The government has changed regulations to allow for the early termination of feasibility studies if the project's economic viability is deemed significantly low during large-scale public investment projects. This measure is aimed at increasing administrative efficiency by reducing unnecessary procedures, especially in cases where it is difficult to secure feasibility despite receiving perfect scores in evaluation items other than economic viability.
According to the government on the 14th, the Ministry of Economy and Finance has recently revised some of the guidelines for preliminary feasibility studies. The core of the new guideline states that "if it is determined after the study commences that there are no benefits to continuing based on the economic analysis results, the study can be terminated without further analysis through the practical coordination committee, resulting in 'no feasibility secured.'"
Preliminary feasibility studies are procedures that determine whether to proceed with a large-scale public investment project by evaluating its technical feasibility and economic and financial aspects. Over a period of 1 to 2 years, economic viability, policy validity, and regional balanced development are analyzed in sequence, with each receiving scores of 30%, 40%, and 30%, respectively.
Here, economic viability is a quantitative indicator calculated as the benefit-cost (B/C) ratio of the project. Policy validity and regional balanced development are qualitative indicators that score consistency of policy and intent to implement, feasibility of funding, environmental evaluation, employment creation effects, regional lag, and regional economic ripple effects.
The issue is a project where the B/C value is too low, making it difficult to secure feasibility even if perfect scores are achieved in the remaining qualitative indicators. A representative example is the feasibility re-assignment of the 'Yeongdong Expressway Seochang-Ansan Expansion (6 lanes to 10 lanes)' project being promoted by the Korea Expressway Corporation.
This project passed the preliminary feasibility study in 2012 and completed its basic design in 2016, starting construction in 2021. However, unlike the smooth progress of the second section (Gunja-Ansan section), the first section (Seochang-Wolgot section) could not commence due to budget issues.
This occurred because the sound reduction structure planned for the nonhyeon district was changed from a 'sound barrier' to a more expensive 'sound tunnel,' and construction costs also soared. As the total project cost increased by over 20% from the original plan, the government conducted a feasibility re-assignment in June 2023.
According to the Korea Expressway Corporation, the B/C ratio for the first section was analyzed to be only 0.2. Since this project is located in a metropolitan area, the evaluation was planned to be conducted with an economic viability score of 60-70% and a policy validity score of 30-40%, without regional balanced development analysis.
In order to pass a feasibility study, the total evaluation score must exceed 0.5 out of 1 point. In this case, even if all evaluators set the economic viability score at 60%, the policy validity score must exceed 0.95. If the average economic viability score is 65%, a perfect score in policy validity would still not be enough to surpass the passing threshold.
Under the existing system, studies must continue even in such cases. In this particular case, the Korea Expressway Corporation argued for the necessity of the project, and negotiations with the government continued while the study was conducted for nearly two years. Ultimately, the government prepared a new guideline that allows for the early termination of studies and decided to terminate the project early during the financial project evaluation committee held last month.
A government official noted, "This is a measure to enhance efficiency without wasting administrative power or time," and explained, "This project has become the first case to apply the early termination guideline."
Meanwhile, the Korea Expressway Corporation has decided to revise the Yeongdong Expressway Seochang-Ansan expansion plan to 8 lanes instead of 10 lanes to proceed again, as traffic congestion issues in this section remain serious. A representative from the corporation stated, "According to the results of the feasibility re-assignment, it is judged that adequate services can be provided if the expansion is to 8 lanes," adding that they will renegotiate with the Ministry of Economy and Finance through redesign.