Reports:

Affordable mass transit - guidance

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Foreword
Executive summary
1: Introduction
2: Phase 1 - strategic assessment
3: Phase 2 - scheme identification
4: Phase 3 - scheme refinement and monitoring
5: Data
Appendices

Foreword

The laudable aims of Transport 2010, whereby 25 new light rail lines were envisaged by 2010, have not materialised. Currently there are 7 urban centres served by a light rail system, and, according to National Audit Office, 4 of these are running at a loss. The government now considers that the construction of 25 new lines might not be practicable, offer value for money, or be affordable, and it has recently withdrawn final approval for 3 proposed schemes because of escalating costs. What has happened?

The problems of cost escalation, risk and associated premiums, lengthy planning processes and inaccurate patronage forecasting have been well documented by the Parliamentary Select Committee . In particular, the Select Committee notes that local authorities have largely been left to decide whether light rail was appropriate for their areas, and recommends a more proactive role for government.

It is against this background that CfIT commissioned its Affordable Mass Transit study. It is not our intention to single out any one scheme or mode. It is our intention to encourage better analysis to enable early decision making and avoid delay and prevarication. This is a useable, practical guide to delivering the most appropriate mass transit system in a given situation. As such it is aimed primarily at public authorities and those with responsibility for transport in urban areas. The focus is on all mass transit technologies which we consider likely to provide realistic, practical and affordable solutions in the UK context.

Our approach puts forward a rigorous evaluation designed to eliminate the less suitable options from an early stage. In particular, it encourages the continual assessment and monitoring of risk from the initial, strategic assessment phase right through to design and implementation. Most importantly, it provides the option to reappraise at all stages, where key parameters such as system costs or patronage forecasts have changed. As such it is vital that alternatives are genuinely optimised.

The CfIT study is designed to complement existing guidance and provides advice on its application. In so doing, we hope that our work will be of benefit to both local authorities and DfT in their moves to develop and support innovative local plans to tackle congestion, as announced by the Secretary of State in July of this year.

This study has been steered by a working group comprising CfIT membership and local authority, operating company and DfT representation. In addition we have sought input from a wider stakeholder group at key points in the project. I would like to thank all involved for their input and support. Ultimately, we hope that our work will go some way to assisting the delivery of high quality mass transit that provides value for money both in terms of the user and non user benefits of the system.

Peter Hendy
Chair
Commission for Integrated Transport
September 2005

Executive summary

The need for this guidance

The need for this guidance has arisen from:

• the Government's objectives for transport, notably the need to reduce reliance upon the private car;
• the lower than anticipated rate of delivery of mass transit systems;
• concerns regarding the affordability
and below forecast performance of some mass transit schemes that have been promoted or delivered in recent years; and
• the consequent need to achieve improved delivery of affordable and costeffective mass transit systems.

Purpose of this guidance

This guidance document is designed to assist promoters of mass transit systems to select the most suitable, affordable and costeffective technology to meet their needs and objectives, and to do so quickly and at reasonable cost.

For the purposes of this guidance mass transit is defined as an urban public transport system which provides a 'turn-up and go' service. This requires a maximum headway between vehicles of 10 to 15 minutes or a minimum frequency of 4-6 services per hour over core sections of route, providing a minimum capacity per direction of typically 300 passengers per hour (pph) for bus based systems and 800 pph for rail based systems.

In addition it is assumed that mass transit systems as addressed by this guidance will enjoy a degree of segregation from, and/or priority over, general traffic movements, unless these can be controlled effectively through measures such as road user charging.

Affordability relates to the ability to deliver the system. This includes the ability to obtain adequate funds for the construction and operation of the system (including any requirement for ongoing revenue support), the availability of such funding within an appropriate timescale, and the balance between system costs and the benefits delivered. Where private sector financing is to be used the financial assessment must include the costs and charges associated with such finance.

The process detailed in this guidance is intended to address all potential mass transit technologies that are capable of providing a 'turn up and go' service. The focus of the detail of this guidance (in terms of the information supplied) is upon bus based and light rail technologies, as these are most likely to provide realistic, practical and affordable solutions in the UK context.

Users of the guidance

The primary audience for this guidance will be those directly responsible for the promotion of mass transit systems. These will typically be public authorities with responsibility for transport in major urban areas, such as County, City, Regional and Unitary councils, Passenger Transport Authorities and TfL. The guidance should be used by the elected members and officers of these organisations together with those working on their behalf (such as consultancy companies).

