NATIONAL ROADS AUTHORITY

Project Appraisal Guidelines

March 2008

Version 1.0

Project Appraisal Guidelines Changes made to document since previous version -

Date issued 01.03.2008

St Martins House, Waterloo Road, Dublin 4 Tel: +353 1 660 2511 Fax: +353 1 668 0009 Email: [email protected] Web: www.nra.ie

Foreword
These Project Appraisal Guidelines are intended to guide road designers and the decision makers through the process of ensuring that the best choices are made and the best value for money is obtained on all national road projects. In short - the right project in the right place at the right time. While the objective may be simple, its achievement requires a disciplined approach and a comprehensive framework for its delivery. That is the function of these Guidelines. They build on the objectives set out in the Department of Finance's and Department of Transport's guidance documents and develops them and focuses them to apply to national road projects. Appraisals should provide an assessment of whether a project is worthwhile or not. In applying this to national road projects it is important that the function and purpose of the proposed road is continually kept in focus. In the main, national roads, particularly national primary routes, are focussed on serving longer distance strategic traffic and should not be used as local traffic distributors. National road proposals and appraisals that have a heavy focus on local traffic distribution should be discouraged. Instead, the development of national roads projects should aim to deliver on the strategic transport route corridors objectives identified in national policy documents such as the National Development Plan 2007-2013 and Transport 21. The continuing development of Ireland's national road network will help underpin sustainable development in every region and sustain national economic competitiveness while supporting preservation of the environment and improvement in quality of life. These appraisal guidelines provide a structured approach to the development and implementation of national road projects that effectively deliver on these objectives.

Table of Contents
Foreword 1 Introduction ..................................................................................................................... 5 Context .............................................................................................................................. 5 Extension of appraisal....................................................................................................... 6 The purpose of appraisal .................................................................................................. 6 The need for intervention .................................................................................................. 7 Setting appropriate objectives........................................................................................... 7 Considering possible options ............................................................................................ 7 Choosing between various options ................................................................................... 8 Evaluation.......................................................................................................................... 8 When is appraisal required ............................................................................................... 8 Government objectives ..................................................................................................... 8 Overview of the scope of the appraisal process ............................................................... 8 Overall project planning .................................................................................................. 10 Route / option selection................................................................................................... 10 Preliminary design / land acquisition............................................................................... 11 Construction documents preparation and tender award ................................................. 11 Final account / closeout .................................................................................................. 11 Contents .......................................................................................................................... 11 Project management ..................................................................................................... 15 Key organisations / roles ................................................................................................. 15 Appraisal deliverables ..................................................................................................... 15 The appraisal process ..................................................................................................... 17 Responsibilities ............................................................................................................... 18 Staff requirements ........................................................................................................... 19 Appraisal team ................................................................................................................ 19 Audit process................................................................................................................... 19 Project Brief ................................................................................................................... 23 Purpose of the Project Brief ............................................................................................ 23 The Project Brief and the planning and appraisal process ............................................. 23 Contents of the Project Brief ........................................................................................... 23 Functional and operational outcomes ............................................................................. 24 Transport modelling...................................................................................................... 27 Introduction...................................................................................................................... 27 Road assignment modelling principles............................................................................ 28 Data requirements........................................................................................................... 29 Model calibration and validation...................................................................................... 30 Model forecasting ............................................................................................................ 30 Traffic Modelling Report .................................................................................................. 31 Management of the modelling process ........................................................................... 31 Cost Benefit Analysis ................................................................................................... 35 Introduction...................................................................................................................... 35 Section A - Cost Benefit Analysis Principles and economic theory ................................ 35 Why use Cost Benefit Analysis? ..................................................................................... 35 Option generation............................................................................................................ 36 Consumer surplus ........................................................................................................... 36 Discounting and the price base....................................................................................... 38 Valuation principles ......................................................................................................... 40 Section B Application of CBA to road schemes ........................................................... 40 When is CBA applied ...................................................................................................... 40 Who undertakes CBA...................................................................................................... 41 Project management ....................................................................................................... 41 CBA report....................................................................................................................... 41 Auditing processes .......................................................................................................... 42

Costs and benefits........................................................................................................... 42 Values of time.................................................................................................................. 43 Vehicle Operating Costs ................................................................................................. 43 Scheme costs.................................................................................................................. 44 Delays during construction and maintenance ................................................................. 44 Accidents......................................................................................................................... 45 Greenhouse gases .......................................................................................................... 45 Procurement method....................................................................................................... 45 The Do-Minimum and Do-Something options................................................................. 45 Fixed versus variable trip matrices.................................................................................. 46 The CBA method............................................................................................................. 47 Appraisal period .............................................................................................................. 48 Treatment of parameter values ....................................................................................... 49 Methods for comparing costs and benefits ..................................................................... 49 CBA outputs .................................................................................................................... 50 6 Project Appraisal Balance Sheet ................................................................................. 53 Introduction...................................................................................................................... 53 Structure of the Project Appraisal Balance Sheet........................................................... 53 Implementation of the PABS structure ............................................................................ 55 Describing Environmental impacts in the PABS ............................................................. 55 Monetisable impacts........................................................................................................ 55 Non-monetisable impacts................................................................................................ 55 Describing Safety impacts in the PABS .......................................................................... 57 Describing Economy impacts in the PABS ..................................................................... 57 Describing Accessibility and Social Inclusion impacts in the PABS ............................... 57 Describing Integration impacts in the PABS ................................................................... 58 Format for the PABS ....................................................................................................... 61 The Business Case ....................................................................................................... 67 Purpose of the Business Case........................................................................................ 67 The Business Case and the planning and appraisal process......................................... 67 Contents of the Business Case....................................................................................... 67 Post Project Review ...................................................................................................... 71 Background to the review................................................................................................ 71 Responsibility for the Post Project Review ..................................................................... 71 Timing of the Post Project Review .................................................................................. 71 Overall approach to the review ....................................................................................... 71 Project conception........................................................................................................... 72 Project planning............................................................................................................... 72 Project implementation.................................................................................................... 72 Project operational performance ..................................................................................... 72 Focus of the review ......................................................................................................... 72 Contents of the report ..................................................................................................... 74 Non-Major Schemes...................................................................................................... 77 Background ..................................................................................................................... 77 Overview of the Business Case ...................................................................................... 77 Analysis of need and objective setting ............................................................................ 79 Design and appraisal of options...................................................................................... 81 Assessment of benefits of each option ........................................................................... 82 Comparison of benefits and costs................................................................................... 82 Budgeting, costing, and risk assessment........................................................................ 83 Assessment of risks ........................................................................................................ 83 Procurement of and proposals for implementing the works............................................ 84 Layout of the Business Case .......................................................................................... 84 Post Project Reviews ...................................................................................................... 84

Glossary of terms ...................................................................................................................... 87

Introduction

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1.1

Introduction
Context In 2004, the National Roads Authority (NRA) launched a set of guidelines on how to conduct Cost Benefit Analysis (CBA) for national road schemes. These guidelines, which were subsequently updated in 2005, detail the background to transport project appraisal in Ireland, the requirements for the appraisal of major road schemes, the principles underlying CBA, instructions regarding traffic modelling and appraisal, and the parameter values to be applied in appraisals. Since the initial release of the guidelines, there have been two documents published which require changes to the way in which NRA appraisals are undertaken, they are: Guidance for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector, Department of Finance, February 2005, and Guidelines on a Common Appraisal Framework for Transport Projects and Programmes, Department of Transport, May 2007. 1.3 The impact of these documents on the appraisal process is summarised as follows. Guidance for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector 1.4 These guidelines update the previous documentation from 1994 in order to: Reflect changes in evaluation, project appraisal and management best practice; Introduce more proportionality and greater consistency in project appraisal and management while maintaining a rigorous approach, and Provide for more clarity and greater understanding in relation to the roles of all those involved in approving capital expenditure. 1.5 The guidelines set out the stages of appraisal (appraisal, planning, implementation and post project review), identify the requirements from each stage and emphasise the need for all bodies in receipt of public funding to comply with the requirements. These requirements include the need to undertake a) an Exchequer Flows Analysis, and b) a Financial Appraisal (for commercial schemes only) in addition to the normal elements of CBA that have traditionally been undertaken. This is to ensure compliance with the DoF guidelines referred to above. Where a scheme involves an element of Public Private Partnership (PPP), the PPP unit at the NRA should be consulted with regard to the correct approach to undertaking a financial appraisal. Guidelines on a Common Appraisal Framework for Transport Projects and Programmes 1.6 This document provides guidelines for the appraisal of transport projects and programmes. It draws on, and is compatible with, the Department of Finance guidelines referred to above. The document begins by outlining the Department of Finance Guidelines and the manner in which they should be interpreted in the appraisal of transport projects and programmes. This is followed by advice on defining projects for appraisal and on the generation of project options. An overall Common Appraisal Framework is then outlined. This is an objectives-led framework that employs both multi-criteria and cost-benefit approaches. Benefits and costs are considered through the development of a Project Appraisal Balance Sheet, which provides a framework within which the various benefits and costs of a project may be brought together for consideration. Specific advice is provided on the conduct of costbenefit analyses and there is a template provided for the development of a Business Case.

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Extension of appraisal 1.9 Figure 1.1 depicts the core impacts previously included within CBA under the 2005 Guidelines and how the appraisal process has subsequently been expanded to encompass the full set of impacts, some of which can only be assessed in a qualitative manner. As an example, the impact on landscape and visual intrusion can not be expressed in monetary or other quantifiable terms but could be described and then scaled according to a seven point scale ranging from highly positive to highly negative. All of the impacts, both quantitative and qualitative will be summarised in the Project Appraisal Balance Sheet, which is described in chapter seven of this guidance.

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Figure 1.1 Costs and Benefits Considered Within Appraisal Framework The purpose of appraisal 1.12 The purpose of appraisal is to ensure that scarce public funds are allocated in an efficient manner by establishing the merits of a proposal using a consistent and comprehensive framework. Proposals for public sector investment invariably exceed the resources available. Choice and priority setting are therefore inescapable. The systematic appraisal and professional management of all capital projects helps to ensure that the best choices are made and that the best value for money is obtained. Appraisals should provide an assessment of whether a proposal is worthwhile and clearly communicate conclusions and recommendations. It is important to recognise that appraisal is an ongoing process through the life of a project concerned with the following stages: Justifying the need for intervention and setting appropriate objectives (incorporated into the Project Brief); Considering possible options as part of and facilitating the prioritisation of schemes (which is reported in the preliminary Business Case); Developing the preferred solution (reported on in the full Business Case); Implementing the solution, and Evaluation of the solution (as described in the Post Project Review).

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The need for intervention 1.14 The first step in the appraisal process is to identify the need for the intervention and to consider whether or not any subsequent proposal is likely to be cost effective. Any appraisal must include the potential negative impacts of an intervention as well as considering a Do-Nothing option. It will often be the case that this initial step will involve an exercise to determine the scope of the work and the rationale behind intervention. Setting appropriate objectives 1.15 An important task of any public sector organisation is continually to reassess needs and objectives. New projects should only be undertaken where there is a clearly established public need for the projects or service to be provided. An objective is the explicit intended result of a particular programme or project, measured as precisely as possible. For example in the transportation context, there may be a need to improve traffic flow on a road. To state the objective of works on that road as being to reduce average journey times would be unsatisfactory since it would not provide a basis for judging whether investment proposed to improve the roads would produce sufficient benefit. Something more explicit is needed. To reduce average journey times between Town A and Town B by X minutes is a more precise objective. It should be noted that the degree to which the objectives can be specified will increase as the project progresses. Using the earlier example, once the preferred option has been determined, it may only then be possible to set a quantifiable amount of minutes that the journey time should be improved by. Using this form of objective in addressing such question as what are the various ways in which this objective can be reached; what costs and what results can be expected from each alternative course of action; and are the benefits sufficient to justify the costs. Project objectives should be expressed in terms of the benefits they are expected to provide and those whom they are intended to benefit. For example, the construction of a new road is not an end in itself; it must be seen in the light of the needs of the economy as a whole, and of the target groups for which the project caters (for example, freight traffic, tourist traffic, commuters etc.). There is a need for realism in stating objectives. Where schemes have multiple objectives it is necessary to be clear about the relative importance of each and how this should be reflected in resource allocation and in the appraisal process. It is important that objectives are expressed in a way that will facilitate consideration and analysis of alternative ways of achieving them. They should not be so expressed as to point to only one solution. Considering possible options 1.21 All realistic ways of achieving stated objectives should be identified and examined critically when considering project options for the first time. This should be done with a completely open mind, and should always include the option of doing nothing or doing the minimum. Different scales of the same response should be included as separate options, where appropriate. The alternatives should be described in such a way that the essentials of each alternative, and the differences between them, are clear. Considering the possible alternatives in the light of the constraints will usually lead to the conclusion that some of the alternatives are not feasible. Others may conflict with existing policies. Objectivity is important in considering options. There can be a danger that the selection of options may be manipulated in order to make a case for a course of action which is already favoured. It is intended that following the appraisal process set out in this document will minimise the likelihood of that occurring.

