 
line with a structured prioritisation system endorsed by the Ministry of Transport and 
underpinning the implementation of the entire investment scheme.  

Project effectiveness  

Overall, the project achieved the expected objectives. The different effects generated 
by the investment are briefly resented in what follows: 

•  The  project  generated  a  positive  economic  return  due  to  cost  savings 
(in the form  of VOC and time) for  travelers  of  the  new  bypass,  reduction 
in  accidents,  noise  and  air  emissions  due  to  shift  of  traffic  from  an 
urban road to a suburban road. All these effects have been quantified in the 
ex-post  CBA.  The  analysis  points  to  an  Economic  Net  Present  Value  (ENPV) 
amounting to EUR 103.1  million in the baseline case 3, with an internal rate of 
return of 9.4%. The risk analysis indicates that there is a probability of nearly 
50% that the ENPV is lower than the baseline one but a nil probability for the 

3

 With the applied discount rates of 6.67% backward and 6.25% forward. See First Interim Report. 

7 

 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

ENPV to be less than zero. Such results confirm that the project had a positive 
socio-economic impact and it is not subject to high risk in the future evolution. 
If  fact,  even  with  variations  of  critical  variables  in  a  negative  direction,  the 
economic performance of the project remains positive. 

•  A  positive  effect  on  the  living  conditions  of  both  Saulkrasti’s  citizens 
and  tourists  is  also  recognized,  as  evidenced  by  interviews  with  local 
stakeholders and data on numbers of tourists. As a matter of fact, traffic jams 
are no more an issue in Saulkrasti – even in summer season – and Saulkrasti is 
a quite a peaceful place where to live or spend holidays. 

•  Losses  of  profits  for  the  small  economic  activities  (gas  stations,  bars, 
cafeterias,  etc.)  located  along  the  existing  A1  soon  after  the  bypass  opening 
were mentioned by local stakeholders as one of the possible drawbacks of the 
project.  However,  due  to  overlap  of  the  bypass's  initial  operating  phase  with 
the  economic  crisis  of  2008-2010,  such  losses  cannot  be  fully  attributable  to 
the investment. In any case, few years after the crisis such negative effect has 
been more than outweighed by the increase in tourism, which was encouraged 
by  the  reduction  of  transit  traffic  going  through  Saulkrasti  town  and  its 
improved accessibility. 

•  Another  remarkable  benefit  of  the  project  is  the  learning  effect  enjoyed  by 
the  Ministry  of  Transport  and  the  Latvian  Road  Administration  as 
Saulkrasti bypass was the first new construction project of such scale in Latvia 
since  the  nation’s  independence  of  1991.  The  project  was  a  useful  experience 
for  the  development  of  project  management  system  within  the  road 
administration.  It  stimulated  the  improvement  of  existing  technical  know-how 
as  well  as  system  development  on  how  to  plan,  develop,  implement  and 
operate road construction projects in Latvia. In addition, thanks to this project 
a  land  acquisition  unit  was  established  within  the  Latvian  State  Road 
administration  and  new  procedures  were  set  at  the  national  level  for  land 
pricing. 

•  The  project  contributed  to  strengthen  territorial  cohesion  in  Riga 
region as well as in the country. As a consequence of the reduction in travel 
time and costs,  connectivity between the  Estonian border and Riga have been 
facilitated.  However,  at  European  level  the  effects  on  territorial  cohesion  are 
expected  to  be  wider  in  the  future,  when  all  the  remaining bottlenecks  on  Via 
Baltica will be addressed. 

Project efficiency  

Although  the  project  was  well  prepared  and  designed,  it  experienced 
challenges  and  delays  during  its  implementation.  In  particular,  the  tendering 
procedures  turned  out  to  be  longer  and  more  troublesome  than  expected.  Actually, 
the project was implemented soon after Latvia joined the EU. This resulted, firstly, in 
changes  in  the  binding  tendering  procedures  (from  PRAG  rules4  to  national 
procurement  law)  and,  secondly,  in  a  sudden  transformation  of  the  country’s 

4

 PRAG stands for “Procedures and practical guide” which explains the contracting procedures applying to all 
EU external actions financed from the EU general budget (the EU budget) and the European Development 
Fund (EDF). 

8 

 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

macroeconomic situation, especially impacting on price increase. As a result, the start 
of  the  project  implementation  was  delayed  by  one  year  and  the  investment  cost 
significantly  increased:  from  48.81  million  to  EUR  130.5  million,  in  nominal  values. 
Nevertheless,  thanks  to  a  good  managerial  capacity  of  stakeholders  involved  in  the 
project  implementation  the  commissioning  of  the  bypass  was  delayed  only  of  three 
months and cost overrun was promptly covered by the State Budget.  

Resources  from  the  State  Budget  also  guarantee  the  financial  sustainability  of  the 
project in the operational period. Indeed, maintenance activities on the bypass (which 
is not tolled) are financed by the State budget, while maintenance of the old A1 (now 
V101) crossing Saulkrasti is now under the responsibility of the municipality.   

EU added value  

The  project  has  contributed  to  the  development  of  the  Trans-European  Transport 
network.  It  has  facilitated  mobility,  especially  for  cargo  traffic,  on  Via  Baltica  route 
which  is  an  important  artery  among  the  Baltic  States  and  the  rest  of  Europe.  At  the 
same time the project contributed to reduce negative externalities in Saulkrasti town, 
in  line  with  European  priorities  and  requirements.  All  these  effects  would  not  have 
been achieved without the support from the EU. As a matter of fact, the state of Latvia 
did not have the financial capacity to implement big and desirable investment such as 
Saulkrasti  bypass,  which  was  the  first  road  construction  project  since  Latvia’s 
independence in 1991.  

Apart  from  the  financial  support,  the  European  Commission  had  a  lot  of  power  to 
oversee  the  preparation  process  and  the  project  benefitted  from  the  EC  technical 
assistance through the pre-accession instrument (ISPA), mainly for the elaboration of 
the project documentation such as the feasibility study.  

In  the  absence  of  the  EU  support,  the  bypass  would  not  have  been 
constructed.  The  Ministry  of  Transport  would  have  only  carried  out  extraordinary 
maintenance  on  the  existing  A1  passing  through  Saulkrasti,  which  would  not  be 
enough  to  solve  the  traffic  bottleneck.  Accession  to  EU  funds  allowed  the  Ministry  of 
Transport, the Latvian State administration and the Saulkrasty town to have an extra 
chance to meet their needs in terms of connectivity, accessibility and quality of life.         

The EU support has been crucial not only for Saulkrasti project but also for all 
the other investments on Via Baltica route carried out in the same and in the 
subsequent years. Nowadays, it continues to remain a significant source of financing 
for  road  improvement  projects,  thus  ensuring  connectivity  and  quality  of  the  road 
network.  

MECHANISMS AND DETERMINANTS 

In  terms  of  mechanisms  and  determinants  explaining  the  project  performance  a 
number of findings can be drawn from the project assessment. 

•  Context  is  without  doubts  one  of  the  most  important  pre-requisite  of 
the  project  performance.  The  bypass  was  in  fact  in  line  with  the  context 
needs  and  the  objectives  of  both  the  Accession  Partnership  and  the  National 
Programme  for  Adaptation  of  the  acquis  with  regards  the  transport  sector  by 
facilitating  the  integration  of  the  transport  infrastructure  of  Latvia  into  the 
European Transport network. The time played a twofold role. On the one hand, 
the  project  was  timely  conceived  as  soon  as  EU  financial  resources  become 
available  to  Latvia.  On  the  other  hand,  the  project  implementation  coincided 
with  the  EU  accession,  which  radically  changed  the  country’s  situation  in 

9 

 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

financial  and  labour  markets,  thus  creating  an  unfavorable  condition  for  the 
bypass construction. 

•  The  whole  project  definition  and  option  selection  process  managed  by  the 
Latvian Road Administration – with the support of different consultants 
–  has  played  a  positive  role  in  the  project’s  final  performance.  The 
process  was  based  on  sound  feasibility  studies  and  involvement  of  all  the 
stakeholders,  including  the  municipalities  and  citizens  through  two  public 
consultations.  

•  Forecasting  capacity  can  be  considered  satisfactory  given  the  uncertain 
and  changing  situation  that  Latvia  was  facing  when  forecasts  were  made.  A 
prudential approach was taken with respect to traffic forecasts, this resulted in 
actual  traffic  being  higher  than  expected  on  the  new  bypass.  However, 
investment cost increase was huge, which partially reflects an underestimation 
of the financial consequences of the EU accession. 

•  The  project  governance  and  the  managerial  capacity  had  positively 
contributed  to  the  satisfactory  performance  achieved  by  the  project. 
The  institutions  involved  in  the  project  preparation  and  implementation  did 
their  best  to  overcome  the  difficulties  brought  about  by  such  a  new  and 
complex  project  with  respect  to  road  construction  experience  in  Latvia  at  that 
time. Also, it is worth noting that the Saulkrasti bypass project is considered by 
both  the  Ministry  of  Transport  and  the  Latvian  Road  Administration  an 
important step in terms of capacity building in the public transport sector.     

CONCLUSIONS 

In  conclusion,  the  ex-post  assessment  of  this  project  points  towards  an  overall 
positive  outcome  from  the  Saulkrasti  bypass.  It  represents  an  example  of 
infrastructural  project  in  the  road  transport  sector  which  managed  to  deliver  net 
positive  benefits  in  spite  of  the  considerable  cost  increase  experienced  in  the 
investment  phase.  As  a  matter  of  fact,  the  investment  was  the  right  and  necessary 
initiative  to  implement  to  avoid  traffic  bottlenecks  on  one  of  the  main  artery  of  
Latvia’s  road  network  as  well  as  to  sustain  the  local  development  of  Saulkrasti.  That 
said, it must be acknowledged that the future performance of the project is subject to 
possible changes due to the implementation of the Rail Baltica project, co-financed by 
the  EU  TEN-T  budget,  which  is  expected  to  divert  the  major  freight  transport  in  the 
Baltic region from road to rail.  

The  story  of  the  Saulkrasti  bypass  illustrates  that  a  major  project  can  play  a  pivotal 
role  in  developing  technical,  legal  and  administrative  capacities  within  the  public 
authorities  involved  in  the  project  conception,  selection,  and  implementation,  which 
should  be  capitalised  for  future  projects.  At  the  same  time,  the  institutional  capacity 
needed  to  implement  such  kind  of  projects  should  be  acknowledged  since  the 
beginning  in  order  to  avoid  adverse  negative  events  such  as  delays,  cost  overrun  or 
benefit shortfall.  

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1.  PROJECTS DESCRIPTION 

The  project  “Improvement  of  Via  Baltica  Route.  Construction  of  Saulkrasti  bypass  on 
the Latvian State Main road A1 Riga (Baltezers) – Estonian boarder (Ainazi) from km 
21.05 (Lilaste) to km 40.57 (Skulte)” (No 2002/LV/16/P/PT/008) is a stage of a wider 
investment scheme aimed at rehabilitating and upgrading the Via Baltica – part of the 
Pan European Corridor N.1.  

On November 14, 1995 the Cabinet of Ministers of the Republic of Latvia approved the 
National  Transport  Development  Programme  for  the  period  of  1996-2010  which 
stressed the importance of upgrading the transit corridors of Latvia to European road 
standard.  Via  Baltica  route  is  indeed  a  strategic  artery  not  only  for  Latvia’s  road 
network  but  also  for  transit  traffic  in  north-Europe.  As  a  consequence,  Via  Baltica 
Route was given the  highest priority  in National ISPA Strategy  for Transport 
Sector.  In  this  context,  the  Ministry  of  Transport  elaborated  a  Public  Investment 
Programme where construction of Saulkrasti bypass was included.  

In  particular,  the  project  under  assessment  concerns  the  construction  of  a  new  road 
with  long-term  capacity  to  bypass  Saulkrasti  town.  The  project  also  includes  the 
rehabilitation of the existing road A1 passing through the residential area. The project 
cost amounts to EUR 130.5 million in nominal term.  

This  section  contains  a  brief  description  of  the  project.  The  socio-economic  context, 
the  target  population  and  key  structural  features  of  the  infrastructure  and  service 
delivered are outlined in order to give a general description of the project context and 
objectives. 

1.1. Context 

The project is located on the state main road A1 connecting Riga, the capital of Latvia, 
to Ainaži, which is a Latvian town on the border with Estonia. The A1 is part of the Via 
Baltica route, which runs from Estonia to Poland (Figure 1). 

Figure 1.  Location of the project on Via Baltica route 

SAULKRASTI 

Source: Balticmaps.eu, authors 

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Via  Baltica  is  the  most  important  highway  between  the  Baltic  States  with  high  traffic 
volumes (see Figure 2). It is also part of the European Route E67 running from Prague 
to Helsinki through Poland, Lithuania, Latvia, Estonia.5 From Tallinn to Warsaw E67 is 
part of Transport Corridor N.1 within the Trans-European Transport Network (TEN-T). 

Figure 2.  AADT on the state main roads in Latvia (2016) 

Source: Latvian State Roads 

The  project  is  located  in  Saulkrasti  town  and  the  interrelated  villages 
Zvejniekciems and Skulte, which are about 45 km north of Riga.  

The territory of Saulkrasti stretches across 17  km from Lilaste river to Zvejniekciems 
village.  Saulkrasti  district  consists  of  2-5  km  wide  territory,  including  the  forests  on 
the  coast  line,  the  Lilaste  lake,  the  territory  with  summer  cottages  on  the  east  from 
the railroad, and Zvejniekciems where port of Skulte is located. Skulte parish borders 
with Saulkrasti district in the north. Its territory stretches for 5.8 km along the coast. 
Before  the  bypass  construction  the  Saulkrasti  town  was  crossed  by  the 
national  road  A1.  After  that,  the  road  passing  through  Saulkrasti  has  been 
downgraded to local road (V101). 

The  historic  settlements  of  Saulkrasti,  including  Pabaži  in  the  south  and 
Zvejniekciems in the north, have developed as seaside resorts and form about 12 
km  long  stretch  of  residential  area  along  the coast.  During  the  Soviet  epoch,  several 
allotment  cooperatives  with  summer  cottages  were  established  within  the  adjacent 
forest areas (east of coastal settlements).  

According  to  the  data  from  the  Office  of  Citizenship  and  Migration  Affairs,  2,126 
inhabitants  lived  in  Skulte  parish  and  6,127  inhabitants  lived  in  Saulkrasti  district  in 
2016.  Over  the  years,  the  population  in  Saulkrasti  and  Skulte  has  not  followed  the 

5

 Road E67 from Warsaw to Tallin is known as Via Baltica.  

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overall  negative  tendency  in  Latvia  but  has  even  slightly  increased  comparing  with 
year  2005.  This  can  be  explained  by  labour  migration  within  the  country  and 
agglomeration trends towards the capital city. As in Riga the job offer is higher than in 
the  rest  of  the  country,  people  choose  a  place  of  residence  in  close  vicinity  of  their 
workplace  in  the  capital  city  (usually  within  1  hour  travelling  distance).6  The 
population  density  in  Saulkrasti  is  128.34  persons/km2  (2016)  which  corresponds  to 
the average density in Riga agglomeration for sub-urban territories of similar size and 
with private houses. 

Figure 3.  Population dynamics in Saulkrasti, Skulte and Latvia (base year 2005) 

106%

104%

102%

100%

98%

96%

94%

92%

90%

88%

86%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Saulkrasti

Skulte

Latvia

Source: The Office of Citizenship and Migration Affairs, Authors 

Due  to  the  convenient  location  in  the  vicinity  of  Riga  and  being  on  the  sea  coast, 
Saulkrasti town has become an attractive resort destination in Latvia. The recreational 
vocation of the town is also evident from its motto – "The town closer to the Sun". 

Figure 4.  Photos of Saulkrasti beach and forest 

During  the  summer,  population  in  Saulkrasti  increases  of  nearly  10  times  because 
allotment cooperatives and summer cottages fill in with summer vacationers.  

Source: Authors’ picture and www.latvia.travel.en 

6

  More  than  2/3  of  the  value  of  the  Latvian  economy  are  created  in  Riga  and  Riga  region.  (Source: 

Sustainable Development Strategy of Riga Planning Region 2014-2030). 

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The  number  of  tourists  using  accommodations  in  Saulkrasti  has  more  than  doubled 
during the last 8 years (see figure below). 

Figure 5.  Number of persons served in Saulkrasti’s touristic accommodations 

12,000

10,000

8,000

6,000

4,000

2,000

0

2009

2010

2011

2012

2013

2014

2015

2016

Source: Central Statistical Bureau data, authors 

The  development  of  entrepreneurship  in  Saulkrasti  is  mainly  related  to  services  in 
trade  and  tourism.  The  majority  of  enterprises  are  small  local  companies  (up  to  10 
employees)  focused  on  catering  or  hospitality  activities  which  mainly  depend  on 
revenues  earned  during  the  summer  season.  Unemployment  level  is  low  –  4.1%  in 
2016 (see table below). 

Table 1.  Unemployment level in Latvia 

UNEMPLOYMENT LEVEL 

2014 

Saulkrasti 

4% 

National average 

10.6% 

2015 

4.8% 

9.9% 

2016 

4.1% 

9.6% 

Source: Central Statistical Bureau, Latvia 

The  overall  socio-economic  development  of  Saulkrasti  can  be  assessed  using  a 
territorial development index (TDI) 7, which demonstrates higher or lower development 
of a territory  from the  average  social economic development level of  the state in the 
relevant  year.  As  presented  in  the  figure  below,  the  index  shows  that  Saulkrasti 
development level has been higher than the average level in the country. 

7

 TDI is a generalised indicator which is calculated with determined weight coefficients by summing up standardised values 
of  the  most  important  basic  indicators  of  statistics  which  characterise  the  development.  In  the  TDI  calculation  the 
standardized values of eight different indicators are used and each of them has its own weight (influence) as follows: 
•  Number  of  economically  active  individual  entrepreneurs  and  commercial  companies  per  1000  inhabitants,  (weight 

0.25); 

Low-income persons to the total population,% (weight 0.1); 
Total number of criminal offenses per 1000 inhabitants, (weight 0.05); 

•  Unemployment rate,%, (weight 0.15); 
• 
• 
•  Natural changes in population per 1000 inhabitants, (weight 0.1); 
• 
Long-term migration surplus per 1,000 inhabitants, (weight 0.1); 
• 
Population over working age per 1000 working age persons (weight - 0.05); 
•  Personal income tax per capita, in euro, (weight - 0.2). 

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Figure 6.  Territorial development index for Saulkrasti district 

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0

2007

2008

2009

2010

2011

2012*

2013

2014

2015

2016

*Data not available 
Source: Authors 

About  two  third  of  economically  active  persons  work  outside  Saulkrasti  (mainly  in 
Riga). People commute to Riga using private cars or public transport – rail, bus. There 
is  a  good  rail  connection  with  a  service  every  30  minutes  in  the  morning  and  less 
frequent  service  during  the  rest  of  the  day.  The  journey  by  train  takes  58  minutes, 
bus is slightly longer (65 minutes) while by car requires on average 45-50 minutes.  

Mobility  and  transport  infrastructure  are  of  great  importance  for  the 
development of the territory of Saulkrasti as well as for the well-being of its 
inhabitants.  First  of  all,  adequate  road  infrastructure  is  important  to  ensure 
comfortable, safe and fast connectivity for those living in Saulkrasti agglomeration and 
working in Riga. Secondly, a fast connection to Riga and to the neighbouring countries 
is key for tourism development, which is one of Saulkrasti’s main drivers of economic 
development.  Via  Baltica  road  is  indeed  used  for  interregional  and  international  bus 
connections, and it is a link to Riga passenger port and Riga airport for those coming 
from the northern part of the country and Estonia. At the same time, a safe and quite 
environment  is  another  important  aspect  spurring  tourism,  especially  in  view  of  the 
Latvian Tourism Marketing Strategy 2010-2015 which promotes Latvia as the place to 
slow down the lifestyle pace and enjoy calm, harmony and discover truth values8.   

Adequate  long-distance  roads  are  also  fundamental  for  the  economic 
development  of  the  country  as  a  whole.  As  a  matter  of  fact,  Latvia’s  geographic 
location at the center of the Baltic region and at the external boarder of the European 
Union allows for rapid distribution of goods via roads not only in the Baltic States and 
even  Helsinki,  Stockholm  or  Warsaw  within  24  hours  but  also  access  to  Russian 
Federation  and  the  Republic  of  Belarus.  This  favourable  circumstance  has  been 
exploited by the  country since its independence in 1991 (see box below) although at 
that  time  the  road  infrastructures  were  suffering  from  poor  maintenance  and  needed 
to  be  integrated  with  the  Trans-European  transport  network.  Over  the  years,  the 
transport sector has taken a stable position in the Latvian economy. The transport and 
storage sectors contribute roughly 9% to the total added value and employ around 9% 
of Latvia’s working population.9  

8

 https://www.interregeurope.eu/fileadmin/user_upload/tx_tevprojects/library/file_1508254284.pdf 

9

 Data refers to 2016. 

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Figure 7.  Transport sector contribution to the Latvian economy 

million EUR 

25000

20000

15000

10000

5000

0

2008

2009

2010

2011

2012

2013

2014

2015

2016

Total added value

Transport and storage sector added value

Source: National statistical office 

Box 1. 

Latvia’s history in a nutshell: from independence to EU accession 

Latvia restored its independence after the collapse of the Soviet Union in 1990, when 
it  started  the  transition  from  a  centrally  planned  to  a  market  economy.  The  Latvian 
national currency (lats; LVL) was introduced in 1993. In the first half of 1995, Latvia 
faced  a  major  banking  crisis  which  hampered  Latvia’s  economic  renaissance  until 
1997. In the same year of the crisis, Latvia formally applied for EU membership and, 
at the end of 1999, the European Commission recommended that member states open 
negotiations  with  Latvia.  In  2003  Latvia  held  a  referendum  on  EU  membership.  It 
joined  the  European  Union  in  2004,  and  the  Economic  and  Monetary  Union  on  1 
January 2014. 

Source: Authors based on Latvia’s post-soviet transition (www.piie.com) 

In  the  context  of  freight  traffic,  Via  Baltica  transport  corridor  plays  a 
significant  role  for  goods  transportation  among  the  Baltic  countries.  Most  of 
freight carried towards Estonian border comes from Latvia, Lithuania and Poland with 
a final destination in Estonia or Finland.10 Goods carried from north mainly come from 
Estonia  or  Finland  and are  transported  to  Latvia,  Lithuania  or  Poland.  Statistical  data 
show  that  freight  flow  to  and  from  Estonia  has  a  tendency  to  increase  (see  figure 
below).  Around  75%  of  all  freight  traffic  on  the  main  road  A1  are  transit  traffic 
(destination  outside  Latvia).  This  indicates  that  the  road  A1  is  relevant  not  only  at 
national level, but also for cross-border trade.  