The secondary users of this guidance will be those organisations associated with, but not directly responsible for, the promotion of mass transit schemes. This will include those providing public sector finance (such as DfT), private sector financial organisations, PFI contractors and public transport operators. This guidance is intended to assist such organisations (and those working on their behalf) to determine whether the work undertaken by the promoting authority is robust and in accordance with best practice and whether the proposed system represents a sound investment.

Approach to this guidance

This guidance is focused upon the UK context and is designed to link closely to existing guidance relating to the promotion of mass transit systems within the UK. In particular, it is presumed that the overall context and objectives for any mass transit system have already been clearly established through the Regional Transport Strategy or Local Transport Plan process, together with identification of the overall planning and transport context within which the system will operate.

The guidance is designed to provide an overall structure for the decision making processes needed to deliver the most appropriate mass transit system for a given situation. It explains the nature of the decisions that should be made and provides information to support the decision making process. This guidance is not prescriptive. It is intended to encourage quick and efficient assessment of a wide range of mass transit systems and technologies and the geographic areas over which these may be applied. In particular, careful consideration should be given to the differences between lower intensity solutions applied on an area-wide basis and higher intensity solutions applied on a corridor basis.

Structure

The structure detailed in this guidance uses increasing levels of detail in a step-wise manner to progressively eliminate those options that are not likely to provide an 'affordable' solution to the identified need and objectives. Three principal phases of work are identified as shown in Figure 1:

• Phase 1 - a high level strategic assessment of the alternative mass transit technology options and geographic areas of treatment;
• Phase 2 - a detailed appraisal of a shortlist of options in accordance with the recommendations set out in the Government's Major Scheme Appraisal Guidance; and
• Phase 3 - a monitoring process to be adopted during the detailed design and implementation of the preferred option.

Assessment of risk is an important part of the process throughout all three Phases. Allowance should be made for variability in key parameters (particularly costs and forecast patronage), with higher levels of allowance in the earlier Phases reflecting the less detailed analysis and thus lower levels of definition and certainty. Sensitivity tests are an essential part of the evaluation of risk and are recommended at key points in the process. In addition, optimism bias should be included at all stages in accordance with guidance from DfT.

The focus of the guidance is on Phase 1 - the process of selecting the most appropriate options for detailed analysis from a wide range of mass transit technology options including area-wide or corridor based treatment. Promoters must assess whether their transport objectives can be best met by applying intensive measures to a limited number of corridors (for example via rapid transit measures) or whether more widespread application of lower level measures may be more effective. The key output of this phase should be a clear demonstration that all options have been considered together with robust and transparent evidence as to the reasons for rejection of options. This Phase will help ensure that only the most appropriate options are taken forward for detailed assessment in Phase 2.

Where the more detailed work in Phases 2 or 3 results in significant changes to key system parameters (such as scheme costs or performance), consideration should be given to the need to re-examine the earlier Phase(s), as illustrated in Figure 1. Such iteration will be required where the changes are of a scale that would affect the decisions made in the previous Phase(s). This is most likely to occur as a result of increases in estimated system costs or reductions in forecast patronage.

Figure 1: Guidance overview

Phase 1

The Phase 1 process comprises 3 steps, each of these steps is briefly summarised below:

Step 1 - a qualitative assessment of the performance of each technology option. This is undertaken through identification of:

• the Problems that the mass transit system is intended to address;
• the Policy Objectives to which the mass transit is intended to contribute;
• the Context within which the mass transit system will be implemented and operated; and
• the Physical Opportunities and Constraints that will influence the design of the mass transit system.

Indicators should be established for each of these areas and the performance of each option assessed qualitatively using a 7-point scale.

The results of the qualitative assessment should enable elimination of the those options that do not provide an effective solution to the identified problems, do not contribute significantly to the policy objectives, or are unlikely to be deliverable.

Step 2 - a high-level quantitative assessment of the financial performance of each technology option. This is undertaken through identification of:

• likely levels of passenger demand;
• revenue;
• operating costs; and
• capital costs.

An outline methodology is indicated in the guidance, together with supporting information to assist the estimation of system costs. The detail of the work in Step 2 should be tailored to a level sufficient to distinguish between the options being examined and thus inform the decisions being made. Allowance should be made for risk, with sensitivity tests recommended to establish the impact of variation in key system parameters.

The results of Step 2 should enable rejection of further options where these are unaffordable in the sense that insufficient funding is likely to be available within an appropriate timescale to support the required level of capital expenditure and/or operating subsidy.