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Choosing between various options 1.22 Once the possible options have been considered during the route / option selection process, the Project Appraisal Balance Sheet should be used to select the most appropriate option (see Chapter 6 for further guidance). Evaluation 1.23 Evaluation is similar in principle to appraisal but relies on actual outturn information and takes place after the scheme or solution has been implemented. The main purpose is to ensure that lessons are learnt and applied for other future appraisals. When is appraisal required 1.24 In line with DoF, DoT and NRA requirements, project appraisal is required at the following stages for Major Projects (defined as any new road construction or any upgrade scheme to the existing network, in either case involving a capital expenditure of at least 5 million): Overall Project Planning; Route Selection; Preliminary Design; Construction Documents Preparation and Tender Award, and Final Account / Closeout. Government objectives 1.25 Each scheme must be assessed against the Governments five key criteria set out in the Department of Transports Guidelines on a Common Appraisal Framework for Transport Projects and Programmes: Economy; Safety; Environment; Accessibility and Social Inclusion, and Integration. 1.26 The economy objective is concerned with improving the economic efficiency of transport and providing economic transport solutions. Safety relates to loss of life, injuries and damage to properties resulting from transport accidents and security. Environment aims to protect the built and natural environment, including reducing the direct and indirect impacts of transport schemes and their use on the environment of users and non-users. Accessibility and Social Inclusion seeks to improve facilities for those without a car and to reduce access severance. Finally, Integration aims to ensure that all decisions are taken in the context of wider Government policy objectives, and the impact of a scheme in terms of transport provision (e.g. provision of missing links), land use integration (e.g. compatibility with national / local land use strategies) and geographic integration (e.g. does the scheme improve transport links to Northern Ireland, Europe or the Rest of the World?). Overview of the scope of the appraisal process 1.27 For Major Projects see definition above - the deliverables from the appraisal process are as follows: Project Brief (PB); Transport Modelling Report (TMR); Cost Benefit Analysis (CBA) report; Project Appraisal Balance Sheet (PABS); Business Case (BC), and Post Project Review (PPR).

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The Project Brief (PB) identifies the need for the scheme and sets out the project objectives. It also considers the existing, and likely future, problems and reports on the options that have been considered. It also provides a history of the development of the project. The Transport Modelling Report (TMR) describes what techniques have been used to model the situation, both existing and in the future, and what the forecasted impact of the scheme is. The Cost Benefit Analysis (CBA) report provides an economic assessment of the costs and benefits of the scheme in order to determine if the scheme is economically worthwhile. All of the impacts of the scheme which can be given a monetary value are included in this assessment. The Project Appraisal Balance Sheet (PABS) reports on all of the impacts of the scheme under the Governments five criteria as described earlier. It contains a mixture of quantitative indicators and qualitative statements and provides a concise summary of all of the aspects and impacts of the scheme. It is a key document for decision makers and is to be used to select between route options. The Business Case (BC) brings together the PB, CBA and PABS to form a complete statement documenting the rationale behind, and justification for the project. It is the document that enables the Sponsoring Agency to bring together all of the evidence to support their contention that the scheme should be implemented. It will be the Business Case that the Sanctioning Authority will base its decision upon and it must therefore provide a complete picture of all of the arguments for, and impacts of, the scheme in question. The purpose of the Post Project Review (PPR) is to determine whether: The basis on which a project was undertaken proved correct; The expected benefits and outcomes materialised; The planned outcomes were the appropriate responses to actual public needs; The appraisal and management procedures adopted were satisfactory, and If conclusions can be drawn applicable to other projects, to the ongoing use of the asset, or to associated policies.

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These appraisal deliverables are required to be prepared, or reviewed, at various stages throughout the life of a Major Project as illustrated in the following table.

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Table 1 Appraisal Deliverables for Major Projects by Project Phase Phase Overall Project Planning Route Selection Preliminary Design / Land Acquisition Construction Documents Preparation & Tender Award Construction Final Account / Closeout
Y
(2)

Deliverable PB
Y

TMR

CBA

PABS

BC

PPR

(1)

Note: (1) Preliminary Business Case for preferred option required at this stage. (2) CBAs are required on a sample of schemes at this project phase [the NRA should be contacted in advance of this phase to determine whether a CBA is required for the scheme in question].

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The purpose of each deliverable at each project phase is considered in the following sections. Overall project planning

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The Project Brief should set out the rationale for the project in a clear and concise manner so that the reader can understand why the project is being proposed, what objectives it is seeking to achieve and what other options have been considered with reference to Government policy. The Project Brief should be submitted to the NRA prior to requesting funding for scheme development and will be used by the NRA to determine whether to grant funding for same. Route / option selection

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The Project Brief should be reviewed at this stage and updated to reflect the history of the project and provide further detail on objectives where possible. The Traffic Modelling Report should document all of the transport modelling work that has been undertaken, including associated data collection, and compare the route options in terms of network performance. The report should provide evidence that it is fit for this purpose. The Cost Benefit Analysis should present the economic efficiency of the various scheme options based upon Option Comparison Cost estimates. The Project Appraisal Balance Sheet should be used at this stage to select between possible route options. A Preliminary Business Case will bring the Project Brief, Traffic Modelling Report, Project Appraisal Balance Sheet and Costs Benefit Analysis together with any other information that the sponsoring agency feels is pertinent in terms of making the case for the preferred option. The Preliminary Business Case should be submitted to the NRA for approval in advance of the formal adoption of the preferred option and will also be used by the NRA to

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determine whether the scheme should be progressed to preliminary design / land acquisition stage. Preliminary design / land acquisition 1.44 1.45 The Project Brief should be reviewed and updated to reflect the history of the project and should provide firm objectives for the scheme. The Traffic Modelling Report should be updated if any refinement of the modelling work has been undertaken since route selection. The results of the model will be a key input to the design of the scheme at this stage, as well as providing the base data for the economic and environmental assessments. It must therefore be shown to be sufficiently robust for this task. The Cost Benefit Analysis should present the economic efficiency of the scheme based upon separate Total Scheme Budget and Target Cost 1 scenarios. Separate CBA runs should be provided for high and low traffic growth scenarios. The Project Appraisal Balance Sheet should summarise the impacts of the scheme against the Governments five criteria of economy, safety, environment, accessibility & social inclusion and integration. The Business Case should bring together the PB, TMR, CBA, and PABS into a cohesive, structured argument supporting the development of the scheme. The Business Case should be submitted to the NRA for approval prior to seeking NRAs permission to proceed to purchasing the land required for the scheme. Construction documents preparation and tender award 1.50 Documentation at this stage should be based upon the costs outlined in the successful tender. This will necessitate updates to the CBA, PABS and BC and there may also be updates required to the PB. It is unlikely that the TMR will change at this stage (unless there have been changes to the scope of the project since the preliminary design phase). The Cost Benefit Analysis should present the economic efficiency of the scheme based upon separate Total Scheme Budget and Target Cost 2 scenarios. Separate CBA runs should be provided for high and low traffic growth scenarios. The Business Case should be submitted to the NRA for approval prior to seeking formal NRA approval for contract award. Final account / closeout 1.53 CBAs are required for a sample of schemes at final account / closeout phase. The Design Team should liaise with the NRA at this stage to determine whether a closeout CBA is required for their particular scheme. Post Project Reviews are required for all Major Projects at this project phase. Contents 1.54 1.55 Following this introductory chapter, the guidelines are split into eight further chapters. Chapters 2-8 outline the required appraisal / evaluation deliverables for Major Projects (i.e. any new build scheme, or any scheme involving substantial upgrades to the existing network and expenditure of at least 5 million) while Chapter 9 outlines the requirements for non-Major Schemes (defined as all other schemes involving capital expenditure in excess of 500,000). The guidelines therefore comprise of: Chapter 2 Project Management; Chapter 3 Project Brief; Chapter 4 Transport Modelling; Chapter 5 Cost Benefit Analysis;

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Chapter 6 Project Appraisal Balance Sheet; Chapter 7 Business Case; Chapter 8 Post Project Review, and Chapter 9 Non-Major Schemes. 1.56 The document provides high-level guidance on the principles of appraisals. Various technical appendices, giving more detailed advice on practical application of the elements involved in the appraisal, are available for download from the NRA website. These are most relevant to CBA practitioners, members of the appraisal team and auditors.

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Project management

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2
2.1

Project management
Key organisations / roles The key organisations and people in the appraisal process for Major Projects are 1 : National Roads Authority (NRA) the overseeing organisation for all National Road schemes. The NRA is generally the Sanctioning Authority although in select cases (for example PPP schemes) the NRA may function as both the Sponsoring Agency and the Sanctioning Authority. Design Office (DO) the organisation managing the various phases of the scheme preparation and supervision of construction generally a Regional Design Office or Local Authority. The Design Office typically is the Sponsoring Agency and will comprise of the following: o Design Office Project Manager (DOPM) the person within the Design Office responsible for ensuring the progression of a scheme in accordance with policy and procedures; o Design Team (DT) the group undertaking the various phases of scheme preparation on behalf of the Design Office. This may be a team within the Design Office, the Local Authority Road Design Team or an external consultant; o Design Team Leader (DTL) the person in the design team responsible for managing the scheme design; o Appraisal Team (AT) the group undertaking the project appraisal, including any traffic modelling. This may be a team within the Design Office, the Local Authority Road Design Team or an external consultant. Within this team there will be persons with specific responsibilities for undertaking Cost Benefit Analysis (CBA); o Appraisal Team Leader (ATL) person leading the appraisal team and responsible for managing the appraisal process, and o Project Steering Group (PSG) responsible for overseeing the project and containing representatives of the NRA and the Design Office. Appraisal deliverables 2.2 The set of deliverables required from the appraisal process is influenced by requirements from the NRA and the Department of Transport, alongside those set out by the Department of Finance. Within the context of transportation projects, for which the NRA is the Sanctioning Authority, the appraisal process includes a number of defined deliverables that are required at various stages, and to varying levels of detail, as the scheme progresses. For Major Projects, these deliverables are: Project Brief (PB); Traffic Modelling Report (TMR); Cost Benefit Analysis (CBA); Project Appraisal Balance Sheet (PABS); Business Case (BC), and Post Project Review (PPR). 2.3 The flow chart in Figure 2.1 illustrates when the various deliverables (indicated by underlining) are required in relation to the scheme stage. The chart also distinguishes between those that are existing requirements, in green, and those that are new as a consequence of this guidance, highlighted in gold. In certain cases the project delivery structure may vary from that outlined above. In such cases the roles and duties of the various parties shall be interpreted accordingly. In such cases agreement should be reached in advance with the NRA as to the roles and duties of all parties involved in the appraisal / evaluation process.

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The requirements for non-Major Projects are outlined in Chapter 9.

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Figure 2.1 Appraisal Process Flowchart

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The appraisal process Overall Project Planning The Design Team (DT) prepares the Project Brief (PB) and submits to the NRA for approval (after DT internal review). The NRA reviews the PB and decides whether to ask for revisions to same or to accept / reject the PB. If the brief is rejected, the project will not be given approval to go to the next phase. Route / Option Selection The DT reviews the AT CVs and approves or otherwise. The approved AT provides the NRA with a Traffic Modelling Scoping Note that outlines the proposed modelling methodology and any data collection that will be undertaken. A pro-forma that should be used for this purpose can be found in Appendix 1, which is available for download from the NRA website. This pro-forma should be completed for all models. The NRA approves or otherwise the modelling methodology. If approved the AT can progress with developing the base year and forecast year traffic models. After an internal review by the DT, the AT submits a Traffic Modelling Report (TMR) to the NRA for approval. The contents of the TMR are discussed in Chapter 4. The NRA reviews the TMR and either accepts it or requests changes. The AT reviews the PB and updates it if necessary and undertakes the CBA using the outputs of the approved TMR. At route selection, the option comparison cost estimate, agreed with the NRA Cost Estimation Unit, should be used in the derivation of the scheme costs (refer to Appendix 12 for further guidance). The AT prepares the Project Appraisal Balance Sheet (PABS) for each option to use in the selection of the preferred option. The content of the PABS is set out in Chapter 6. The AT incorporates the PB, PABS and the CBA Report into a Preliminary Business Case for the preferred option and submits it to the NRA for approval (after DT internal review) prior to seeking NRA acceptance of the preferred option. The NRA then requests changes, accepts or rejects the Preliminary Business Case (in which case project is not approved to go to next stage). Preliminary Design The DT reviews the AT CVs and approves or otherwise. The AT provides the NRA with a modelling scoping note that outlines the proposed methodology and any data collection that will be undertaken if different from the previous phase. The NRA approves (or otherwise) the modelling methodology. If approved, the AT can progress with developing the base year and the forecast year traffic models. After an internal review by the DT, the AT submits a Traffic Modelling Report (TMR) to the NRA for approval. The NRA reviews the TMR and either accepts it or requests changes. The AT reviews the Project Brief (PB) and updates it if necessary, prepares the Project Appraisal Balance Sheet (PABS) and then undertakes the CBA using the outputs of the approved TMR. At preliminary design stage the CBA should be run both on the basis of Target Cost 1 figures and again on the basis of Total Scheme Budget figures (agreed with the NRAs Cost Estimation Unit, see Appendix 12 for further instructions). At minimum, each cost figure (Target Cost 1 and Total Scheme Budget) should be run against both high and low traffic growth projections, yielding a minimum of four scenarios. The AT incorporates the PB, the PABS and the CBA Report into a Business Case (BC) for the scheme and submits it to NRA for approval (after DT internal review) prior to seeking NRA approval to purchase any land required for the scheme (e.g. go to CPO). The NRA then either requests changes, accepts the BC, or rejects the BC (in which case project is not approved to go to next stage). Construction Documents Preparation and Tender Award

