Texas High Speed RailBySusheel Kumar Siram

So what’s happening in Texas?

• Using Japanese technology to develop America’s first high speed rail line.

• Currently 2 lines are under consideration.

• Company claims $10 Billion in funding is required and it will be completed by 2021.

• Dallas to Houston in 90 minutes at 205 mph.

Who’s involved?

Central Japan Railway company is the primary advisor and will oversee the project and provide expertise.

Private Investors & Money Lenders

Will provide primary funding for the project. No taxpayer money will be required for the project’s completion. (That’s the claim TCR has made)

More Details

• N700-I Bullet Train• $33 Million per set• 500 passengers

• Our aim is to protect private property rights, maintain efficient modes of transportation, and prevent the wasteful use of taxpayer dollars or public subsidies for high-speed rail transportation.

• Our members include citizens, private property owners, business owners and elected officials from all across Texas who share our core belief of combating eminent domain for private use and our opposition to any tax-subsidized railway.

How does this benefit Texas?

Courtesy of the TCR website

Stakeholders

• Commuters in Texas

• Non commuters in Texas

• The investors and the government

• Counties through which the railway will pass.

High Influence, Low

Interest

High Influence, High Interest

Low Influence, High Interest

Low Influence, Low

Interest

Who’s going to use it when it’s built?

96000 Super Commuters b/w

Dallas and Houston

Potential customers for High

Speed Rail

What’s the competition like?

Southwest airlines is the

primary operator

between Dallas and Houston with a daily

volume of 3400 people.

Air

I-45 is the major highway

connecting Dallas and Houston.

AADT=310,662 Vehicles

Car

No passenger rail lines

between the two cities

Rail

Do we really need it?

How much will it cost to build?

Capital Cost

Annual Operation

and Maintenan

ce Cost

Total Cost of the

project over

Design period

Capital Costs

Image from: Campos, de Rus; 2009

Capital Cost• The per distance cost of a HSR line depends

greatly on the topography of the land over which it is being built.

• The line will be built either adjacent to the existing BNSF track or along the utility corridor which run along mostly flat land.

• Based on a paper Campos, de Rus; 2009 , I concluded that $36 million per kilometer was the average cost of building a HSR line.

• Edward Glaeser who also ran a similar analysis used $53 million as the benchmark.

• Hence during my investigation I used these two values as best and worst case numbers.

What are the O&M costs?Item Dollars per Train Mile (2003$)

(based on CHSR Report 2004)Annual Costs (2003$)

Station Services 0.54 2,838,240

Insurance 1.32 6,937,920

General Support 0.95 4,993,200

Maintenance of Way 2.83 14,874,480

Train Operations 6.59 34,637,040

Equipment Maintenance 7.73 40,628,880

Marketing and Reservations 1.39 7,305,840

Power 4.66 24,492,960

Total 26.01 136,708,560

I calculated that the total annual mileage for 8 train sets is approximately 5,256,000 miles.

How much will the passenger have to pay?

• The figure on the left is from an article on the Transport Politic website by Yonah Freemark that compares rider cost per kilometer travelled.

• I assumed $0.3 per km to be acceptable. This yielded a ticket cost of about $116.

What are the sources of uncertainty?

Prior to Operation

During Operation

Phase

Annual O&M Cost

Ticket Prices

Ridership

Construction Time

Construction Cost

Primarily, construction cost and ridership will define the success or failure of the project. So for the purpose of my analysis, I will only be using them to construct scenarios.

Assumptions• The project will take 6 years to complete.• Ticket price remains constant over the design

period of 40 years.• The annual O&M cost is $136 million during year

1 of the operation after which it increase at a rate of 3%.

• Ridership increases at a rate of 5% till 2035 and then plateaus due to operational saturation.

• Load factor can be either 0.35 (worst case) or 0.75 (best case).

• Lower and upper bounds for per kilometer construction costs are $37 million and $53 million.

• No discounting to present value.

Scenario Construction & Analysis

• High Ridership• Low Construction Cost

Best Case Scenario

• High ridership and high constuction cost

• Low ridership and low construction cost

Neutral Scenarios

• Low Ridership• High Construction Cost

Worst Case

Scenariofile://localhost/Users/susheelsiram/Desktop/Evaluating Infrastructure Systems/Project (Policy Analysis)/Report 3/Cash Flow Sheet.xlsx

ResultsScenario

Total Construction Cost

Breakeven Year Net Project Revenue

Best Case $14,546,000,000 2033 $49,238,906,406

Neutral Case 1 $20,722,000,000 2036 $43,062,906,406

Neutral Case 2 $14,546,000,000 2045 $9,722,690,915

Worst Case $20,722,000,000 2055 $3,546,690,915

From the analysis, we can see that ridership is a more important factor than initial construction cost.

Recommendations

We want to limit the possibility of a bad outcome, both during construction and operation phase. Hence my recommendations would include:•A good travel demand model for the Dallas-Houston Corridor.• Limit the possibility of cost overruns for the project

Questions?

Thanks Prof. Schofer !!! From the class of 2015!

Picture Credits: Omer Verbas