10

 Study on transit freight by road transport through Latvia, 2014. 

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Figure 8.  Freight transported to and from Estonia11 

s
n
o
t
d
n
a
s
u
o
h
t

1000

900

800

700

600

500

400

300

200

100

0

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Exported goods

Imported goods

Lineare (Exported goods)

Lineare (Imported goods)

Source: Central Statistical Bureau, Latvia 

1.2. Project objectives  

Saulkrasti bypass project was one of the projects listed in the investment program of 
Ministry of Transport of Latvia (1997), which task was to upgrade the transit corridors 
of Latvia to European road standard. At that time most of the state main roads were in 
bad  technical  conditions  and  did  not  provide  satisfactory  level  of  service  for  road 
users.  

Box 2. 

Condition of road infrastructure in 1995 

In  Latvia,  the  process  of  collapse  of  the  relatively  well-developed  transport 
infrastructure  already  started  in  the  Soviet  epoch.  At  the  time  when  the  National 
transport  development  program  (1996-2000)  was  carried  out,  the  country  had  77.3 
km of roads with collapsed black pavement. According to the assessment of the Road 
Administration,  more  than  half  of  all  black  pavements  in  the  country  were  over  11 
years  old,  so  they  were  in  a  critical  phase.  The  surface  of  black  pavement  should  be 
renovated on about 700 km long sections every year, but in reality, due to the lack of 
financial  resources,  the  renovation  of  black  pavements  took  place  in  around  ten 
kilometers  only.  It  was  concluded  that  if  the  situation  would  have  not  changed 
radically,  then  the  Latvian  state  road  network  would  have  become  practically 
inoperative in the coming years and the society would have suffered heavy losses.  

Source: National transport development program 1996-2000 (www.piie.com) 

Saulkrasti  was  identified  as  a  bottleneck  on  Via  Baltica  route  which  greatly 
hindered the transit traffic flow. In addition, the city was severely affected by the 
negative impact of traffic flow on the environment, population and traffic safety. 

11

 Goods transported to and from Estonia mainly use Via Baltica route. 

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The main problems for traffic on the state main road A1 and Saulkrasti town were as 
follows: 

•  Being  A1  part  of  the  Via  Baltica,  connecting  Riga  to  Estonia,  the  road  was 
used  both  for  passenger  and  road  cargo  traffic  between  the  Baltic 
countries,  and  by  local  traffic,  as  well  as  by  public  transport.  Since  it  was 
the only road in Saulkrasti that stretches throughout the town, traffic on it was 
particularly  heavy,  especially  during  the  summer  season  due  to  holiday 
travelers. Being in an urban environment, the speed limit for the most part of 
this  road  section  (10.1  km)  was  50  km/h  which  clearly  prolonged  the  travel 
time on Via Baltica.  

•  The  road  stretching  throughout  Saulkrasti  runs  concurrent  to  coastal  line  and 
on average the distance to the shore is less than 500m. In a section of km 33.1 
the road is less than 10 meters  away from the beach and approximately 
5  meters  above  the  sea  level,  so  during  winter  time  part  of  the 
embankment used to be washed away to such a degree that strengthening 
measures of the embankment were needed. 

•  Due  to  heavy  traffic  it  was  not  easy  for  local  traffic  to  enter  the  main 
road in Saulkrasti as well as it was difficult for pedestrians to cross the 
road.  This  problem  was  particularly  troubling  during  summer  time  when  the 
number  of  holiday-makers  by  far  exceeded  the  number  of  residents. 
Pedestrians  were  systematically  crossing  the  road  in  full  length  of  Saulkrasti 
zone  in  both  directions  to  get  to  and  from  the  seaside.  It  was  very  hard  to 
organize such dissipated pedestrian flow with heavy traffic on the main road. 

•  Transit  traffic,  especially  HGV,  caused  local  air  pollution  and  increased 

noise level in the local environment along the road. 

•  Safety level on the old road A1 was not adequate neither for pedestrians 
crossing,  especially  for  elderly  people  and  children,  nor  for  vehicles  transit. 
Actually,  mix  of  local  and  transit  traffic  with  many  exits  and  entrances  to 
adjacent streets and properties created a high risk for traffic accidents. 

In light of the above, the purpose of the bypass was threefold. First of all, it was 
meant  to  separate  the  cargo  traffic  from  the  traffic  serving  local  residents  in 
Saulkrasti, thus improving safety and reducing travel time and vehicle operating costs. 
Secondly,  the  project  was  aimed  at  bringing  Via  Baltica  section  from  km  21.05 
(Lilaste)  to  km  40.57  (Skulte)  in  compliance  with  European  road  standards.  Thirdly, 
the project was expected to contribute to development of the Pan-European transport 
network,  removing  a  bottleneck  on  corridor  1  and  thus  strengthening  territorial 
cohesion at EU level.  

The  project  contributed  to  the  objectives  of  both  the  Accession  Partnership  and  the 
National Programme for the Adoption of Acquis by meeting the requirements set out in 
these two documents with regards to transport network access, inter-connections and 
inter-operability by facilitating the integration of transport infrastructure of Latvia into 
the European Transport network.  

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1.3. Structural features  

The  total  scope  of  the  project  includes  two  different  components  which  are  further 
described in what follows: 

1.  Constuction of a new road with long-term capacity to bypass Saulkrasti center; 
2.  Improvement of existing road A1 from Lilaste to Skulte.  

Saulkrasti bypass is a 20.2 km long, with two lane carriageway (width of the roadway 
– 14 m, carriaageway –11.5 m) from Lilaste to Dūči (Figure 9). The designed speed on 
the bypass is 100 km/h.  

Figure 9.  Alignment of Saulkrasti bypass 

Railway 

Strengthened embankment 

Old road A1 

Green line: Construction Phase I 

Violet line: Construction Phase II 

The  bypass  includes  17  different  road  structures,  including  7  grade-saparated 
junctions, 6 new bridges, 2 pedestrian tunnels, 2 railroad bridges. All road structures 
are  detailed  in  the  table  below.  For  the  comfort  of  pedestrians  and  cyclists,  two 
tunnels were built - at the Inčupe and Ķīšupe station, and the sidewalks of 4.4 km on 
the roads crossing the bypass. 

Source: www.celuprojekts.lv 

Table 2.  Constructed road structures 

NUMBER 

TYPE OF STRUCTURE 

Structure No 1 

Grade-separated junction in Lilaste 

Structure No 2 

Railroad bridge in Lilaste 

Structure No 3 

Bridge over Inčupe river  

Structure No 4 

Grade-separated junction with state road Sēja – Ragana 

Structure No 5 

Bridge over Pēterupe river 

Structure No 6 

Grade-separated 
cooperative “Saulainā ieleja” 

junction  with  access  road 

to  summer  cottage 

Structure No 7 

Grade-separated junction with state road Saulkrasti-Bīriņi 

Structure No 8 

Grade-separated junction Vidrižu ielā 

Structure No 9 

Bridge over Ķīšupe river 

Structure No 10 

Pedestrian tunnel at Ķīšupe railway station 

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Structure No 11 

Bridge over Aģe river 

Structure No 12 

Grade-separated junction with state road Vidriži – Skulte 

Structure No 13 

Railroad bridge in Skulte; 

Structure No 14 

Grade-separated junction with access road to Skulte 

Structure No 15 

Bridge over Mazupīte river on access road Vidriži-Skulte 

Structure No 16 

Bridge over Mazupīte river 

Structure No 17 

Pedestrian tunnel at km 45 

Source: www.celuprojekts.lv 

The  road  pavement  structure  is  1  m  thick  including  drainage  layer  0.50  m,  mineral 
aggregates 0.28 m and three layers of asphalt pavement in total 0,22 m. In line with 
the European road standards, the design of the roadway structure was done in order 
to  ensure  the  necessary  load  bearing  capacity,  i.e.  the  standard  truck  axle  load 
bearing  capacity  of  11.5  t.  Lightning  is  installed  in  all  junctions.  Rainwater  drainage 
and collectors were built to mitigate the impact of ground compression on inflitration 
of  surface  waters.  Reconstruction  of  power  transmission  line  and  communication 
networks was also performed.  

In order to minimize environmental impact, noise protection walls in the total area of 
3,936.76  m2,  152  double-pane  windows,  wire  mesh  fences  are  installed,  as  well  as 
hedges are planted in some sections. 

Figure 10. Noise protection walls 

To  incorporate  the  new  bypass  in  the  existing  road  network  and  to  make  traffic 
between  the  bypass  and  the  existing  road  A1  attractive  in  order  to  reduce  traffic 
volume on road A1 through Saulkrasti town, reconstruction of 6 state roads (these are 
connecting  roads  classified  as  second-class  roads)  were  included  in  the  scope  of  the 
activities, co-financed by EU funds. In total, 13 km of access roads were constructed.  

Source: own picture 

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Figure 11. Grade-separated junction with access road and railroad in Skulte 

Source: www.binders.lv 

The  bypass  received  an  award  as  “The  best  structure  of  2007  in  Latvia”  in  the 
nomination  of  “Engineering  structure”.  The  competition  for  the  best  structure  is 
organized  every  year  by  16  non-governmental  organizations  from  construction 
industry  in  Latvia.  The  aim  of  the  competition  is  to  promote  the  quality  of  the 
construction  process  by  identifying  and  promoting  the  best  structures  and  good 
practice  examples  in  the  construction  process  in  Latvia,  to  promote  professional 
growth  and  quality  of  work  in  the  sector,  to  express  recognition  and  motivate  the 
industry representatives to highlight the final result of the construction process. 

Figure 12. Saulkrasti bypass 

In  addition  to  the  baypass  construction,  the  improvement  of  the  existing  road  A1 
section  km  21.05  -  40.57  was  done,  i.e.  rehabilitation  of  road  14.8  km,  including 
construction/reconstruction of sidewalks 5.55 km, reconstruction of 47 bus stops and 
11.6  km  of  street  lighting.  All  works  related  to  rehabilitation  of  existing  A1  were 
planned and were actually financed by State Budget of Latvia.  

Source: www.celuprojekts.lv 

21 

 
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

Figure 13. Reconstructed bus stop and sidewalk 

Source: Authors' picture 

22 

 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

2.  ORIGIN AND HISTORY 

2.1 

BACKGROUND 

The history of Via Baltica’s rehabilitation and upgrade dates back to the mid-
Nineties  when  the  First  Via  Baltica  Investment  Programme  1996-2000,  prepared  on 
the basis of the Memorandum of Understanding on the Development  of Via Baltica12, 
was approved with the aim of implementing infrastructure maintenance projects, i.e., 
pavement restoration, bridge reconstruction and an improvement in traffic safety.13 

Soon  after  the  approval  of  this  Programme,  in  1996-1997  a  group  of  European  and 
Latvian  consultants14  prepared  a  Master  Plan  for  Latvian  road  network  maintenance, 
development and operation and a programme for improving road safety 15 on the main 
state roads on behalf of the Ministry of Transport (MoT).  

The main emphasis in the Master plan was put on the following issues: 

•  Road safety strategy and road safety improvement programme; 

•  Traffic modelling and defining long-term development priorities; 

•  Feasibility study of improving Via Baltica (Saulkrasti, Iecava, Bauska); 

•  An  overview  of  environmental  aspects  in  relation  to  the  development  of  the 

road network. 

Taking  into  account  the  actual  traffic  flows,  the  most  important  transport  corridors 
passing  through  Latvia  were  identified:  North-South  corridor  (Via  Baltica)  and  East-
West  transport  corridor  (see  figure  below).  Accordingly  and  in  view  of  the  EU 
accession,  the  Master  Plan  highlighted  the  integration  into  the  TEN-T  network  as  the 
most important task on the road network. In other words, the need to upgrade transit 
corridors  of  Latvia  to  E-road  standards  was  set  as  a  priority.  The  National  ISPA 
Strategy  for  Transport  sector (issued in October 1999 by the MoT)  stated that in the 
selection  of  projects  the  European  Commission’s  priority  would  have  been  given  to 
measures  facilitating  the  development  of  connections  with  the  EU  countries  and 
projects  included  in  the  TINA  network 16,  in  particular  the  Helsinki  Pan-European 
Corridors.   

12

 signed in Helsinki, 1 December 1995 by the Transport Ministers of the Baltic countries and the European 

Commission. 

13

 The First Via Baltica Investment Programme has been financed through the loans from the World Bank, 

European Bank for Reconstruction and Development, EU PHARE programme and the State Road Fund. 

14

 Viatek Group LTd (Finland), SweRoad (Sweden), Celuprojekts (Latvia) and LT-Consultants (Finland). 

15  The  Master  plan  for  the  maintenance,  development  and  operation  of  the  road  network  and  highway 
safety programme (June 1997).  
16

 In preparation for the enlargement of the European Union to the east, in 1996 the European Commission 
set up the Transport Infrastructure Needs Assessment (TINA) to oversee and co-ordinate the development 
of an integrated transport network in the 11 countries that have applied for EU membership and to ensure 
coherence  with  the  Trans  European  Transport  Network  within  the  EU.  In  the  TINA  process,  the  Transport 
Ministries, the Commission and the TINA Secretariat have worked to define the precise transport links that 
should  make  up  the  eastern transport  network.  Projects  were  initially  financed  by  the  PHARE  programme. 
From  2000  onwards,  further  money  become  available  -  through  the  Instrument  for  Pre-Accession  Aid 
(ISPA).  

23 

 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

Figure 14. Main transport corridors in Latvia 

E67 (Via Baltica) 

E22 

Liepāja 

and 
connections  with 

Ventspils 
TEN-T network and corridor 9 

TEN T  

id  1A 

Source: Transport and Telecommunication Institute 

A  number of traffic studies17 carried out by Latvian road administration in the period 
of 1996-2000 allowed to identify, at national level, the road sections where travel time 
increased and traffic safety significantly reduced. Among the results of these studies, 
Saulkrasti  together  with  other  towns  such  as  Iecava  and  Bauska  was  identified  as  a 
“bottleneck” for transit traffic on Via Baltica route. 

The  project  forms  part  of  an  overall  scheme  to  rehabilitate  and  upgrade  Via 
Baltica  route  on  the  state  main  road  A1  between  Riga  and  Ainazi  near  to  the 
Estonian Border – part of the Pan-European corridor N.1 (see table below). Therefore 
the  measure  has  been  given  the  highest  priority  in  the  National  ISPA  Strategy  for 
Transport Sector.   

17

 1) Feasibility study for the improvement of State main road A10 Rīga – Ventspils, 2) Feasibility study for 
the  improvement  of  State  main  road  A9  Rīga  (Skulte)  –  Liepāja,  3)  Study  of  West  –  East  road  transport 
corridors in section Rīga – Jēkabpils, 4) Feasibility study for traffic safety improvement on State main road 
A1 Rīga (Baltezers) – the Estonian border (Ainaži). 

24 

 
 
 
 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

Table 3. 

Improvement of the Via Baltica route: the overall scheme until 2007 

SUB-SECTION  KM 

LOCATION 

COMMENTS 

1 (*) 

2 (*) 

3 (*) 

4 (*) 

5 

0.0 – 6.3 

Baltezers – Adazi  

ISPA 2001 

6.3 – 12.8 

Riga – Adazi 

Adazi - Gauja 

ISPA 2003 

12.8 – 13.0  Gauja Bridge 

Phare COP’97 

13.0 – 21.2  Gauja - Lilaste 

ISPA 2000. Completed in November 2001.  

21.2 – 41.0 

Lilaste – Skulte 

Saulkrasti bypass 

Project under assessment 

Note: * these projects were started and completed between 2000-2006, i.e. before Saulkrasti bypass 
project. Source: Authors based on information provided in the Application for assistance under the ISPA 
financial instrument 

2.2 

FINANCING DECISION AND PROJECT IMPLEMENTATION 

The  project  under  consideration  was  prepared  by  the  Latvian  Road 
Administration in cooperation with the Ministry of Transport.  Initially, to solve 
the bottleneck in Saulkrasti the options were either to widen the existing 2-lane road 
to four lanes or to construct a bypass for transit traffic. 

Saulkrasti  municipality  declined  the  widening  of  the  road  which  goes  through  the 
town. Also the designers considered this solution an impossible option due to densely 
located  residential  buildings  (part  of  which  historical  buildings)  along  the  road. 
Moreover, such an option would not reduce traffic through Saulkrasti town and would 
not  reduce  the  environmental  impact  in  residential  area,  and  the  high  risk  of  traffic 
accidents. 

In 1998 the first Feasibility study for Traffic Safety improvements on Road A1 
Riga  –  the  Estonian  Boarder  was  prepared  by  a  consortium  of  consultants 
composed by an international company and a Latvian one. 18 The study proposed six 
alternatives  for  bypassing  route,  two  of  which  were  accepted  by  involved 
municipalities  (see  figure  below).  One  alternative  (II)  proposed  a  bypass  along  the 
existing  railroad,  and  the  other  one  (IV)  offered  a  bypass  quite  at  a  distance  from 
Saulkrasti town through the forests.  

18

 The international consultant was COWI, the national one was ProVIA. 

25 

 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

Figure 15. Locations of Saulkrasti bypass alternatives 

Source: Improvements of Via Baltica route. Consturction of Sauklrasti bypass on the Latvian State main 
road A1 Riga (Baltezers) –Estonian border (Ainaži) from km 21.05 (Lilaste) to km 41.57 (Skulte). 
Environmental Impact Statement, May 2002. 

In  1999-2000,  another  feasibility  study19  was  specifically  performed  for  the 
two  selected  alternatives.  Technical,  financial  and  environmental  aspects  were 
assessed  for  each  option  and  the  results  were  in  favour  of  alternative  II  (taking  into 
account  alignment,  territory  of  land  required,  costs,  impact  on  natural  resources  and 
residential  areas).  According  to  the  “Construction  law”  of  the  Republic  of  Latvia  and 
the  “Regulations  on  public  hearing  of  construction”20,  a  first  public  hearing  was 
organised  in  May-June  2000  as  a  part  of  EIA.  Taking  into  account  the  view  of  local 
residents,  Saulkrasti  municipality  supported  alternative  II  adding  mandatory 
requirements for the corrections to bypass the territories for which the opposition was 
the greatest due to their proximity to the new road.  

Two  amended  alternatives  IIA  and  IIB  were  proposed  by  the  designer  and 
offered  for  public  hearing  in  August  2001  in  Saulkrasti  and  in  Skulte 21. 
Alternative IIA was closer to the existing railway and therefore closer to the residential 
areas.  Alternative  IIB  was  along  the  existing  high-voltage  power  line,  which  entailed 
that  less  forest  needed  to  be  cut  and  less  inhabited  territories  would  have  been 
affected  by  the  bypass.  In  total,  1,057  opinions  were  received,  of  which  62.2% 
supported alternative IIB, 0.1% supported alternative IIA and 20.9%  supported both 
alternatives.  Clearly,  the  most  active  residents  were  those  who  had  real  estate  close 

19

 Study for Road A1 Riga – the Estonian boarder potential road alignment alternatives in the section Riga- 

Skulte (prepared by COWI/ProVIA).  

20

 Regulation N. 309 of the Cabinet of Ministries of the Republic of Latvia.  

21

 On behalf of Latvian Road Administration the hearing procedure was organized and implemented by JSC 

“Celuprojeckts”, “Eirokonsultants” Ltd. And Real Estate Formation Board of State Land Service.  

26 

 
 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

to  the  proposed  road  alignment  IIA  and  IIB.  Less  interest  were  shown  by  residents 
living between the coast and the railroad. 

Main benefits foreseen by residents from alternative IIB were the following: 

•  Existing road through Saulkrasti would be released from heavy traffic; 

•  Light traffic on existing road would reduce by approximately 50%; 

•  Road  alignment  would  go  east  from  settlements  “Pabaži”  and  “Veselība”. 
Summer residents would not have to cross the bypass heading towards the sea 
and the centre of Saulkrasti. 

to 

After  a  comprehensive  analysis  concerning  all  environmental  factors  in  the  research 
area 22,  both  alternatives  were  compared  with  regard 
their  prospective 
environmental  impact.  The  EIA  resulted  in  calculating  the  potential  conflict  density 
(quantified  environmental  risks)  for  both  options.  Based  on  the  results  of  the  EIA 
and  the  public  hearing,  variant  IIB  was  accepted  by  the  authorities  for 
further promotion. 
Concerning  the  source  of  funding,  in  2000,  when  EU  pre-accession  funds 23 
become  available  for  Latvia,  it  was  decided  to  use  these  funds  for  the 
reconstruction  of  the  Via  Baltica  sections,  starting  with  the  “bottlenecks”  in 
Saulkrasti  and  Baltezers.  Accordingly,  the  project  (like  the  others  co-financed  by 
ISPA) was required to be prepared, approved, implemented and supervised in 
line  with  the  ISPA  procedures 24.  Saulkrasti  bypass  was  the  first  new  construction 
project since the independence of Latvia to follow these procedures. 

The  opening  of  the  first  construction  works  procurement  procedure  in  line  with  the 
Financial  Memorandum  was  set  for  March  2003.  At  first,  tendering  documents  were 
prepared in accordance with the Practical Guide to PHARE, ISPA and SAPARD and in a 
co-ordinated  manner  by  all  the  involved  institutions  (LSR,  MoT,  MoF  and  EC).  The 
coordination  of  the  Project  procurement  documentation  was  a  long  process, 
which  was  further  influenced  by  changes  in  regulations  governing  the  tender 
procedure. The procurement documentation was redone several times (the ISPA rules 
changed, and in 2004 the transition to the Latvian Law on Public Procurement25 took 
place).  As  a  result,  the  actual  project  implementation  was  delayed  by  two 
years.  This  was  due  to  both  the  lack  of  experience  in  drawing  up  the  necessary 
documents  and  the  complex  and  lengthy  administrative  procedure  for  document 
coordination.   

22

  I.e.  population,  inhabited  areas,  landscape,  cultural  heritage  and  material  assets,  flora/fauna/biotopes, 

climate/air, surface water, soil. 

23

 Instrument for Pre-Accession Aid (ISPA). 

24

 As per Regulations of the Cabinet of Ministers of Latvia No.1 adopted on 2 January 2001. Procedures by 
which Projects Financed from Resources of the Financial Instrument for European Union Structural Policies 
for Pre-accession are Prepared, Approved, Implemented and Supervised. 

25

 In 2004 the Ministry of Finance, as a public administration body, procured purchases in accordance with 
the Law on procurement for the needs of State or Local Government, later  – the Public Procurement Law, 
which  transposed  the  European  Parliament  and  Council  Directives  2004/18/  EC  on  the  coordination  of 
procedures for the award of public works contracts, public supply contracts and public service contracts. 

