A Review of Cost-Benefit Analysis for Freight Projects Sae Chi, Tom Frost and Ben Ellis NineSquared
A Review of Cost- Benefit Analysis for Freight Projects Sae Chi, Tom Frost and Ben Ellis 27-29 November, 2017 Australian Transport Research Forum 2017, The University of Auckland
Presentation outline 1 Background Literature review Research gap and aim Case Study Background of each case that has been studied Benefits Impacts of the new facility Impacts to the existing rail and road facilities Quantifying How benefits are quantified Conclusion Study findings Future research
Background why freight? 2 Passenger task in AU (pax-km): 427 billion passengerkilometres * Freight task in AU (tonne-km): 726 billion tonne-kilometres * Freight vs occupant VOT ** B-double Art 5 axle Med rigid Freight VOT Occupant VOT Note: * Data from 2013-14: National Transport Commission. (2016). Who Moves What Where: Freight and Passenger Transport in Australia. Retrieved from https://www.ntc.gov.au/media/reports/(d62e6efc-36c7-48b1-66a7-ddef3b04ccae).pdf * * Data for urban roads: Australian Transport and Infrastructure Council. (2016). Australian Transport Assessment and Planning Guidelines: PV2 Road Parameter Values. Retrieved from https://atap.gov.au/parameter-values/index.aspx
Background Literature review 3 Cost-Benefit Analysis (CBA) Well-established and well-discussed Measures the net impact of a project Most commonly used to evaluate transport projects. Academic studies in freight CBA Scholars claim excluding reliability can impact the results Opinions differ between scholars CBA Guidelines Freight projects are seldom discussed Some rail parameters are not provided
Background Research aim 4 Gaps Conflicting views on freight reliability, and env. and ext. impacts The US study suggests improvement of CBA for freight CBA for freight projects are not as well documented as road and public transport projects Aim Review CBA conducted for existing/past land freight projects Investigate the CBA methodologies used in practice 4 Australian cases + 2 international cases Questions How are CBA conducted for freight projects in practice? Which benefits are included? How are the benefits quantified? Study Contributions Types of guidance that need to be provided The methodology that need to be better established and documented A list of the parameters that need to be provided
Case Study
Cases Inland Rail 5 Melbourne-Brisbane Inland Rail (MBIR) 1,700 km long rail corridor between Melbourne and Brisbane Consists of 13 projects across Victoria, New South Wales and Queensland 4 projects in Queensland will be delivered through PPP scheme
Cases SFRCS and DFRC 6 Southern Freight Rail Corridor Study (SFRCS) 55 km long rail corridor between Kagaru and Rosewood Aligned with MBIR Dedicated Freight Rail Corridor (DFRC) Extending from the existing Fisherman Islands rail line for 37 km to the Interstate Standard Gauge Rail Line (ISGR) Upgrading the ISGR for 25 km from Larapinta to Kagaru Development of SFRC and Toowoomba Second Range Crossing Upgrading the QR Western Line (approx. 260 km)
Cases GRBP 7 Global Rail Baltica Project (GRBP) 870 km freight and passenger railway in the Baltic states, which consists of Estonia, Latvia and Lithuania
Cases NSFRCP and WVIF 8 Northern Sydney Freight Corridor Program (NSFCP) An initiative to improve the capacity and reliability of the freight network between Strathfield and Broadmeadow Rail underpass Development of 3rd track 2 x passing loops Western Virginia Intermodal Facility (WVIF) WVIF is proposed to be located southwest of Roanoke, Virginia in U.S.
