How Can a Very High Value for Money Transport Scheme Have a Negative Benefit Cost Ratio (BCR)?



How Can a Very High Value for Money Transport Scheme Have a Negative Benefit Cost Ratio (BCR)?

Authors

Chris White, Mott MacDonald, Sansaka Sirivadidurage, Mott MacDonald

Description

This paper examines the practical issues encountered through the application of transport benefit appraisal methodology.

Abstract

The UK Government recently approved a major improvement for Norwich’s Postwick interchange on the A47 Trunk Road due to the scheme enabling employment development to proceed. Although there would be a negative impact on traditional travel time benefits for existing car users, the benefits from the new employment, its location and its users mean that the scheme would produce an overall value for money that is very high.

Some transport interventions will help to unlock new development or, to look at this another way, the new development is directly dependent on the implementation of proposed transport intervention. This paper examines the practical issues encountered through the application of transport benefit appraisal methodology. It explains how benefits are derived and why a scheme with a negative BCR actually represents very high value for money.

The UK Department for Transport produced guidance several years ago in WebTAG which dealt with some of the issues, the calculation of planning gain and transport external costs, but requiring the conventional transport benefits to be based on traffic levels excluding new development trips. However here is no guidance in WebTAG on the calculation of Gross Value Added (GVA) for employment gains.

Some of the problems addressed by the paper include the difficulty in determining dependency of schemes in large network models, the irrationality of calculating transport benefits without the development trips being included and the assumptions required for GVA calculations, especially those on the additionality of development.

The paper suggests that the dependent benefits should be included with the conventional benefits so that the calculated BCR properly reflects that value for money for a scheme. It also makes suggestions for how the guidance should be altered to address some of the problems and how GVA benefits should be set out alongside the transport and planning gain benefits.

Publisher

Association for European Transport