27 

 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

The first construction works  procurement  was announced in March 2004 but 
then  cancelled  after  all  the  received  bids  were  above  the  available  budget.  The 
second  procurement  for  the  now  joint  first  and  second  sections  of  the  construction 
works was tendered and the contract was concluded on 26 July 2005. The remaining 
procurements were arranged simultaneously.  

The  accumulated  delay  affected  the  costs  of  construction.  The  increase  in 
project  costs  was  also  affected  by  changes  in  the  macroeconomic  indicators  in  the 
country soon after the EU accession (see Table 4). In particular, the general increase 
in  prices,  stimulated  by  the  growth  of  the  national  economy,  and  especially  the 
increase in construction costs and wages, significantly affected the final project cost. 

Table 4.  Percentage  change  of  macroeconomic  indicators  against  the  previous 

year in Latvia (%) 

BEFORE  EU 
ACCESSION 

AFTER EU ACCESSION 

Indicator 

2002  2003  2004  2005  2006  2007  2008 

GDP growth rate 

7.1 

8.4 

8.3 

10.7 

11.9 

10.0 

-3.5 

Consumer price changes 

1.9 

2.9 

6.2 

6.7 

6.5 

10.1 

15.4 

Wage changes 

Wage  changes 
sector 

8.5 

11.3 

9.1 

26.4 

3.1 

31.6 

20.7 

in  construction 

3.0 

13.5 

9.4 

21.0 

32.0 

34.0 

18.0 

Construction cost changes 

-3.5 

-1.6 

5.9 

16.6 

20.3 

24.4 

13.8 

Source: Central Statistical Bureau, Latvia 

Another  factor  which  affected  the  cost  increase  relates  to  the  payments  for  works. 
While the co-financing from the EC was received in euro,  the local constructors were 
paid in  lati  (national  currency)  as  at  that  time  Latvia  was  not  in  the  Eurozone 26.  The 
changes  in  the  currency  exchange  rate  affected  the  difference  between  the  cost 
increase  in  lati  and  in  euro27.  As  a  result,  the  increase  in  the  eligible  costs  of  the 
project in lati was 64%, while converted into euro units the increase was 30%. 

Despite the  cost increase the scope  of works  remained the same but  the shortage  of 
funding resulted in a delay of two years in the project timeline (see figure below) and 
a  postponement  of  the  deadline  for  the  project's  implementation  by  one  year.  The 
project  was  indeed  implemented  from  2005  to  200828,  whereas  the  planned 
timeline  was  2003-2007.  Several  amendments  were  made  to  the  Financial 
Memorandum  to  reflect  the  price  increase,  nonetheless  the  construction  costs  still 
exceeded the revised financial plans. The initial planned total cost was EUR 48.81 
million, but the final total project cost was EUR 130.5 million, including eligible 
project  costs  of  EUR  94.8  million  (all  figures  are  in  nominal  terms).  While  the 

26

 Latvia joined the Eurozone in 2014. 

27

  In  2002  currency  exchange  rate  was  1EUR=0.558  LVL.  Since  1  Januray  2005,  currency  exchange  rate 

was 1EUR=0.702804 LVL. 

28

 Finally, the bypass was commissioned in two tranches: phases I and II on 31 October 2007 and phase III 

on 20 November 2007. After that, works on connecting roads were completed by the end of 2008. 

28 

 
 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

construction of the bypass was co-financed by Cohesion Fund, all the works related to 
the rehabilitation of existing road A1 were financed by the state budget of Latvia. The 
CF financing initially was planned at EUR 30.79 million but, due to  cost increase, the 
actual CF co-financing reached EUR 40.03 million. The state budget covered the extra 
eligible costs of the project above the available CF co-financing. The project delays did 
not affect the socio-economic benefits envisaged by the project. 

Figure 16. Time line of Saulkrasti bypass 

Source: Authors 

2.3 

CURRENT PERFORMANCE AND OTHER INVESTMENT NEEDS  

As already observed by the update of ex-ante CBA carried by DEA Baltika on behalf of 
the Ministry of Transport in 2009, as soon as the Saulkrasti bypass was opened, 
it took all international transport away from the settlements. This alone was a 
significant  relief  since  transit  traffic  mostly  means  heavy  trucks  (7.5-32  t  gross 
weight), which cause the most serious vibration effects as well as the highest rates of 
noise and also air polluting emissions.  

Figure 17. AADT on the state main road A1 before and after Saulkrasti bypass 

12000

10000

8000

6000

4000

2000

0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

AADT on old A1

AADT on Saulkrasti bypass

AADT on local road (via Saulkrasti)

Saulkrasti  town  and  Skulte  were  relieved  not  only  from  noise  but  also  from  polluting 
air-emissions. As a matter of fact, the new road mainly strains through forests in the 
rural  area  of  Saulkrasti.  From  the  traffic  safety  point  of  view,  about  2  m  high  grid 

Source: Latvian State Road 

29 

 
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

fence  are  installed  along  the  east  edge  of  the  road  to  protect  wild  animals  from 
crossing  the  road.  The  local  traffic  remains  on  the  existing  old  road  with  the 
settlement further on, cumulating in the central part of Saulkrasti. 

State  main  road  A1  is  currently  one  of  the  busiest  roads  in  the  country  with  the 
highest proportion of HGV (22% in 2016, see figure below). 

Figure 18. AADT of HGV on the state main roads in Latvia (2016) 

Source: Latvian State Road 

Saulkrasti bypass  has  significantly  reduced  transit  traffic in  Saulkrasti,  Zvejniekciems 
and  Skulte.  The  only  permanent  cargo  flow  concentration  point  has  remained  Skulte 
port  in  Zvejniekciems.  After  the  bypass  construction,  there  is  about  2-5%  of  heavy 
gross vehicles in total traffic flow on the local road via Saulkrasti. 

While  the  traffic  situation  from  km  0  to  km  41  is  currently  solved  thanks  to 
improvements  financed  in  the  period  2001-2007,  there  are  still  some  bottlenecks 
remained  on  Via  Baltica  route  namely  Ķekava,  Iecava  and  Bauska  towns,  as  well  as 
Riga  bypass  and  Daugava  river  crossing  on  Riga  bypass  through  the  hydroelectric 
power station.  

30 

 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

Figure 19. Development projects in the Latvian state road network 

Source: Ministry of Transport 

In order to solve such bottlenecks the Ķekava bypass, the new Daugava river crossing 
on the  state main road A5 (Riga bypass) and  the upgrade of the state main road A4 
section  Baltezers-Saulkrasti  were  included  in  the  transport  development  guidelines 
2014-2020.  This  is  in  line  with  the  effort  put  in  the  last  two  decades  to  ensure 
development of road infrastructure in the most important transport corridors.  

The  mentioned  future  improvements  may  affect  the  traffic  level  on  the  entire  Via 
Baltica  Route  in  Latvia,  including  the  Saulkrasti  bypass.  As  a  matter  of  fact,  the 
easiness of transit along the road could stimulate the road traffic. On the other hand, 
the  use  of  Via  Baltica  Route  could  be  negatively  influenced  by  the  new  Rail  Baltica 
project  (see  box  below)  which  envisages  to  build  high-speed  train  line  for  both 
passenger and freight traffic throughout the Baltic States along Via Baltica route. As a 
consequence  of  this  project,  part  of  road  users  such  as  point-to-point  travellers  and 
intra-Baltic traffic could shift from road to rail. 

Box 3.  Rail Baltica project 

Rail Baltica is one of the priority projects of the European Union (TEN-T). It is a green 
field  infrastructure  (870  km)  which  envisages  a  continuous  rail  link  from  Tallinn 
(Estonia)  to  Warsaw  (Poland),  going  via  Riga  (Latvia)  and  Kaunas  (Lithuania).  The 
project is considered a  symbolic return  of the  Baltic States to Europe. Actually, since 
the  middle  of  20th  century  the  Baltic  countries  have  been  mainly  linked  to  an  East-
West  railway  axis  using  the  Russian  gauge  1520  mm  rails,  reflected  in  current  rail 
traffic flows. Unfortunately, the 1520 mm gauge system makes it difficult and costly to 
interconnect the Baltics with the rest of EU via Poland, where 1435 mm gauge system 
is in place. The estimated cost of this mega project is EUR 5 billion and the completion 
date should be 2025 for the Baltic section, 2030 for the link to Warsaw. 

Source: Authors based on information available at www.railbaltica.org (accessed on 01/02/2018)  

31 

 
 
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

3.  DESCRIPTION OF LONG-TERM EFFECTS 

In this chapter the main long-term effects produced by the project are presented and 
discussed.  First,  a  summary  of  the  effects  produced  along  the  four  categories 
identified in  Volume  I  of  the  First  Interim  Report  is  briefly  described.  Then,  the  most 
significant ones are discussed and supported by available evidence. 

3.1 

KEY FINDINGS 

The long-term contribution of this project shall be considered under the following four 
main  categories:  economic  development  as  well  as  quality  of  life  and  well-being, 
environmental sustainability and distributional effects. 

The  economic  growth  aspect  includes  the  quantifiable  benefits  derived  from  faster 
and less costly travelling on the state main road A1 (Via Baltica) bypassing Saulkrasti 
town. These effects are incorporated in the CBA in the form of travel time savings as 
well as vehicle operating costs savings. 

Under the heading of social well-being and quality of life the increased road safety 
is  considered  together  with  effects  related  to  the  noise  level.  The  increase  in  travel 
safety and the reduction of noise are confirmed by the ex-post CBA. 

Among  the  environmental  sustainability  effects,  reduction  of  air  pollution  can  be 
observed. The effect quantitatively measured and included in the CBA is positive. 

As  for  the  distributional  effects,  a  positive  effect  on  territorial  cohesion  is  visible 
with the network extension and associated development of adjacent districts. Also, the 
project facilitated the connectivity between the regions and the states linked with Via 
Baltica road. 

The results of Cost-Benefit Analysis, as included in the Annex II to this report indicate 
that  the  project  adds  value  to  the  European  society  under  the  social  and  economic 
points  of  view.  In  the  baseline  case,  the  Socio-Economic  Net  Present  Value  (ENPV) 
equals  EUR  103.1  million,  with  the  applied  discount  rates  of  6.67%  backward  and 
6.25% forward, whereas the Economic Internal Rate of Return is at the level of 9.4%. 
Also,  the  risk  analysis indicates  that  there  is  a  nil  probability  for  the  ENPV  to  be  less 
than  zero  and  a  probability  of  nearly  50%  that  the  expected  ENPV  is  less  than  the 
reference one. These results show that the project yields positive socio-economic net 
benefits  and  it  has  a  low  level  of  risk.  The  distribution  of  benefits  in  the  CBA  is 
presented in the figure below. 

Figure 20. Main socioeconomic benefits (% of total benefits) 

Source: Authors 

32 

 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

In  addition  to  these  measurable  impacts,  there  are  also  other  effects  which  are 
however  difficult  to  be  captured 
for  the 
comprehensive  assessment  of  the  project,  which  are  discussed  in  the  following  sub-
chapters.  

in  monetary  terms,  but  relevant 

The table below summarises the nature and strength of the project’s effects classified 
under  the  above  referred  four  categories  (economic  growth,  quality  of  life  and  well-
being, environmental sustainability and distributional issues), as well as the territorial 
levels where these are visible, and the time-horizon of their materialisation. 

Table 5.  Summary  of  nature  and  strength  of  effects  (the  effects  highlighted  in 

green are those included in the ex-post CBA) 

CATEGORY 

EFFECT 

STRENGTH* 

LEVEL 

Economic 
growth 

Travel time 

Vehicle operating cost 

Reliability journey time 

Income for the service provider 

Wider economic impacts 

Institutional learning 

Safety 

Service quality 

Crowding 

Security 

Noise 

Aesthetic value 

Urban renewal 

Local air pollution 

Climate change 

Biodiversity 

Water pollution 

Social cohesion 

Territorial cohesion 

Quality of life 
and well-being 

Environmental 
sustainability 

Distributional 
effect 

+4 

+5 

+5 

N.R. 

N.R. 

+2 

+4 

+3 

N.R. 

N.R. 

+3 

N.R. 

N.R. 

+3 

0 

N.R. 

N.R. 

N.R. 

+3 

Local  –  regional  – 
cross-border 

Local  –  regional  – 
cross-border 

Local  –  regional  – 
cross-border 

National 

Local – regional 

Local – regional 

Local 

Local 

Local  –  regional  – 
cross-border 

*Note: the strength score reflects the weight that each effect has with respect to the final judgment of the 
project. In particular:  
-5 = the effect is responsible of the negative performance of the project;  
-4 = the effect has provided a negative contribution to the overall performance of the project;  
-3  =  the  effect  has  contributed  in  a  negative  way  to  the  performance  but  it  was  outweighed  by  other 
positive effects;  
-2 = the effect has a slightly negative contribution to the project performance;  
-1 = the effect is negative but almost negligible within the overall project performance;  
0 = the effect has no impact on the project performance;  
+1= the effect is positive but almost negligible within the overall project performance;  
+2 = the effect has a slightly positive contribution to the project performance;  
+3  =  the  effect  has  contributed  in  a  positive  way  to  the  performance  but  it  was  outweighed  by  other 
positive effects;  
+4 = the effect has provided a positive contribution to the overall performance of the project;  
+5 = the effect is responsible of the positive performance of the project;  

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

N.R. = The effect is not relevant for the specific project;  
No data = The effect is potentially relevant, but no evidence on impacts is available. This shall be used only 
for  relatively  low  significant  effects  whose  inclusion  would  in  no  case  dramatically  affect  the  overall 
assessment.  

The  following  sub-chapters  include  some  more  detailed  description  of  the  effects 
incorporated  in  the  ex-post  CBA  and/or  supported  by  available  qualitative  evidence 
either from documental sources or interviews. 

3.2 

EFFECTS RELATED TO ECONOMIC GROWTH 

Measurable effects  

With  regard  to  the  socio-economic  consequences  of  the  investment,  the  most 
significant  effect  is  savings  in  vehicle  operating  costs  for  traffic  diverted  to 
the  bypass  as  a  result  of  a  higher  quality  road  infrastructure.  Improved  road 
technical  condition, 
forced  speed  reductions  and  accelerations  due  to 
entering/exiting  vehicles,  and  increased  road  capacity  substantially  reduce  trip  costs 
for vehicles using the new bypass. 

less 

Another  relevant  effect  for  traffic  diverted  to  the  bypass  is  the  reduction  of 
travel  time.  On  the  bypass  there  are  no  single  level  intersections,  no  roadside 
activities which reduce the speed of the traffic, and the speed limit is 90 km/h on the 
whole  section.  Under  normal  traffic  conditions,  it  allows  to  save  7  minutes  of  travel 
time  as  compared  to  the  old  road  A1.  Travel  time  benefits  are  not  only  relevant  for 
transit traffic but also for Saulkrasti residents who commute every day to Riga. Thus, 
the project has a relevance which is local, regional, national and European at the same 
time, as part of the Trans-European Transport Network. 

Savings  in  VOC  and  reduction  of  travel  time  are  incorporated  in  the  Cost-Benefit 
Analysis (see Annex II) in which, respectively, 52% of total benefits arise from savings 
in  VOC  and  20%  arise  from  savings  in  travel  time  for  transit  traffic.  To  obtain  the 
value of benefits in terms of time savings, it has been assumed that 43% of the total 
car traffic are business travellers, 21% are commuters and 36% are other travellers. 

“Thanks to the bypass I gain up to half an hour per day when 
driving  in  both  directions.  In  the  past,  Saulkrasti  was  a  real 
obstacle for me: I was literally forced to crawl at 50 km/h and 
could  not  even  think  about  overtaking.  The  situation  has 
improved dramatically”. Driver from Skulte29 

Non measurable effects  

An  observed  economic  benefit  after  completion  of  the  bypass  is  reliability  of  travel 
time,  especially  for  transit  traffic.  Before  the  bypass  was  constructed,  the  old  state 
road  A1,  being  the  main  and  only  road  running  through  the  town  of  Saulkrasti,  was 
used for both local and transit traffic in 11 km long section causing inconvenience for 
locals  due  to  high  transit  traffic  volumes  and  causing  delays  for  transit  traffic  due  to 
low speed and frequent entry/exit of local vehicles to/off the main road. In case of an 
accident,  often  there  was  no  alternative  route  to  bypass  the  accident  due  to  lack  of 
connecting  road  network  in  Saulkrasti.  Now  the  risk  of  additional  delay  due  to  low 

29

 See: http://ec.europa.eu/regional_policy/en/projects/latvia/seaside-resort-benefits-from-big-bypass 

34 

 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

speed  and  congestion  in  Saulkrasti  is  eliminated.  It  increases  the  reliability  of  road 
users. 

“The  bypass  has  created  an  alternative  route  for  Saulkrasti 
citizens.  In  the  past  in  case  of  accident  there  was  the  risk  of 
remaining stacked in the traffic for hours” Interviewed citizen 
from Saulkrasti 

Moreover,  the  interviews  with  local  entrepreneurs  revealed  that,  at  local  level,  the 
construction  of  the  motorway  has  led  to  an  initial  loss  of  profits  for  the  small 
economic  activities  (gas  stations,  bars,  cafeterias,  etc.)  located  along  the  existing 
A1 from which traffic has been diverted. However, it must be noticed that this short-
term  effect  has  also  been  negatively  affected  by  the  economic  crisis  of  2008-2010, 
which makes the loss of profits not fully attributable to the construction of the bypass. 
Currently,  the  local  stakeholders  claim  that  this  negative  effect  has  been  more  than 
outweighed by the increase in tourism, thanks to the reduction of transit traffic going 
through Saulkrasti town and improved accessibility to areas of tourist interest. 

Finally,  another  remarkable  economic  benefit  is  the  learning  effect  as  Saulkrasti 
bypass project was the first new construction project of such scale in Latvia since the 
nation’s  independence  of  1991.  With  this  project,  the  land  aquisition  unit  was 
established within the Latvian State Road administration and the procedures were set 
at  national  level  including  the  methodology  for  land  pricing.30  After  the  project, 
changes  in  legislation  were  also  initiated  to  speed  up  the  land  aquisition  processes. 
Morover, the project was a useful experience for development of project management 
system  within  the  road  adminsitration.  It  was  necessary  to  reconcile  the  interests  of 
several  stakeholders,  coordinate  large-scale  construction  works  and  supervision,  as 
well as manage cash flow from different financing sources. For contractors, it was the 
first  large  scale  construction  project  in  Latvia  where  nearly  all  major  national 
contractors  were  involved.  According  to  interviewees,  this  project  was  a  great 
experience for mutual cooperation. It stimulated the improvement of existing technical 
know-how  as  well  as  system  development  on  how  to  plan,  develop,  implement  and 
operate road construction projects in Latvia. 

3.3 

EFFECTS ON QUALITY OF LIFE AND WELL-BEING 

Measurable effects 

Road safety has improved significantly in Saulkrasti since 2008 when the transit traffic 
was diverted to the bypass as it can be seen from the historical accident data on the 
old A1 going through Saulkrasti (see table below). Traffic safety has improved due to 
increased  road  capacity,  local  and  transit  traffic  separation,  constructed  separate 
infrastructure  for  pedestrians  and  cyclists,  eliminated  single  level  intersections, 
installed lightning, improved road visibility. 

30

 I.e. a methodology to determine fair compensation for expropiated real estate for public purposes. 

35 

 
 
 
                                                   
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(ERDF) and Cohesion Fund between 2000 and 2013 

Table 6.  Road accidents on road V101 in Saulkrasti 

YEAR 

ROAD ACCIDENTS 

FATALITIES 

INJURED PERSONS 

Before the 
project 

After the 
project 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

2014 

2015 

2016 

15 

14 

14 

8 

8 

5 

5 

6 

6 

5 

10 

8 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

2 

1 

2 

1 

6 

2 

1 

15 

3 

0 

7 

1 

Similarly, number of road accidents has decreased on the state main road A1 section 
km  21.05-41.57  (Figure  21).  No  fatalities  have  been  reported  on  the  road  A1  during 
the last 6 years except one in 2013. 

Source: Road Traffic Safety directorate 

Figure 21. Road  accident  rate  per  million  vehicle-km  on  the  state  main  road  A1 

section km 21.05-41.75 

1.10

1.00

0.90

0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Accidents

Road accidents with injured

Fatalities

Injured

Source: Road Traffic Safety directorate 

The safety benefit which is included in the Cost-Benefit Analysis (see Annex II) 
is  valued  at  EUR  89  million  per  year.  Overall,  it  constitutes  23%  of  total  project 
socio-economic effects.  

Another  effect  included  in  the  ex-post  Cost-Benefit  Analysis  (see  Annex  II)  is  the 
noise reduction effect, equalling EUR 1.6 million at present level. Taking transit 

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(ERDF) and Cohesion Fund between 2000 and 2013 

transport  away  from  the  settlements,  the  bypass  has  relieved  all  inhabitant  areas  in 
Saulkrasti,  Zvejniekciems  and  Skulte  from  increased  noise  level.  This  alone  is  a 
significant  relieve  since  transit  traffic  mostly  means  heavy  trucks  (7.5-32t  gross 
weight), which cause the most serious vibration effects as well as the highest rates of 
noise.  

“The  vibrations  caused  by  heavy  traffic  were  so  loud  that  it 
was  difficult  to  talk  on  the  phone”  Interviewed  real  estate 
agent 

The new  road mainly strains forests in the  rural area  of Saulkrasti. Along the bypass 
route,  the  impact  caused  by  vibration  and  noise  on  a  few  built-up  areas  (primarily 
south  of  Kisupe  river)  is  by  far  less  severe  than  previously  in  Saulkrasti  before  the 
bypass  was  built.  Moreover,  noise  barriers  are  constructed  separating  the  road  from 
the  nearby  inhabitant  areas  in  order  to  mitigate  the  possible  negative  effect  of  the 
bypass. 

Non measurable effects  

It is agreed among Saulkrasti inhabitants that the construction of the bypass and the 
parallel  rehabilitation  of  the  existing  road  A1  (now  road  V101)  has  greatly  improved 
living conditions of residents. Diverting transit traffic away from the town has allowed 
to  create  an  urban  environment  more  suitable  for  the  needs  of  the  residents  and 
holidaymakers. The main street has changed a lot: a number of pedestrian crossings 
are  marked  to  ease  the  access  to  the  sea,  sidewalks  are  adjusted  for  the  use  of 
cyclists  and  pedestrians.  The  local  businesses  have  gradually  changed  and  adopted 
their activities more to  recreational services, as well as to needs of local residents. A 
positive effect on infrastructure quality is also recognised. Widening of the state main 
road, lightning, easy entry/exit to and from the main road and reconstruction of local 
roads  make  travelling  more  comfortable  and  safe.  Moreover,  the  project  and 
improvements  on  other  road  A1  sections  has  increased  accessibility  and  connectivity 
to Saulkrasti. This, in turn, has increased the town attractiveness as a destination for 
nature and hiking lovers as proved by the increase in tourists shown in Figure 5.  

