BITRE road spend­ing doubts

Australian Transport News - - Contents -

Bureau ques­tions the ve­rac­ity of road in­fra­struc­ture plan­ning

THE BUREAU OF IN­FRA­STRUC­TURE, TRANS­PORT AND RE­GIONAL ECO­NOM­ICS (BITRE) has ques­tioned the ve­rac­ity of road in­fra­struc­ture plan­ning for 12 projects worth more than $1 bil­lion and cast doubt on the sys­tems used for bil­lions of dol­lars more.

With eye-wa­ter­ing amounts of cash fo­cused on new roads na­tion­ally, not least on truck­ing’s fuel tax, the re­port, Ex-post Eco­nomic Eval­u­a­tion of Na­tional Road

In­vest­ment Projects, takes gov­ern­ments to task over the state of cost-ben­e­fit anal­y­sis ap­proaches used to jus­tify them.

“Cost-ben­e­fit anal­y­sis (CBA) has long been the pre­ferred way to as­sess trans­port in­fra­struc­ture in­vest­ment projects in Aus­tralia,” BITRE states in its ex­ec­u­tive sum­mary. “How­ever, CBA, as ap­plied in prac­tice, is prone to er­rors.

“Avail­able ev­i­dence sug­gests that there is much room for im­prove­ment in the qual­ity of prac­ti­cal Aus­tralian road CBAs if they are to be used as an ef­fec­tive tool for op­tion rank­ing and project pri­ori­ti­sa­tion.”

Based on the case study re­sults of what it ad­mits is a small sam­ple, BITRE ob­serves: • The net present value (NPV) was over-es­ti­mated by sig­nif­i­cant mar­gins in most of the se­lected case study projects. • Over-es­ti­ma­tion in NPV was largely caused by over-es­ti­ma­tion of road user ben­e­fits, with er­rors in travel time cost sav­ing es­ti­mates ac­count­ing for 60 per cent of the to­tal ab­so­lute vari­a­tion be­tween the NPV from the ex-ante CBA and that from the ex-post CBA • In­ac­cu­rate traf­fic fore­casts and

method­ol­ogy er­rors were mostly re­spon­si­ble for the over­es­ti­mated road user ben­e­fits • There was no sys­tem­atic ev­i­dence of cost over­runs for the projects se­lected for ex­post re­view. The sit­u­a­tion is not new and the re­port notes Aus­troads raised the CBA is­sue is 2011. BITRE is also crit­i­cal of the lack of peer re­views of CBAs, traf­fic fore­cast­ing er­rors and the plau­si­bil­ity of base case for projects. Base cases are said to suf­fer from: • Over-es­ti­ma­tion of travel time cost

sav­ings • In­ap­pro­pri­ate speed-flow curves • Ve­hi­cle op­er­at­ing cost sav­ing er­rors • Safety ben­e­fit es­ti­mates short­falls.

On safety ben­e­fits, the re­port ex­plic­itly notes crash in­for­ma­tion was be­low what is needed for proper de­ci­sion mak­ing.

“Crash anal­y­sis was ham­pered by lack of good data and anal­y­sis,” the re­port says.

“Un­til crash data and anal­y­sis are sig­nif­i­cantly im­proved, there may be a case for us­ing model de­fault rates for both the base and project cases, as these are sub­ject to less un­cer­tainty.”

The re­view looks at road in­vest­ment projects on the Na­tional Land Trans­port Net­work in 2005–2007 and in 2014–2016.

The Aus­tralian Truck­ing As­so­ci­a­tion (ATA) re­acted with con­cern at the find­ings.

“The truck­ing in­dus­try is be­ing over-charged for our use of the road net­work ... there’s no guar­an­tee that those funds will be spent ef­fi­ciently,” ATA pol­icy of­fi­cer Sa­muel Marks says.

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