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The DT reviews the schemes cost, design and scope. If the project's cost, scope and design are unaltered from preliminary design phase, no further appraisal is required at this project phase. If the cost, scope or design of the scheme has changed since the preliminary design CBA was completed, the approved AT contacts the NRA and agrees upon a modelling methodology, based upon the submission of model pro forma. If appropriate, the AT submits the revised Traffic Modelling Report (TMR) to the NRA for approval (after internal DT review). The NRA reviews the TMR and either accepts it or requests changes. The AT reviews the Project Brief (PB) and updates it if necessary, prepares the Project Appraisal Balance Sheet (PABS) and undertakes the CBA using outputs of the approved TMR. The CBA should be run at least four times (combining high and low traffic growth scenarios with Target Cost 2 and Total Scheme Budget cost estimates, refer to Appendix 12 for more details). The AT incorporates the PB, the PABS and the CBA Report into a final Business Case for scheme and submits it to the NRA for approval (after internal DT review) prior to seeking NRA permission to award the main construction contract. The NRA then requests changes, accepts or rejects the final Business Case (in which case permission to go to construction is not given). Final Account / Closeout The DT liases with the NRA to see whether a full CBA is required. The approved AT undertakes the Post Project Review (PPR) - and CBA if required and submits it to NRA for approval after an internal review by the DT. The final outturn cost to be used in the derivation of scheme costs (refer to Appendix 12). The NRA reviews the (CBA and the) PPR and either requests changes or approves the evaluation. The NRA applies lessons learned from PPR to the evaluation / management of future projects. Responsibilities 2.6 A good understanding of the key responsibilities of each organisation with regards the appraisal of national road schemes is important for all involved. The key responsibilities of each organisation in the appraisal process are defined below: National Roads Authority (NRA) The provision and maintenance of the Appraisal Guidelines and updating of associated documentation, for example the technical appendices; Provision of advice / support on all appraisal-related matters to DTs and ATs; Approval of the Project Brief; Approval of the Traffic Modelling Scoping Note (refer to the above); Approval of the Traffic Modelling Report; Approval of the Business Case (including CBA Report, Project Appraisal Balance Sheet and Project Brief); Advises the DT on the need to undertake a CBA at Final Account / Closeout; Approval of Post Project Review, and External audit of appraisal deliverables. Design Office Project Manager Overall management of appraisal process; Approval of Appraisal Team, and Overseeing the internal audit of all appraisal deliverables. Design Team Provision of all inputs/information as required by the Appraisal Team; Preparation and internal review of the Project Brief at Overall Project Planning Phase;

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Internal review of the Traffic Modelling Scoping Note; Internal review of the Traffic Modelling Report; Internal review of the Business Case, CBA Report and Project Appraisal Balance Sheet; Review of scheme cost, design and scope at Construction Documents Preparation and Tender Award phase, and Liaison with NRA at Final Account/Closeout to establish whether full CBA is required. Appraisal Team Updating of the Project Brief; Preparation of the Traffic Modelling Scoping Note; Preparation of the Traffic Modelling Report; Preparation of the CBA Report; Preparation of the Project Appraisal Balance Sheet; Preparation of the Business Case, and Undertakes Post Project Review. Staff requirements 2.7 Persons involved in the appraisal process must have had some prior experience or have attended an approved formal training course on either project appraisal or CBA. This holds true for both members of the Appraisal Team and for the person responsible for reviewing the appraisal work in the Design Offices. For Major Projects, the Appraisal Team comprises an Appraisal Team Leader and Appraisal Team Members. The required experience within the Appraisal Team and the Design Office is defined below. Note that the requirements for the Appraisal Team are relevant regardless of whether the team is drawn from the Design Office, or employed as an external consultant. Appraisal Team Leader: The Appraisal Team Leader must be able to demonstrate knowledge of the appraisal process, including the use of standard computer programmes used in traffic modelling and economic assessment. The Team Leader must have been on an approved training course and have detailed experience of appraisal on at least three road projects. Appraisal Team Member: The Appraisal Team member must have been on an approved training course or seminar and/or have practical experience in undertaking appraisal. At least one Appraisal Team member should be included on each Appraisal Team. Appraisal team 2.11 The Appraisal Team is to be approved by the DOPM in advance of any phase of the appraisal work commencing. The NRA is not involved in the approval of the Appraisal Team. Audit process 2.12 During the overall project process there are two levels of audit: internal and external. Both internal and external audits take place at all phases of the appraisal work relating to traffic modelling, CBA, Project Appraisal Balance Sheet, Business Case and Post Project Reviews. Specific auditing requirements relating to these can be found in the relevant chapters. Internal audits are undertaken by the DOPM and supported by the Appraisal Team. They comprise reviews of the approach and methodology, or any assumptions made in the appraisal work, including any relevant deviations from the appraisal guidelines. The external audit consists of a detailed review and is to be undertaken by either the NRA or an NRA appointed consultant.

2.8

2.9

2.10

2.13

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2.14

Note that in all cases it is the responsibility of the DOPM to ensure that all appraisal deliverables prepared for the scheme are robust and reflect the scheme in the most appropriate manner. It is for this reason that internal reviews are required at all Phases by the DOPM.

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Project Brief

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3
3.1

Project Brief
Purpose of the Project Brief The purpose of the Project Brief (PB) is to formalise the objectives of the project and its intended outputs in terms of its key functional and operational outcomes. The Project Brief and the planning and appraisal process 3.2 The PB should be prepared and updated as required at four stages in the project planning process, namely: overall project planning; route option selection; preliminary design, and construction documents preparation / tender award stage. It is first prepared at the overall project planning stage, where it forms the basis for project planning initiation. At each stage, the PB should be reviewed by the relevant project engineer, who will check it for clarity and completeness. Each revision of the PB should be then submitted to the NRA for approval. Contents of the Project Brief 3.4 The PB should address the following issues: Project history; Need; Strategic fit and priority; Scope, constraints and interfaces; Objectives, and Functional and operational outcomes. 3.5 Project history The background to the project should be outlined. This should include references to relevant documents and their conclusions and recommendations. Need The problems which the project is intended to address should be specified. Relevant documentation, information or data that supports the existence of the need should be briefly outlined. This section should also consider options other than road schemes (such as public transport and demand management / pricing where appropriate). Strategic fit and priority The compatibility of the proposed project with existing policies and plans should be set out. Any priority accorded the project in relevant plans and programmes should be noted. The inclusion of the project in any of the following plans and policies should be referenced: The National Development Plan, 2007-2013; Transport 21; The National Spatial Strategy; All Island Infrastructure Co-operation; Regional, County and local development plans, and Plans and programmes of the National Roads Authority. Scope, constraints and interfaces The geographical scope of the project should be identified. Its intended interface with other existing or planned transport projects should be set out. Its dependency on other projects or initiatives should be stated. Any significant, known, physical or engineering constraints or assumptions should be noted.

3.3

3.6

3.7

3.8

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3.9

Objectives National transport planning is now focused on improving transport systems through a Common Appraisal Framework based on five criteria: Economy; Safety; Environment; Accessibility, and Integration. The PB should establish the objectives for the project in the context of these criteria.

3.10

Economy The existing road may be inefficient or ineffective in terms of its use or maintenance costs. In terms of use, the road may, for example, have restricted capacity, operating speeds, or surface quality. Indeed the objective may be to provide a new transport corridor where none currently exists. The project may also be aimed at securing wider economic benefits such as inward investment or urban regeneration The PB should identify the objectives set for the project in terms of these or other relevant factors. Safety The existing road may have features that are giving rise to poor safety outcomes and the objective of the project may be to redress these features. If the route section has been identified as a high accident location by the NRA or in EuroRAP publications, this should be noted. Environment The existing road may have negative environmental impacts along one or more dimensions and the objective is to mitigate these environmental impacts. These are: air quality; noise; landscape impact and visual intrusion; land use; biodiversity; cultural heritage/archaeology, and water resources. Accessibility Current road systems may be providing poor access to people in remote areas or to deprived communities and the proposed project may help in remedying this. Integration There may be need to better integrate the road with the rest of the road network or cross border road networks in terms of consistent quality or layout. Similarly, there may be a need to integrate the road network more fully with other transport modes e.g. with the rail mode, or to create cycling or walking facilities. Integration with existing land use / planning policies may also be an objective. The PB should clearly identify which of the objectives are considered of most importance or relevance for the project, based on the identification of need as indicated above. Functional and operational outcomes The PB should reference any design or other standards to which the finished project is expected to adhere. Relevant performance targets should also be indicated e.g. with regard to the level of service to be attained or a reduction in road accidents to more acceptable norms. A statement of how the project will support national transport strategies, plans or programmes should be included. After the completion of overall project planning phase, the NRA will use the PB to determine whether to provide funding for further scheme development.

3.11

3.12

3.13

3.12

3.13

3.14

3.15

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Transport modelling

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Transport modelling
Introduction What is a transport model? A transport model is a computer-based representation of the movement of people and goods (trips) around a transport network. It is intended to provide an indication of how trips will respond, over time, to changes in that transport network. These changes may be due to growth in the number of trips or due to changes in the transport network itself i.e. the building of new roads or public transport infrastructure. In order to try and predict what will happen over time, it is necessary for the model to make assumptions about how people will react to these changes. A model can therefore never be precise about the future and should never be presented as such. The creation of a transport model can be costly and time consuming particularly in terms of the collection of the necessary data. Thus, it is sensible to consider whether a model is required at all and if so, what form or scale that model should take. What is the purpose of a transport model? A transport model can serve several functions. It can aid the design of a scheme, it can help determine what the most appropriate option for a scheme is and it can provide the necessary outputs for the economic and environmental appraisal of a scheme. Within the context of these guidelines, the primary function of a transport model is to inform the economic and environmental appraisal of a scheme. One of the benefits of using a transport model is that it can ensure that a variety of schemes, or scheme options, are considered on a consistent basis. An objective of these guidelines is to ensure that all national road schemes evaluations follow the principles discussed herein and therefore enable the NRA to consider schemes on a like for like basis. The modeller must always remember that studies are carried out to enable investment decisions to be made and explained, as well as to inform the environmental appraisal of the scheme, and any work that does not further these objectives is wasteful. The practitioner also has a duty to the decision maker to provide information that is robust and does not imply levels of accuracy that are not achievable in practice. They must also ensure that any differences identified between alternatives are real and not a product of the techniques used in the appraisal. Furthermore, it is important that the scope for using existing models and data is carefully considered and that new models and data are up to the task. Careful consideration should be given, before resources are committed to data collection and model building, to the nature of the options that are likely to be tested and the required level of detail of the analyses. In short, the model must be fit for purpose and unnecessary complexity should be avoided. What does a transport model need to reflect? A transport model needs to be capable of reflecting, to an acceptable degree, the existing transport situation as observed on the ground. This can be measured in terms of trip patterns, numbers of vehicles on roads, journey times experienced and the location and extent of any queuing. Additionally, the model needs to have a mechanism whereby it can reflect forecast growth in the numbers of trips being made and also the changes in transport infrastructure (e.g. new roads) which occur over time.

4.1

4.2

4.3

4.4

4.5 4.6

4.7

4.8

4.9

4.10

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4.11

In considering the scope of the transport model, the following basic questions need to be addressed: What is the nature of the scheme to be assessed? Where is the scheme located and in what sort of environment? What is the likely area of influence of the scheme? What modes of transport are likely to be affected by the scheme? What outputs are required from the modelling process?

4.12 4.13

The answers to these questions should lead towards a decision as to whether a model is required and, if so, what form it should take. There is a wide variety of improvement schemes that may need to be evaluated, ranging from minor improvements to junction capacity up to the construction of a major new route. Chapters 3 to 8 of these guidelines are focused on those schemes which entail either the improvement of an existing link or the provision of a new link. Structure of this chapter Following on from this, the following sections provide an introduction to the type of modelling work that is likely to be required for the majority of NRA improvement schemes i.e. new routes or significant improvements to existing routes. It is not however intended to be an instruction manual on how to build models. More detailed advice, together with information on how to deal with other types of scheme such as junction improvements, is for download as Appendix 3 from the NRA website. The remaining sections in this chapter are as follows: Road assignment modelling principles; Data requirements; Model calibration and validation; Model forecasting, and The Traffic Modelling Report. Road assignment modelling principles The basic components of a model Road assignment models consist of three main elements: a network, a zoning system and a trip matrix. The network is a representation of the roads within the study area. Each section of a road comprises a link within the network and each link is defined in terms of its ability to accommodate traffic. The zoning system is a simplified representation of the places where people and goods travel to and from. It is not practical or necessary to represent, for example, each individual property and so zones are defined which cover areas of similar land use (e.g. housing estates) and which connect to the network at similar locations. Finally, the trip matrix indicates the number of people travelling between the zones. Separate trip matrices are usually constructed for different periods of the day and also for different vehicle types (e.g. car vs. truck) or trip purposes (e.g. travel to work, shopping etc). Assigning trips to a network Once the network, zoning system and trip matrices for a model have been constructed, the next stage is to assign or load the trip matrices on to the network. Each trip will choose the best route through the network based on a combination of time and distance. Clearly, as more trips are loaded on to the network, speeds will fall and the choice of best route may change. Models therefore work on an iterative basis and seek to find an equilibrium solution.

4.14

4.15 4.16

4.17

4.18

4.19

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4.20

The concepts of fixed and variable demand When a road improvement takes place, there are a number of behavioural responses that may occur within the travelling population. These are: A change of route (known as reassignment); A change in the timing of the trip (retiming); An increase in the number of trips (frequency); A change in the origin or destination of the trip (redistribution); A change from car to public transport or vice versa (mode choice), and The making of entirely new trips (generation).