3.4 

EFFECTS ON THE ENVIRONMENTAL SUSTAINABILITY 

Measurable effects 

As  it  often  happens  for  this  kind  of  projects,  the  bypass  construction  has  generated 
both  negative  and  positive  effects  on  the  environment.  Negative  impacts  concerned 
the increase in air pollutant emissions related to the generation of new traffic, as well 
as  the  negative  externalities  usually  associated  with  construction  of 
large 
infrastructures. However, despite the generation of these negative effects, the overall 
environmental impact of the highway is positive. This judgment relies on the fact that 
by  diverting  transit  traffic  to  the  bypass,  meaning  less  congestion  in  Saulkrasti,  the 
project contributes to a net reduction in air pollution in town, so where it can 
affect  the  population.  This  effect  is  incorporated  in  the  Cost-Benefit  Analysis  (see 
Annex II) and constitute 3.8% (EUR 14.7 million) of total socio-economic benefits.  

According to the studies carried out by the State Environmental Center in 1998, during 
the  summer  season  the  proportions  of  benzene,  lead  nitrogen  dioxide,  carbon  and 
monoxides  levels  detected  in  the  vicinity  of  the  old  state  road  A1  were  significantly 
higher  than  the  maximum  permitted  levels  laid  down  in  the  legislation.  Although  no 
measurements have been undertaken after the bypass construction, it is reasonable to 

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

affirm  that  the  air  pollution  level  within  the  urban  area  has  decreased  significantly 
after  the  construction  of  the  bypass  because  the  main  pollutants  –  emitted  by heavy 
gross  vehicles  –  have  been  diverted  from  Saulkrasti  town  to  a  less  populated  area 
(mainly forest).  

As regards the greenhouse gas emissions, the project has made no difference because  
the distance travelled by shifted vehicles on the bypass is the same as on the old road 
A1. Differently from air pollutions, GHG emissions have a global impact, and therefore 
the related cost is not dependent on the investment location.    

3.5 

EFFECTS RELATED TO DISTRIBUTIONAL ISSUES 

Non measurable effects  

One of the main objectives of the development policy in Latvia has been to tackle the 
major  sources  of  regional  disparities  in  the  areas  of  infrastructure  and  rural 
development.  Latvia’s  territory  is  relatively  small  and  the  travelling  distances  usually 
are  no  longer  than  250  km.  Therefore,  road  transport  –  which  is  characterized  by  a 
quite  dense  network  –  remains  the  dominant  mode  of  transport  in  the  country.  As  a 
result,  the  quality  of  road  infrastructure  plays  an  important  role  in  the  context  of 
employment and  mobility within the country. 

In  this  regard  Saulkrasti  bypass  project  has  contributed  significantly  towards  the 
development of more accessible and connected populated areas in the northern part of 
Latvia  and  as  well  as  towards  connecting  Baltic  States.  Thus,  the  project  had  a 
positive  effect  on  territorial  cohesion  providing  opportunity  for  people  to  make  the 
most of inherent features of connected territories.  

Good road infrastructure is also important for international competitiveness of Latvia, 
especially  as  a  transport  hub.  Transit  development  also  contributes  to  the  expansion 
of  other  economic  sectors  in  Latvia  supporting  foreign  trade.  The  Saulkrasti  bypass 
links different territories closer to effective cooperation. 

3.6 

TIME-SCALE AND NATURE OF THE EFFECTS 

The project was completed in 2008, therefore most of the discussed observed effects 
materialised in the short-run and continued in the long-run with some of them diluting 
their magnitude due to the evolving context. With reference to the spatial scale of the 
effects all of them are of local nature, however, some of them affecting also the region 
and  the  country  given  the  role  played  by  Via  Baltica  route  in  the  national  road 
network. Right after the bypass was opened for traffic, transit travellers chose the new 
route which was an immediate short-term response to the project. Some of the effects 
related to  economic growth and distributional issues have wider cross-border impact, 
especially when combined with the complementary investments on Via Baltica route.  

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(ERDF) and Cohesion Fund between 2000 and 2013 

Table 7.  Temporal dynamics of the effects 

CATEGORIES 
OF EFFECTS 

Economic 
growth 

Quality  of  life 
and 
well-
being 

Environmental 
sustainability 

Distributional 
issues 

SHORT 
RUN 

(1-5 
YEARS) 

LONG RUN 

(6-10 
YEARS) 

FUTURE 
YEARS 

+++ 

+++ 

++ 

++ 

+++ 

++ 

++ 

+ 

+ 

++ 

++ 

++ 

COMMENT 

Relevant  time  savings,  reduced  VOC, 
reduced 
increased 
congestion, 
reliability.  

Improved  road  safety,  reduced  noise 
level,  good  level  of  satisfaction  of 
Saulkrasti 
and 
holidaymakers. 

residents 

Reduction  in  level  of  air  pollution  due 
to  diverted  trucks;  no  impact  on 
biodiversity. 

Improved 
regions on Via Baltica route. 

connectivity 

between 

Note: + = slight positive, ++ = positive, +++ = strongly positive, +/- = mixed effect. 

39 

 
  
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
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4.  MECHANISMS  AND  DETERMINANTS  OF 

THE  OBSERVED 

PERFORMANCE  

In  this  section  the  key  mechanisms  and  determinants  of  the  long-term  effects 
discussed  in  the  previous  chapter  are  illustrated  and  discussed  along  the  different 
phases  of  the  project  cycle.  Finally,  the  importance  of  each  determinant  for  the 
project’s  final  performance  and  the  interplay  between  them  and  the  observed 
outcomes is discussed. 

Table 8.  Determinants of project outcomes  

DETERMINANT 

STRENGTH* 

Relation with the context 

Selection process 

Project design 

Forecasting capacity 

Project governance 

Managerial capacity 

+5 

+4 

+4 

+2 

+4 

+5 

Note: * the strength score reflects the weight of the role that each determinant played with respect to the 
final judgment of the project. In particular:  
-5 = the determinant is responsible of the negative performance of the project;  
-4 = the determinant provides a negative contribution to the overall performance of the project;  
-3 = the determinant contributes in a moderate negative way to the overall performance of the project;  
-2 = the determinant has a slightly negative contribution to the project performance;  
-1 = the determinant plays a negative but almost negligible role to explain the overall project performance; 
0 = the determinant does not play a role on the project performance;  
+1= the determinant plays a positive but almost negligible role to explain the overall project performance; 
+2 = the determinant has a slightly positive contribution to the project performance;  
+3 = the determinant contributes in a moderate positive way to the performance;  
+4 = the determinant provides a positive contribution to the overall performance of the project;  
+5 = the determinant is responsible of the positive performance of the project. 

4.1 

RELATION WITH THE CONTEXT 

As mentioned before, the project is part of a larger investment plan – the upgrade of 
the Via Baltica, part of the Pan-European Corridor I, during the period of 2000-2007.  

After  the  dissolution  of  the  Soviet  Union,  the  existing  national  system  of 
financing  the  road  infrastructure  maintenance  and  reconstruction  collapsed. 
While  the  level  of  financing  for  the  state  road  network  reached  EUR  85.5  million  in 
1990,  it  decreased  by  seven  times  in  three  years’  period  (EUR  6.6  million  in  1993). 
The  situation  became  critical:  a  large  amount  of  timely  unperformed  reconstruction 
works  started  to  accumulate  in  the  state  road  network  and  more  and  more  roads 
deteriorated  without  being  repaired.  Even  the  main  state  corridors  connecting  the 
capital and regional centres of the country were in bad condition. Therefore, new ways 
were  sought  to  address  the  problems  affecting  road  financing,  operation  and 
maintenance, and development.  

As  a  first  intervention  to  tackle  these  issues,  the  State  Road  Fund  ─ 
administered  the  State  Road  Administration  ─  was  established  in  1994 
together  with  Municipal  Road  Funds  which  were  planned  to  be  financed  by  the 
Annual Vehicle Tax, a new tax levied by the Latvian government. More specifically, 

40 

 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

70%  of  the  tax  revenues  were  allocated  to  the  State  Road  Fund  and  the  remaining 
30% to municipal road funds.  

Although the idea was good, it struggled because of the fund’s limited resources. As a 
matter  of  fact,  the  money  levied  by  the  Annual  Vehicle  Tax  was  not  enough  to  meet 
the  country’s  financing  need.  For  this  reason  the  Latvian  government  decided  to 
increase  the  fund’s  revenue  base  and  to  allocate  to  the  fund  50%  of  revenues  from 
the excise duty on oil products in 1995. This manoeuvre reached the desired financing 
effect:  the  financial  envelope  of  the  State  Road  Fund  reached  USD  80  million  (EUR 
81.6 million) in 2002 (the last year before the EU funds were available to the Latvian 
road sector), i.e. 68% of year 1990 level in nominal prices. 

Besides  financial  problems  addressing  the  operation  of  maintenance  of  the  road 
network,  the  Latvian  national  economy  faced  a  challenge  of  public  road  service 
accessibility  and  quality.  Such  backlog  resulted  in  dissatisfaction  of  road  users  (both 
private  and  business)  due  to  long  travel  time,  high  vehicle  operating  costs  and  low 
level of traffic safety.  

In line with the need to adopt a more strategic approach to the management 
of  the  national  road  system,  the  Ministry  of  Transport  decided  in  1995  to 
for  Latvian  road  network  maintenance, 
elaborate  the  Master  Plan 
development and operation together with the Road Traffic Safety Programme 
(the Master Plan). As already mentioned, a team of international and local consultants 
elaborated  the  Master  Plan  between  1996  and  1997  where  the  most  important 
transport  corridors  were  identified  including  the  Via  Baltica  route  which  in  any  case 
was already under the spotlight of the First Via Baltica Investment Programme 1996-
2000.31  In  addition  to  an  evaluation  of  the  technical  conditions  of  the  road  network, 
the Master Plan included the analysis of the road capacity and the traffic flows as well 
as  road  safety  and  environmental  aspects.  Together  with  the  steering  group  of  the 
Master  Plan,  the  experts  identified  the  Saulkrasti  town  as  a  problem  area  for  both 
transit traffic and local inhabitants. In fact, the town equipped with a single two-lane 
road  was  a  bottleneck  which  caused  significant  increase  of  travel  time  for  both  long-
distance  travellers  and  Saulkrasti’s inhabitants commuting  every  day  to  Riga.  On  the 
other  hand,  the  traffic  prevented  the  town  from  remaining  an  attractive  environment 
for  citizens  and  holidaymakers  and  promoting  Saulkrasti  as  a  tourism  destination 
development.  As  a  matter  of  fact,  due  to  road  congestion,  Saulkrasti  was  unable  to 
make a full use of the opportunities offered by the location on the seaside. 

The  Master  Plan  was  an  important  step  to  set  a  long  term  strategic  vision  for 
development  of  Latvian  roads.  However,  revenues  from  the  State  Rod  Fund  was  not 
sufficient  to  finance  the  capital  investment  of  road  reconstruction  and  development. 
The  Ministry  of  Transport  had  to  look  for  external  funding  sources  in  order  to 
implement  the  foreseen  improvements  of  the  Via  Baltica.  The  most  feasible  and 
realistic  option  was  to  apply  for  the  EU  financial  instruments  (ISPA)  available  to  the 
pre-accession EU member states. 

31

 This programme was worked out on the basis of the Memorandum of Understanding on the Development 
of Via Baltica signed in Helsinki, 1 December 1995 by the Transport Ministers of the Baltic countries and the 
European Commission. 

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(ERDF) and Cohesion Fund between 2000 and 2013 

4.2 

SELECTION PROCESS 

The mentioned Master Plan included a priority investment programme based 
on  a  multi-criteria  analysis.  International  consultants  provided  the  analysis 
methodology  following  the  best  industry  standards.  The  multicriteria  methodology 
included the following criteria: 

•  Visual inspection data; 

•  Roughness and bearing capacity data; 

•  Traffic data. 

In addition, a cost-benefit analysis was prepared for each investment project. 
The multi-criteria analysis methodology was needed for national authorities, including 
the Latvian State Road, to make rational decisions about allocation of limited financial 
resources.  

In  this  regard,  it  is  worth  noting  that  since  the  adoption  of  the  Master  Plan  the  road 
administration  authority  followed  the  established  practice  and  carried  out  visual 
inspection  as  well  as  collection  of  technical  measurement  and  traffic  data  on  annual 
basis.  As  a  result,  the  Master  Plan’s  methodology  proved  to  be  a  sustainable  and 
useful  tool  for  the  Latvian  State  Road  Administration’s  continuous  analysis  of  the 
condition of the Latvian state roads’ network. 

After  a  thorough  road  network  analysis  in  the  framework  of  the  Master  Plan,  the 
national  authorities  concluded  that improvements  were  needed  throughout  the  entire 
length on the state main road A1. The reconstruction works were started sequentially 
in  sections  starting  from  the  first  kilometre  of  road  A1  (see  table  3  in  section  2).  In 
total,  41  km  out  of  101  km  (total length  of  the  main  road  A1)  were  upgraded  in  the 
period of 2000-2007 including construction of the Saulkrasti bypass. 

At  this  stage,  the  Ministry  of  Transport  commissioned  the  feasibility  study  of  the 
bypass  to  COWI  AS  and  Pro  Via  Ltd.,  a  consortium  of  international  and  local 
consultancy  companies,  in  order  to  identify  the  optimal  track  layout  of  the  planned 
bypass.  The  elaboration  this  feasibility  study32  and  the  selection  process  of 
the  most  feasible  project  option  took  three  years  (including  the  environmental 
impact assessment and public hearing) and involved the participation of different 
stakeholders.  Firstly,  the  Latvian  Road  Administration,  which  was  the  project 
implementing  body,  administered  the  contract  of  consultancy  services  and  governed 
the  entire  selection  process.  Secondly,  the  local  municipality  of  Saulkrasti  and 
the neighbouring Skulte municipality (a small section of the bypass goes through 
this  administrative  territory)  were  involved  in  the  process  as  privileged  stakeholders. 
Thirdly, the inhabitants living in the catchment area were taken in the process. 
In particular, two public consultations (which is a standard procedure in Latvia) were 
organized until the final agreement was reached on the best option. 

As  mentioned  in  section  2.2,  at  an initial  stage  both  the  possibilities  of  enlarging  the 
existing road and constructing a bypass were taken into account. However, according 

32

 Different studies were carried out from 1998 to 2002, among which: Feasibility Study for Traffic Safety 
Improvements  on  Road  A1  Riga  (Baltezers)  –  the  Estonian  boarder  (Ainazi);  Study  of  road  A1  Riga 
(Baltezers)  –  the  Estonian  boarder  (Ainazi)  potential  road  alignment  alternatives  in  the  section  Riga  – 
Skulte. 

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(ERDF) and Cohesion Fund between 2000 and 2013 

to the opinion of municipal authorities and local inhabitants, the bypass was the only 
credible  solution  for  eliminating  problems  in  the  town  caused  by  HGV  transit  traffic. 
Accordingly,  the  first  project’s  feasibility  study  included  several  alternatives  for  the 
new alignment of the bypass.  

As  a  result  of  the  entire  selection  process,  the  selected  location  of  the  bypass  was 
along the existing railroad which was considered the option minimising the impact on 
residential areas in the Saulkrasti and Skulte districts.   

The whole project identification and option selection process was undertaken 
without  major  pending  issues.  The  process  was  well  organized  at  the  very 
beginning  as  the  project’s  development  objective  was  clearly  defined  and  acceptable 
to  all  key  stakeholders:  the  Ministry  of  Transport,  Latvian  Road  Administration, 
Saulkrasti  and  Skulte  municipalities  and  population  in  general.  The  task  of 
stakeholders  was  to  find  out  the  most  feasible  technical  alternative  to  reach  the 
objective of common interest. 

At the final stage of the project preparation the EC (DG REGIO) reviewed the project 
application together with the feasibility study. The EC made its decision concerning the 
grant  of  assistance  from  the  ISPA  on  20  December  2002.  The  Government  of  Latvia 
signed the Financing Memorandum on 17 March 2003. 

4.3 

PROJECT DESIGN 

After the selection of the best bypass track layout option a detailed (technical) design 
was  carried  out  during  the  period  2002-2005.  The  technical  design  was  prepared  in 
stages.  

The  project  was  considered  to  be  rather  complex  vis-à-vis  the  existing  road 
construction  experience  in  Latvia  after  restoration  of  national  independence 
in  1990.  As  a  matter  of  fact,  the  project  includes  17  different  road  structures 
including  7  grade-separated  junctions  and  2  railway  bridges  (e.g.,  multimodal 
transport). Also, the project was the first road construction to follow the EU standards 
in  the  technical  design  according  to  the  EU  directives  (including  the  legal  acts 
governing  environmental  protection).  As  such,  the  project  design  included  some 
innovative approaches in the technical design, for example, the establishment of noise 
barriers,  protection  fences  for  animals  and  rainwater  collectors,  which  were  not  a 
common practice in the country until that moment. 

The  design  contract  was  awarded  ─  through  an  open  tender  ─  to  JSC  “Ceļuprojekts” 
(in English “Road design”), a national company which is very experienced in technical 
design of roads and structures.  

After ten years from the bypass opening, the designed width of the roadway 
is still sufficient for the existing traffic in 2017. All interchanges are in two levels 
(grade-separated junctions) which significantly decrease the number of conflict points. 
Acceleration  lanes  are  foreseen  for  traffic  entering  the  bypass.  Transport  vehicles  on 
the  bypass  do  not  have  to  reduce  speed  due  to  entering  traffic.  The  road  is  well 
visible.  

The  reduced  number  of  road  accidents  indicates  that  technical  solutions  included  the 
technical  design  are  well-suited  for  road  users.  No  accidents  with  animals  have  been 
reported on the state  main road A1 after 2007 which can be explained by the fences 
installed along the forest edge. 

No  complaints  have  been  received  neither  from  the  road  users  nor  from  the 
residents  living  along  the  bypass  regarding  the  bypass  functionality.  In 

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

conclusion,  there  are  evidence  that  the  project  planning  and  design  was  properly 
done.     

4.4 

FORECASTING CAPACITY 

The forecasting capacity is understood as the possibility and capacity to predict future 
trends  and  forecast  the  demand  level  and  estimate  the  technical  challenges,  thus 
estimating  correctly  the  required  resources  (e.g.  looking  at  the  dangers  of  over-
predicting demand and under-predicting construction costs). 

With  regard  to  the  traffic  forecast  which  was  part  of  the  feasibility  study,  the  total 
number  of  vehicles  forecasted  (on  the  old  road  A1  and  the  bypass  together) 
was  higher  in  the  ex-ante  analysis  than  actually  counted  in  2002-2016.  This 
can  be  explained  by  too  high  estimation  of  traffic  in  the  base  year  of  forecast  2002. 
However, the  growth rates applied in the ex-ante analysis turned out to be lower than 
those actually observed.  

In the  ex-ante, the forecasted total traffic then was split between the new alignment 
(bypass) and the existing alignment. In this regard, the forecasts of vehicles using 
the  new  bypass  were more  conservative  than  the  actual  trend.  Indeed,  in  the 
first year of operation the traffic on the bypass was by 6.5% higher than forecasted in 
the  ex-ante  analysis  and  it  continued  to  grow  faster  than  expected  (reaching  24% 
difference  in  2015).  In  contrast,  vehicles  using  the  old  road  via  Saulkrasti  are 
much  less  than  forecasted  in  the  ex-ante  analysis.  According  to  the  field 
interviews  one  explanation  for  this  situation  is  that  even  residents  prefer  using  the 
new bypass instead of the old A1 road when they have to cross the town or travel to 
the capital city Riga.  

Also, the difference between the traffic forecast and the actual data can be explained 
by the changing political and economic situation which Latvia encountered after joining 
the European Union. Rapid economic development facilitated the movement of people, 
led  to  greater  movement  of  goods  which  in  turn  changed  traffic  flows.  Such  increase 
was difficult to predict in 2002 when the project’s feasibility study was elaborated. The 
effects  of  the  Latvia’s  possible  accession  to  the  EU  were  encountered  in  the  traffic 
forecast.  However,  they  were  rather  conservative  considering  the  uncertainty  of 
country’s  future performance in a very different economic environment, which in any 
case was a good approach to avoid possible optimism bias. 

Regarding  the  original  investment  cost  estimates  provided  in  the  feasibility 
study, the total project cost increased by 167% (in nominal terms) comparing to 
the  initially  planned  in  the  project  application.  Several  reasons  are  behind  the  cost 
overrun.  First,  for  reasons  explained  in  section  2.3,  the  construction  of  the  bypass 
started  later  than  originally  planned.  This  delay  to  some  extent  contributed  to  the 
escalation  of  investment  costs  because  a  number  of  road  investment  projects  were 
tendered  out in the period 2005-2007, thus impacting on the price increase due to a 
sudden increase in demand.  

Apart from delays, three main macroeconomic factors affected the increase of 
project  costs:  construction  cost  increase;  wage  increase;  and  depreciation  of  the 
national  currency  (Latvia  joined  the  Eurozone  only  in  2014,  ten  years  after  its 
accession to the EU). The accession of Latvia in the EU radically changed the country 
situation in financial and labour markets. The opening of the borders for free flows of 
finances and capital yields two opposing consequences. On the one hand, it set lower 
prices  for financial resources, increased the lending amounts and domestic demands. 

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

On  the  other  hand,  the  freedom  of  labour  movement  offered  new  opportunities  for 
inhabitants  of  Latvia  to  get  incomes  and  experience  in  other  EU  countries,  which  in 
turn caused rapid labour force outmigration and rise of salary and inflation (Skribane 
and Jekabsone, 2013). As a matter of fact, over a period of three years (2005-2007), 
the  construction  costs  for  transport  infrastructures  increased  on  average  by  75% 
cumulatively and the cumulative wage growth was around 90%. As said above, during 
the  planning  process  (before  the  EU  accession)  given  the  high  uncertainty  about  the 
future  it  was  too  challenging  to  fully  anticipate  fiscal  and  macroeconomic  trends  that 
took place after Latvia joined the EU in 2004, they were rather unpredictable.  

The project had a very high investment cost increase creating 
a  headache  to  the  European  Commission  (DG  REGIO, 
geographical desk officer)33 

Finally, it should be noted that the  economic crisis of 2008 had a little impact on the 
implementation of the project because the financing decisions of the extra investment 
costs were taken and procurement procedures were carried out before 2008. However, 
the  crisis  affected  the  traffic  flow  only  in  the  first  phase  of  operation  -  as  shown  in 
figure 17. 

4.5 

PROJECT GOVERNANCE 

The  project’s  governance  structure  as  well  as  the  number  of  stakeholders  to  be 
involved in the project’s preparation and implementation were known and rather clear 
since  its  early  development  stage  as  the  structure  mirrored  the  requirements  set  in 
the EU ISPA regulations (see box below).  

