21. Economic Performance of Route Corridor Options 21.1 Introduction 21.2 Method of Appraisal 21.3 Basic Data 21.4 Scheme Specific Data 21.5 Construction Costs 21.6 Delays During Construction 21.7 Accidents 21.8 Removal of Model "Noise" 21.9 Results 21.10 Summary
21. Economic Performance of Route Corridor Options
21.1 Introduction
21.1.1 The economic evaluation of the route corridor options has been carried out using a program developed by the Department for Transport (DfT), called Transport User Benefits Appraisal (TUBA). This software was developed for the appraisal of transport schemes.
21.2 Method of Appraisal
21.2.1 Inputs to TUBA are zone-to-zone trips, time, distance and tolls for the "do-minimum" and "do-something" options. These data were obtained from TMfS:05A. The scheme benefits are calculated by comparing, for each pair of zones, the total costs of travel (including travel time, fares, vehicle operating costs and tolls) for the "Do-minimum" and "Do-Something" scenarios.
21.2.2 The analysis described in this report is based on road transport only. So although the effects of the different road scenarios will cause the distribution of private trips to change, there will be no transfers between public and private transport. The trip matrices for goods vehicles (heavy and light) have been kept constant for all scenarios. This is a suitable basis for comparison between options.
21.2.3 In accordance with Her Majesty’s Treasury ‘Green Book’ guidance and DMRB guidance, the benefit stream is calculated for a 60 year period between years 2017 (the planned opening year) and 2076 inclusive. The summed monetised units of benefit are expressed in 2002 prices and discounted to 2002 at 3.5% per annum for the first 30 years and at 3.0% per annum for the next 30 years.
21.2.4 The summed benefits and costs are denoted by PVB (Present Value of Benefits) and PVC (Present Value of Costs); from these are calculated the NPV (Net Present Value = PVB-PVC) and the BCR (Benefit to Cost Ratio = PVB/PVC). Where an option produces a positive NPV (i.e. a future stream of forecast benefits in excess of scheme costs) and a BCR>1 then it will be considered more favourable than the do-minimum subject to affordability of the proposal.
21.3 Basic Data
21.3.1 For these initial assessments, the do-minimum scenario against which the benefits of the options were measured was taken to be the complete closure of the existing bridge (TMfS:05A). No mitigation measures were taken into account. The do-something scenarios also assumed that the existing bridge would be closed to all traffic.
21.3.2 The do-minimum assignment was carried out using the full demand model, so the trips in the forecast year matrices were adjusted to reflect travel costs by private and public transport. For the option tests, the matrix used was the output demand from an earlier full demand model run of a generic scheme combination of North Corridor Option 1 combined with South Corridor Option 1.
21.4 Scheme Specific Data
21.4.1 TMfS:05A was run for the AM, PM and Inter-peak periods. Modelled runs were undertaken for the appraisal years 2017 and 2022. For intermediate years, benefits were obtained by interpolation. No traffic growth is assumed after 2022, as agreed with Transport Scotland. Consequently, travel costs and, hence, route corridor choices will remain unchanged. However, economic parameters, and therefore scheme benefits, are assumed to continue to change beyond 2022, as set out in WebTAG (www.webtag.org.uk). These parameters include;
- Value of Time
- Cost of Fuel
- Proportion of transport fleet using diesel or petrol
21.4.2 Whilst this approach offers a conservative valuation of scheme benefits, it was felt that this was a suitable basis for comparison of corridor options.
21.4.3 The following factors were used to factor road traffic demand outputs from the three modelled time periods to annual benefits as output by TUBA. The factors have been taken from the MVA Information Note ‘Regional Annualisation Factors’, number 1 version 3, 01 April 2008:
- AM – 559
- Inter peak – 3596
- PM - 650
21.5 Construction Costs
21.5.1 The four combinations of northern and southern route corridor options tested are defined in Chapter 20. The cost of each option was estimated, comprising the proposed replacement bridge and the connecting road systems north and south of the Firth of Forth. Following the production of initial estimates, adjustments are required for the excess of construction cost inflation over general inflation, for risk and for optimism bias, as set out in STAG (Scottish Transport Appraisal Guidance, available at www.transportscotland.gov.uk/stag/home).
- Construction Cost Inflation (9.5.2) No adjustment at this stage
- Risk (13.2) 10% added (9.4% for bridge)
- Optimism Bias (13.3.3) Motorways 25% added, Bridges 45% added
21.5.2 Construction was assumed to take place over 5 years (2012 to 2016) with the annual percentage being 10%, 15%, 15%, 30% and 30%.
21.5.3 The construction cost estimates (£M, 2006 Q4 prices) are as presented in Table 21.1. These exclude VAT, Costs are input to TUBA exclusive of VAT. Costs of the do-minimum scenario, complete closure of the Forth Road Bridge, have been taken as zero.