4.21

A transport model which reflects reassignment only is referred to as fixed demand. Where one or more of the other responses are also included, then it is known as variable demand. The distinction between the two becomes important when undertaking economic evaluations. For most non-urban schemes it is anticipated that a fixed demand model will be appropriate. Further advice can be obtained from the NRA in the event that a variable demand model is being considered. Data requirements Network A transport model network is represented by a series of links, or sections of road, between nodes, or junctions. Each link in the network will have an associated capacity based on the number of lanes available to traffic and usually a speed flow curve. This defines how the speed of vehicles on the road alters as the number of vehicles change. Clearly, as the number of vehicles increases, the speed decreases. The way in which junctions are handled is dependant on the modelling software that is chosen for the study. Some consider junctions as simple nodes with no associated delay; others incorporate more complex junction modelling which takes account of the type of junction (e.g. roundabout or signals) and the effect on the capacity of the network. The road network does not need to include all roads in the study area, only those which carry a significant volume of traffic. But it should incorporate sufficient detail to reflect route choice within the area and may therefore incorporate minor roads which are used as rat-runs. If a variable demand model is required the assignment process will also likely require a public transport network. This would need to cover all available public transport options within the study area, whether that is bus, rail or light rail. If an existing model is not available then a network will need to be built based on a combination of map data, and information gleaned from aerial photos or site visits. Zoning system The development of an appropriate zoning system does not require data per se, but does require knowledge of the administrative boundaries (e.g. county, district, parish, townland). This is because zones should be designed so as to be capable of being aggregated to match these boundaries. This assists when making comparisons with other sources of data (e.g. population statistics) and also so that adjacent or regional / national models have some degree of commonality. Trip matrices The development of trip matrices can be a costly and time-consuming process if the modeller is required to build these from scratch. Roadside interview (RSI) surveys will usually be required, where a sample of vehicles are stopped on key routes in the area. The drivers are interviewed and the responses collated and expanded to provide an estimate of the total population of trips passing that point. This information is then combined with synthetic (i.e. not observed) estimates of the other movements in the area in order to generate a complete trip matrix. However, if a model has been built previously, or if there is a regional/national model available, then trip matrices from those sources can prove a valuable starting point.

4.22

4.23

4.24

4.25

4.26

4.27

4.28

4.29

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4.30

If a variable demand model is to be built then the level of data required to support the trip matrices will be greater. There is likely to be a need for public transport surveys (e.g. bus or rail) as well as, possibly, home interview surveys in order to help determine the appropriate parameters for use in the behavioural model. Transport surveys Transport surveys are undertaken both to help build models and also to provide an indication of their performance. The most common types are: Turning counts at junctions; Link counts, both automatic (ATC) and manual; Roadside interview surveys; Journey time surveys, and Queue length surveys.

4.31

4.32

All of these may be required for a standard fixed trip assignment model. If a variable demand model is required then additional surveys may be required such as: Public transport surveys (boarding, alighting and transit counts for various modes), and Stated preference surveys.

4.33

The latter is required in order to inform the relative magnitude of the various behavioural demand responses referred to earlier. Model calibration and validation

4.34

Calibration and validation are separate concepts although they are frequently confused with one another. Calibration relates to the estimation and adjustment of model parameters in order that the model fits with observations. Validation uses independent data, not used within the model building process, compared to model outputs to indicate how well the model reflects reality. It is neither possible nor practical to produce a perfect model. However it is also true to say that if a model cannot adequately reflect the existing situation, then any forecasts from that model should be treated with a high degree of scepticism. Model forecasting

4.35 4.36

4.37

The primary purpose of a model is to help estimate what is likely to happen in the future as a consequence of some change to the transport network, and compare that situation with what would have happened had that change not occurred. The forecasting process needs to consider changes in the volume of trips using the network over time and changes to the network itself. Traffic growth forecasts are available from the NRA website. These are updated on a regular basis and are likely to be suitable in most cases for scheme appraisal. However, where scheme specific characteristics are such that alternative growth forecasts are more applicable, those alternative growth forecasts may, with NRA approval, be utilised. In addition to the scheme which is being appraised, there will be changes to the network which are forecast to occur irrespective of whether or not the scheme progresses. It is important that these changes are reflected in any network coding for assignment models or junction arrangements for junction modelling. It is important to note that any changes to either the Do-Minimum or Do-Something networks, for use in the scheme appraisal, must be agreed in advance with the NRA. The NRA provides regular updates on the progress of major road schemes on its website and this should be consulted to see if any schemes are relevant to the study area. Further details on timing for major schemes in the future that are currently under consideration should be sought from the NRA. The local authorities should also be consulted in order to determine if there are any projects or plans locally which may impact upon the scheme under consideration.

4.38 4.39

4.40

4.41 4.42

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Traffic Modelling Report Purpose of the report The purpose of the Traffic Modelling Report (TMR) is to describe the work that has been undertaken relating to the transport model. The report must make the case for using the model as the basis for the appraisal of the scheme. It therefore needs to describe in some detail the way in which the model has been built and provide evidence that it is sufficiently capable of reflecting observed conditions. The document should also make clear the basis for any forecasts produced by the model and provide a clear view of the impact of the scheme that is being assessed. Contents of the report The TMR should contain the following three sections: Data collection; Model build & validation, and Model forecasting. 4.46 The data collection section should provide a summary of any transport data that has been collected in order to build the model. This will include project specific surveys (e.g. traffic counts), data collected from other sources (e.g. census data) as well as information obtained from other models (e.g. regional / national models or earlier versions of the scheme model). It should enable the reader to understand what data has been used in building the model and what the quality of that data is. The model build and validation section should describe how the model was built and provide evidence that it is capable of reflecting conditions as they are observed on the network. It will therefore contain comparisons of model output to a number of observed data sets such as link counts, turning counts and journey time surveys. The validation standards that are expected of models are discussed in Appendix 3. Ultimately the report needs to demonstrate that the model is fit for purpose. The purpose of the forecasting element of the report is to illustrate what the model predicts would happen if the scheme was built, and how this compares to what would happen if it was not. It should make clear any assumptions which have been made as part of the forecasting process, and indicate the range of results which would occur if those assumptions were to change, as it is important that the forecasting work recognises the uncertainties associated with predictions about future events. The report should provide a basic node / link diagram for the study area with associated traffic flows for the Do-Minimum and Do-Something scenarios for the relevant model years. Further details on the required contents of the TMR are provided in Appendix 2 of this document which is available for download from the NRA website. Management of the modelling process Roles and responsibilities As described within the project management section of this guidance, the responsibility for undertaking the transport modelling work will reside within the Appraisal Team. They will be responsible for determining the most appropriate form of modelling (and economic appraisal) to be used for the scheme. This should be agreed by the Appraisal Team Leader (ATL) and submitted to the NRA by the Design Office Project Manager (DOPM) using the Modelling & Economic Appraisal Pro Forma (Appendix 1), which is available via the NRA website. No modelling work should be undertaken until this pro forma has been signed off by the NRA.

4.43

4.44

4.45

4.47

4.48

4.49

4.50

4.51

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4.52

The Appraisal Team (AT) is then responsible for undertaking all transport modelling, and associated data collection, relating to the scheme. As such, they will liase with Regional Design Offices / Local Authorities and other relevant bodies to ensure their knowledge of local traffic conditions is captured and adequately reflected in the model. They may also need to liaise with the Local Authorities, and An Garda Sochna, with regard to data collection activities. The AT will compile the TMR and ensure that an internal review of the work is undertaken by the ATL and the DOPM. The DOPM will take ultimate responsibility for submission of the TMR to the NRA. The NRA will audit the report and may request changes to be made before approval of the document.

4.53

4.54

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Cost Benefit Analysis

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5
5.1

Cost Benefit Analysis

Introduction Cost Benefit Analysis (CBA) forms one element of the appraisal process for road infrastructure projects. CBA serves a number of functions at both the individual scheme level and when comparing different projects: At the individual scheme level, the results of the CBA indicate whether a road scheme is economically viable; i.e. whether economic benefits resulting from the provision of a scheme outweigh the costs to construct and maintain it. Secondly, they can provide a comparison of alternative options, and At the national level, the Government has finite resources to commit to road infrastructure improvements. The outputs from economic assessments allow different schemes to be compared and enable the schemes that provide best value to be identified. If the results of the CBA are to be used to prioritise schemes, then the assessments need to be carried out in a consistent manner. 5.2 The requirement to undertake an economic appraisal of major road schemes should not be confused with the requirements set out in the Department of Finance guidelines to undertake a financial appraisal, which is needed only for schemes with a commercial aspect (e.g. PPP schemes). The NRAs PPP unit should be consulted for guidance on conducting financial appraisals. Output from the CBA should be used to satisfy the requirement within the appraisal process to undertake an exchequer cash flow analysis. The UK computer program COBA has been adapted for use in Ireland for fixed trip matrix CBA. For variable trip matrix (VTM) CBAs, the UK TUBA program is the recommended software; however, with prior agreement from the NRA, alternative software may be used for VTM appraisals provided they can be altered to accommodate recommended Department of Transport and Department of Finance parameter values. The NRA must be consulted prior to embarking on a VTM appraisal. Guidance on selecting the most appropriate method for undertaking the appraisal is provided within this chapter. This chapter is split into two sections; the first deals with the theory and principles of CBA, while the second considers the application of CBA to road schemes. Section A - Cost Benefit Analysis Principles and economic theory Why use Cost Benefit Analysis? 5.6 Resources, particularly public sector investment resources, are scarce. All Governments are therefore concerned with securing value for money from investment expenditure and with finding tools that measure value for money objectively in areas of public sector expenditure. Governments need to be able to understand the value for money of different expenditure programmes (e.g. comparing road schemes with investment in other transport projects), to identify priorities within a single programme (e.g. comparing different road schemes) and to understand if individual projects provide value for money. Financial profitability yardsticks cannot generally be applied to road investments, so CBA was developed as a technique for assessing value for money in such circumstances. It is, however, a partial technique; economic appraisal of the sort embodied in the COBA and TUBA programs do not purport to measure value for money over the whole range of costs and benefits, as presented in the Project Appraisal Balance Sheet, including those broadly classified as environmental.

5.3 5.4

5.5

5.7

5.8

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Option generation 5.9 Transport proposals designed to meet specific objectives are grouped under the term Do-Something and their appraisal involves measuring their performance over a period of time against either a Do-Nothing or Do-Minimum scenario. Do-Nothing The Do-Nothing, as the name implies, relates to the situation when the future case is unchanged from that at present. Do-Minimum The Do-Minimum applies to all proposals and comprises all schemes and proposals under construction or where there is a firm commitment to provide improvements. Options for the future transport proposal will be appraised by reference to their performance against the Do-Minimum scenario. Do-Something The Do-Something scheme is the road proposal under consideration. There may be more than one Do-Something option. The number and nature of the Do-Something scheme options will change as the planning of the road scheme proceeds. Consumer surplus 5.13 CBA was developed for sectors that do not have a marketable output. For this reason, the change in consumer surplus is used as an indicator of well being to measure the benefits of a particular road scheme. Consumer surplus is the difference between the price consumers are willing to pay for a good or service and the actual market price. If a consumer is willing to pay more than the actual price then the consumer surplus is defined as the difference in the two prices. On a standard demand and supply curve, as illustrated in Figure 5.1, consumer surplus is shown by the shaded area. Figure 5.1 Definition of consumer surplus

5.10

5.11

5.12

5.14

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5.15

The cost a user of a transport facility is prepared to pay comprises of several elements, including any physical payments made (such as fares, tolls and vehicle running costs) and the value that the consumer places on his/her time. These elements are combined into an overall generalised cost of travel. Changes in generalised travel costs resulting from a transport scheme give rise to changes in consumer surplus, with positive movements representing a benefit to the consumer. For example, if an individual is willing to travel for up to 15 minutes to enjoy a particular activity and a transport scheme reduces this time to 10 minutes then the traveller enjoys a consumer surplus equivalent to the generalised cost of five minutes of travel time. Across all travellers making the same journey, the change in consumer surplus is the difference between the change in the total benefit enjoyed and the change in the costs. If travel demand remains unchanged (i.e. demand is perfectly inelastic, meaning totally unresponsive to changes in price), but travel costs change, the change in consumer surplus is represented by the shaded area in Figure 5.2, and defined by the following formula: Change in consumer surplus = (P0-P1)*T

5.16

5.17 5.18

5.19 5.20

Where P0 and P1 are the Do-Minimum and Do-Something travel costs respectively and T represents the number of travellers. This situation is analogous to the fixed trip matrix assumption, where there is no increase in trips as a result of building a scheme. Figure 5.2 Change in consumer surplus fixed demand

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5.21

In the case where demand changes as result of changes in travel costs (i.e. demand is not perfectly inelastic), then the change in consumer surplus is as shown in Figure 5.3 and defined by: Change in consumer surplus = (P0-P1)T0 + (P0-P1)(T1-T0) = (T0+T1)(P0-P1)

5.22

This situation is analogous to the variable trip matrix assumption, where there is a change in the number of trips as a result of building a scheme. Figure 5.3 Change in consumer surplus variable demand

5.23

The convention in this case is to attribute half of the change in costs to the change in trips and is known as the rule of half. Discounting and the price base

5.24

Implementing a transport scheme usually results in a stream of costs followed by a stream of benefits, some of which have monetary values applied to them. These monetised costs and benefits occur over a number of years, and cannot simply be added together as if they all occurred simultaneously. In order to be able to add costs and benefits that occur over a period of time, two distinct issues must be dealt with: General changes in price levels over time (inflation), and Preferences for consumption now rather than later (time preferences).