Box 4.  On co-ordination in the country 

In the general report on pre-accession assistance (PHARE – ISPA – SAPARD) of 2000 
it  is  reported  that:  “At  the  country  level  and  in  line  with  the  objective  of 
decentralisation,  the  Commission  strongly  encourages  the  candidate  countries  to 
enhance inter-ministerial co-ordination which is a key pre-condition for the candidate 
countries’ successful future management of the Structural Funds.”  

Source: General report on pre-accession assistance (PHARE – ISPA – SAPARD) 

The transition from the ISPA to the CF financing and implementation rules did 
not  negatively  affect  the  project’s  governance  since  procedures  are  rather 
similar,  with  the  exception  of  the  procurement  rules.  In  fact,  the  major 
challenge for the Ministry of Transport in the role of the procurement authority was at 
first to learn the ISPA (PRAG) rules34, which changed during the course of the project’s 

33

 At the very beginning DG REGIO was suspicious because it was difficult to understand the reasons for the 
cost increase. However, the Latvian Ministry of Transport provided a special cost analysis study to explain 
and justify the investment cost increase. This study was presented to DG REGIO in Brussels and after a long 
discussion the EC finally accepted Latvia’s position. The parties agreed on the compromise that the Latvian 
state would finance the cost increase.   

34

 PRAG stands for “Practical guide to Phare, ISPA and SAPARD” which explains the contracting procedures 
applying to all EU external actions financed from the EU general budget (the EU budget) and the European 
Development Fund (EDF). 

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

implementation  and  they  had  to  be  streamlined  with  the  national  procurement 
regulation.  Then,  to  shift  from  PRAG  to  the  new  Public  Procurement  Law  adopted  in 
2004  following  the  EU  procurement  legal  framework.  All  these  factors  contributed  to 
delay of the project for two years.35 Delay due to procurement procedure was a well-
known problem in Latvia, which affected a lot of projects, as revealed by the Ex-post 
evaluation of Cohesion Fund for the period 2000-2011 (see box below). 

Box 5. 

Procurement and delays 

Significantly  delays  associated  mainly  to  procurement  procedures  were  identified  by 
the Ex-post evaluation of Cohesion Fund (including ISPA) for the period 2000-2011 as 
one of the most serious issues affecting the performance of ISPA/CF delivery system. 
Under  the  PRAG  rules,  the  contracting  period  tended  to  be  very  long  due  to  long 
procedures  and  very  strict  and  detailed  ex-ante  controls  by  the  EC  Delegation. 
Instead,  once  the  national  legislation  was  adopted,  the  main  reason  for  delay  was 
appeals  by  unsuccessful  tenderers.  The  delays  in  tendering  procedures  were  then 
exacerbated by insufficient knowledge of the PRAG rules, on one hand, and the limited 
wok experience of many employees in the ISPA/CF administrating institutions, on the 
other  hand.  Actually,  there  were  very  few  projects  of  such  size  and  complexity 
implemented prior to the ISPA programme. 

Source: Authors based on Ex-post evaluation of Cohesion Fund (incl. ISPA) – Work package D: Management 
and Implementation. Country Report: Latvia (2012) 

During  the  implementation  phase,  the  project  was  directly  managed  by  the 
Latvian  Road  Administration  (currently,  the  state  joint  stock  company  “Latvian 
State Roads”, see Box 1 below), which was acting as implementing body in the name 
and for the benefit of the Ministry of Transport. On the signature date of the Financing 
Memorandum  the  Latvian  Road  Administration  was  responsible  for  the  whole  project 
life  cycle  including  the  project  preparation  (elaboration  of  feasibility  study), 
implementation and operation phases. 

Box 6. 

Latvian State Roads 

State  Joint  Stock  Company  “Latvijas  valsts  ceļi”  (in  English  “Latvian  State  Roads”)  is 
the legal successor of the former Latvian Road Administration and now fulfils the same 
road  administration  and  management  functions.  Since  26  October  2004,  the  Latvian 
State  Roads  is  a  State  Joint  Stock  Company  that  operates  according  to  Company 
Statutes and the Agreement “On Road Sector Management” signed with its main client 
– the Ministry of Transport of the Republic of Latvia. It performs the  management of 
the  state  road  network,  administration  of  the  State  Road  Fund  and  organisation  of 
public  procurement  in  order  to  provide  the  public  with  profitable,  durable,  safe  and 
environmentally friendly state road network. 

Source: Latvian State Roads 

The  Ministry  of  Finance  acted  as  the  Managing  Authority  and  was  responsible 
for  effective  and  transparent  implementation  of  the  EU  funds  according  to  the 

35

  It  was  known  that  –  after  the  EU  accession  -  the  tenders  will  be  procured  according  to  the  national 
legislation. However, the Ministry could not predict that the co-ordination of tender documents prepared in 
accordance  to  PRAG  between  the  Ministry  of  Finance  and  the  Delegation  of  the  European  Commission  in 
Latvia will take so long that the procurement will have to be tendered after May 1, 2004.  

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(ERDF) and Cohesion Fund between 2000 and 2013 

principles  of  sound  financial  management.  The  Ministry  of  Finance  also  performed 
functions of the EU funds management and ex-post update of the project CBA. 

The  Ministry  of  Transport  was  the  Intermediate  Body  involved  in  the 
administration  of  the  project  and  the  Beneficiary  of  the  project.  The  MoT  was 
responsible  for  procurement  including  signing  of  Works  and  Works  supervision 
contracts.  

Finally, during the project’s design phase Latvian road administration worked in close 
cooperation with the Saulkrasti municipality, as it was necessary to reconstruct some 
sections of local roads ensuring access to the bypass and to reconstruct old road A1. 

Figure 22. Project implementation structure 

Source: Authors 

A  professional  project  management  team  within  the  LRS  with  experience  and 
knowledge  gained  in  another  Via  Baltica  reconstruction  projects  (implemented  until 
2005)  ensured  successful  project  management.  This,  in  turn,  allowed  for  the 
capitalisation  of  developed  know  how  with  positive  effect  on  the  implementation  of 
future  road  infrastructure  rehabilitation  and  reconstruction  projects.  Also,  sound 
institutional  arrangements  and  effective  share  of  responsibilities  between  the 
institutions involved resulted in successful project implementation.  

As  regards  the  operation  phase,  maintenance  of  the  Saulkrasti  bypass  is 
performed by the state joint stock company “Latvijas autoceļu uzturētājs” (in 
English  “Maintainer  of  Latvian  State  Roads”).  This  state  owned  company  executes 
routine  maintenance  works  24  hours  per  day  in  the  whole  state  road  network 
according  to  requirements  of  national  legislation.  Besides,  the  company  monitors 
weather conditions on the roads (especially important during winter time for de-icing 
operations),  collects  information  about  the  road  accidents  and  handles  user 
complaints.  The  maintenance  company  has  persons  in  duty  around  the  clock  who 
follow road conditions, weather conditions, receive up-to-date information about road 
accidents and receive road user complaints. 

In  conclusion,  the  governance  structure  set  up  in  accordance  with  the  EU 
requirements to manage EU  funds proved to be effective. A shared  objective, a clear 

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

allocation of responsibilities and close cooperation among the different actors assured 
a good project implementation in spite of the transition period. 

4.6 

MANAGERIAL CAPACITY 

The  managerial  capacity  refers  to  the  professional  ability  to  react  to  changes  in  the 
context/needs  as  well  to  unforeseen  events  during  the  project  implementation  and 
afterwards as well as to the professional capability to manage the project ensuring the 
expected level of service in the operational phase.  

Two project managers were appointed by the Latvian Road Administration to lead the 
project  implementation  –  each  managing  one  construction  phase.  The  biggest 
challenge  was  to  manage  the  land  acquisition  process  because  this  was  the 
first  construction  project  in  Latvia  since  1991.  The  Land  acquisition  unit  was 
established within the Latvian Road Administration and experienced professionals with 
local  knowledge  of  land  administration  and  sales  were  hired.  Specialists  of  the  Land 
acquisition  unit  acquired  the  land  needed  for  construction.  It  was  the  first  project  in 
the  road  sector,  which  was  subjected  to  the  law  on  the  forced  expropriation  of  real 
estate for public purposes. No specific procedures on land acquisition were elaborated 
at that time therefore Saulkrasti project had a precedent character for these matters. 

Another  issue  faced  by  the  project  management  team  was  the  tendering 
process.  All  tender  documents,  prepared  by  LSR,  had  to  be  approved  by  the  MoT, 
MoF,  and  finally,  by  the  European  Commission  Delegation.  This  administrative 
procedure  took  a  lot  of  time  and  was  in  force  until  Latvia  joined  the  EU.  Long 
coordination of tender documents and, in the end, terminated tender process because 
of offers exceeding the available budget made it necessary to look for ways to speed 
up  the  implementation  process.  The  decision  to  combine  construction  of  phase  I  and 
phase II into one contract was made based on this consideration. Thus the opening of 
Saulkrasti bypass was delayed only by three months. 

Regardless  of  the  scope  and  complexity  of  works,  no  substantial  technical  changes 
occurred during the project implementation.  

4.7 

PROJECT BEHAVIORAL PATTERN 

Following the identification of the typical determinants of project performance and the 
main project outcomes, the final step entails describing the chain of interlinked causes 
and effect determining the project performance over time.  

The  behavioural  pattern  of  the  project  under  assessment  is  provided  in  the  following 
figure.  The  round  boxes  in  light  blue  indicate  the  projects’  determinants,  the 
rectangular boxes in light grey refer to the observed events, the “+” signs next to the 
green  arrows  indicate  that  the  factor  has  positively  influenced  the  project 
performance,  the  “-“  sign  next  to  the  red  arrows  indicate  factors  that  has  negatively 
influenced the project performance. In particular, arrows in dark green indicate factors 
that  had  a  stronger  influence  on  the  project,  arrows  in  light  green  instead  indicate 
factors that had a positive but less strong influence.  

The project can be characterized as the “rising sun” project. 

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Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

Figure 23. Behavioural pattern of Saulkrasti bypass: rising sun 

Source: Authors 

The Saulkrasti bypass is the first project of its kind being implemented in Latvia since 
1991.  The  project’s  overall  positive  performance  is  the  result  of  a  combination  of 
several factors: a very good context, a fair selection process and an adequate project 
design.  Nevertheless, 
its 
implementation  ─ due to slow procedures and unexperienced administration to deal 
with  such  big  and  complex  projects  ─  which  were  counteracted  by  successful 
project management and governance. 

the  project  experienced  challenges  during 

The  Saulkrasti  bypass  was  perfectly  in  line  with  the  context  needs  and  the 
objectives  of  the  Master  Plan.  Definition  of  the  project  scope  and  selection  of  the 
best option was done according the best internationally accepted practices  and active 
involvement of stakeholders including the Saulkrasti and Skulte municipalities and its 
population.  Besides,  the  most  experienced  road  design  company  elaborated  the 
technical  design  of  the  project  in  line  with  EU  road  infrastructure  and  environmental 
standards. 

Limited  (mixed)  forecasting  capacity  partially  explains  the  encountered 
problems during the project’s implementation phase. It refers to assessment of 
human  resources  and  institutional  framework  needed  for  implementation  of  the 
project  (procurement  procedures,  land  acquisition)  as  well  as  macroeconomic  factors 
affecting the project’s performance. 

However,  forecast  of  the  macroeconomic  factors  like  increase  of  construction  costs 
and  salaries  in  the  national  economy  was  very  difficult  to  predict  considering  the 
situation  after  Latvia’s  accession  to  the  EU  on  May  1,  2004.  The  project  planning 
phase  was  completed  before  this  date.  It  should  be  noted  that  the  Ministry  of 
Transport and the State Road Administration were very prudent in traffic forecast. In 
the  ex-post  evaluation  the  actual  traffic  volume  (AADT)  on  the  Saulrasti  bypass  is 
24% higher compared to the year 2015 of the ex-ante analysis. 

A  good  governance  of  the  project  (broad  involvement  of  stakeholders  has  to  be 
noted) allowed to solve the key problems during the project’s implementation phase: 
project  delay  and  cost  overrun.  Definition  of  clear  responsibilities  of  project 
governance among the key stakeholders – the Ministry of Transport (Beneficiary), the 
Ministry  of  Finance  (Managing  authority),  Latvian  Road  Administration/LSR 
(Implementer), SJSC “Latvijas Autoceļu uzturētājs” (Operator) and the Saulkrasti and 
Skulte  municipalities  significantly  contributed  to  successful  implementation  of  the 
project  and  maintaining  of  the  project  results  during  the  operational  phase.  A  good 
sign  of  governance  is  also  a  decision  of  the  Latvian  government  to  finance  the 

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(ERDF) and Cohesion Fund between 2000 and 2013 

unexpected  investment  cost  overrun  and  increase  the  national  co-financing  of  the 
project. 

The  project  management  was  based  on  successful  co-operation  between  the 
Latvian  Road  Administration  providing  technical  (engineering  expertise,  land 
acquisition,  contract  administration)  capacity  and  the  Ministry  of  Transport 
providing procurement and financial management capacity. 

In  conclusion,  the  project  cost  overrun  and  implementation  delay  due  to  effective 
project  governance  and  management  did  not  adversely  affect  the  project’s  planned 
socio-economic benefits.  

On the top of that, the external factors which have (in the past) and may affect 
the project performance  in the future  should  be mentioned.  In respect to past 
events,  the  macroeconomic  disruption  after  Latvia's  accession  into  the  EU  and  the 
economic  the  crisis  of  2008  have  negatively  affected,  respectively,  the  project 
investment  cost  and  the  traffic  flows  in  the  first  phase  of  operation.  With  respect  to 
the future, the project performance could be affected in a positive way by the further 
improvement  of  the  road  network,  in  which  Via  Baltica  route  is  an  important  artery, 
and  in  a  negative  way  by  rival  investments  in  the  rail  sector  (i.e.  the  rail  Baltica 
project). 

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5.  FINAL ASSESSMENT 

Based  on  the  different  findings  produced  by  the  project  analysis  both  in  terms  of 
effects generated and measured through the CBA or qualitatively discussed as well as 
of factors affecting the generation of those effects, the final assessment of the project 
performance is presented here after along a set of evaluation criteria. 

5.1 

PROJECT RELEVANCE AND COHERENCE 

The project was relevant in the context when it was implemented, as the state 
main road A1 was in bad technical condition and caused inconvenience and additional 
costs  for  road  users.  The  Saulkrasti  bypass  was  the  right  initiative  to  implement  in 
order to upgrade the Via Baltica section from km 21.05 (Lilaste) to km 40.57 (Skulte) 
to European standard and to divert transit traffic from Saulkrasti town, thus benefiting 
to  reduced  congestions,  improved  road  safety  and  reduced  negative  environmental 
impact.  

The project was launched at the time when Latvia was preparing to join EU. It 
contributed significantly towards development of northern part of Latvia and improved 
connectivity and mobility among the Baltic States. 

The  project  was  not  only  coherent  with  the  TEN-T  initiative  but  also  with  an 
overall  national  scheme  to  rehabilitate  and  upgrade  Via  Baltica  route  on  the 
state  main  road  A1  between  Riga  and  Estonian  Border,  which  was  and  still  is  the 
busiest route in the country. After reconstruction, Via Baltica became more attractive 
in the regional, national and international context as shown by statistical traffic data.  

5.2 

PROJECT EFFECTIVENESS 

The  project  was  useful  to  implement  because,  despite  of  significant  cost 
increase  from  EUR  48.8  million  to  EUR  130.5  million  (nominal  value),  the 
socio-economic NPV of the project is EUR 103.1 million, with an EIRR of 9.40%. 
Benefits  in  terms  of  savings  (in  terms  of  time  and  VOC)  and  externalities  clearly 
outweigh  the  investment  and  operating  costs,  so  the  performance  indicators  confirm 
that  the  project  was  desirable  and  increased  welfare.  The  positive  performance  was 
ensured  by  the  following  interrelated  factors:  traffic  increase  on  the  new  bypass  was 
actually  higher  than  forecasted  in  the  ex-ante  analysis  and,  at  the  same  time,  traffic 
reduction on the existing A1 was higher than expected, thus leading to a considerable 
reduction in  travel time, VOC, accidents, air pollution, noise. 

Besides, the risk analysis shows that under the socio-economic perspective the project 
has a low risk level, i.e. with negative variations from the reference case of the values 
of  critical  variables,  there  is  a  nil  probability  that  the  ENPV  of  the  project  become 
negative  and  a  probability  of  nearly  50%  that  the  expected  ENPV  is  less  than  the 
reference one. 

In  respect  to  the  time  frame  of  effects,  it  is  reasonable  to  consider  that  most  of  the 
benefits are likely to have already materialised and stabilised. 

The  upgrade  of  Via  Baltica  route  to  the  European  standards  and  increased  road 
capacity  contributed  significantly  to  connectivity  and  territorial  cohesion.  More 
specifically,  it  has  facilitated  the  workforce  mobility  to  and  from  Riga,  international 
trade and tourism. 

As a positive long-term effect shall be mentioned the development of Saulkrasti town, 
which thanks to the project has reinforced its image as an attractive resort destination 

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in  Latvia.  It  has  taken  a  few  years  for  the  local  businesses  to  adapt  to  the  situation 
when  transit  traffic  is  not  passing  through  Saulkrasti  anymore.  Some  initial  losses  of 
profits were mentioned as an initial drawback of the project. However, nowadays the 
local  entrepreneurs  have  redirected  their  activities  more  towards  tourism  and  have 
adjusted to seasonal variations, as the population in summer time increases nearly 10 
times in Saulkrasti. 

In  terms  of  mechanisms  and  determinants  explaining  the  project  outcomes,  the  first 
finding is that the institutional, economic and political context played a relevant role in 
the  project’s  success.  As  explained  earlier,  there  was  an  accumulated  deficit  of 
unperformed  road  reconstruction  works  and  also,  there  was  a  strong  desire  to 
integrate  into  the  trans-European  network.  The  project  benefited  from  well-
established  institutional  arrangements  for  the  management  of  the  pre-
accession  structural  funds.  This  facilitated  good  decision-making  capacity 
with long-term vision and enabled the completion of the project in a rapid-changing 
economic context, which followed after Latvia joined the EU in 2004. 

The  success  of  the  project  was  also  largely  due  to  managerial  capacity. 
Considering that the project was the first new road construction project in the country 
since  1991,  the  road  administration  successfully  coped  with  difficulties  encountered 
during  the  implementation  process  (cost  increase  and  changing  procurement 
procedures) as well as with new tasks such as land acquisition process, which created 
a basis for procedures of future projects. 

Another  factor  that  made  positive  effect  on  the  project’s  outcomes  was 
successful  project  governance.  The  roles  and  responsibilities  were  clearly  defined 
among  the  government  institutions  and  the  road  administration.  Also,  fruitful 
cooperation  with  Saulkrasti  municipality  and  extensive  public  consultations  ensured 
successful integration of the bypass into the existing road network. 

5.3 

PROJECT EFFICIENCY 

The  project  was  well  prepared  and  designed  but  experienced  challenges  during  its 
implementation,  in  particular,  during  the  tendering  process,  which  happened  to 
coincide with the time when Latvia joined the EU. It resulted in significant investment 
cost increase and overall project delay by 1 year. Nevertheless, a committed  project 
management and governance allowed to solve the key problems with the cost overrun 
and time delay. The commissioning of the bypass was delayed only for three months, 
and  after  that  the  commissioning  of  remaining  sections  of  local  roads  followed.  The 
results  of  the  ex-post  CBA  proves  that  the  project  was  cost-efficient  even  with 
increased investment costs (ENPV at the level of EUR 103.1 million and ERR equal to 
9.4%). 

Financial sustainability of the project was met constantly matching disbursements on a 
year-by-year  bases  in  the  investment  period.  In  the  operational  period,  maintenance 
activities on the new bypass are financed from the state budget, while those on V101 
are under the responsabilities of Saulkrasti municipality. 

5.4 

EU ADDED VALUE 

The  project  as  a  part  of  the  state  main  road  improvement  programme  has 
contributed  to  the  development  of  Trans-European  transport  network.  It  has 
facilitated  mobility  at  regional  and  national  level,  and  improved  connectivity  among 
the  Baltic  States  and  with  the  rest  of  Eastern  Europe.  The  project  has  supported  the 

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increased cargo traffic volumes on Via Baltica and at the same time reduced negative 
environmental impact in the vicinity of Saulkrasti.  

Overall,  the  analysis  of  the  performance  of  the  Saulkrasti  bypass  and  its  impacts  on 
socio-economic environment show that the implementation of the project generated 
positive effects and impacts, which could not be achieved without the support 
from  the  EU.  As  a  matter  of  fact,  the  state  of  Latvia  did  not  have  the  financial 
capacity to support big scale but socially desirable projects such as Saulkrasti bypass 
(see  the  financial indicators  of  the  ex-post  financial  analysis  ─  FNPV  and  FRR  ─  both 
below zero). Therefore, without the EU support the project would not have been 
implemented.  

The  EU  support  has  been  crucial  in  all  subsequent  years  and  continues  to  remain 
significant source of financing for road improvement projects in Latvia. The Structural 
Funds have made it possible to continue improvements in the state road network, thus 
ensuring  overall  development  of  the  road  sector,  which  can  be  considered  as  an 
indirect  EU  added  value.  It  helps  to  improve  road  construction  quality  assurance 
system  by  strengthening  the  management  capacity,  accumulating  construction 
experience and improving supervision system. 

Apart  from  the  financial  aspects,  at  the  moment  when  the  project  was  selected  and 
implemented  the  EU  support  acted  as  a  catalyst  to  improve  internal 
administrative  procedures  and  capacity,  which  contributed  to  streamline  the 
delivery system. The latter is understood as the combination of legal requirements and 
procedures  that  support  the  effective  and  efficient  investment  of  EU  and  national 
resources,  and  of  the  outlining  of  roles  and  responsibilities  in  planning,  management 
and  implementation  of  investment  projects.  As  a  matter  of  fact,  the  EC  provided 
technical  assistance  through  the  ISPA,  mainly  for  the  elaboration  of  project 
documentation, and DG REGIO had a very close cooperation with the Latvian transport 
authorities. Representatives of DG REGIO made several visits to the construction site 
including verification of environmental protection measures.   

5.5 

FINAL ASSESSMENT 

In conclusion, the Saulkrasti bypass project is a success story taking into an account 
the  unforeseen  macroeconomic  changes  during  the  project  implementation.  The 
challenges  with  the  tendering  process  and  cost  overrun  have  been  successfully 
overcome  by  good  managerial  capacity  and  effective  project  governance.  Being  the 
first new construction project in Latvia since 1991, it has served as a basis for creating 
the land acquisition procedures. The project has also been a good example of mutual 
cooperation between all stakeholders - governmental institutions, municipalities, road 
administration  and  contractors.  Evidence  gathered  within  this  ex-post  evaluation 
shows that the Saulkrasti bypass has served well the first 10 years, the road capacity 
is  adequate  to  the  current  traffic,  and  the  long-term  effects  outweigh  the  benefits 
initially foreseen. 

