Economic, Environmental and Social Impacts of Changes in Maintenance Spend on Local Roads in Scotland
14 Summary of Changes and Impacts
This Section summarises the conclusions from the study against the five STAG criteria (environment, safety, economy, integration, accessibility and social inclusion).
For some sub-criteria within each criterion, there is very limited potential for road maintenance funding to have any impact and where appropriate this has been noted.
The basis for the comments is the results of the literature review (see Appendix B) and the analyses carried out in this study. References have been provided throughout the report as appropriate and are not repeated here for ease of reading.
Table 14.1 Assessment of impacts on environmental criterion
Table 14.2 Assessment of impacts on safety criterion
Table 14.3 Assessment of impacts on economy criterion
Table 14.4 Assessment of impacts on integration criterion
Table 14.5 Assessment of impacts on accessibility and social inclusion criterion
Appendix J provides the detailed annual costs and benefits for the analyses undertaken. Table 14.6 and Table 14.7 summarise the overall quantified costs and benefits for each Scenario for the 20 year analysis period. It is essential to note that:
- Quantification of the impacts represents only a portion of the various impacts that have been discussed in Section 14.1.
- The analysis is an assessment using high-level summary data only and has involved a number of significant assumptions which are discussed in Appendix C.
- The effects on the pavement asset value are summarised in Table 14.8.
Notwithstanding these comments, the analysis shows that there is an increase in user costs with increasing budget cuts and the accumulated depreciation of the asset shows that the condition at the end of the asset value is diminished by the end of the analysis with increasing budget cuts (i.e. condition does not return to the same level that could be achieved by maintaining current levels of maintenance expenditure despite increasing budgets in the latter half of the analysis).
| Cumulative Discounted Costs for Local Road Network (£m) | Scenario 1 | Scenario 2 | Scenario 3 |
|---|---|---|---|
| Financial costs | |||
| Internal works costs | 5,677 | 4,989 | 4,218 |
| Economic impacts | |||
| Vehicle operating costs | 274,246 | 275,731 | 277,212 |
| Travel time costs (surface condition related) | 1,572 | 1,649 | 1,730 |
| Accident costs (skid related) | N/A | N/A | N/A |
| Delays costs (roadworks) | 1,480 | 1,126 | 768 |
| Lighting costs (accidents) | 2,155 | 2,173 | 2,192 |
| C02 emissions | 14,971 | 14,957 | 14,955 |
| Overall impact | 294,424 | 295,636 | 296,857 |
Note: Discount rate = 3.5%.
|
Cumulative costs1 (£m 20022 Prices) |
Undiscounted3 | Discounted3 | ||||
|---|---|---|---|---|---|---|
|
Scenario 1 (Base Case) |
Scenario 2 | Scenario 3 |
Scenario 1 (Base Case) |
Scenario 2 | Scenario 3 | |
| Financial Costs to Transport Scotland | ||||||
| Maintenance works | 7990 | -947 | -1976 | 5877 | -688 | -1459 |
| Impacts on Society | ||||||
| Vehicle operating costs | 392,020 | +2,272 | +4,558 | 274,246 | +1,485 | +2,966 |
| Travel time (surface condition related) | 2,352 | +117 | +240 | 1,572 | +77 | +158 |
| Accident costs (skid related) | N/A | N/A | N/A | N/A | N/A | N/A |
| Delays (through roadworks) | 2,073 | -423 | -861 | 1,480 | -354 | -712 |
| Lighting (accidents) | 2,975 | +23 | +47 | 2,155 | +18 | +37 |
| C02 Emissions | 21,398 | -13 | -8 | 14,971 | -14 | -16 |
| Overall (non-works) impact | 420,818 | +1,976 | +3,976 | 294,424 | +1,212 | +2,433 |
| Economic analysis | ||||||
| Works costs reduction | Base Case | 947 | 1976 | Base Case | 688 | 1,459 |
| Increase in non-works costs | Base Case | 1,976 | 3,976 | Base Case | 1,212 | 2,433 |
| Net Present Value4 | Base Case | -1,029 | -2000 | Base Case | -524 | -974 |
Notes:
1. Annual discount rate = 3.5%.
2. 2002 prices are 2010 prices factored by 0.81.
3. Scenario 2 (20% reduction) and Scenario 3 (40% reduction) figures are shown as differences compared to Scenario 1 (2010/11 funding retained).