5.25

5.26

The effects of inflation are resolved by means of converting all costs and benefits to a common price base year (using a price index). To take into account time preferences, a discount rate is applied, discounting future costs/benefits back to a given year the present value year. The present value year is usually the same as the price base year. Present value year Costs and benefits arising in different years are expressed in terms of their value from the standpoint of a given year. In principle, any year can be taken as the present value year;

5.27

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however reference should be made to the NRA National Parameter Values Sheet, available from the NRA website, for the year currently used in appraisal. Summing the Present Values of Costs and subtracting these from the Present Value of Benefits gives the Net Present Value (NPV) of the scheme at the present value year. 5.28 The discount rate Costs and benefits arising in different years are transformed to their present values by the process of discounting. This can be understood by considering the principle of compound interest. If 1 is invested at a real interest rate of r, at the end of one year it would be worth (1 + r) and after two years (1 + r)2 and so on. By the same logic, 1 received in n years time is worth 1/(1 + r)n now. Note that this illustration ignores the effect of inflation and assumes that 1 has the same real spending value in each year. Because discounting involves the notion of charging interest against a project, rather than paying interest to an investor, r is known as the discount rate. Any sum may be reduced to its Present Value (PV) by means of the following formula:

5.29

PV =

S (1 + r ) y p

Where: PV is the present value; S is the sum to be discounted; r is the discount rate, expressed as a decimal; y is the year in which the sum is received or incurred, and p is the present value year. 5.30 Net Present Values The NPV is the discounted sum of all future benefits less the discounted sum of all future costs over the appraisal period. Guidance from the NRA as to the appropriate appraisal period to be used can be found by referring to the National Parameter Values Sheet (see Appendix 6). The Present Value of a stream of Benefits (PVB) represents the value in the present value year of all the benefits that will accrue over the appraisal period. It is calculated according to the following formula:

5.31

PVB = y = year 0

y = year n

(1 + r ) y p

By

Where By is the benefit occurring in each year, from the first year in which benefits are accrued (Year 0) discounted as appropriate, up to the limit of the appraisal period (year n). The Present Value of the stream of Costs (PVC) represents the value in the present value year of all the costs that will accrue over the appraisal period, comprising mainly construction and maintenance costs. It is calculated in a similar way to the approach for calculation of PVB. For some schemes, it is possible that construction costs may have been incurred prior to the present value year. In such cases, this would require an inflation of the scheme costs to the present value year using the discount rate. 5.32 The approach to calculating PVC is therefore:

PVC = y = year 0

y = year n

(1 + r ) y p

Cy

Where Cy is the cost incurred in year y, discounted as appropriate, up to the limit of the appraisal period year n. Year 0 is the first year that costs are incurred, which may be prior to the present value year. 5.33 The NPV of the scheme can then be calculated according to the following formula:

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NPV = PVB PVC Valuation principles 5.34 In presenting the results of CBA two distinct issues arise: Are the results to be presented exclusive of VAT and indirect taxation (i.e. expressed as factor / resource costs) or inclusive of VAT and indirect taxation (i.e. at market prices)?, and Do we present aggregated cost and benefits to society as a whole (social cost calculus) or do we disaggregate costs / benefits according to who bears them (the Willingness-To-Pay calculus)? 5.35 It is important to note that the choice of unit of account (i.e. factor versus market prices) or calculus (social cost versus Willingness To Pay) is immaterial to the results. It is important, however, to present all results on a consistent basis and to state which unit of account and calculus is used. Current guidance is to present all results in WTP in market prices. The standard appraisal software COBA for fixed trip matrix appraisals and TUBA for variable trip matrix appraisals already outputs the required summary tables in WTP in market prices. Section B Application of CBA to road schemes When is CBA applied 5.36 During the overall project timescale, CBA will normally be required at the following four key phases: Route Selection; Preliminary Design; Construction Document Preparation and Tender Award, and Final Account / Closeout. 5.37 Route Selection At this phase option comparison cost estimates, to be agreed with the NRA Cost Estimation Unit, will be used. The CBA must reflect the relative benefits of competing options. Default parameters for traffic composition and accident rates are therefore generally applicable. Reference should be made to the NRA National Parameter Values Sheet (Appendix 6). Whilst at minimum two different scenarios should be analysed (and reported on), i.e. high and low traffic growth forecasts, a range of other scenarios can be studied, including: the impact of alternate road / junction standards and the impact that omitting nearby planned but not committed to schemes would have. Preliminary Design The CBA at this phase is more detailed, using local parameter values for traffic composition and, perhaps, local accident rates. More robust scheme cost estimates will be available. It is particularly important that the CBA for this phase uses the latest parameter values supplied by the NRA, in order to ensure a consistent and robust reporting process. At this stage the CBA must be run (at least) four times, one for each combination of traffic growth scenario (high and low) and cost estimate (Total Scheme Budget and Target Cost 1). The results of each of the four scenarios (2 traffic growth scenarios X 2 cost estimates) should be presented separately. For possible PPP schemes separate tolled and untolled scenarios should be presented. In addition, a range of other scenarios can be studied, including: the impact of alternate road / junction standards, and the impact that omitting nearby planned but not committed to schemes would have. Construction Document Preparation and Tender Award A revised CBA is to be carried out at construction documents preparation and tender award phase if the tender price is different from that envisaged (i.e. if the Target Cost 2

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differs from the Target Cost 1 figure, see the NRA Cost Management Manual), or if the project scope has changed on foot of changes in planning agreements. 5.41 At this stage the CBA must also be run (at least) four times, one for each combination of traffic growth (high and low) and cost estimate (Total Scheme Budget and Target Cost 2). The results of each of the four scenarios (2 traffic growth scenarios X 2 cost estimates) should be presented separately. PPP schemes should focus on the tolled scenario, including all relevant costs such as the operation costs of the toll plaza / toll collection system. Final Account / Closeout The purpose of the final account / closeout phase CBA is to determine how the outturn costs and actual post-opening traffic flows compare with forecasts, and how these affect the overall economics of the scheme. Analysis of a final account CBA can help identify issues relating to the assessment and provide useful information to feed into future assessments. The final account / closeout CBA should use actual scheme costs and traffic values and is carried out after the road has opened to traffic. The CBA at this phase should use, insofar as possible, the same parameters used in the preliminary design and construction documents CBAs. The results of high and low traffic growth scenarios should be presented. Other possible scenarios for analysis include: the impact of adjacent not-committed-to schemes may have and the impact of different value of time and accident cost assumptions has on the scheme. Who undertakes CBA 5.44 CBA is undertaken by members of the approved Appraisal Team (AT). This may be a team within the Design Office, the Local Authority Road Design Team or an external consultant. Project management 5.45 The responsibilities of those involved in the CBA and the project management of CBA in the context of the overall appraisal process is described within Chapter 2 of this document. CBA report 5.46 Having carried out a CBA, the AT is responsible for producing a formal CBA report for submission to the DOPM. The purpose of the report is to detail and justify the methodology, provide detailed information on the data inputs and to present the results of the economic appraisal. The CBA report is the primary output from the CBA process, and will contain all the information required by both the NRA and the DOPM. This includes: the Validation Checklist; node-link diagrams; maps; COBA *.dat and *.prn files for each scenario tested (or equivalent TUBA files for Variable Trip Matrix appraisals), and any other information requested by the NRA or DOPM. Contents of CBA report A CBA report would be expected to detail the methodology and assumptions of the CBA process, with supporting Appendices. The report should provide information on the following: Stage of the assessment that the CBA relates to; Rationale for the modelled area; Details on the extent of any data collection, for example traffic counts and journey time surveys; Any assumptions behind the input data, with particular reference given to the treatment of CBA parameters; Validation of the COBA model, and

5.42

5.43

5.47

5.48

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Results from the assessment, which must include the exchequer cash flow analysis [note that the results of each sensitivity test / scenario analysis should be provided separately]. 5.49 When is a CBA report required? A CBA report will normally be required at route selection, preliminary design, and construction documents phases. The NRA must be contacted during final outturn / closeout phase for each particular scheme to determine whether a CBA is required for that phase. The level of detail included in the report may reflect the phase at which it is prepared. For example, if default parameter values have been used during route selection, the report will only need to state that default values have been used, in line with the values in the National Parameter Values Sheet. Conversely, a report produced at preliminary design, will have to contain full documentation on the derivation of local parameter values. At final account / closeout the report should compare the results with the construction documents CBA results. Auditing processes 5.51 During the overall project process there are two levels of audit at each project phase: internal and external. Internal audit Internal audits are undertaken by the DOPM and supported by the Appraisal Team. They comprise reviews of the approach and methodology, of any assumptions made in the CBA work, of parameter values and of any relevant deviations from the current guidance. An audit checklist is available for download from the NRA website (see Appendix 2). External audit The external audit is to be undertaken by either the NRA or an NRA appointed consultant. This is a detailed audit check, and includes an assessment of local parameter values and comparison against other data sources. Note that in all cases it is the responsibility of the DOPM to ensure that the CBA supplied to the NRA is robust and reflects the scheme in the most appropriate manner. It is for this reason that an internal review of the CBA report is required at all phases by the DOPM. Requirements In terms of the auditing, the main aspects of the CBA that should be considered are: The use of non-default parameter values and the derivation thereof; The accuracy of the coded COBA network in representing the Do-Minimum and DoSomething schemes. Checks should be made of the geometrical properties of the links and junctions along with parameters relating to speed and accident characteristics; Correct inputs of traffic flows on links and junctions; Correct input of scheme costs, including the expenditure profile. Given a period of time may have elapsed since the local cost estimates were collated, it will be necessary to verify that the estimates are still valid; An interpretation of the stream of benefits arising from the scheme. The COBA output should be examined to ascertain whether the projected benefits are in line with the proposed objectives of the scheme, and Evidence of appropriate sensitivity testing / scenario analysis. Costs and benefits 5.56 The analysis of monetised costs and benefits is currently limited to the assessment of the following core impacts: Changes in travel time; Changes in vehicle operating costs; Changes in tolls; Changes in scheme costs and maintenance expenditure;

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Delays during construction and maintenance; Changes in accident costs, and Changes in greenhouse gases. 5.57 Table 5.1 sets out those impacts of a road scheme that are not monetised; instead these are to be assessed qualitatively according to the guidance provided in Chapter 6 and scored in the Project Appraisal Balance Sheet (PABS). Table 5.1 Non-Monetised Impacts in the Appraisal of Road Scheme

Criterion

Element Air quality Noise and vibration Landscape and visual quality Biodiversity Cultural heritage Land use Water resources Security Other economic impacts Impact on vulnerable groups Impact on deprived geographic areas Transport integration Land use integration Geographical integration Integration with other Government policies

Environment

Safety Economy Accessibility and Social Inclusion

Integration

Values of time 5.58 5.59 Travel timesavings are the major items of the calculated benefit resulting from a typical road scheme. For most schemes the aggregate time saving is positive, with the change in travel time directly or indirectly associated with the proposal, for example: Direct changes in travel time are incurred by transport users using the new facility, such as a bypass, rather than the next best alternative, and Indirect changes result from changes in travel times along other routes that may be affected by the scheme. 5.60 Three distinct purposes of travel are distinguished: travel in the course of work, commuting (travel to and from normal place of work) and other (travel for other non-work purposes). A different value of time can be applicable depending on the journey purpose, vehicle mode and whether the occupant is the driver or passenger. The latest values of time recommended by the NRA for use in CBA of road infrastructure projects are provided in the National Parameter Values Sheet. Vehicle Operating Costs 5.62 The use of the road system by private cars and lorries gives rise to operating costs for the user. These costs are split into two groups: fuel costs and non-fuel costs, the latter comprising items such as fuel, oil and tyres, and an element of vehicle maintenance.

5.61

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5.63

Road schemes can give rise to changes in operating costs. Differences in the Vehicle Operating Costs (VOC) are recorded among the benefits resulting from a road improvement. The change in total VOC over all links depends on changes in the distance travelled by vehicles and on average link speeds. Whilst for most schemes the aggregate time saving is positive the change in overall VOC can be either negative or positive depending on the balance of changes in distance travelled and speeds. The latest VOC parameter values recommended by the NRA for use in CBA of road infrastructure projects are provided in the National Parameter Values Sheet. Tolls Any additional charges resulting from tolls should be treated as a cost (disbenefit) to travellers and a reduction in charges should be treated as a benefit. Toll revenues are a benefit to the toll provider and possibly the Government / NRA if they receive a share of the toll revenue. Further advice on CBA of schemes involving tolling is provided later in this chapter. Scheme costs

5.64

5.65

5.66 5.67

5.68

The total costs of the scheme are considered in terms of: Investment costs (including construction, land, labour, preparation and supervision costs), and Operating costs, relating to changes in the cost of maintaining the network.

5.69 5.70

Detailed advice on how to undertake the computation of scheme costs for input into CBA is provided in Appendix 12. In the majority of cases, scheme costs will be borne entirely by national Government. However, in some instances contributions may be sought from private developers. Exchequer cash flow analysis The overall net costs incurred by Government will take into account: Contributions from developers; Revenue raised by indirect taxation (as a result of changes in vehicle operating costs), contributions from developers, and Income received from tolled roads procured under Public Private Partnership (PPP) agreements. Specific advice should be sought from the NRAs PPP Unit in such cases.

5.71

5.72

The exchequer cash flow analysis takes these factors into account and information required to complete this analysis, for reporting within the Project Appraisal Balance sheet, is taken from standard output files produced by the COBA and TUBA programs. Shadow prices Shadow prices cover the worth of social benefits or losses that are either not priced by the market or unsatisfactorily priced. The pricing adjustment to be made for Government funds or labour when undertaking CBA work is provided in the National Parameter Values sheet. At present a shadow price factor of unity is applied to Government funds and labour. Delays during construction and maintenance

5.73

5.74

Delays during construction and changes in delays due to routine maintenance are generally only considered for complex schemes, or when they are likely to represent a significant element of the costs or benefits. In such instances the NRA should be contacted to agree a method for assessing such implications.