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Table 9.  Evaluation matrix 

EQ 

ASSESSMENT 

SCORE (*) 

CRITERION 

Relevance  

To what extent the original objectives of the examined major project matched:  
• 
• 

the priorities established at the programme, national, and/or EU level. 

the existing development needs,  

The  project  was  and  over  the  years 
remained fully in line with the development 
needs  and  the  priorities  established  at 
various levels. 

Coherence 

• 
• 

Are the project components in line with the stated project objectives?  

To  what  extent  the  examined  the  project  were  consistent  with  other  national  and/or  EU 
interventions carried out in the same field and in the same area? 

Fully consistent. 

•  Has  the  examined  major  project  achieved  the  objectives  stated  in  the  applications  for 

Cohesion policy support?  

•  Was the actual implementation in line with the foreseen time schedule?  
•  What factors, including the availability and the form of finance and to what extent influenced 

the implementation time and the achievement observed?  

Effectiveness 

•  What has changed in the long run as a result of the project (for example, is there evidence 

showing contribution of the project to the private sector investments)?  

•  Were these changes expected (already planned at the project design stage, e.g., in terms of 
pre-defined  objectives)  or unexpected (emerged,  for instance, as a result  of changes in  the 
socio-economic environment)?   

•  How have these changes matched the objectives set and addressed the existing development 

needs, the priorities established at the programme, national and/or EU level?  

•  Did the selected project turn out to be the best option among all feasible alternatives? 

Efficiency 

• 

• 

Are  there  any  significant  differences  between  the  costs  and  benefits  in  the  original  cost-
benefit analysis (CBA) and what can be observed once the project has been finalised?  

To what extent have the interventions been cost effective? 

EU added 
value 

•  What is the EU added  value  resulting  from  the  examined major  project  (in  particular,  could 
any  of  the  major  projects  examined,  due  to  its  risk  profile,  complexity  or  scope,  have  not 
been carried out if not for the EU support)? 

•  Did  the  examined  major  projects  achieve  EU-wide  effects  (e.g.  for  preserving  the 

environment, building trans-European transport networks, broadband coverage etc.)? 

• 

To  what  extent  do  the  issues  addressed  by  the  examined  interventions  continue  to  require 
action at EU level? 

The  project  has  achieved  the  expected 
objectives  with  a  one  year  delay.  The 
project has contributed to the development 
of  Saulkrasti  as  an  attractive  residential 
and recreational town.   

The  project  performance  is  cost  effective 
even 
increased 
investment costs. Benefits are greater than 
initially expected in the ex-ante evaluation. 

significantly 

with 

High  EU  added  value,  i.e.  the  project 
achieved  positive effects which would  have 
not been achieved without the EU support 

5 

5 

4 

4 

4 

Note: scores range from 1 to 5. Source: authors 

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6.  CONCLUSIONS AND LESSONS LEARNED 

According to the ex-post assessment the project can be considered as a success. The 
project was implemented in a complex macroeconomic environment, in particular: 

•  The project planning phase took place before accession of Latvia to the EU. 

•  Complexity  and  scope  of  the  project  being  the  first  new  motor  road 

construction project in Latvia since 1991. 

•  Capacity  constraint  of  national  economy  to  handle  simultaneous  large  scale 

investment projects including the road sector. 

•  Global  economic  crisis  of  2008  which  had  severe  effect  on  Latvia’s  public 

spending.  

Such  complexities  led  to  investment  cost  overrun  and  delay  of  the  project 
implementation.  However,  good  project’s  governance  and  management  were  the  key 
determinants  to  face  the  above-mentioned  challenges.  Also,  favourable  context 
variables  were  key  for  the  project  to  bring  about  positive  socio-economic  benefits  to 
society given the increased investment costs and the extension of the implementation 
phase  for  one  year.  As  a  matter  of  fact,  additional  spending  from  the  Latvian  state 
budget  to  cover  investment  cost  overrun  was  positively  offset  by  increased  user 
benefits because the traffic growth turned out higher than forecasted in the feasibility 
study. 

The following lessons can be learned from the project: 

•  Big infrastructural projects are somehow able to influence the  context 
in  which  they  took  place,  by  changing  the  surrounding  socio-economic  and 
legislative  environment.  The  Saulkrasti  bypass  project  –  the  first  of  its 
nature  to  be  implemented  in  Latvia  since  1991  –  played  a  pivotal  role  in 
developing  technical,  legal  and  administrative  capacities  related  in 
particular  to  land  acquisition  and  environmental  protection  measures.  The 
experience  gained  thanks  to  the  project  was  then  used  to  elaborate  and 
improve the legal basis in Latvia for other public road investment projects. 

•  Institutional  capacity  even  if  it  requires  additional  spending  on  staff 
costs  is  crucial  for  successful  implementation  of  a  major  project.  It  is 
particularly important when a pipeline of projects is planned to be implemented 
in  a  given  sector.  In  this  regard,  the  Saulkrasti  bypass  project  gave  to  the 
Ministry  of  Transport  and  the  Latvian  Road  Administration  the  opportunity  to 
enhance  capacity  in  the  public  sector  for  the  benefit  of  subsequent  projects. 
This is the result of a mix of factors: i) the hiring of national and international 
consultant  firms  to  carry  out  jointly  the  feasibility  studies,  the  elaboration  of 
technical  solutions  and  documentation;  ii)  the  hiring  of  professionals  from  the 
private  sector  to  form  a  new  unit  within  the  Latvian  road  administration  in 
order  to  deal  with  land  acquisition  processes;  iii)  the  continuous  exchange 
between  the  Latvian  administration  with  the  EC  in  order  to  obtain  ex-ante 
validation of their decisions before taking actions.  

•  The ex-post assessment demonstrated that adequate attention to trying to 
compound  all  stakeholders’  interests,  especially  local  community, 
positively  contributes  to  the  selection  process  and  the  quality  of  the 
project.  While,  wide  consultations  are  advisable  from  an  early  stage  in  order 
to  avoid  negative  reactions  and  unexpected  problems  during  implementation, 
their  organization  needs  to  be  carefully  prepared  in  order  to  be  really 

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worthwhile  and  avoid  delays  in  the  implementation  with  negative  effects  on 
investment costs. 

The  Managing  Authority  of  the  EU  Structural  Funds  and  the  Cohesion  Fund  has  used 
the  lessons  learned  to  the  possible  extent  in  implementation  of  the  following  major 
infrastructure projects in Latvia which are financed by the EU structural funds and the 
Cohesion Fund. 

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ANNEX I. METHODOLOGY OF EVALUATION 

This Annex summarises the methodological approach undertaken for  carrying out the 
project case studies and presented in the First Intermediate Report of this evaluation 
study. The main objective is to provide the reader a concise account of the evaluation 
framework  in  order  to  better  understand  the  value  and  reach  of  the  results  of  the 
analysis as well as to enable him/her, if interested, to replicate this methodology. 36  

The  Annex  is  divided  into  four  parts,  following  the  four  building  blocks  of  the 
methodological  approach  (mapping  of  effects;  measuring  the  effects;  understanding 
effects;  synthesis  and  conclusions)  laid  down  in  the  First  Intermediate  Report.  Three 
evaluation  questions,  included  in  the  ToR,  guided  the  methodological  design.  They 
are: 

•  What kind of long term contribution can be identified for different types of 

investment in the transport field? 

•  How  is  this  long  term  contribution  generated  for  different  types  of 
investments, i.e., what is the causal chain between certain short term and log-
term socio-economic returns from investments?  

•  What  is  the  minimum  and  average  time  needed  for  a  given  long  term 
contribution  to  materialise  and  stabilise?  What  are  these  time  spans  for 
different types of investments in the transport field? 

A I.1  Mapping the effects 

The Team developed a classification of long-term effects, with the aim of identifying all 
the  possible  impacts  of  transport  investments  on  social  welfare.  Under  four  broad 
categories, a taxonomy of more specific long-term development effects of investment 
projects  has  been  developed.  The  definition  of  each  type  of  effect  is  provided  in  the 
Table below.  

Far from being exhaustive, this list is intended to guide the  evaluators in identifying, 
in a consistent and comparable way, the most relevant effects that are expected to be 
identified and included in the analysis. Additional effects could possibly be relevant in 
specific cases and, if this is the case, they can be added in the analysis.  

In  researching  all  the  possible  long-term  effects  of  project  investments,  it  is 
acknowledged  that  there  could  be  a  risk  of  duplication.  In  addition,  the  allocation  of 
some  effects  under  different  categories  is  to  some  extent  arbitrary  and  thus  it  may 
happen that categories overlap. That said, caution will be paid in order to avoid double 
counting when performing the ex-post CBA.   

36

 Specific recommendations which may enable  application of the same evaluation methodology to future 

projects are discussed in the Final Report of this evaluation study.  

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Figure 24. Taxonomy of effects 

DIRECT EFFECTS  

DESCRIPTION 

EFFECTS ON 
ECONOMIC 
GROWTH 

Travel time  

Reduction  in  travel  time  for  business  travellers,  shippers  and  carriers  (including  the  hours  gained 
because  of  a  reduction  of congestion)  is  a  typical  positive  outcome of  transport  project,    except those 
that specifically aim at environmental or safety benefits. 

Vehicle operating cost  

Vehicle  operating  cost  savings  for  the  travellers  (fuel  costs,  fares)  and  for  transporters  of  goods  (this 
refers to the distance-dependent transport costs) are relevant if the project aims at reducing congestion 
and/or the journey distances. 

Reliability of journey 
time 

It  means  reduced  variation  in  journey  times.  Reliability  benefits  are  potentially  important  for  many 
projects,  unless  journey  times  are  already  quite  reliable.  However,  often  forecasting  models  or  other 
information for the impacts on and through reliability are missing (de Jong and Bliemer, 2015) 

Income for the service 
provider 

It  includes  the  revenues  (e.g.  rail  ticket  income  increase)  accrued  by  the  producer  (i.e.  owner  and 
operators together) as well as the operational cost savings. To some extent it can reflect the previous 
aspects (i.e. the service fare is increased to reflect a better service allowing for significant time saving 
for the users) so double counting shall be avoided. This aspect might be particularly relevant for public 
transport projects or toll road projects, especially if the project is expected to feature significant traffic 
(generated or induced) or a substantial change in fares. 

ADDITIONAL 
EFFECTS  

DESCRIPTION 

Wider economic 
impacts 

Institutional learning 

It  refers  to  the  agglomeration  effect  on  productivity  (the  productivity  of  the  economy  is  increased 
because  the  project  leads  to  a  clustering  of  economic  activities  together  in  a  core  city  which  makes 
these sectors produce more or better goods and services together than before). Agglomeration effects 
are unlikely to occur for small projects and even for large projects there are specific pre-conditions (see 
for  instance  Chen  and  Vickerman,  2017).  Wider  economic  impacts  (agglomeration  effects)  depend  on 
whether  the  project  makes  a  potential  economic  cluster  location  substantially  more  accessible.  This  is 
only  possible  if  the  infrastructure  network  before  the  project  had  important  missing  links  which  the 
project effectively removes. 

It  refers  to  wider  spillover  effects  that  any  investment  project  may  bring  to  the  Public  Administration 
and  other  institutions  at  national  or  regional  levels  in  terms  of  expertise  gained  by  working  on  large 
scale  projects.  Learning  may  lead  to  productivity  gains  by  stimulating  the  improvement  of  existing 
technical  know-how,  improved  policy-making,  competitive  tendering  and  divert  resources  towards  the 
most growth enhancing projects. 

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DIRECT EFFECT 

DESCRIPTION 

Travel time 

Safety (accident 
savings) 

Security 

Leisure  time  saving  relates  to  projects  that  provide  a  reduction  in  travel  time  for  non-business 
travellers. 

It relates to the amount of fatalities, serious and slight injuries, damage-only accidents. Safety impacts 
should possibly be included in all project evaluation.  

Safety of travellers in the vehicle and at stations, platforms and stops, safety of the goods transported 
(often  damaged  or  stolen).  Security  impacts  are  often  neglected  in  project  evaluation,  but  for  public 
transport projects (both urban and intercity) they can be of considerable importance. 

EFFECTS 
RELATED TO 
QUALITY OF LIFE 
AND WELL-BEING 

Noise  

ADDITIONAL 
EFFECT 

Crowding 

It refers to the exposure of population to noise measured in dB 
DESCRIPTION 

A  reduction  of  crowding  in  public  transport  is  mainly  relevant  for  projects  that  provide  significant 
additional capacity in public transport. 

Service quality (other 
than crowding) 

It  refers  mainly  to  the  availability  of  specific  service  features  increasing  the  journey  comfort    e.g. 
smoother movement of the vehicles, more comfortable seats, provision of electricity, Wi-Fi, catering.  

Aesthetic value 

This  relates  to  projects  that  provide  infrastructure  with  positive  visual  effects  (e.g.  a  beautifully 
constructed  bridge)  or  when  public  transport  provide  a  better  image  in  the  eye  of  the  public.  Also,  it 
refers to projects that lead to a less attractively looking landscape (e.g. constructing high walls).  

Urban renewal 

It  refers  to  the  spillover  effects  of  urban  transport  projects  on  residents  (not  necessarily  users  of  the 
project) due to an improved local context and possibly reflected in an increase in real estate values.  

DIRECT EFFECT 

DESCRIPTION 

Local air pollution 

Local air pollutants are typically small particles, NOx, VOCs and SO2. The increased/decreased volume of 
local air emissions is a typical effect of transport projects. 

EFFECTS ON THE 
ENVIRONMENT 

Climate change 

ADDITIONAL 
EFFECTS 

Biodiversity 

Water pollution 

Climate  change  refers  to  the  volume  of  greenhouse  gases  (GHG)  emitted  by  transport  infrastructure. 
The increased/decreased volume of GHG emissions is a typical effect of transport projects. 

DESCRIPTION 

This refers to the reduction of biodiversity through the extinction of species in a specific area. It is not a 
common effect but it can be relevant in selected cases.  

Emissions  of  substances,    e.g.  from  the  road,  into  watercourses,    that  are  harmful  for  people  (as 
drinking water) or for life in the water 

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EFFECTS 
TO 
RELATED 
DISTRIBUTIONAL 
ISSUES 

ADDITIONAL 
EFFECTS 

Social cohesion  

DESCRIPTION 

It encompasses the allocation of the main benefits over income and social groups 

Territorial cohesion 

It encompasses the allocation of the main benefits over central (core) and peripheral areas 

Source: Authors 

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A I.2  Measuring of effects 

Because  of  the  variety  of  effects  to  be  accounted  for,  a  methodological  approach 
firmly rooted on CBA (complemented by qualitative analysis when necessary) is 
adopted in order to grasp the overall long-term contribution of each project.  

In terms of their measurement level, the effects can be distinguished into: 

A.  Effects that by their nature are already in monetary units (e.g. transport 
costs savings). These can therefore be easily included in a cost-benefit analysis 
(CBA). 

B.  Effects  that  are  quantitative,  but  not  in  money  units,  and  that  can  be 
converted  into money  units  in  a  reasonably  reliable  way  (e.g.  transport 
time  savings,  accidents,  air  pollution)37.  These  effects  can  also  be  included  in 
the CBA. 

C.  Effects  that  are  quantitative,  but  not  in  money  units,  for  which  there 
are no reasonably reliable conversion factors to money. We propose not 
to  try  to  include  such  effects  in  the  CBA,  but  to  discuss  them  in  a  qualitative 
way together with the overall outcome of the CBA. 

D.  Effects  that  are  difficult  to  measure  in  quantitative  (cardinal)  terms, 
but do lend themselves for ordinal measurement (a ranking of the impact 
of  different  projects  on  such  a  criterion  can  be  provided,  such  as  very  good, 
good,  neutral,  bad,  very  bad).  We  propose  to  discuss  these  effects  in 
qualitative terms.  

E.  Effects  that  might  occur  but  that  are  subject  to  a  high  degree  of 
uncertainty:  these  will  be  treated  as  part  of  the  risks/scenario  analysis  that 
will be included in the CBA. 

F.  Effects that might occur but that we cannot even express in an ordinal 
(ranking)  manner:  they  are  residual  effects  that  can  be  mentioned  in 
qualitative description in case study report.    

In  short,  all  the  projects’  effects  in  A  and  B  are  evaluated  by  doing  an  ex-post  cost-
benefit  analysis  (CBA)38.  Reasonably,  these  represent  the  most  significant  share  of 
long-term effects. Then the outcome of the CBA (e.g. the net present value or benefit-
costs ratio) is complemented by evidence from C and D, while E is used for descriptive 
purposes. Moreover, qualitative techniques are used to determine why certain effects 
are generated, along what dimensions, and underlying causes and courses of action of 
the delivery process (see below). 

Section  3  of  each  case  study  includes  a  standardised  table  in  which  scores  are 
assigned  to  each  type  of  long-term  effect.  Scores  ranging  from  -5  to  +5  (5  =  very 
strong  negative  effect;  0  =  no  effect;  5  =  very  strong  positive  effect)  are  given  in 

37

  Methods  to  establish  such  conversion  factors  include:  stated  preference  surveys  (asking  respondents 
about hypothetical choice alternatives), hedonic pricing or equating the external cost with the cost of repair, 
avoidance or prevention or with the costs to achieve pre-determined targets  

38

 More details on the approach adopted to carry out the ex-post CBA exercise and, in particular, indications 
on project identification, time horizon, conversion factors and other features are extensively described in the 
First Intermediate Report of this evaluation study. 

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order to intuitively highlight which are the most important effects generated for each 
case study.  

A I.3  Understanding the effects 

Once  the  project  effects  have  been  identified  and  measured,  and  the  causal  chain 
linking different categories of short-term and long-term effects has been investigated, 
the  third  building  block  of  the  methodological  approach  entails  reasoning  on  the 
elements,  both  external  and  internal  to  the  project,  which  have  determined  the 
observed  causal  chain  of  effects  to  take  place  and  influenced  the  observed  project 
performance. 

Taking  inspiration  from  the  literature  on  the  success  and  failure  of  projects,  and 
particularly on costs overruns and demand shortfalls, and on the basis of the empirical 
evidence which develops from European Commission (2012) six stylised determinants 
of projects’ outcomes and their development over time have been identified (see table 
below).  

The interplay of  such determinants may reinforce  or dilute one effect  over the  other. 
Moreover,  each  determinant  may  contribute,  either  positively  or  negatively  to  the 
generation/speed  up/slow-down  of  certain  short-term  or  long-term  effects.  For  this 
reason it is important not only to understand the role that each determinants has on 
the observed project outcome, but also their interplay in a dynamic perspective.  

In  doing  this,  it  is  useful  to  refer  to  stylised,  typical  “paths”  of  project  behaviours 
outlined  in  the  following  table.  Such  patterns  capture  common  stories  and  reveal 
recurring  patterns  of  performance,  as  well  as  typical  problems  that  may  arise  and 
influence the chronicle of events. Case studies test the validity of such archetypes and 
are used to specify in better nuances or suggest possible variations or additions. 

Section 4 of each case study includes standardised tables in which scores are assigned 
to  each  determinant.  Scores  ranging  from  -5  to  +5  are  given  in  order  to  intuitively 
highlight which are the most relevant determinants explaining the project outcomes (5 
=  very  strong  negative  effect;  0  =  no  effect;  5  =  very  strong  positive  effect). 
Moreover,  section  4  of  each  case  study  includes  a  graph  describing  the  project’s 
behavioural  pattern,  i.e.  describing  the  chain  of  interlinked  causes  and  effect 
determining the project performance over time. 

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Table 10.  Stylised determinants of projects’ outcomes 

DETERMINANT   DESCRIPTION 

Relation 
the context 

with 

It  includes  the  considerations  of  institutional,  cultural,  social  and  economic 
environment  into  which  the  project  is  inserted,  was  the  project  appropriate   to 
this  context?;  is  there  a  problem  that  the  project  can  solve?;  does  the  project 
remain relevant over the years? 

Selection 
process 

Project design 

Forecasting 
capacity 

Project 
governance 

Managerial 
capacity 

It  refers  to  the  institutional  and  legislative  framework  that  determines  how 
public  investment  decisions  (and  especially  those  co-financed  by  ESIF)  are 
taken,  i.e.  which  is  the  process  in  place  and  the  tools  used  to  select  among 
alternative  projects.  The  selection  process  is  influenced  by  incentive  systems 
that  can  lead  politicians  and  public  institutions  to  either  take  transparent 
decisions  or  strategically  misrepresent  costs  and/or  benefits  at  the  ex-ante 
stage. 

it refers to the technical capacity (including engineering and financial expertise) 
to properly design the infrastructure project. Under a general standpoint, we can 
distinguish: 

•  the  technical  capacity  to  identify  the  most  appropriate  conceptual  design, 
which best suits the need of a specific context. Even when a region really is 
in need of the project, it usually requires a well-designed project to solve the 
observed  problems.  This,  in  turn,  involves  that  different  alternatives  are 
considered and the best option in terms of technical features and strategical 
considerations is identified; 

•  the  technical  capacity  to  develop  the  more  detailed  level  of  design 
(preliminary  and  detailed),  thus  identifying  most  effective  and  efficient 
detailed  infrastructure  solutions  and  construction  techniques,  thus  avoiding 
common  pitfalls  in  the  construction  stage  (such  as  introducing  variants  that 
are  not  consistent  with  the  original  conceptual  design)  and  the  risk  of  cost 
overruns  during  the  construction  phase  by  choosing  inappropriate  technical 
solutions. 

It  regards  the  possibility  and  capacity  to  predict  future  trends  and  forecast  the 
demand  level  and  estimate  the  technical  challenges,  thus  estimating  correctly 
the  required  resources  (e.g.  looking  at  the  dangers  of  over-predicting  demand 
and  under-predicting  construction  costs).  In  particular,  technical  forecasting 
capacity  is  related  to  the  quality  of  data  used  and  forecasting/planning 
techniques adopted.  At the same time, forecasting capacity includes the ability 
of the project promoter and technical experts not to incur in the planning fallacy 
(the  tendency  to  underestimate  the  time  or  cost  needed  to  complete  certain 
tasks) and optimism bias (the systematic tendency to be overly optimistic about 
the outcomes of actions). 

It  concerns  the  number  and  type  of  stakeholders  involved  during  the  project 
cycle  and  how  responsibilities  are  attributed  and  shared.  This  is  influenced  by 
the incentive mechanisms. If bad incentives exist, this can lead different actors 
involved in the project management to provide benefits for their members, thus 
diverting  the  funds  away  from  their  optimal  use,  or  forcing  them  to  delegate 
responsibilities according to a non-transparent procedure. 