Cases Summary 9 Types of projects: 5 rail freight + 1 internodal facility Location of projects: 4 Australian + 2 international Size of the capital: AU$5+b AU$65+m Influences to CBA: The nature of costs The nature of benefits
Benefits and Quantifying
Benefits of the proposed rail/intermodal facility 10 Type of benefits included Reduced environmental and external costs unit price Reduced crash rate Reduced operating cost unit price Reduced freight travel time Induced freight volume DFRC Yes Yes Yes MBIR Yes Yes Yes Yes Yes Yes NSFCP Yes Yes Yes Yes Yes SFRCS Yes Yes GRBP Yes Yes Yes Yes WVIF Yes Yes Yes Freight availability and reliability
Benefits for surrounding rail facilities 11 Type of benefits included Delaying constructions to replace the existing rail facilities Improved reliability of passenger services DFRC Yes MBIR Yes Yes NSFCP SFRCS GRBP Reduced maintenance costs Reduced travel time Yes
Benefits for surrounding road facilities 12 Type of benefits included Reduced road congestion Reduced maintenanc e costs Reduced crash rate Reduced environmen tal impacts DFRC Yes Yes Yes Yes Yes MBIR Yes Yes Yes Yes NSFCP Yes Yes Yes SFRCS Yes Yes GRBP Yes Yes Yes WVIF Yes Yes Yes Yes Reduced travel time
Benefits from other changes 13 Type of benefits included DFRC MBIR NSFCP SFRCS GRBP WVIF Increased track access revenues Yes Yes Impacts of modal shifts from private vehicles - reduced operating and maintenance costs Yes
Quantifying benefits 14 National Guidelines for Transport System Management in Australia Volume 3: Appraisal of initiatives Environment and external costs for rail and road Austroads Guide to Project Evaluation Part 4: Project Evaluation Data Environment and external costs for road Road congestion costs Value of time Road vehicle operating costs Crash costs Principles and Guidelines for Economic Appraisal of Transport Investment and Initiatives Value of freight time Proportion of business peak hours
Quantifying benefits 15 Economic effects of a Brisbane- Melbourne inland railway Value of freight time Melbourne Brisbane Inland Rail Alignment Study Environment and external costs for rail Crash rate of rail Rail maintenance costs Value of time including freight time
Quantifying benefits 16 Railway Safety Performance in the European Union 2013 Rail crash rate Update of the Handbook on External Costs of Transport Environment and external costs for rail Crash costs Road congestion cost Addendum to the 1997 Federal Highway Cost Allocation Study Final Report Environment and external costs for road Road congestion cost Crash costs Pavement costs
Conclusion
Study findings 17 INCONSISTENCIES IN ACADEMIC STUDIES Inconsistencies in academic studies in terms of the types of benefits and quantifications of those LACK OF GUIDANCE Lacks guidance in: scope of the analysis, the types of impacts that need to be captured and WEBs INCONSISTENCIES IN PRACTICE The review of past freight CBA found inconsistencies between analyses WEAKNESS OF FREIGHT CBA CBA of freight projects highly rely on analysts judgement; importance of demand forecasts
Future research 18 Analysis approach may need to differ from road projects Standardised methodology and clear guidance 0 A list of impacts that need to be considered in CBA and traffic forecasts Further research into developing common parameters
Key references 19 Guidelines Australian Transport and Infrastructure Council. (2016a). Australian Transport Assessment and Planning Guidelines: PV2 Road Parameter Values. Retrieved from https://atap.gov.au/parametervalues/index.aspx Australian Transport Council. (2006a). National Guidelines for Transport System Management in Australia Volume 3: Appraisal of initiatives. Retrieved from http://transportinfrastructurecouncil.gov.au/ publications/ Tan, F., Lloyd, B., & Evans, C. (2012). Guide to Project Evaluation Part 4: Project Evaluation Data. Sydney, NSW. Transport for New South Wales. (2013). Principles and Guidelines for Economic Appraisal of Transport Investment and Initiatives. Retrieved from http://www.transport.nsw.gov.au/sites/defa ult/files/b2b/publications/tfnsw-principlesand-guidelines-for-economic-appraisal-oftransport-initiatives.pdf Academic Paper Boardman, A., Greenberg, D., Vining, A., & Weimer, D. (2014). Costbenefit analysis : concepts and practice (4th ed.). Harlow, Essex: Pearson Education Limited. Chi, S., Bunker, J. M., & Teo, M. (2017). Measuring impacts and risks to the public of a privately operated toll road project by considering perspectives in cost-benefit analysis. Journal of Transportation Engineering, 143(12). 10.1061/ JTEPBS.0000088 Jakob, A., Craig, J. L., & Fisher, G. (2006). Transport cost analysis: a case study of the total costs of private and public transport in Auckland. Environmental Science & Policy, 9(1), 55 66. https://doi.org/10.1016/j.envsci.2005.09.001 Janic, M. (2008). An assessment of the performance of the European long intermodal freight trains (LIFTS). Transportation Research Part A: Policy and Practice, 42(10), 1326 1339. https://doi.org/10.1016/j.tra.2008.06.008 Protopapas, A., Warner, J., & Morgan, C. (2012). Evaluation of methodologies in benefit-cost and economic impact analyses for freight rail projects. Transportation Research Record, (2288), 83 90. https://doi.org/10.3141/2288-10
Contact Nine-Squared Pty Ltd Level 6, 243 Edward Street Brisbane QLD 4000 GPO Box 21 Brisbane QLD 4001 Australia www.ninesquared.com.au Sae Chi schi@ninesquared.com.au