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Accidents 5.75 For road accidents, standard methodologies exist for calculating the projected number of accidents, the types of accidents and associated casualties in the Do-Minimum and DoSomething scenarios. The methods relate the traffic on a road (measured by vehiclekilometres) to the number of accidents via the application of an accident rate. Accident rates (and casualty rates) for different road types are set out in the NRA Parameter Values Sheet and these should be adopted. The COBA program adjusts these rates to account for the phenomenon of under-reporting. Accident rates and accident severity rates are predicted to change over time irrespective of whether or not a specific intervention is being considered. Reduction factors for both accidents and casualty rates are provided in the NRA Parameter Values Sheet (see Appendix 6). Standard cost values are attributed to fatal, serious and slight casualties allowing the monetisation of accidents in the before and after scenarios, and hence the calculation of the benefits or otherwise of a proposal. The standard costs per accident, are given in the NRA National Parameter Values Sheet, which also provides costs per accident for insurance administration, damage to property and Garda costs for different types of accidents on different types of roads. Local accident data can be used in place of national values for selected links where such data are considered to be reliable. The Irish version of COBA applies an automatic adjustment to take into account the phenomenon of accident under-reporting. Greenhouse gases 5.80 Carbon emissions should be considered in terms of the change in the equivalent tonnes of carbon released as a result of implementing a road scheme. Carbon emissions are estimated from fuel consumption in the Do-Minimum and the Do-Something options. Changes in carbon emissions for the opening year and over the whole appraisal period, as well as the monetary value for carbon emissions over the whole appraisal period should be recorded in the PABS. The Irish version of COBA the main software used in the appraisal of Irish road scheme, automatically calculates the change in carbon emissions as a result of a scheme. Procurement method 5.81 In the case of Public Private Partnership scheme that proposes a toll, a benchmark CBA should be undertaken for the non-tolled scenario. In such cases, the construction costs should be based on the anticipated tender cost, excluding VAT. Where required by the PPP Unit, a separate assessment should be undertaken for the tolled scenario. The methodology and the public sector costs required for this evaluation should be agreed with the PPP Unit. The Do-Minimum and Do-Something options 5.82 The first stage in a CBA appraisal is to define the alternative options that are to be appraised. The minimum number of options is two, namely, a Do-Minimum option and a Do-Something option. In most cases, however, there will be several Do-Something options under consideration. While these terms may appear self explanatory, in fact they raise some issues of fundamental importance. Do-Minimum The Do-Minimum scheme (or option) is the base road and traffic network against which alternative improvements can be assessed. In many cases, the definition of the DoMinimum is straightforward: it is simply the existing network without modification, that is, a Do-Nothing scenario. This corresponds to the general principle that all expenditure that

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is not historic (sunk) requires an economic justification. However, one or more of the following four cases may arise, in which the Do-Minimum differs from the Do-Nothing: The case where works will be carried out regardless of whether or not the DoSomething scheme is built. An example is where there is a firm commitment to improve a junction in the existing network, regardless of other road proposals. In this case, the improved (not the existing) junction should be coded in the COBA network in both the Do-Minimum and Do-Something schemes in the year it will be improved. The cost of the junction improvement may be regarded as committed and is irrelevant for the COBA appraisal of the road proposal; it should not, therefore, be included in the scheme costs; The case where the existing network may be improved to form a Do-Minimum scheme that can be tested as an alternative to carrying out major Do-Something improvements. An example is where the traffic demand at an existing junction or link is forecast to become heavily overcapacity in the near future and where relatively minor improvements can be undertaken to increase capacity, such as by adding a lane at a traffic signal; The case where traffic conditions can be improved without significant capital expenditure. An example is where traffic management measures can be undertaken to reduce existing traffic delays, in which case the assignments input to COBA will differ in the Do-Minimum from those in the Do-Nothing, and The case where the area covered by the COBA network includes road proposals other than the one under immediate consideration. The COBA Do-Minimum and DoSomething networks should be coded to include planned improvements elsewhere in the network in the year they will be open, for example as set out in the National Roads Programme or in Local Authority development plans. 5.84 However, it will often be desirable to exclude improvements which are scheduled for completion after the scheme being appraised and which therefore may be subject to some uncertainty. This would be undertaken in the form of sensitivity tests, supporting the main Do-Minimum scenario, which includes all committed schemes. It should be noted that even a literal Do-Nothing base case is not a no change one. With traffic growth in the future, Do-Nothing user costs will increase over time, reflecting increased congestion. Do-Something The Do-Something scheme is the road proposal under consideration. Usually there will be more than one feasible Do-Something option. The number and nature of the DoSomething options will change as the planning of the road scheme proceeds. At early stages in scheme planning, a wide range of different options may be considered. At later stages, the range will be narrower but Do-Something options may be refined to highlight more detailed differences such as junction design or link standards. Fixed versus variable trip matrices 5.87 When a road improvement takes place, several changes in trip patterns are possible in principle: Reassignment: traffic travelling from A to B may transfer to the new route between A and B; Time of day: trips may be made at a different time of day; Redistribution: traffic may change its origin or destination; e.g. traffic may go to C instead of B; Modal shift: trips to the same destination may be made by a different mode of transport, and Generation: trips may be made when previously travel did not take place (including the release of suppressed demand). 5.88 The number of trips in the matrix is fixed between the Do-Minimum and Do-Something in situations when only the first reaction, reassignment, takes place. The change in consumer surplus in this instance is as illustrated in Figure 5.1.

5.85

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5.89

When it can be demonstrated that a scheme, or combination of schemes, is likely to cause a significant response other than reassignment, the fixed trip matrix assumption may be inappropriate, and the Do-Something and Do-Minimum matrices will differ in the number of trips. In such instances, the calculation of consumer surplus is based on Figure 5.2, with the rule of half used to calculate the net welfare gain. The method of CBA appraisal will depend upon whether the fixed trip or variable trip matrix assumption is applicable: Fixed Trip The COBA programme should be used. The computation of user cost savings in the context of a fixed trip matrix is the central principle of the COBA program. Taking a fixed trip matrix and assignments for the Do-Minimum and DoSomething it can estimate the effects of daily and seasonal flow variations on total user costs through the application of speed/flow, junction delay, accident and vehicle operating cost flow related formulae. Using the traffic forecasts it can repeat these calculations for each of the years in the evaluation period. This allows ready estimation of a stream of benefits, which can be discounted to give a base year Net Present Value (NPV). Variable Trip The TUBA program is specifically designed to address CBA in the case of variable trip matrices and is the recommended software for such appraisals. The use of alternative software titles will be subject to the agreement and approval of the NRA. TUBA requires time and distance skim matrices to be extracted from the traffic model.

5.90

5.91 5.92

In most cases, a fixed trip matrix assessment shall be carried out as a benchmark, accompanied by a full CBA report. Whilst COBA is not suitable for the appraisal of user benefits when the trip matrix is variable, it can be used to calculate the change in accident costs, which are not dealt with in TUBA. Further guidance on undertaking a preliminary assessment as to whether the fixed trip matrix assumption is valid can be found in Chapter 4. The NRAs approval must be sought prior to commencing a variable trip matrix appraisal. The CBA method

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Traffic flows with and without the road scheme under appraisal are obtained from a traffic forecasting process that is carried out separate from CBA. The traffic forecasting process assigns trips to the road network with and without the proposed road scheme, and forms the basis of the traffic input to CBA. The technique appropriate for this assignment will vary according to the particular scheme and specific guidance on traffic modelling is provided in Chapter 4. Depending on whether a COBA or a TUBA style assessment is appropriate, different outputs from the modelling are required. In the former case assigned flows on links and junctions are required, whereas the latter uses matrices of total trips, travel times and distance travelled. COBA The essence of COBA is that the travel cost for each component (link and junction) of the network is calculated separately according to the flows and turning movements assigned to it. These individual link and junction costs (that is, time, vehicle operating and accident costs) are summed to yield the total user costs over the network. The matrix of trips is assumed to be fixed in all cases when using the COBA programme. As such, a comparison can be made between total network costs before and after the road improvement in question. The reduction in costs is taken as a measure of the scheme benefits as they arise in each year of the appraisal period, and rests on the assumption that the improvement in question does not affect the number of trips made nor their origins and destinations. User benefits are calculated for all traffic on the whole road network affected, and include impacts on traffic both using and not using the new road.

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5.99

User costs consist of changes in travel time, vehicle operating costs (fuel and non-fuel) and the occurrence of accidents. COBA applies monetary values to each such that they can be set alongside capital and maintenance costs to provide total scheme costs as a single monetary value. The COBA program requires all costs to be input as resource costs (i.e. net of indirect taxation), although the final output tables are provided in market prices. Guidance on using the COBA programme is provided in Appendix 7. TUBA The TUBA programme requires skim matrices relating to travel time and distances between each origin and destination in the roads model and is suited to instances where the fixed trip matrix assumption is not valid. User benefits in terms of changes in travel time and VOC are calculated for each journey as a whole, rather than on a link-by-link basis. The skim matrices may be disaggregated to represent different user groups and travel modes, depending on the complexity of the traffic model. Guidance on using the TUBA programme is provided in Appendix 10. Overview Figure 5.4 illustrates how the costs and benefits of a scheme are brought together in the overall appraisal of monetised benefits. Figure 5.4 Overview of the CBA appraisal process
Transport User and Provider Costs Accident Costs Greenhouse Gasses Costs on Do Minimum Network (discounted over evaluation period) A1 Transport User and Provider Costs Accident Costs Greenhouse Gasses Costs on Do Something Network (discounted over evaluation period) A2

5.100 5.101 5.102

5.103 5.104

Net Government Expenditure on Scheme PVC

Transport User and Provider Benefits Accident Benefits Greenhouse Gasses Benefits PVB = A1-A2

CRITERION FOR PROJECT APPRAISAL BCR, NPV, IRR

Appraisal period 5.105 The appraisal period is the period over which costs and benefits are calculated. The appraisal period for National Road schemes is provided in the National Parameter Values Sheet. CBA considers the stream of benefits arising over the life of a road scheme allows a sounder basis for evaluation than is afforded by single year measures. Such measures can be particularly deceptive since two scheme options may yield similar returns for a given year but perform differently as traffic flows change over time. Residual value It is recognised that roads can have a useful life beyond the appraisal horizon and for this reason a spreadsheet that can be used for calculating the residual life in monetary terms at the present value year is provided on the NRAs website. The present value of the residual life should be included within the calculation of the overall Net Present Value and the Benefit to Cost Ratio of the scheme.

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5.108

Changes to parameter values with time In the future the real value of a number of parameters will change. The National Parameter Values Sheet provides information on the growth factors that are to be applied to the value of time and the value of accidents. These factors are derived from forecast growth in real gross national product per person employed. Treatment of parameter values

5.109

COBA and TUBA contain a series of default parameters relating to items such as economic values (for example time, accidents and vehicle operating costs), accidents (rates and severity), annual traffic flow patterns and vehicle composition. Default values for the parameters can be found in the National Parameter Values Sheet, which is available on the NRA website. An Irish version of the COBA programme has been developed which contains default parameter values. This software will be made available by Transport Research Laboratory. Appendix 8 provides further details on the work undertaken by TRL, highlighting the differences between the UK and Irish versions of the program. When undertaking TUBA assessments, the standard economics file must be amended to overwrite values specific to the UK with those suitable for CBA assessments in Ireland. A default economics file is provided in Appendix 11. Economic input parameters do not change by project phase; however the treatment of other parameters is dependent on the phase of scheme development and guidance on the source for each parameter and whether local or national default values should be used. Where local (i.e. non default) values are required, the user must update the relevant fields in the COBA input file. Methods for comparing costs and benefits

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If all impacts of a scheme could be monetised and included in the CBA, the overall economic worth of a scheme could be summarised using one or more of the following measures: Net Present Value (NPV); Benefit/Cost Ratio (BCR), and Internal Rate of Return (IRR).

5.114

Benefit to Cost Ratio The BCR is given by the ratio of the discounted sum of all future benefits to the discounted sum of all costs. Thus: BCR = PVB / PVC

5.115

Internal Rate of Return The IRR is the rate of discount that makes the present value of the benefits exactly equal to the present value of the costs. Put another way, the IRR is the rate of discount that makes the NPV of the entire stream of benefits and costs exactly equal to zero. The IRR is that for which the sum:

5.116

(1 + )
y =n y =0

By

y p

=0

Where By is the net benefit (undiscounted) in year y. 5.117 It should be noted that there may also be other significant costs and benefits, some of which cannot be presented in monetised form. In such cases, whilst a value for the NPV and BCR can be calculated the results may be misleading and will not necessarily provide a reliable measure of overall value for money. Under such circumstances, the analysis should not be used as the sole basis for decisions.

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CBA outputs 5.118 COBA and TUBA provide summary output tables that form the basis of the CBA results required for the CBA Report and Project Appraisal Balance Sheet (PABS). Transport Economic Efficiency Table (TEE) Table - contains the costs and benefits incurred by both users and operators of the transport system. Costs incurred by Government are not included in this table; instead these are reported in the Impact of the Public Accounts. Impact on the Public Accounts the present value of the scheme costs are summarised in this table, which documents the net cost to Government after taking into account the contributions towards the scheme cost from other sources, revenues received from tolls and income received from changes in indirect taxation. This table provides the information required to undertake the Exchequer Cash Flow Analysis. Analysis of Monetised Costs and Benefits within this summary output table, all the benefits from the road scheme that can be expressed in monetary form are arranged to derive the NPV and BCR.

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Project Appraisal Balance Sheet

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Project Appraisal Balance Sheet

Introduction 6.1 The Project Appraisal Balance Sheet (PABS) provides an overview of the costs and benefits of the road project. As indicated in the previous chapter, these costs and benefits comprise both monetised and non-monetised elements. In line with the Common Appraisal Framework developed by the Department of Transport, the PABS assesses road projects using the following criteria: Environment; Safety; Economy; Accessibility and Social Inclusion, and Integration. 6.2 The PABS should be first developed at route / option selection stage, where it forms the basis for selection of the preferred option. At preliminary design / land acquisition stage, a PABS should once again be prepared for the preferred option. Finally, an updated PABS should be completed at the construction documents preparation / tender award phase. On each occasion that it is prepared, the PABS should incorporate the results of the relevant Cost Benefit Analysis, which was described in Section 5. It is the responsibility of the Appraisal Team (AT) to prepare the PABS. An external consultant may be used. The Design Office Project Manager (DOPM) is responsible for ensuring that the PABS is subjected to internal audit for compliance with the procedures set out below, and for approving the PABS after completion of the internal audit. The NRA or an NRA appointed consultant will, in addition, undertake an external audit of the PABS at each project phase. Structure of the Project Appraisal Balance Sheet 6.6 The PABS provides a summary appraisal of the impact of the project using the criteria identified above (a Multi-Criteria Analysis). Within some of these criteria a number of elements or sub-criteria are identified by the Department of Transport Guidelines as in Table 6.1 below. The elements highlighted are those contained in the CBA and are thus (at least partially) estimated in money value terms. For all other elements, a quantitative and qualitative analysis is sufficient.