4. Negative NPV shows an overall increase in cost (i.e. non-works costs increase more than the reduction in maintenance expenditure).
| Depreciation [at 2002 prices] (Current accumulated depreciation = £4,105m) | |||
|---|---|---|---|
| Accumulated depreciation at 2030 | 4,832 | 4,950 | 5,066 |
| Difference compared to 2010 accumulated depreciation | Base Case | -118 | -234 |
14.3 Sensitivity analysis
The results of the quantified analyses showed the largest contribution to the overall Net Present Value came from Vehicle Operating Costs and the changes in those costs for Scenarios 2 and 3 are sufficient to remove any potential savings achieved by reducing the maintenance budget over the analysis period.
Various assumptions were made in the estimation of the Vehicle Operating Costs but two of the key components in the total costs are the cost of fuel in the total Vehicle Operating Costs and the effect of scaling the results from the 8 sample Local Authorities to give the results for all the road network.
14.3.1 Effect of fuel costs on vehicle operating costs
From the analysis of Vehicle Operating Costs using the HDM-4 model, fuel makes up nearly half of the total cost. The other major component of cost, for all vehicle types, is the cost of labour used for vehicle maintenance. The vehicle crew costs have been removed and are considered in the costs associated with journey time. Much of the labour costs arise from regular maintenance and are less affected by changes in condition of the road network but the cost component from fuel changes more directly with change in road surface condition. The costs of spare parts also change with road condition but there is little effect on capital costs, oil or tyre costs from changes in road condition.
Table 14.9 shows the components of Vehicle Operating Cost per vehicle for different levels of road condition. The Table shows the costs over a wider range of road surface condition (IRI) than is expected to occur in any year for any of the Scenarios. For this analysis, the likely range in condition is in the band of IRI between 2.5 and 5.
The total Vehicle Operating Costs of spare parts changes only due to road surface condition but in the analysis, the component of cost arising from fuel consumption allows for a real increase in the cost of fuel over the analysis period but this is balanced, in part, by an expected improvement in vehicle engine efficiency. All cost components reflect the increase in the number of vehicles resulting from the assumed annual traffic growth rates.
The results of the analysis described in Section 14.2 show an increase in Vehicle Operating Costs as the maintenance budget is reduced (i.e. Scenarios 2 and 3) and these increases are the main contributor to the overall increase in NPV for these Scenarios. To assess the minimum increase in Vehicle Operating Costs that may result from the change in road condition, the assessment of these costs has been repeated but with no traffic growth in the analysis period and no real increase in the cost of fuel. The real improvements in vehicle fuel efficiency were retained in the assessment. Table 14.10 shows the change in Vehicle Operating Costs and the impact on the NPV resulting from the reduced Vehicle Operating Costs.
| Road Condition (IRI) | Vehicle Type | Cost (pence/vehicle/km) (2002 prices) | ||||||
|---|---|---|---|---|---|---|---|---|
| Capital | Fuel | Labour | Oil | Parts | Tyres | Total | ||
| 1.0 | HGV | 59.9 | 147.1 | 215.6 | 13.4 | 110.8 | 27.1 | 573.9 |
| PSV | 53.4 | 39.5 | 118.7 | 6.6 | 23.1 | 6.6 | 247.9 | |
| Car | 66.4 | 21.8 | 38.7 | 2.0 | 19.2 | 1.2 | 149.4 | |
| LGV | 66.5 | 27.0 | 40.6 | 9.0 | 27.6 | 1.8 | 172.5 | |
| 4.0 | HGV | 60.6 | 153.0 | 231.1 | 13.6 | 126.6 | 27.6 | 612.4 |
| PSV | 54.1 | 40.9 | 133.9 | 6.6 | 29.2 | 6.7 | 271.4 | |
| Car | 66.4 | 22.2 | 41.3 | 2.0 | 21.6 | 1.2 | 154.7 | |
| LGV | 67.3 | 27.7 | 43.2 | 9.1 | 31.0 | 1.8 | 180.0 | |
| 7.0 | HGV | 75.3 | 159.9 | 260.7 | 13.7 | 159.7 | 28.1 | 697.6 |
| PSV | 67.2 | 42.3 | 161.9 | 6.7 | 42.1 | 6.7 | 327.0 | |
| Car | 68.1 | 22.6 | 47.8 | 2.0 | 28.2 | 1.2 | 170.0 | |
| LGV | 83.6 | 28.3 | 48.4 | 9.1 | 38.2 | 1.8 | 209.5 | |
| 9.5 | HGV | 90.9 | 166.8 | 280.3 | 13.9 | 183.7 | 28.3 | 763.8 |
| PSV | 81.1 | 43.3 | 178.8 | 6.7 | 51.0 | 6.8 | 367.7 | |
| Car | 70.1 | 22.9 | 52.7 | 2.1 | 33.7 | 1.3 | 182.8 | |
| LGV | 100.9 | 29.0 | 52.0 | 9.2 | 43.5 | 1.8 | 236.3 | |
Rather than an overall increase in cost from reduced maintenance expenditure (i.e. Scenarios 2 and 3), both Scenarios show there is an overall saving when there is no traffic growth or real increase in the cost of fuel.
