VALUE FOR MONEY AND APPRAISAL OF SMALL SCALE PUBLIC TRANSPORT SCHEMES

Document Type

Report

Publication Date

2011

Subject Area

economics - appraisal/evaluation, economics - benefits, place - europe

Keywords

appraisal, evaluation, small scale public transport schemes, value for money

Abstract

The evidence base on the relative value for money of different types of transport investment has grown considerably since the Eddington report in 2006. Small scale public transport schemes remain an important exception, however, and this is understood to have been a key reason for the substantial decline in Integrated Transport Block (ITB) funding in 2010. The work reported in this report has intended to fill this gap by compiling a database of close to 150 schemes obtained from PTEs and other local authority bodies, over a quarter of which had been the object of some sort of quantitative economic appraisal and/or ex-post evaluation. In some cases, enough information had been gathered to enable us to produce an ex-post estimate of value for money, using a bespoke Simplified Appraisal Framework (SAF) developed as part of this project. The study covered the following types of scheme: • Bus Quality Corridors; • Bus Priority; • Bus Stations / interchanges; • Bus Real Time Information (RTI); • Bus Park & Ride; • Bus vehicle quality improvements; • Rail station improvements, and; • Rail Park & Ride. With a median benefit of £3.5 for every £1 spent, the results suggest that small scale public transport schemes delivered by PTEs and local authorities can be at least as cost effective, if not more, as larger capital projects. According to Department for Transport guidance, BCRs between 1 and 2 represent medium value for money, between 2 and 4 represent high value for money, and above 4 represent very high value for money. Overall, every scheme in our sample exceeded a benefit:cost ratio of 1.5. On the other hand, several schemes reached BCRs above 3.0, notably some forms of bus priority, quality bus corridors and relatively low cost interventions such as information provision. These results dispel the notion that schemes that fall outside the major business case framework are poor value for money. In reality, all PTEs have decision making frameworks in place to help identify local investment priorities. Despite this, only a minority of sampled schemes had gone through a conventional economic appraisal. One important reason appears to be the degree of complexity and effort required by the DfT’s standard modelling and appraisal guidance, which is typically deemed to be disproportionate to the cost of small schemes. While some PTEs have developed streamlined in-house appraisal methods this is the exception rather than the rule. As part of this project, we have therefore developed a Simplified Appraisal Framework (SAF), which we hope could help support and strengthen local decision making processes where local methods do not currently exist. Application of the SAF to a sample of case studies has shown that it leads to broadly similar results as the sponsor’s original appraisals. This is encouraging and suggests that it may be possible to make use of simplifying assumptions without much loss of accuracy. Value for Money & Appraisal of Small Scale Public Transport Schemes, Issue No.05, July 2011 ii Although this project has already produced a considerable evidence base, some gaps were also identified, in particular with respect to the comparison of monitoring studies with ex-ante appraisal results. A second area for development is the conversion of the results of ex-post customer satisfaction surveys, which appear to be increasingly common, into more conventional measures of value for money. The current evidence base should therefore be seen as work in progress to be updated and developed by PTEs and other key stakeholders in the future.

Rights

Permission to link to this report has been given by Passenger Transport Executive Group (pteg), copyright remains with them. We have been given to publish The Executive Summary, produced by Pedro Abrantes

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