This paper starts from the premise that the scope of the appraisal of transport projects should depend upon the presence (or absence) of various forms of market failure. It reviews the purposes and processes of transport appraisal before setting out a typology of market failures. Then it examines what distinguishes marginal, non-marginal and transformational projects in appraisal terms and what special challenges are created by transformational projects. The report then considers the methods available for the appraisal of such projects and the challenges faced.