Step 3 - a value for money assessment of each technology option based upon the results of Steps 1 and 2. The quantitative work undertaken in Step 2 should enable refinement of the qualitative assessment, in particular a better estimation of the benefits likely to be delivered by each option.

A Technology Option Appraisal Summary Table (TOAST) should be assembled to include the key indicators arising from the results of Steps 1 and 2. This Appraisal Summary Table (AST) is based upon the advice given in DfT's 'Guidance on the Methodology for Multi-Modal Studies' (GOMMMS). Emphasis should be given to those indicators that provide distinction between alternative options and will thus contribute to the decision making process. The TOAST should also include an estimate of the risks associated with each of the elements in the table.

On the basis of the TOAST, the remaining options should be ranked on a value-formoney basis. This will require comparison of the benefits, impacts and costs associated with each option. The 'best' performing options as assessed by the TOAST process will be taken forward to more detailed analysis in Phase 2.

It is recommended that an independent review of the Phase 1 process be undertaken at the end of Step 3. This should be designed to ensure that the full range of options has been considered and that the assessment process has been undertaken in a manner that is both appropriate and robust.

Phase 2

Phase 2 focuses on scheme development and appraisal. This area is covered by the DfT's existing detailed guidance and thus this guidance does not seek to replace, supersede, or duplicate that existing guidance.

Thus Phase 2:

• indicates the existing guidance framework for scheme development and appraisal;
• explains the linkages between Phase 1 of this guidance and the existing guidance; and
• provides advice on the application of the existing guidance.

The results of the Phase 2 activity should be compared against the outputs from Phase 1 to determine the degree to which key system values may have changed during the more detailed assessment process in Phase 2. This review should examine whether the changes in such values (in particular costs and patronage) would be sufficient to alter the conclusions from Phase 1. Where this is the case, the Phase 1 work should be repeated using the more detailed valuations from Phase 2 and, if appropriate, alternative option(s) taken forward to Phase 2.

The output from Phase 2 should be a definition for the preferred scheme option(s), the next best option and a low cost alternative together with their appraisal summary tables. These should be complemented by the results of sensitivity tests to inform the monitoring activity in Phase 3.

Phase 3

The Phase 3 process comprises monitoring of both internal and external changes that may occur during the detailed design and implementation of the preferred system. Internal changes are those occurring as part of the scheme design and refinement process. External changes are those occurring to the external context within which the system will be implemented and operated. An important part of this monitoring process will be to ensure that the conclusions reached in Phase 1 and 2 continue to be valid. Where changes to key system values (in particular system costs and forecast patronage) remove the advantage previously shown for the preferred option, it will be necessary to repeat Phase 2 and, where appropriate, Phase 1 using the revised valuations.

Separate but related detailed monitoring plans are recommended:

• Internal Changes - should be recorded as they occur. The nature of each change should be recorded together with its impacts upon system performance and any recommended action; and
• External Changes - should be recorded on a periodic basis in a similar manner to internal changes.

It will be important to undertake regular assessments of the cumulative impacts of the changes that have been monitored. It should be noted that the net effect of a series of changes may be greater than the sum of the individual effects for each change. As noted above, particular attention should be given to system costs and forecast patronage.

The results of the monitoring process should lead to decisions regarding the future development of the scheme, these are likely to fall into three categories:

• changes to scheme design to accommodate or mitigate the change;
• the promotion of changes to the external environment (particularly where these are under the control of the system promoter); and
• in circumstances where changes to key system values have required a return to Phase 2 or Phase 1, change to an alternative scheme or technology option.

Data

As part of this guidance, technical data is provided to assist with the quantitative calculations required, particularly those outlined in Step 2 of Phase 1. The appendices to the guidance provide details of capital costs and operating costs for a number of existing and proposed mass transit systems in the UK. Recorded costs vary significantly and are strongly influenced by the context within which an individual scheme is being promoted. There is a general lack of robust data relating to bus-based schemes due to:

• a relative lack of experience of measures such as guided bus;
• a lack of detailed monitoring of enhanced bus based systems; and
• the commercial confidentiality attached to bus-based cost information.

The data sources that have been researched emphasise the need for a systematic approach to mass transit system monitoring and data collection in order to provide information that will enhance the robustness of quantification of costs and performance for mass transit systems. It is recommended that DfT give serious consideration to a programme of data collection and monitoring for mass transit systems (similar to that adopted by the Highways Agency for trunk road schemes), including those using bus based technology. In particular there is a lack of data relating to bus systems that have been subject to intensive investment (such as Crawley 'Fastway' and the guided bus systems in Leeds and Bradford) and this is an important area for improved data collection.

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