6.3 6.4 6.5

6.7

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Table 6.1 Criteria and Elements for Appraisal of Road Projects Criterion Element Air quality; Noise and vibration; Landscape and visual quality; Biodiversity; Cultural heritage / archaeology; Land use, and Water resources. [Regard should also be had, where appropriate, to other environmental elements including, inter alia, soils and geology, architectural heritage, waste, natural resources and material assets.] Safety Accident reduction, and Security.

Environment

Economy

Transport efficiency and effectiveness; Other economic impacts, and Funding impacts.

Accessibility and Social Inclusion

Impact on vulnerable groups, and Impact on deprived geographic areas.

Integration

Transport integration; Land use integration; Geographical integration, and Integration with other Government policies.

6.8

The PABS should provide the following for each of these elements: A qualitative statement summarising the impact of the project in qualitative terms; A quantitative statement that sets out quantified and monetised indicators of the impact for those impacts subject to quantification, and A scaling statement that ranks the project on a seven-point scale in terms of each element.

6.9 6.10

Having considered the quantitative and qualitative impacts, the scaling statement is used to indicate the degree of impact of the project or project options under each element. The scaling statement indicates whether the impact is: Highly positive; Moderately positive; Slightly positive; Neutral; Slightly negative; Moderately negative, or Highly negative.

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Implementation of the PABS structure 6.11 The impact of the project under all criteria and elements must be considered. The AT is permitted to add to the elements, if a particular impact not contained in the above elements is identified as being significant. Additional criteria may not be added. Equally, subject to a solution being technically feasible, engineering difficulty should be reflected in cost adjustment rather than being added as a separate element. The above flexibility should not be used to avoid analysis of costs and benefits. For example, where different route options have different geotechnical features, their impact on project costs should be assessed, rather than expanding the list of elements to include this aspect. Where a project has no impact in terms of a particular criterion or element, this should be indicated in the qualitative statement and a neutral scaling awarded. Where the impact of the project on a particular element is not clear at a particular planning phase (for example, where assessment of the impact must await detailed design), then this should be noted in the qualitative statement together with any views the AT has on the potential impact. Where at route / option selection, the project options have identical impacts in terms of a given element, the AT is still required to assess and record this impact, so as to inform a decision to proceed or not with project planning. The impacts of a project will vary over its lifetime. Where, for a particular element, it is not possible to estimate the impact over the full lifetime of the project, the impact in the project design year should be assessed. Describing Environmental impacts in the PABS 6.17 The environmental impacts of the project to be outlined in the PABS are those that remain after mitigation measures have been devised and included in project costs. Any impacts that will be fully mitigated should not be included in the PABS. In determining and describing environmental impacts full regard should be had to the NRAs Environmental Assessment and Construction Guidelines. Monetisable impacts Air quality (Climate Change) Standard CBA analysis, as described in Section 5, monetises the impact of the project on CO2 emissions. The outputs of the analysis should be included in the PABS in terms of an estimate of the Present Value of the Benefits (PVB) from this element. The overall PVB from emissions to air should also be expressed as a ratio of the Present Value of project Costs (PVC). 2 Non-monetisable impacts Air quality (General) The quantitative and qualitative assessments required by the NRAs Guidelines for the Treatment of Air Quality During the Planning and Construction of National Road Scheme (National Roads Authority) should be carried out. Noise and vibration The quantitative and qualitative assessments required by the NRAs Guidelines for the Treatment of Noise and Vibration in National Road Schemes (National Roads Authority) should be carried out.

6.12

6.13 6.14

6.15

6.16

6.18

6.19

6.20

Where the project results in an increase in emissions over and above the do-minimum, the PVB will be a negative number.

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6.21

Landscape and visual quality Road projects have the potential to impact on both the intrinsic character of the landscape or townscape and the quality of views experienced by people in their homes, workplaces, recreational and outdoor areas. Such effects can occur through the introduction, removal or alteration of infrastructure or natural landscape features, such as landforms, trees, and hedges as well as from changes in numbers of traffic movements. The presence of lighting in previously dark areas can also contribute to the level of impact. Reference to the NRAs A Guide to Landscape Treatments for National Road Schemes (National Roads Authority) and Guidelines for the Protection and Preservation of Trees, Hedgerows and Scrub, Post, Prior and During the Construction of National Road Schemes (National Roads Authority) is advised. Biodiversity Effects on biodiversity are generally considered in terms of impacts on specific flora or fauna, or on defined habitats. The construction, presence and operation of transport infrastructure can impact on nature conservation resources through direct loss or damage to habitat or specific species, creation of barriers to population movement or indirect effects resulting from for example changes in water quality or levels, air quality or noise and light levels. The quantitative and qualitative assessments required by the NRAs Guidelines for Assessment of Ecological Impacts of National Road Schemes (National Roads Authority) should be carried out. Cultural heritage / Archaeology Effects on cultural heritage can be considered in terms of impacts on below ground archaeological remains, historic buildings (individual and areas), and historic landscapes and parks. The construction, presence and operation of transport infrastructure can impact directly on such cultural heritage resources through physical impacts resulting from direct loss or damage, or indirectly through changes in setting, noise and vibration levels, air quality, and water levels. Land use In addition to the indirect effects on land use (air, noise, visual etc) identified above, the construction and presence of roads can result in temporary or permanent effects on land use through land-take, severance or reduction of viability, which prevents or reduces its value for intended use. Such uses include residential, commercial, recreational, open space, agriculture, minerals and public facilities (hospitals, schools, and places of worship). Soils and geology All construction projects, including national road schemes, are constructed in, or on, the geological environment. A wide range of geologically related issues therefore affect the planning and construction of roads. Soil properties determine whether it can be re-used in construction of earth structures. Bedrock properties determine how it is excavated and its subsequent value and use as a construction material. In some limestone areas, the presence of karst features requires specific construction responses to ensure safety and stability of the road. Where deemed appropriate the quantitative and qualitative assessments required by the NRAs Guidelines for Assessment of Geology, Hydrology and Hydrogeology for National Road Schemes (National Roads Authority, 2008) should be carried out. Water resources Water resources comprise surface waters, ground waters and coastal waters. The construction, presence and operation of transport infrastructure can impact directly on flows, levels, and quality of such waters and through this can result on effects on people, biodiversity, agriculture and soils. For example, pollution or increased sediment loads can increase pollution of littoral environments or of aquifers used for drinking water supply, while new structures could affect the capacity of flood plains. The quantitative and qualitative assessments required by the NRAs Guidelines for Assessment of Geology, Hydrology and Hydrogeology for National Road Schemes (National Roads Authority, 2008) should be carried out. At Preliminary Design stage, the results of an Environmental Impact Statement (EIS) will also normally be available. The PABS should encapsulate the results of these analyses to

6.22

6.23

6.24

6.25

6.26

6.27

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assess the likely severity of impacts on the environment after mitigation initiatives are in place. Key quantitative data and qualitative assessments arising from the analyses should be included in the PABS in the quantitative and qualitative statements respectively. Describing Safety impacts in the PABS 6.28 6.29 Safety impacts comprise the impact on road accidents and road user security. Road accidents The PABS qualitative statement should outline how the proposed road or route option will improve safety. A quantitative assessment of potential accident reduction should be included in the quantitative statement. This should include the estimated number of lives that could be saved and the serious injuries avoided. The quantitative statement should also include the outputs of the Cost Benefit Analysis, which will have been assessed in monetary terms. The CBA outputs should be presented in terms of the PVB from this element, and also as a ratio of the present value of project costs. Security This refers to the personal security of road users. The most likely occasion on which this impact would have to be assessed would be where pedestrian facilities, such as underground passes, are put in place. A qualitative assessment of any such risks should be included in the qualitative statement. Describing Economy impacts in the PABS Transport Efficiency and Effectiveness These impacts normally comprise two elements: the consumers surplus (time and vehicle 3 operating cost savings ) as measured by the Cost Benefit Analysis and the costs of the project. The anticipated time and operating cost savings should be indicated in the quantitative statement. The present value of these benefits should be identified and expressed as a ratio of the present value of costs. The costs of the project in terms of the PVC should also be indicated. In calculating the above ratio, the PVB associated with safety and environmental factors should be excluded, so as to avoid double counting. Other economic impacts Road projects may have impacts that are not represented by the transport efficiency and effectiveness benefits described above. These include impacts on competition in the economy, agglomeration or clustering of economic activity, inward investment, improved labour supply, and urban regeneration. Where the AT believes that a project could have one or more of these impacts to a significant degree, they should seek the guidance of the NRA as to both their inclusion in the PABS and the approach to analysis of the impacts. Funding impacts Where non-Exchequer funding sources are available to the project, this should be recorded in the PABS. Describing Accessibility and Social Inclusion impacts in the PABS 6.36 Government policy has the objective of reducing and, ideally, eliminating poverty and social exclusion particularly as it affects vulnerable groups such as vulnerable women, children and young people, older people, people with disabilities and ethnic minorities. These issues often manifest themselves on an area basis, as both urban and rural communities in certain areas may suffer from multi-faceted social exclusion.

6.30

6.31

6.32

6.33

6.34

6.35

Where tolls are envisaged and have been included in the user cost for appraisal purposes, the toll revenue arising should be added to the consumers surplus calculation to reflect the fact that such tolls are usually transfer payments.

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6.37

Government has put two programmes in place to address deprivation on an area basis. The CLR programme is a targeted investment programme in rural areas. The investments support physical, community and social infrastructure across a variety of measures. The measures introduced under the programme reflect the priorities identified by the communities in the selected areas. RAPID is its urban equivalent and has two strands. Strand I targets the twenty-five most disadvantaged urban centres for priority funding under the National Development Plan. Strand II is targeting twenty provincial towns in a similar fashion. 4 The Department of Transport Guidelines indicate that transport appraisals should assess the impacts of a road on: Vulnerable groups, and Deprived geographic areas.

6.38

6.39

The following should be considered by the AT: The extent to which the project gives access to vital social infrastructure such as schools and hospitals; The extent to which the project improves access to job opportunities for lower income groups; The extent to which the project accommodates public transport, which is more widely used by people with disability and on low incomes; The extent to which the project improves accessibility generally for people in socially deprived areas, particularly CLAR and RAPID areas, and The distribution of the benefits of the road project by income group and by the vulnerable groups identified above, where data are available to calculate the distribution of benefits.

6.40

The qualitative and quantitative statements should where relevant identify the social infrastructure and deprived areas that are afforded greater access. Estimates of the population benefiting and the degree of improvement in access should be presented in the quantitative statement, where relevant. It is important to note that Accessibility in a national road context is concerned with accessibility on a strategic or regional level. It should not be considered as a mechanism to promote inappropriate access onto the national road, or to support inappropriate development adjoining, or in proximity to, the national route. Such approaches should be negatively assessed in the appraisal process. A similar conclusion applies in the case of Social Inclusion where the impact again must be considered at a strategic of regional level. Describing Integration impacts in the PABS Transport integration Transport integration impacts may arise where the project: Provides a missing link in road networks; Improves the linkage along key road corridors; Improves the inter-connectivity between road and other modes; Provides for public transport and non-mechanised modes, as well as private car and goods vehicle use, and Provides access to other transport infrastructure such as ports and airports. Land use integration This needs to be considered at two levels: Integration with land use strategies and objectives, and Integration with regional and local land use plans.

6.41

6.42

6.43

Further information on these programmes is available from the web site of the Department of Community, Rural and Gaeltacht Affairs (http://www.pobail.ie/en/RAPIDandCLR/).

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6.44

The purpose and function of the proposed road needs to be considered in evaluating its impact on land use integration. In the main, national routes, particularly national primary routes, are focussed on serving longer distance strategic traffic and should not be used as local traffic distributors. National Road proposals that have a heavy focus on local traffic distribution should be discouraged. National land use strategies promote the vitality of urban centres, seek to focus development on public transport nodes and corridors and advise against land use development that promotes long distance commuting especially by car. Projects should be assessed as to whether they support such national land use and transport objectives. Separate consideration should then be given to compatibility with statutory planning documents, such as the Regional Planning Guidelines and the local authority development plans. Geographical integration The Department of Transport Guidelines highlight two aspects of geographical integration: Improved internal transport links with Northern Ireland, and Access transport links with Europe and the rest of the World.

6.45

6.46

6.47

6.48 6.49

With regard to Northern Ireland, projects that improve cross-border networks would be considered to have a major impact under this sub-criterion. Trans European Networks of Transport (TENs-T) is the building block of the European transport network, with traffic on the network accounting for half of all goods and passengers transported in the Union. Road projects within the Tens-T programme should rank highly in terms of the geographical integration criterion. The possible contribution of the project to the National Spatial Strategy (NSS) should also be assessed. Gateways are large towns or combinations of large towns that have the critical mass in terms of social and economic infrastructure to drive the development of regions. Gateway development is a key focus for policies aimed at promoting regional balance. Similarly, the NSS aims at improving the more peripheral areas of the country outside the Greater Dublin Area. Providing such areas with access to export markets is vital for their development. Road projects will have strong integration impacts vis--vis the National Spatial Strategy where they: Are internal to gateways or give local access to gateways in the peripheral regions; Link gateways in the peripheral regions; Provide access to international ports and airports, and Are on radial routes to the east region, where such routes improve access to international ports and airports. Other government policy integration There is a need for transport projects to be compatible with Government policies generally. There is a requirement therefore to consider the wide range of Government policies to determine whether in principle the project in hand could impact to significant degree on one or more of them. Any significant effects should be highlighted. Road projects included in the following plans and policy initiatives should be accorded a high rating under this criterion: The National Development Plan, 2007-2013; Transport 21; All Island Infrastructure Co-operation, and Regional development plans.