It refers to the:  

•  professional  ability  to  react  to  changes  in  the  context/needs  as  well  as  to 

unforeseen; 

•  professional  capability  to manage  the  project  ensuring  the  expected level of 
service  in  the  operational  phase.  To  ensure  a  project  success,  it  is  not 

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enough  that  it  is  well planned  and  designed,  but  also  that  the organizations 
in  charge  of  the  management  and  operations  provide  a  good  service  to  the 
end users (e.g. ensuring a good maintenance of the infrastructure).     

Source: Authors 

Table 11.  Behavioural patterns archetypes  

Behavioural  patterns  are  illustrated  by  use  of  diagrams  linking  determinants  and 
project outcomes in a dynamic way 

TYPE 

DESCRIPTION 

Bright 
star 

This pattern is typical of projects where the good predictions made ex-ante (both on 
the  cost  side  and  demand  side)  turn  out  to  be  accurate.  Proper  incentive  systems 
are in place so that the project actually delivers value for money and success. Even 
in  the  event  of  exogenous  negative  events,  the  managerial  capacity  ensures  that 
proper corrective actions are taken and a positive situation is restored. 

Rising sun  

This  pattern  is  typical  of  projects  which,  soon  after  their  implementation,  are 
affected  by  under  capacity  issues  because  of  a  combination  of  low  demand 
forecasting  capacity,  weak  appropriateness  to  the  context,  and  weak  technical 
capacity  to  design  the  infrastructure.  However,  due  to  changed  circumstances  or 
thanks  to  responsible  management  and  good  governance  the  project  turns  around 
to reap new benefits. 

Supernova  

This pattern is typical of projects for which the good predictions made ex-ante (both 
on  the  cost  and  demand  side)  turn  out  to  be  accurate.  However,  due  to  changed 
circumstances  or  because  of  weak  management  capacity  and/or  governance  the 
project eventually turns out to be unsuccessful. 

Shooting 
star  

Black-hole  

This  pattern  is  typical  of  projects  starting  from  an  intermediate  situation  and 
resulting  in  a  failure.  This  outcome  can  be  explained  by  a  low  forecasting  capacity 
affected  by  optimism  bias  which  yields  a  cost  overrun.  Then  during  project 
implementation,  because  of  low  managerial  capacity  and/or  poor  governance  (also 
due to distorted incentives) corrective actions are not implemented, this leading to 
project  failure.  The  situation  is  exacerbated  if  unexpected  negative  events 
materialise during the project implementation.   

This pattern is typical of projects that since the beginning of their life fail to deliver 
net  benefits.  This  is  a  result  of  a  combination  of  ex-ante  bad  factors  (i.e.  low 
technical  capacity  for  demand  forecasting,  optimism  bias,  inappropriateness  to  the 
local context and bad incentives affecting both the selection process and the project 
governance)  and    careless  management  during  the  project  implementation  or  bad 
project governance (e.g. unclear division of responsibilities, bad incentive schemes). 

Source: Author 

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A I.4  Synthesis and conclusions 

Qualitative  and  quantitative  findings  are  integrated  in  a  narrative  way,  in  order  to 
develop  ten  project  ‘histories’  and  to  isolate  and  depict  the  main  aspects  behind  the 
project’s long-term performance. A final judgment on each project is then conveyed in 
the  case  studies  with  an  assessment  structured  along  a  set  of  evaluation  criteria,  as 
suggested in the ToRs. Evaluation criteria are the following:  

•  Relevance  (were  the  project  objectives  in  line  with  the  existing  development 

needs and the priorities at the programme, national and/or EU level?); 

•  Coherence  (with  other  national  and/or  EU  interventions  in  the  same  sector  or 

region); 

•  Effectiveness  (were  the  stated  objectives  achieved,  and  in  time?  Did  other 

effects materialise? Were other possible options considered?); 

•  Efficiency  (costs  and  benefits  relative  to  each  other  and  to  their  ex-ante 

values); 

•  EU added value (was EU support necessary, EU-wide effects, further EU action 

required?). 

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ANNEX II.  EX-POST COST-BENEFIT ANALYSIS REPORT 

This Annex illustrates the ex-post CBA of the project under consideration, undertaken 
to quantitatively assess the performance of the project. The methodology applied is in 
line with the guidelines provided in the First Interim Report and, more generally, with 
the  EC  Guide  (European  Commission,  2014).  This  annex  aims  to  present  in  more 
detail  the  assumptions,  results  of  the  CBA  and  the  scenario  analysis  for  the  project 
under consideration. 

A II.1 METHODOLOGY, ASSUMPTION AND DATA GATHERING 

In  what  follows,  the  main  assumptions  and  the  procedure  of  data  gathering  are 
described in detail.  

•  Project identification  

The unit of analysis of this CBA is the Saulkrasti bypass project. As explained in 
Section  1  of  the  main  report,  the  project  was  included  in  the  Master  Plan  for 
Latvian  road  network  maintenance,  development  and  operation  (1997)  and  a 
programme for improving road safety on state main roads (1997). The project 
under assessment comprise the following components: 

  Construction of new road to bypass Saulkrasti 20.15 km; 
  Construction of grade-separated junctions (15 structures); 
 

Improvement  of  the  existing  road  A1  section  km  21.05  -  40.57,  i.e. 
rehabilitation  of  road  14.8  km,  including  construction/reconstruction  of 
sidewalks  5.55  km,  reconstruction  of  47  bus  stops,  including  bus-stop 
pavilions (4 items) and 11.6 km of street lighting. 

The project was implemented from 2002 to 2008 as detailed below.  

Table 12.  Synthesis of the interventions 

ACTIVITY 

IMPLEMENTATION PERIOD 

Preparatory phase (design, FS) 

2002 – 2007 

Phase I 

Land acquisition 

Construction 

Phase II 

Land acquisition 

Construction 

Phase III 

Land acquisition 

Construction 

2002 – 2006 

2005 - 2007 

2002 – 2006 

2005 – 2007 

2003 – 2008 

2005 – 2008 

Source: Project final report, LSR 

•  Time horizon 

In line with the First Interim Report, the time horizon for the CBA of the project is set 
at  26  years  (2002-2027).  The  investment  period  for  Saulkrasti  bypass  construction 
runs  from  2002  to  2008.  The  operational  period  of  newly  constructed  Saulkrasti 
bypass  starts  in  October  2007  when  the  road  was  open  to  public.  Some  sections  of 
local  roads  were  finished  in  2008  therefore  the  investment  period  ends  in  December 

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2008.  A  mix  of  historical  data  from  2002  to  2016  (covering  15  years)  and  forecasts 
from 2018 to 2027 (covering 10 years) is used. 

•  Constant prices and discount rates 

In line with the guidelines of the First Interim Report, the CBA was performed 
using  constant  prices.  Historical  data  have  been  adjusted  and  converted  into 
Euro  at  2017  prices  by  using  the  yearly  average  percentage  variation  of 
consumer prices provided by the International Monetary Fund. As for data from 
2017  onwards,  they  have  been  estimated  in  real  terms  (no  inflation  is 
considered).  

Consistent with the choice of using constant prices, financial and social discount 
rates  have  been  adopted  in  real  terms.  Specifically,  inflows  and  outflows  of 
financial  analysis  -  for  both  the  backward  and  forward  periods  of  analysis  – 
have been discounted and capitalised using a 4% real rate, as suggested in the 
EC  CBA  Guide  (2014).  With  regard  to  the  economic  analysis,  a  real  backward 
social discount rate of 6.67% and a real forward social discount rate of 6.25%, 
specifically  calculated  for  Latvia  (see  the  First  Interim  Report  for  the 
calculation), have been adopted. 

•  Without the project scenario  

As  explained  in  Section  2  of  the  main  report,  without-project  scenario 
comprises  continued use  of the  existing state  main road A1 with present road 
standard.  No  measures  are  implemented  to  increase  capacity  of  the  road  and 
to  improve  road  safety.  On  that  basis,  the  reference  scenario  for  the  CBA 
(Without  the  project  scenario)  is  a  “Business  as  usual”  scenario.  Only  routine 
and periodic maintenance of the road and the existing structures is carried out. 

•  Data sources  

The analysis relied on data provided by the Latvian State Roads, the EC and on 
the  opinions  of  the  experts  interviewed.  Moreover,  information  has  been 
gathered from a review of documents available online and on the local press. 

•  Technical features  

The  project  includes  a  new  road  constructed  to  bypass  Saulkrasti  centre,  with 
two lane carriageway (width of the roadway - 14 m,  carriageway -11 m, total 
length  -  20.22  km)  in  accordance  with  European  road  standards,  i.e.,  the 
standard  truck  axle  load  bearing  capacity  of  11.5  t.  In  total  15  bridges  and 
overpasses  are  built,  as  well  as  2  pedestrian  underpasses,  4  railway  at-grade 
level crossings and a cycle path. 

In  addition,  the  project  includes  rehabilitation  of  connecting  roads  sections 
(12.97 km) to incorporate the new bypass into the existing road network, and 
a  construction  of  a  section  of  11  kV  electrical  power  transmission  line.  Along 
the roadside, there are noise protection walls with a total area of 3 936.76 m2 
installed, wire mesh fences with a total length of approximately 7.2 km, street 
lighting  with  a  total  length  of  32.84  km,  and  152  double  pane  glass  windows 
for  dwellings  near  to  the  road  installed.  New  pedestrian  sidewalks  of  4.5  km 
constructed. 

Also,  the  old  main  road  A1  (currently  local  road  V101)  via  Saulkrasti  is 
reconstructed  in  the  length  of  14.8  km,  including  reconstruction  of  sidewalks 
5.5km,  47  bus  stops  (including  4  bus-stops  pavilions)  and  11,6  km  of  street 
lighting. 

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A II.2 Future scenario 

In  order  to  assess  the  project’s  performance  in  the  future,  hypotheses  have  been 
made regarding the future trends of variables, in particular the evolution of traffic. To 
develop the demand analysis, the original demand analysis and assumptions included 
in the ex-ante analysis have been revised based on the available information.  

The  traffic  analysis  for  the  ex-ante  analysis  was  prepared  based  on  visual  counting 
data in 1996-2000, and the traffic forecast took into account automobilization level in 
European countries. In the ex-post analysis, historical traffic data on the main road A1 
and  the  local  road  V101  (former  main  road  A1  via  Saulkrasti)  are  instead  used 
(available  in  the  database  of  Latvian  State  roads  for  the  period  2003-2016)  because 
the construction of the Saulkrasti bypass has split the traffic on the main road A1 into 
bypassing traffic and local traffic still using the old road via Saulkrasti.  

Road  A1  is  one  of  the  busiest  roads  in  the  country  where  traffic  has  increased  on 
average by 9% annually in the last years. For the period 2017-2027, the traffic growth 
forecast on the main road A1 is based on LSR projections for high scenario (see table 
below), while projections for moderate increase scenario is used to forecast traffic on 
local  road  V101.  The  choice  of  using  an  optimistic  scenario  for  the  new  road  and  a 
moderate scenario for the old one reflects the trend of traffic growth since the opening 
of  the  bypass.  Actually,  the  observed  total  traffic  on  the  bypass  is  systematically 
higher than the ex-ante expectation, while traffic on local V101 is lower. This suggests 
that more vehicles than expected are diverted to the new road.  

Table 13.  Traffic growth forecast 

PERIOD 

MODERATE SCENARIO 

HIGH SCENARIO 

(used for local road V101) 

(used for main road A1) 

2017-2019 

2020-2027 

3.5 % 

2.0% 

5.0% 

2.5% 

Source: LSR 

For the with-project scenario the following assumptions are used: 

o  Traffic split between bypassing traffic and traffic using state local road V101 via 

Saulkrasti (old road A1) from October 2007; 

o  Historical  traffic  counting  data  on  the  main  road  A1  and  the  local  road  V101 

used till 2016; 

o  The growth rate is based on LSR projections for the period 2017-2027. 

For the without-project scenario the following assumptions are used: 

o  All traffic remains on the old road A1; 
o  Historical  traffic  counting  data  on  the  main  road  A1  and  the  local  road  V101 

used till 2016 are combined; 

o  The growth rate is based on LSR projections for the period 2017-2027. 

The historical and future traffic is shown in the Figure below. 

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Figure 25. Historical  and  future  traffic  on  Saulkrasti  bypass  and  old  main  road  A1 

via Saulkrasti (2002-2027) 

T
D
A
A

16000

14000

12000

10000

8000

6000

4000

2000

0

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

0
2
0
2

1
2
0
2

2
2
0
2

3
2
0
2

4
2
0
2

5
2
0
2

6
2
0
2

7
2
0
2

AADT on bypass

AADT on local road (via Saulkrasti)

AADT on A1 (without-project)

Source: LSR, Authors 

According  to  traffic  count  data,  nearly  all  heavy  gross  vehicles  have  shifted  to  the 
bypass  where  truck  traffic  forms  22%  of  total  traffic  in  the last  five  years.  The  same 
proportion is maintained in the future projections. Historical data show that only 2% of 
all  vehicles  using  local  road  V101  have  been  trucks  in  the  period  2007-2014.  The 
situation has slightly changed in 2015-2016 when the  share  of  HGV increased to 5% 
and  8%  accordingly  which  can  be  explained  by  increased  economic  activities  in 
Saulkrasti  and  increased  cargo  turnover  in  Skulte  port.  In  the  future,  it  is  assumed 
that 5% of all traffic on local road will be truck traffic.  

As  a  final  remark  on  traffic  demand,  it  must  be  notice  that  for  caution  reasons  no 
induced traffic or switch from other modes is expected, since the project is not located 
in  a  major  urban  area  and  no  specific  changes  in  population,  employment  and  land 
use pattern are expected.   

A II.3 FINANCIAL ANALYSIS 

  Investment cost 

The table below  summarizes the breakdown of the investment according to the main 
cost  categories  and  shows  the  financial  cost  of  the  investment  in  nominal  value  and 
updated to 2017 values.   

Table 14.  Investment cost breakdown by work component (EUR) 

PROJECT ITEM 

NOMINAL VALUE  

PRESENT VALUE (2017) 

Eligible investment costs 

Road construction 

Supervision 

92 785 000 

2 019 000 

131 925 926 

2 787 875 

Total eligible investment costs 

94 804 000 

134 713 801 

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Non-eligible investment costs 

Planning, design 

Land 

Land aquisition costs 

2 474 000 

861 000 

34 000 

4 204 663 

1 361 481 

48 323 

Construction costs 

12 811 000 

15 781 512 

Supervision 

Project management costs 

Designer's supervision 

228 000 

2 014 000 

210 000 

302 991 

2 230 407 

294 046 

VAT for eligible costs* 

17 065 000 

24 295 669 

Total non-eligible investment costs 

35 697 000 

48 519 093 

Total investment costs 

130 501 000 

183 232 894 

 *VAT is not recoverable  

Total  project  costs  are  130.5  million  EUR.  Costs  for  project  components  which  were 
eligible for EU co-financing (construction and supervision) are 72.65% of total project 
costs. 

  Residual value 

The income methodology was applied to the residual value calculation and was based 
on  the  assessment  of  net  present  value  of  financial  flows  at  the  end  of  project 
reference period. 

  Operating & Maintenance costs 

The ex-ante analysis does not provide calculation of road maintenance costs  or input 
data  used  in  O&M  costs  calculations.  Therefore,  values  from  LSR  methodological 
guidelines are used. 

Due  to  improvements  made  in  the  project,  as  well  as  downgrading  the  road  class  of 
old road A1 from the main road to local road, road maintenance costs for old road via 
Saulkrasti  are  reduced.  Instead,  additional  expenditures  are  needed  to  maintain  the 
newly built bypass. In line with the LSR methodological guidelines, the average routine 
maintenance  cost  for  the  bypass  is  assumed  to  be  21,440  EUR/km  and  for  the  local 
road  V101  –  12,843  EUR/km.  In  total,  routine maintenance  costs  increased  after  the 
project.  

Periodic maintenance of the bypass is estimated on the basis of the expected schedule 
of periodic maintenance works. The timing of the works was determined on the basis 
of  the  observed  maintenance  cycle  for  state  roads  in  the  country,  e.g.  re-pavement 
after 10 years. Average cost of pavement renovation is also based on cost observed in 
the past. 

  Operating revenues 

A  toll  is  not  collected  from  the  vehicles  using  the  bypass  therefore  there  are  no 
revenues from the project. 

  Project’s Financial Performance 

On  a  financial  basis,  the  profitability  of  the  project  is  negative.  The  Financial  Net 
Present Value (NPV) on investment is equal to EUR -240 million (at a discount rate of 
4%,  real),  with  an  internal  rate  of  return  of  -4.8%.  Also,  the  Financial  Net  Present 
Value  on  capital  is  negative  with  the  level  of  EUR  -153  million  and  with  the  internal 
rate  of  return  for  capital  of  -2.96%.  These  negative  values  confirm  that  the  project 
was  in  need  of  EU  funding  since  no  private  investor  would  have  been  motivated  to 

70 

 
 
  
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

implement  it  without  an  appropriate  financial  incentive.  The  results  of  the  project 
financial performance are presented in the following table. 

Table 15.  Financial performance indicators of the project 

INDICATOR 

FNPV/C  

FRR/C  

FNPV/K 

FRR/K 

EUR 

-240,461,780 

-4.61% 

-152,933,457 

-2.96% 

Source: Authors 

71 

 
Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

Table 16.  Financial return on investment (EUR) 

IT. 

PRESENT 
VALUE 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

1 

Operational income 

 0 

0 

0 

0 

0 

0 

0 

0 

2 

CAPEX 

 -281 995 414 

-2 113 053 

-1 027 620 

-2 948 726 

-41 384 253 

-83 301 448 

-41 110 143 

-11,347,650 

Preparatory phase 
(design, FS) 

-7 284 192 

-2 113 053 

-646 827 

-1 110 070 

-104 148 

-56 034 

-155 291 

-380 793 

-150 629 

-732 101 

-77 585 

0 

0 

0 

-43 103 

-5 220 

0 

0 

0 

-1 615 987 

-34 601 715 

-66 970 490 

-33 519 297 

-10 999 950 

-60 579 

-82 706 

-1 682 452 

-1 132 709 

-132 420 

-449 408 

-914 469 

-687 588 

-175 667 

-91 895 

-51 724 

-142 241 

-5 322 280 

-13 505 591 

-5 467 798 

0 

0 

2.1 

2.2 

2.3 

Land acquisition 

-2 230 771 

Land acquisition 
services 

-74 082 

2.4 

Construction costs 

-226 460 296 

2.5 

Supervision 

2.6 

LSR costs 

-4 688 502 

-3 400 580 

2.7  Designer's supervision 

-450 936 

2.8 

VAT for eligible costs 

-37 406 056 

3 

OPEX 

 -8 349 118 

3.1 

3.2 

Road maintenance  

-5 840 538 

Pavement renovation 

 -2 508 580 

4 

Residual value 

 49 882 752 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

-3 275 

-8 186 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

-71 271 

-71 271 

0 

0 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

5 

Total (1+2+3+4) 

 -240 461 780 

-2 113 053 

-1 027 620 

-2 948 726 

-41 384 253 

-83 301 448 

-41 181 414 

-11 632 735 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

IT. 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

1 

Operational income 

0 

2 

CAPEX 

2.1 

2.2 

2.3 

Preparatory 
(design, FS) 

phase 

Land acquisition 

Land 
services 

acquisition 

2.4 

Construction costs 

2.5 

Supervision 

2.6 

LSR costs 

2.7  Designer's supervision 

2.8  VAT for eligible costs 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

3 

OPEX 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-2 998 364 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

Road maintenance  

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

3.1 

3.2 

Pavement renovation 

0 

4 

Residual value 

0 

0 

0 

0 

0 

0 

0 

0 

0 

-2 713 280 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

73 838 659 

5 

Total (1+2+3+4) 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-2 998 364 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

73 553 575 

73 

 
 
  
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

Table 17.  Financial return on national capital (EUR) 

LP. 

PRESENT 
VALUE 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

1 

Inflow 

49 882 752 

1.3 

Residual value 

49 882 752 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

2 

Outflow 

-202 816 210 

-2 113 053 

-1 027 620 

-2 948 726 

-27 888 357 

-54 453 447 

-26 649 498 

-11 632 735 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

2.1  National 

-196 975 672 

-2 113 053 

-1 027 620 

-2 948 726 

-27 888 357 

-54 453 447 

-26 578 227 

-11 347 650 

0 

0 

0 

0 

0 

contribution 

2.2  OPEX 

 -8 349 118 

0 

0 

0 

0 

0 

-71 271 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

3 

TOTAL (1+2) 

-152 933 457 

-2 113 053 

-1 027 620 

-2 948 726 

-27 888 357 

-54 453 447 

-26 649 498 

-11 632 735 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

LP. 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

1 

Inflow 

1.3 

Residual value 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

73 838 659 

73 838 659 

2 

Outflow 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

2.1  National 

0 

0 

0 

0 

0 

2 713 280 

0 

0 

0 

0 

0 

0 

0 

0 

contribution 

2.2  OPEX 

-285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

3 

TOTAL (1+2) 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-2 998 364 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

-285 084 

73 553 575 

74 

 
 
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

  Financial Sustainability 

The  project  financial  sustainability  is  presented  in  the  table  overleaf;  the  analysis  
shows  that  the  sources  of  financing  had  consistently  matched  disbursements  on  a 
year-by-year  basis  in  the  investment  period.  Concerning  operating  and  maintenance 
activities  of  the  new  road  A1,  they  are  financed  by  the  the  state  budget,  while  O&M 
costs for the old road passing through Saulkrasti town are civered by the municipality 
budget.  The  cumulated  net  cash  flow  is  positive  for  all  the  years  considered,  the 
project sustainability is then met. 

75 

 
Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

Table 18.  Financial sustainability of the project (EUR) 

National sources 

2 113 053 

1 027 620 

2 948 726 

27 888 357 

54 453 447 

26 649 498 

11 632 735 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

2014 

EU grant 

Total revenues 

Total inflows 

Initial investments 

Replacement costs 

Total operating costs 

Total outflows 

Net cash flow 

Cumulated net cash flow 

 0 

 0 

 0 

 0 

 0 

 0 

13 495 896 

28 848 001 

14 531 916 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

2 113 053 

1 027 620 

2 948 726 

41 384 253 

83 301 448 

41 181 414 

11 632 735 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

2 113 053 

1 027 620 

2 948 726 

41 384 253 

83 301 448 

41 110 143 

11 347 650 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

71 271 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

2 113 053 

1 027 620 

2 948 726 

41 384 253 

83 301 448 

41 181 414 

11 632 735 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

2015 

2016 

2017 

2018 

2019 

2020 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

National sources 

285 084 

285 084 

285 084 

285 084 

2998 364 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

EU grant 

Total revenues 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

Total inflows 

285 084 

285 084 

285 084 

285 084 

2998 364 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

Initial investments 

Replacement costs 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

2713 280 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

Total operating costs 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

Total outflows 

285 084 

285 084 

285 084 

285 084 

2998 364 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

285 084 

Net cash flow 

Cumulated net cash 
flow 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

 0 

76 

 
  
  
 
 
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

A II.4 Economic analysis 

  From market to accounting prices 

In  line  with  the  CBA  Guide  (2014),  the  social opportunity  cost  of  the  project’s  inputs 
and  outputs  has  been  considered  in  the  economic  analysis.  For  this  purpose,  market 
prices  have  been  converted  into  accounting  prices  by  using  appropriate  conversion 
factors. In line with the First Interim Report, backward and forward conversion factors 
of  labour  are  used  to  correct  investment  costs.  The  table  below  summarises  the 
conversion factors applied for each cost item. 