Table 21.1: Construction Cost Estimates
Option |
1N + 1S |
1N + 2S |
2N + 2S |
2N + 1S |
|---|---|---|---|---|
Connecting roads North |
£518.8 |
£518.8 |
£671.5 |
£671.5 |
Connecting Roads South |
£318.3 |
£454.2 |
£454.2 |
£318.3 |
Main Crossing |
£1,144.9 |
£1,144.9 |
£1,144.9 |
£1,144.9 |
Total |
£1,982.0 |
£2,117.9 |
£2,270.6 |
£2,134.7 |
21.6 Delays During Construction
21.6.1 No assessment of the economic impacts of delays during construction has been undertaken at this stage of assessment.
21.7 Accidents
21.7.1 It is not expected that the cost of accidents will vary significantly between the options. Detailed calculations regarding the change in accidents for each route corridor option have not yet been carried out, so the same value, as calculated for North Corridor Option 1 combined with South Corridor Option 1 has been added to the traffic benefits for each option.
21.8 Removal of Model "Noise"
21.8.1 In areas remote from the scheme, where traffic is unlikely to be significantly influenced by the scheme, there is a degree of background ‘noise’ in the modelled calculations of flows and delays. To reduce errors in the benefit calculations, areas considered likely to be unaffected by the scheme, but with high traffic volumes and so possible sources of error, were identified. All changes to costs in and between those areas were then removed. The areas were;
- South Lanarkshire
- East Ayrshire
- South Ayrshire
- North Ayrshire
- East Renfrewshire
- Glasgow City
- North Lanarkshire
- East Dumbartonshire
- Renfrewshire
- Inverclyde
- West Dumbartonshire
21.8.2 The majority of TUBA benefits therefore came from the areas that would be directly affected by the tested scenarios; i.e. within or between the four council areas; City of Edinburgh, West Lothian, Fife and Perth & Kinross.
21.9 Results
21.9.1 The Economic Performance for each option is set out in Table 21.2, for comparison. They are expressed in 2002 prices, discounted to 2002.
Table 21.2: Economic Performance
| 1N + 1S |
1N + 2S |
2N + 1S |
2N + 2S |
|
|---|---|---|---|---|
Present Value of Benefits |
£5,225,947 |
£5,571,062 |
£5,162,019 |
£5,641,019 |
Present Value of Costs |
£1,150,117 |
£1,224,283 |
£1,236,505 |
£1,316,490 |
Net Present Value (NPV) |
£4,075,830 |
£4,346,779 |
£3,926,291 |
£4,324,529 |
Benefit to Cost Ratio (BCR) |
4.54 |
4.55 |
4.18 |
4.28 |
21.9.2 Benefit to Cost Ratios (BCRs) for North Corridor Option 1 are higher than their North Corridor Option 2 equivalents. Therefore, North Corridor Option 1 appears to be the most economically efficient option.
21.9.3 In comparing the economic evaluation of Corridor Option combinations, under South Corridor Option 2 it is noted that a proportion of Edinburgh bound traffic would assign to the A904 as a more direct route from the Forth Replacement Crossing to Scotstoun Junction and Edinburgh via the A90, leaking from the new strategic network linking to the M9 and M9 Spur. The attributed traffic cost benefits, including the benefits attributed to the traffic from Fife using the A904, results in a higher Net Present Value (NPV). However, South Corridor Option 2 also comes with a substantial additional cost and therefore a broadly equivalent Benefit to Cost Ratio (BCR) in comparison to those option combinations containing South Corridor Option 1.
21.9.4 In the consideration of the North Corridor Option 1 combinations, the similarity in BCRs suggests that there is little to justify the additional expenditure associated with South Corridor Option 2.
21.10 Summary
21.10.1 This section reports an evaluation of the economic costs and benefits of the northern and southern route corridor options associated with the proposed replacement bridge. In each case the modelled scenario assumed the closure of the Forth Road Bridge as the do-minimum scenario against which the options were tested.
21.10.2 The economic evaluation program TUBA was used for the evaluation, as it is able to assess the economic effects of redistribution of trips due to journey cost changes resulting from the introduction of a road scheme. Traffic data for input to TUBA was derived from the Transport Model for Scotland (TMfS:05A).
21.10.3 A summary of the Net Present Values (NPV) and Benefit to Cost Ratios (BCR) is presented in Table 21.2.
21.10.4 It is clear that North Corridor Option 1 offers a better return for lower cost, than North Corridor Option 2.
21.10.5 For the southern route corridor options, there is little difference in the BCRs between the options (coupled with North Corridor Option 1). Consequently, there seems little to be gained from the additional investment required for South Corridor Option 2.