Reducing the Cost of New Road Infrastructure: Sustaining...
Transcript of Reducing the Cost of New Road Infrastructure: Sustaining...
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2015/FMP/WKSP2/007 Session 1.8
Reducing the Cost of New Road Infrastructure: Sustaining Capacity Benefits
Submitted by: Transport Technology Consultants
Workshop on Infrastructure Financing and Capital Market Development
Iloilo, Philippines23-24 July 2015
Reducing the cost of new road
infrastructure: sustaining
capacity benefits
Andrew Pickford
Transport Technology Consultants Ltd
Hong Kong
APEC Workshop on Infrastructure Financing and Capital Market Development
23-24 July 2015Iloilo City, Philippines
Current environment for PPPs
• No shortage of capital – necessary but not sufficient for a successful PPP regime
• New road infrastructure: broad benefits to business and consumers
• Economic activity coupled to traffic and ensuring continued benefits of new capacity is a social, economic and environmental challenge
• Successful PPP regimes develop market interest- but weak PPP regimes reduce market interest and increase risk premiums
• Transfer of risk sometimes seen as means for Government to ‘abdicate’ some risks entirely
Common sources of failure of PPP schemes
• New infrastructure often planned with a design life that is too short
• Traffic models too simple => traffic forecasts often far too high or too low
• Roads are planned with the assumption that they do not significantly change the road network system
• The success of a PPP initiative is often measured in terms of number of deals closed but with little regard to: o how the benefits of new infrastructure will be sustained o how the ‘ownership costs’ for government, private sector
and users could be sustained • Toll road PPPs conflict with regional efforts to constrain traffic
The way forward
• Big Shift for Government: Infrastructure Provider > Network Manager > Service Provider
• Evidence that ‘design for operations’ can reduce capital expenditure
• Opportunities for new road infrastructure is limited in urban areas => operations-only contracts
• Selectively employ new infrastructure where needed and employ demand management elsewhere
• Intelligent Transport Systems (ITS) can reduce the need for additional road capacity: BCR typically 6 to 10:1 whereas additional highway capacity BCR of 2 to 3:1
Examples (1 of 3)
Europe
“Relatively small investments in ITS would allow abetter use of existing infrastructure and would … bemuch more cost effective than building newinfrastructure or enlarging existing one[s]. At thesame time, the environmental impact would be muchlower.”
Source: ITS Action Plan: http://europa.eu/rapid/press-release_MEMO-08-789_en.htm
Examples (2 of 3)
World Bank
“The rapid development of ICT-enabled approachesprovides a great opportunity to optimize andenhance the efficiency of existing and new urbantransport systems, at a cost much lower thanbuilding new infrastructure from the ground up.”
Source: http://blogs.worldbank.org/category/tags/intelligent-transport-systems
Examples (3 of 3)
United Kingdom
“implement a new specification for managedmotorways which will reduce the costs ofimplementation by upto 25% [to] be applied by upto 8schemes in the … investment programme… [and] …encourage proposals which might involve an elementof innovative financing … include proposals for tollingnew infrastructure, or for releasing development gain”
Source: UK National Infrastructure Plan 2011
Managed motorway (M42, UK)
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South Africa: Gauteng Freeway Improvement Programme (GFIP)
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Urban congestion charging (UK)
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Recommendations
• Focus on ‘mobility’ rather than ‘capacity’• Market testing: publish a statement that indicates:
o the level of risk that Government agrees to take on, on behalf of the taxpayer.
o state the mitigations that a private sector partner should take to address its risks
o employ Intelligent Transport Systems (ITS) to mitigate environmental risks
• Declare that no (or low) traffic growth for road infrastructure would be permitted in the urban environment
• Establish a special purpose company with direct responsibility for delivering new infrastructure
• Appoint staff with strong experience of delivering and operating major infrastructure projects and the design & implementation of Intelligent Transport Systems
PPP Scheme Design
• Require management and operations strategies to maintaincapacity benefits
• Establish a performance management regime to maintain service levels
• Provide and protect capacity for transit where appropriate• CBA: use traffic-modelling forecasts to ensure that proposed design
life of new infrastructure accurately reflect its usage• Employ more sophisticated traffic forecasting models over 5-10
years, informed by population and growth targets• Employ construction and project management techniques as used
by the private sector• Provide ‘enabling legislation’ to permit effective traffic
management and enforcement
The Future
• Use technologies to reduce congestion to reduce capital expenditure from the cost of road expansion.
• Infrastructure coupled with:o Managed motorwayso Demand management with
variable tolls or Electronic Road pricing to shift demand rather than build for peak
o Cooperative-ITSo Long-term: Infrastructure
designed around semi or fully autonomous vehicles
Thanks