Table 19.  Conversion factors for input 

ITEM 

CONVERSION FACTOR 

SOURCE 

Labour cost under 
investment costs and 
operating costs 

0.90 backward  

0.81 forward 

Land 

Other costs 

1 

1 

Source: Authors based on cited sources 

  Project’s effects 

First Interim Report 

Own assumptions 

Own assumptions 

Benefits generated by the implementation of the project can be distinguished into:  

•  Change in consumer surplus, represented by the time savings;  

•  Changes in producer surplus, represented by vehicle operating cost savings for 

road users; 

•  Reduction  in  negative  externalities  as  a  result  of  the  transit  traffic  diverted 
from  Saulkrasti  to  the  bypass,  including  air  pollution  savings,  GHG  savings, 
reduction of traffic noise, and reduction of collisions and accidents.  

Main  socioeconomic  benefits  expressed  as  a  reduction  in  costs  are  depicted  in  the 
figure below. 

Figure 26. Main socioeconomic benefits (present value) 

Noise reduction (1%)

Air pollution reduction (4%)

Road safety increase (23%)

Vehicle operating savings (52%)

Travel time savings (20%)

0

50

100

150

200

250

million EUR 

Source: Authors 

77 

 
 
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

  Travel time savings 

The travel time savings result mainly from changes in travel speed. Average speed on 
old main road A1 was 59 km/h on a section 19.52 km long which included 11.06 km 
with speed limit of 50 km/h in Saulkrasti and 1km with speed limit 70km/h. According 
to  LSR  data,  average  speed  on  the  bypass  is  90  km/h  (18.01  km  long  section).  The 
ex-post  time  savings  are  calculated  as  hours  saved  due  to  project  implementation  * 
unit time cost for  Latvia for cars and trucks, according to the methodology described 
in  the  First  Interim  Report,  Volume  I.  Taking  into  account  the  average  proportion  of 
journey  types  for  cars,  the  weighted  average  cost  per  passenger  car  is  calculated.39 
The  time  savings  represent  20%  of  total  socioeconomic  benefits  in  the  ex-post 
analysis.  

  Vehicle operating cost savings 

The  savings  in  vehicle  operating  costs  are  based  on  changes  in  road  conditions.  LSR 
Methodological guidelines provide VOC unit costs for different types of vehicles under 
different  road  conditions  taking  into  account  traffic  volumes.  These  unit  costs  are 
converted in 2017 values and used in the ex-post analysis.  

Table 20.  Vehicle operating cost (EUR per km in 2017 values) 

PROJECT ITEM 

OLD ROAD A1 

NEW ROAD A1 

VOC for cars 

VOC for HGV 

0,400 

1,258 

0,3216 

1,0380 

Source: authors 

As  the  condition  of  old  road  A1  (via  Saulkrasti)  improved  and  traffic  volumes 
decreased, VOC reduced for remaining traffic. Costs reduced also for diverted vehicles 
due to better travelling conditions. VOC savings appear to be the biggest share of all 
economic benefits. 

  Road safety increase 

Historical  road  accident  data  show  that  the  split  of  traffic  between  old  main  road  A1 
(currently  local  road  V101)  and  the  bypass  has  significantly  reduced  the  number  of 
road accidents and fatalities. In the ex-ante analysis, the estimated change in accident 
rate  was  based  on  evaluation  of  historic  accident  statistics  in  1995-2000  for  the 
analysed  road  section.  The  ex-post  assessment  was  made  based  on  actual  statistical 
data  provided  by  Road  Safety  Traffic  Directorate  of  Latvia  for  the  time  period  2002-
2016.  Number  of  accidents  in  the  period  2017-2027  was  projected  based  on  historic 
accident  data.  The  unit  values  of  social  accident  costs  provided  in  the  First  Interim 
Report  were  used  in  calculations40.  The  ex-post  analysis  results  show  that  the  road 
safety  benefits  were  underestimated  in  the  ex-ante  analysis  (11%  of  total  economic 
benefits vs 23%). 

  Environmental impact reduction 

Environmental  impact  reduction  have  not  been  calculated  in  the  ex-ante  analysis  as 
monetarized  benefits.  In  the  ex-post  analysis  noise  and  local  air  pollution  are 

39

 Commuting traffic 21%, bussiness traffic 43%, other traffic 36%. 

40

 Fatality cost 1,103,010 EUR; severe injury cost 149,344 EUR. 

78 

 
                                                   
Ex post evaluation of major projects supported by the European Regional Development Fund 
(ERDF) and Cohesion Fund between 2000 and 2013 

considered to be the most important and relevant environmental cost categories. GHG 
are not included in the analysis because there is no variation in vehicle-km caused by 
the project. 

•  Noise 

The amount of noise harm depends on the surrounding environments (urban or 
rural), type and volume of traffic, as well as time of the day when the noise is 
made.  Diverting  transit  traffic  to  the  bypass  has  reduced  the  level  of  noise  in 
Saulkrasti  town  significantly.  Calculation  of  noise  cost  reduction  follows  the 
methodology  stated  in  the  First  Interim  Report.  Noise  reduction  benefits 
represent a minor share – 1% of total socioeconomic benefits. 

•  Local air pollution 

Air  pollutants  emitted  from  the  vehicles  have  local  effects  and  therefore  have 
impact  on  inhabitants  of  Saulkrasti.  Calculation  of  local  air  pollution  cost 
reduction  follows  the  methodology  stated  in  the  First  Interim  Report.  The  unit 
parameters are differentiated for cars and HGV in suburban environment. 

The  environmental  benefits  in  terms  of  reduced  air  pollution  represent  4%  of 
total economic benefits of the project. 

  Project’s economic performance 

 The results of the project economic performance are presented in the following table. 

Table 21.  Economic performance indicators of the project 

INDICATOR 

ENPV 

B / C 

EIRR 

EUR 

103,143,152 

1.32 

9.4% 

Project  economic  net  present  value  is  much  higher  than  initially  expected  in  the  ex-
ante  evaluation  which  can  be  related  to  higher  actual  traffic  volumes  on  the  bypass, 
higher accident rate decrease, and higher VOC unit costs used in the ex-post analysis. 
The  socio-economic  ex-post  indicators  confirm  that  the  project  was  desirable  for 
Saulkrasti society and transit traffic on Via Baltica, and increased welfare. 

79 

 
 
IT. 

1 

1.1 

1.2 

1.3 

1.4 

1.5 

1.6 

1.7 

2 

2.1 

2.2 

3 

4 

4.1 

4.2 

4.3 

4.4 

4.6 

Land acquisition 

-3 072 148 

acquisition 

-74 479 

Land 
services 

Construction costs 

-289 728 581 

Supervision 

LSR costs 

Designer's 
supervision 

-5 442 182 

-3 408 540 

-453 752 

OPEX 

-7 864 709 

Road maintenance  

 -5 616 060 

Pavement 
renovation 

 -2 248 649 

Residual value 

37 990 468 

Socio-economic 
benefits 

382 945 347 

Travel time savings  

76 956 105 

VOC savings 

200 844 552 

Accidents savings 

 88 828 441 

Pollution savings 

 14 738 882 

Noise 

 1 577 367 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

Table 22.  Economic return of the project (EUR) 

PRESENT VALUE 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

… 

CAPEX 

-310 114 725 

-1 611 651 

-874 136 

-2 665 950 

-34 914 219 

-68 876 363 

-35 303 996 

-11 040 979 

Preparatory phase  

-7 935 044 

-1 611 651 

-493 343 

-846 664 

-79 435 

-42 738 

-118 442 

-14 675 

-380 793 

-150 629 

-732 101 

-77 585 

0 

-20 372 

0 

0 

-32 875 

-3 981 

0 

-1 567 507 

-33 563 664 

-64 961 375 

-32 513 718 

-10 669 951 

-46 204 

-63 081 

-1 512 431 

-1 017 467 

-100 999 

-2 498 

-6 244 

-342 769 

-697 476 

-524 432 

-133 984 

-70 090 

-39 450 

-108 489 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

-67 494 

-67 494 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

2 666 254 

12 946 619 

8 589 823 

13 983 118 

12 444 850 

639 246 

2 304 824 

2 679 858 

2 636 456 

2 586 716 

1 906 158 

6 926 876 

6 893 131 

7 018 625 

7 079 355 

0 

3 218 667 

-1 418 379 

3 777 544 

2 155 229 

109 051 

448 336 

392 090 

497 207 

563 860 

11 799 

47 915 

43 123 

53 286 

59 689 

5 

Total (1+2+3+4) 

 103 143 152 

-1 611 651 

-874 136 

-2 619 745 

-34 851 138 

-67 363 931 

-31 687 769 

1 736 664 

8 319 849 

13 713 144 

12 174 875 

80 

 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ex post evaluation of major projects supported by the European Regional Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

IT. 

… 

2016 

2017 

2018 

2019 

2020 

2021 

2022 

2023 

2024 

2025 

2026 

2027 

1 

CAPEX 

1.1 

Preparatory phase  

Land acquisition 

acquisition 

Land 
services 

Construction costs 

Supervision 

LSR costs 

Designer's 
supervision 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

OPEX 

-269 975 

-269 975 

-269 975 

-2 814 999 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

-269 975 

Road maintenance  

-269 975 

-256 376 

-256 376 

-256 376 

-256 376 

-256 376 

-256 376 

-256 376 

-256 376 

-256 376 

-256 376 

-256 376 

Pavement 
renovation 

Residual value 

Socio-economic 
benefits 

0 

0 

0 

0 

0 

0 

-2 558 623 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

72 459 878 

19 981 731 

20 612 931 

21 612 407 

22 659 585 

23 214 652 

23 783 329 

24 366 961 

24 963 873 

25 575 427 

26 201 985 

26 844 926 

27 502 612 

Travel time savings  

3 850 827 

4 043 368 

4 245 537 

4 457 814 

4 569 259 

4 683 490 

4 800 578 

4 920 592 

5 043 607 

5 169 697 

5 298 939 

5 431 413 

VOC savings 

9 985 754 

10 408 448 

10 911 909 

11 438 768 

11 718 389 

12 004 834 

12 299 282 

12 599 886 

12 907 832 

13 223 302 

13 547 490 

13 878 567 

Accidents savings 

5 316 029 

5 290 537 

5 540 855 

5 803 192 

5 943 198 

6 086 603 

6 233 490 

6 383 943 

6 538 050 

6 695 899 

6 857 583 

7 023 194 

Pollution savings 

749 066 

786 519 

825 845 

867 138 

888 816 

911 036 

933 812 

957 158 

981 087 

1 005 614 

1 030 754 

1 056 523 

Noise 

80 055 

84 058 

88 261 

92 674 

94 990 

97 365 

99 799 

102 294 

104 852 

107 473 

110 160 

112 914 

5 

Total 

19 711 756 

20 356 554 

21 356 031 

19 844 585 

22 958 276 

23 526 953 

24 110 585 

24 707 497 

25 319 051 

25 945 609 

26 588 550 

99 706 113 

81 

1.2 

1.3 

1.4 

1.5 

1.6 

1.7 

2 

2.1 

2.2 

3 

4 

4.1 

4.2 

4.3 

4.4 

4.6 

 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ex post evaluation of major projects supported by the European Regional 
Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

A II.5 Sensitivity analysis 

A sensitivity analysis has been carried out on the key variables in order to determine 
whether they are critical or not.  The procedure requires to make them vary one at a 
time by a +/-1%, and then to assess the corresponding change in the Economic NVP 
and  IRR.41  A  variable  is  referred  to  as  “critical”  if  the  corresponding  variation  in  the 
economic output is greater than 1% in absolute value. 

The Authors tested the sensitivity of a number of different variables. As a result of the 
sensitivity  test  (see  table  below),  the  following  2  critical  variables  have  been 
identified: traffic growth on bypass; traffic growth on old A1; Speed on old A1 (without 
the project) and average saving in VOC. 

Table 23.  Results of the sensitivity analysis 

INDEPENDENT VARIABLE 

VARIATION (in % or percentage 
points) of the ENPV  due to a ± 1% 
variation (or variation of 1 
percentage point) 

CRITICALITY  

JUDGEMENT * 

Traffic growth on bypass 

7 percentage points 

Critical 

Traffic growth on old A1 

1 percentage point 

Speed on old A1 

Savaging in VOC 

Annual number of accidents 

Noise 

Air pollution 

OPEX 

2 percentage points 

Not critical 

6% 

0.1% 

0% 

0% 

0.1% 

Critical 

Not critical 

Not critical 

Not critical 

Not critical 

Very critical: ΔNPV > +5% (or 5 percentage points); Critical: ΔNPV > +1% (or 1 percentage point); Not 
critical: ΔNPV < +1% (or 1 percentage point). 

A II.6 Risk assessment 

The risk assessment has been conducted on the two critical variables as a result of the 
sensitivity  analysis:  traffic  growth  on  bypass;  traffic  growth  on  old  A1;  Speed  on  old 
A1 (without the project) and average saving in VOC. For the sake of simplicity, it was 
assumed that the probability distribution of each of these variables is triangular, with 
the  value  with  the  highest  probability  being  the  reference  one  –  that  is,  the  “base 
value” adopted for carrying out the CBA – and the lower and upper bounds being the 
“pessimistic” and “optimistic” values defined in the scenario analysis.  

The  analyses  have  been  elaborated  using  the  Monte  Carlo  simulation  technique  with 
10,000 random repetitions. In brief, at each iteration it is randomly extracted a value 
from  the  distribution  of  each  of  the  independent  variables.  The  extracted  values  are 

41

 In case of variables expressed in percentage, the variation applied in this case study is of 1 percentage 

point. 

82 

 
 
 
 
                                                   
Ex post evaluation of major projects supported by the European Regional 
Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

then adopted for computing the ENVP and IRR. Finally, the 10,000 estimated values of 
ENPV  and  IRR  are  used  to  approximate  the  probability  distribution  of  the  two 
indicators. 

The risk assessment shows that the expected value of the ENPV is equal to EUR 103.7 
million (almost equal to the reference case), and that the expected value of the ERR is 
9.4% as in the reference case. The probability that the ENPV will become negative and 
that the ERR will be lower that the SDR adopted in the analysis is 0%. However, there 
is  a nearly  50%  probability  that  the  two indicators  assume  a  lower  value  than in  the 
reference  case.  Hence,  the  CBA  outputs  appear  to  be  robust  to  future  possible 
variations in the key variables. Overall, the risk analysis shows that the project has a 
negligible risk level. 

Figure 27. Results  of  the  risk  analysis  for  ENPV  (left-hand  side)  and  ERR  (right-

hand side) 

CBA Reference value

103,143,152

CBA Reference value

9.40%

Estimated parameters of the distribution 

Estimated parameters of the distribution 

Mean
Median
Standard deviation
Minimum
Maximum
Estimated probabilities

Pr. ENPV ≤ base value
Pr. ENPV ≤ 0

103,776,077
103,282,685
30,892,190
6,679,106
211,146,241

0.498
0.000

Mean
Median
Standard deviation
Minimum
Maximum
Estimated probabilities

Pr. ERR ≤ base value
Pr. ERR ≤ Social discount rate

9.40%
9.40%
0.75%
6.86%
11.80%

0.498
0.000

Source: Authors 

Figure 28. Probabilistic distribution of the Economic Net Present Value (EUR) 

Source: Authors  

83 

 
 
 
 
 
         
Ex post evaluation of major projects supported by the European Regional 
Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

Figure 29. Probabilistic distribution of the Economic Internal Rate of Return 

Source: Authors  

84 

 
 
 
 
 
Ex post evaluation of major projects supported by the European Regional 
Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

ANNEX III. LIST OF INTERVIEWEES  

The following table provides details on the stakeholders that have been interviewed as 
part  of  the  ex-post  assessment.  The  stakeholders  have  been  identified  based  on  the 
authors  referenced  in  the  documents  included  in  the  application  dossier  provided  by 
the  European  Commission.  The  institutions  approached  through  these  referenced 
contacts  have  been  consulted  in  order  to  confirm  the  most  appropriate  and  relevant 
persons  to  be  involved  in  this  ex-post  analysis.  Additional  stakeholders  have  been 
identified  on  the  basis  of  the  review  of  articles  and  Web  Sites,  which  have  been 
consulted as part of this evaluation.    

NAME 

POSITION 

AFFILIATION 

DATE 

Rūdolfs Cimdiņš 

Ilze 
Aleksandroviča  

Olga Stoļarova 

Head 
of 
planning department 

special 

Riga 
Administration 

Planning 

Region 

27.11.2017  

Deputy State secretary 

Investment 

Head  of 
programme 
management system 

Ministry 
Responsible authority 

of 

Transport, 

Ministry 
Responsible authority  

of 

Transport, 

27.11.2017 

27.11.2017 

27.11.2017 

Inese Zālamane 

Inhabitant (commuter)  Saulkrasti 

Jānis Lange 

Chairman of the Board 

SJSC  “Latvian  State  Roads” 
(LSR), Project beneficiary 

28.11.2017 

Mārtiņš Kišuro 

Executive director 

Bakery “Bemberi” 

28.11.2017 

Ervīns Grāvītis  

Mayor 

Ineta Zīberga 

Real estate agent 

Saulkrasti 
municipality 

amalgamated 

28.11.2017 

Arco  real  estate,  Saulkrasti 
branch 

28.11.2017 

Mārtiņš Brutāns 

Chef 

Hotel “Minhauzena unda” 

28.11.2017 

Jānis Melnalksnis 

Diāna Rancāne 

Dace Bērziņa 

Project  manager  of 
Saulkrasti 
bypass 
project 

of 

Director 
the 
Monitoring  Department 
of the EU funds 

Head 
planning decision 

of 

Strategic 

Former LSR employee 

23.11.2017 

Ministry  of  Finance,  Managing 
authority 

08.12.2017 

Latvian State Roads 

16.11.2017 

Māris Zaļaiskalns 

Head  of  Road  Safety 
Department 

Latvian State Roads 

16.11.2017 

Sanita Valnere 

of 
Head 
department 

Contract 

Latvian State Roads 

Mārtiņš Dambergs 

Inhabitant 

Skulte  

Māra Cimdiņa 

Designer 

JSC “Celuprojekts” 

various  phone 
e-mail 
and 
exchanges 

16.11.2017 

01.12.2017 

Linda Sproģe 

Regional  Desk  Officer, 
Finland, 
Estonia, 

DG Regional and Urban Policy 

01.03.2018 

85 

 
 
 
 
Ex post evaluation of major projects supported by the European Regional 
Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

Valdis Felsbergs 

Lithuania and Latvia 

Environmental 
specialist 

Andulis Židkovs 

Transport expert 

Eirokonsultants 

05.12.2017 

Former 
State 
Deputy 
Secretary  at  the  Ministry  of 
Transport 

05.12.2017 

Valdis Trēziņš 

President  and  member 
of the Board 

The 
Auto” 

Association 

“Latvijas 

01.12.2017 

86 

 
 
 
 
 
Ex post evaluation of major projects supported by the European Regional 
Development Fund (ERDF) and Cohesion Fund between 2000 and 2013 

REFERENCES 

•  EPRC and Fraser Associates (2012)  Ex-post  evaluation of Cohesion Fund (incl. 
ISPA)  –  Work  package  D:  Management  and  Implementation.  Country  Report: 
Latvia. 

•  Skribane,  I.  and  Jekabsone,  S.  (2013)  Structural  Changes  in  the  Economy  of 
Latvia  After  it  Joined  the  European  Union,  Intellectual  Economics,  Vol.  7,  No. 
1(15), p. 29–41.  

•  European  Commission,  2012-2015.  Project  dossier:  Application  form  with  the 

annexes 

•  Commission  of  the  European  Communities  (2003).  General  report  on  pre-

accession assistance (PHARE – ISPA – SAPARD) in 2000. 

•  DEA  Baltika  (2009)  Update  of  Cost-Benefit  Analysis 

for  the  project 
“Improvement  of  road  Via  Baltica.  Construction  of  Saulkrasti  bypass  on  the 
main road A1 section km 21.05 (Lilaste) to km 40.57 (Skulte)”.  

•  European  Commission  (2014)  Guide  to  Cost-Benefit  Analysis  of  Investment 

Projects. 

•  Gadal,  S.  and  Gražulevičiūtė-Vileniškė,  I.  (2014).  Impact  of  the  Via  Baltica  on 
the  Urbanisation  in  Lithuania  by  Multi-level  Remote  Sensing  Analysis,  
Environmental  Research,  Engineering  and  Management,  2014.  No.  3(69),  p. 
17-28. 

•  Ministry  of  Transport  of  the  Republic  of  Latvia  (1995).  National  transport 
development  programme  1996-2000.  Published  in  the  official  publisher  of  the 
Republic  of  Latvia  "Latvijas  Vēstnesis",  1.12.1995.,  No.  187  (470) 
https://www.vestnesis.lv/ta/id/38194 

•  Garkalns  A.  (2006,  July  19)  Saulkrastu  apvedceļš  ieguvis  reālus  apveidus, 

Neatkarīgā Rīta Avīze. 

•  Lazdiņa  I.  (2001,  September  28)  Pašvaldības  atbalsta  Saulkrastu  apvedceļu, 

Dienas Bizness. 

•  Saulkrasti municipality development programme 2014-2020. 

•  Saulkrastu avīze (2001, July) Tuvojas jaunais apvedceļš, Saulkrastu avīze. 

•  The  World  Bank  (1997).  Staff  appraisal  report.  Republic  of  Latvia.  Highway 

project.  

•  United  Nations,  Economic  and  Social  Council  (2002).  Development  Regarding 
Transport  Policies,  Replies  to  the  questionnaire  on  transport  development, 
Addendum 2, Transmitted by the Government of Latvia. 

•  Vanzovičs  S.  (2007,  September  24)  Šoferi  pamāj  Saulkrastiem  ardievas, 

Neatkarīgā Rīta Avīze. 

87 

 
 
 
 
 
 
 
 
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