Therefore, between the base assumptions, for traffic growth and increase in fuel costs through the analysis period, and no growth in these parameters there is a level of growth that leads to no overall change in cost resulting from a reduced maintenance budget.
| Cumulative Discounted Costs for Local Road Network (£m) | Scenario 1 | Scenario 2 | Scenario 3 |
|---|---|---|---|
| Economic impacts - Base Analysis | |||
| Vehicle operating costs | 274,246 | 275,731 | 277,212 |
| NPB (Works cost savings) | Base Case | 688 | 1,459 |
| NPB (User cost savings including emissions) | Base Case | -1,212 | -2,433 |
| Overall impact (NPV) | Base Case | -524 | -974 |
| Economic impacts - Revised Vehicle Operating Costs | |||
| Vehicle operating costs | 140,988 | 141,617 | 142,238 |
| NPB (Works cost savings) | Base Case | 688 | 1,459 |
| NPB (User cost savings including emissions) | Base Case | -356 | -716 |
| Overall impact (NPV) | Base Case | 332 | 743 |
Notes:
1. Annual discount rate = 3.5%
2. Traffic growth included
3. Scenario 2 (20% reduction) and Scenario 3 (40% reduction) figures are shown as differences compared to figures for Scenario 1 (2010/11 funding retained).
4. Negative NPV shows an overall increase in cost (i.e. user costs increase more than the reduction in maintenance expenditure).
5. 2002 prices are 2010 prices factored by 0.81.
14.3.2 Revised scaling of vehicle operating costs
To calculate the costs for the whole road network based on the analyses of the 8 sample Local Authorities, the results of the analyses for the sample Authorities were scaled using the approach described in Section 12. For the sensitivity test in Section 14.3.1, because the dominant cost in the overall analysis was the Vehicle Operating Costs, the sensitivity of only that aspect of cost was considered in the analysis.
For the scaling up of results in the base analysis, the percentage of the network (for each road type) in red condition (i.e. categorised as red in the SRMCS report for 2009/10) was used for each Authority not in the sample of 8 Authorities analysed. However, an alternative assumption that may better reflect the overall condition of the network would have been to scale the results based on the percentage of the network (for each road type) in red and amber condition (i.e. as categorised in the SRMCS report for 2009/10).
To assess the potential effect on the overall results of the revised scaling approach, Vehicle Operating Costs for all of the non-sample Authorities were derived using the alternative (i.e. percentage of the network in red and amber) scaling factors. Table 14.11 shows the effect on the overall Vehicle Operating Costs and the NPV for the analyses.
The revised scaled values continue to show an increase in the overall NPV if maintenance funding is reduced but the increase in cost over the analysis period is reduced from £524m to £447m for Scenario 2 and from £974m to £806m for Scenario 3.
| Cumulative Discounted Costs for Local Road network (£m) | Scenario 1 | Scenario 2 | Scenario 3 |
|---|---|---|---|
| Economic impacts - Base Analysis | |||
| Vehicle operating costs | 274,246 | 275,731 | 277,212 |
| NPB (Works cost savings) | Base Case | 688 | 1,459 |
| NPB (User cost savings including emissions) | Base Case | -1,212 | -2,433 |
| Overall impact (NPV) | Base Case | -524 | -974 |
| Economic impacts - Revised Vehicle Operating Costs | |||
| Vehicle operating costs | 255,346 | 256,754 | 258,144 |
| NPB (Works cost savings) | Base Case | 688 | 1,459 |
| NPB (User cost savings including emissions) | Base Case | -1,135 | -2,265 |
| Overall impact (NPV) | Base Case | -447 | -806 |
Notes:
1. Annual discount rate = 3.5%.
2. Traffic growth included
3. Scenario 2 (20% reduction) and Scenario 3 (40% reduction) figures are shown as differences compared to figures for Scenario 1 (2010/11 funding retained).
4. Negative NPV shows an overall increase in cost (i.e. user costs increase more than the reduction in maintenance expenditure).
5. 2002 prices are 2010 prices factored by 0.81.