Buenos Aires - Colonia Bridge Project, Financial and Economic Appraisal

The Buenos Aires – Colonia Bridge Project is designed to provide a permanent and non-managed river crossing under all weather conditions between Punta Lara, located approximately 40 km away from Buenos Aires, the Argentine capital, and Colonia, a city in Uruguay. It is planned to involve a private concessionaire for design, construction, operation and maintenance, and the governments of Argentina and Uruguay in supportive roles. The main objectives of this paper are to assess the project from the viewpoint of the concessionaire by the financial appraisal and the governments of Argentina and Uruguay through the economic and stakeholder appraisals. To evaluate the financial viability from the private point of view, we integrate the engineering cost estimates, the traffic forecasting and financing information into a cash flow statement over the life of the project. Therefore, the financial appraisal draws the estimates of construction and operating costs and sources of supply. The economic appraisal evaluates the project from the viewpoint of the Argentine and Uruguayan economy, respectively. It starts with the financial appraisal of costs and revenues and develops a series of adjustments for the most important externalities to reflect the economic costs and benefits to each of the two countries After applying scenario techniques to assess this investment project, we undertake sensitivity and risk analyses of the financial and economic performance of the bridge project. The important project variables and outcomes of sensitivity and risk analyses are identified and analyzed.