6.50 6.51 6.52

6.53

6.54

6.55

6.56

Each of these elements should be considered and rated separately, before aggregating to obtain an overall other government policy integration rating.

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6.57

The qualitative statement in the PABS should encompass the impact on integration. There is little scope for formal quantification of such impacts.

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Format for the PABS 6.58 The following Table depicts the structure of the PABS and the type of information that it could contain. Table 6.2 The Detailed PABS Criterion Element Air (Climate Change) Air (General) Qualitative Statement Higher vehicle speeds increase emissions The relief of congestion in the bypassed town will result in a significant reduction in the number of persons exposed to relatively high levels of pollutant concentrations. Some 250 properties are within 300m of existing or new roads where traffic flow is expected to increase by 25% or more. Some 100 properties are within 100m of existing roads where traffic flow is expected to decrease by 25% or more. No significant impact No adverse affects on the integrity of a Natura 2000 site. Quantitative Statement Tonnes of CO2 emitted; PVB is 1.2m, PVC; is 60m Ratio= - .02 E.g. Index of Overall Change in Exposure (NO2) is 500 (a negative value indicates a benefit). Scaling Statement Moderately negative

Moderately positive (based on Air Quality experts overall assessment)

Noise/vibration

E.g. The Potential Impact Rating (PIR) is 375.

Moderately positive (based on Noise experts overall assessment)

Environment Landscape Biodiversity

3 major negative, 4 moderate negative and 1 minor negative impacts (see Guidelines for Assessment of Ecological Impacts of National Road Schemes). -

Neutral Moderately negative (based on Ecological experts overall assessment)

Heritage

Impact on site of archaeological significance; preservation by record Impact on existing residences Accident reductions arising from design to motorway standards No Security impacts

Slightly negative

Land use Accidents Safety Security

Five dwellings demolished Accident reductions p.a.: 20 serious, 60 slight. PVB= 6m; PVC =60m; PVB/PVC = 0.1

Slightly negative Moderately negative

Neutral

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Criterion

Element Effectiveness/ Efficiency

Qualitative Statement Shorter road alignment and improved speeds

Economy

Quantitative Statement PVB: 87m; Present Value (Envir) = -1.2m; Present Value (Safety) = 6m; Present Value (Econ)= 82.2M; PVC: 60m, and PVB/PVC = 1.45.

Scaling Statement Highly positive

Accessibility

Other Vulnerable groups Deprived areas Transport Land use Geographical

No other significant economic impacts No impact

Neutral Neutral

Provides improved access for remote area Vital link in major interurban corridor Compatible with regional plans No impact Links two Gateways and provides access to port and airport In Transport 21 In NDP

Community of 450 people benefit

Slightly positive Highly positive Slightly positive Neutral

Integration

Other

The two Gateways have a combined population of 85,000

Highly positive

Highly positive Highly positive

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6.59

Accessibility and Social Inclusion Scaling of accessibility and social inclusion impacts will be made on the basis of the extent of the types of impacts identified earlier in this chapter. However, where the project improves accessibility for people in CLAR and RAPID areas, it should be scaled as moderately or highly positive depending on the extent of the improvement in accessibility for those areas. Transport integration With regard to transport integration, the following scaling rules should apply: Where the project is part of a route that is prioritised for improvement, it should be awarded a moderately or highly positive rating. The latter rating should be applied where the proposed project would enable the benefits of previous projects to be more fully realised, and Where the project directly improves access to rail stations, seaport or airports, a moderately or highly positive rating should be applied, depending on the scale of the improvement in accessibility. Land use integration Projects which are identified in local or regional plans as being required to promote desirable land uses should be awarded positive ratings, depending on the priority awarded to the project in such plans. National roads proposals which have an inappropriate focus / balance between strategic and local traffic needs should be rated neutral or lower on this criteria. Geographical integration Projects on TENs-T routes should be awarded a highly positive rating under this criterion. Cross-Border projects should be given a moderately or highly positive rating, depending on the scale of the improvement in accessibility afforded. Policy integration Projects not identified in either the NDP or Transport 21 should not be awarded a positive rating, unless identified as an additional priority by the NRA. Projects on the Atlantic Road Corridor should be awarded a highly positive rating, and Projects that contribute to the completion of the major inter-urban routes as identified in the NDP should be awarded a highly positive rating.

6.60

6.61

6.62

6.63

6.64

Projects that contribute to the NSS should be awarded the following ratings: Improving access to county towns: a slightly positive rating; Serving hubs: a slightly positive rating; Serving a gateway or linking a gateway to a hub: a moderately positive rating, and Linking two or more gateways: a highly positive rating. Using PABS to Inform decision-making At route / option selection stage, a number of options will normally be considered. The PABS should be prepared for all options. A summary PABS should then be compiled that aggregates the analysis to the level of the main five criteria as follows:

6.65

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Table 6.6 The Summary PABS Route Options 1 Environment Slightly negative Slightly positive Moderately positive Neutral Moderately positive 2 Neutral 3 Slightly negative Slightly positive Highly positive Neutral Moderately positive 4 Slightly negative Slightly positive Moderately positive Neutral Moderately positive

Safety

Slightly positive Moderately positive Neutral Moderately positive

Economy

Accessibility Integration

6.66

If any of the Route options is dominant in the sense of being superior on all criteria, then it should be selected. In the above example, Options 2 and 3 are dominant over Options 1 and 4, and the latter may be discarded. The choice is between Options 2, which is better in terms of Environment, and Option 3, which is superior on Economy. Generally speaking, choice of a route option will involve a trade-off between one or more of the criteria. In order to make this trade-off, a balancing or weighting needs to be ascribed to the various criteria. The approach to be adopted will usually be qualitative rather than quantitative but carried out on a reasoned, considered basis. Given that the role of the national roads programme is to provide an integrated network with improved levels of service, it should be the case that the integration and economy criteria will be the predominant factors in the assessment. The environmental criterion should also rank highly and its focus should be to ensure that environmentally unacceptable solutions are not selected. The PABS should be accompanied by a statement setting out the outcome, and the reasoning for it, of the appraisal. The full PABS should be updated throughout the planning phase of the project. It should be accompanied by the results of the CBA and exchequer flows analyses.

6.67

6.68

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The Business Case

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The Business Case

Purpose of the Business Case 7.1 The Business Case (BC) is a single document that describes the proposed project, establishes the rationale for it, and informs a decision to proceed with it. In its final form, it encompasses not only the appraisal of the project but also the assessment of risks and an outline of proposed method of project implementation. The BC will form the basis on which the National Roads Authority makes a decision to continue with the project planning and, ultimately, sanction the implementation of the project. The Business Case and the planning and appraisal process 7.3 The BC should be prepared and updated at three stages in the project planning process. These three stages are: route selection, preliminary design and construction documents preparation / tender award phase. The Sponsoring Agency is responsible for the preparation of the BC at each stage, and this function would usually be expected to be overseen by the Design Office Project Manager (DOPM). The BC is to be submitted to the NRA in each case after the CBA has been undertaken, but well in advance of critical decision-making points for the NRA. This will enable the NRA to review the BC in its entirety, and seek any necessary amendments, before making its decision. Route / option selection stage: the Preliminary Business Case is first prepared at this stage. It presents a summary of the analysis that underpins the recommendation to adopt a particular route. On foot of the Preliminary Business Case, the NRA will either accept the Preliminary Business Case, and sanction continued planning of the project, seek amendments to the Preliminary Business Case, or reject it and terminate funding of further project planning. Preliminary design stage: A Detailed Business case is prepared at this stage. It encompasses all the analyses undertaken to date and makes the case for the proposed project design. On foot of the Detailed Business Case, the NRA either sanctions proceeding to CPO/EIS or withdraws funding for further project planning. Construction documents preparation / tender award stage: the Final Business Case is prepared at this stage, after the costs of the project construction contract are known. It is the basis on which the NRA grants permission to go to construction (or otherwise). The Final Business Case will also be an important source of information for the Post-Project Review. Contents of the Business Case 7.8 Each BC should include the following elements: Identification of need for the project; Analysis of need; Objective setting; Design and appraisal of options; Budgeting and costing; Risk assessment of preferred option; Procurement of the project, and Proposals for implementing the project.

7.2

7.4

7.5

7.6

7.7

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7.9 7.10

As the Project Brief encompasses many of these elements, the raw material for the BC will be derived from the Brief. As the BC proceeds through its three stages, it aggregates and summarises information on the project so that the Final Business Case contains a complete and succinct rationale for the project. The key elements of the BC at each stage are set out in Table 7.1. Each of these elements should be presented in summary form, and should not consist merely of extracts from the relevant reports. At each stage, the BC should contain sufficient data and information as to support NRA decision-making. Where relevant, the different elements of the BC should be updated. For example, the Detailed Business Case should contain an updated Project Brief, if such an updating has been carried out. Table 7.1 Elements of the Business Case Planning Stage Route Selection Preliminary Business Case Project Brief Traffic Modelling Report (TMR) Description of route options and constraints Route selection Cost Benefit Analysis (CBA). Project Appraisal Balance Sheet (PABS) for each route option Recommended route option PB TMR Description of route options and constraints Brief summary of route selection CBA PABS for each route option Recommended route option Key land acquisition issues Details of significant environmental issues Description of key design features Summary of risk assessment process Preliminary Design CBA PABS of preliminary design Preliminary Design Relevant Business Case Detailed Business Case Contents of Business Case PB TMR Description of route options and constraints Brief summary of route selection CBA PABS for each route option Recommended route option Key land acquisition issues Description of key design features Details of significant environmental issues Summary of risk assessment process Final CBA Final PABS Risk assessment of proposed project Procurement report Proposed project scheduling Final Business Case Tender Award

7.11

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Post Project Review

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Post Project Review

Background to the review 8.1 NRA Guidelines require that a post project completion report be prepared. The post project completion report verifies that all aspects of the project have been completed, confirms project budget information and discusses the issues that arose in project development, particularly those that have implications for future road planning and implementation. The Department of Finance (DOF) Guidelines 5 indicate that in addition to the post-project completion report, a Post Project Review (PPR) should be carried out for all projects costing in excess of 30 million, and for a representative sample of 5 per cent of all projects. The aim of the review is to determine whether: The basis on which a project was undertaken proved correct; The expected benefits and outcomes materialised; The planned outcomes were the appropriate responses to actual public needs; The appraisal and management procedures adopted were satisfactory, and Conclusions can be drawn applicable to other projects, to the ongoing use of the asset, or to associated policies. 8.3 The PPR thus incorporates elements of the post project completion report, but extends beyond that report to consider the full range of issues identified above. Responsibility for the Post Project Review 8.4 The responsibility for the PPR rests with the Sponsoring Agency. The PPR should be carried out by either an employee of the Design Office or a consultant appointed by the Design Team. The person(s) undertaking the PPR should not have been directly involved in the oversight of the project planning or implementation, or in the appraisal of the project. Timing of the Post Project Review 8.5 The Department of Finance Guidelines indicate that a PPR should be undertaken once sufficient time has elapsed to allow the project to be properly evaluated with sufficient evidence of the flow of benefits and costs from it. It is envisaged that, except in special circumstances, the PPR should be commenced one year after project opening. This timing ensures that at least a full years experience of operation of the road and of the traffic volumes arising is available to inform the analysis. At the same time, it also enhances the likelihood that personnel engaged in the project planning and implementation are still available to help address data and information gaps. Overall approach to the review 8.6 The PPR should evaluate four phases of the project vis--vis: Project conception; Project planning; Project implementation, and Project operational performance.
5

8.2

Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector. Department of Finance, February 2005, as amended by the Value for Money Circular of January 2006.

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Project conception 8.7 This part of the review should provide an account of the background to the project, how the project arose and reference relevant road or transport programmes or policies. It should then consider the Project Brief and review its comprehensiveness and relevance. In particular, it should assess whether the need for the project was soundly established within the brief and whether the objectives were clearly specified. Project planning 8.8 The review should address the following aspects of project planning: Traffic analysis and forecasting; Route selection process; Preliminary design processes; Project appraisal processes; Compliance with procurement, EIS and other statutory requirements, and Consultation processes. Project implementation 8.9 With regard to project implementation, the PPR should address the following: Project management structures; Monitoring and evaluation; Budget compliance; Project schedule compliance, and Project scope, value and risk management. Project operational performance 8.10 This phase of the PPR should consider: Achievement of the project objectives; Traffic volume outcomes; Traffic operation and road safety outcomes, and Implications of operational performance for the projects potential economic return. Focus of the review 8.11 With regard to each of the project phases, the PPR should concentrate on: Confirming that all phases of project planning and implementation complied with relevant Department of Finance, Department of Transport, and NRA guidelines; 6 Confirming that necessary approvals were obtained from the NRA at appropriate project planning decision points; Assessing whether the project has delivered and is likely to continue to deliver on its objectives; Identifying any problems with project planning and implementation and analysing how they arose, and Drawing lessons from the project planning and implementation for future management of projects. 8.12 The review should consider whether:
6 Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector, Department of Finance, 2005, and Guidelines on a Common Appraisal Framework for Transport Projects and Programmes, Department of Transport, 2007.

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Traffic analysis and forecasting Traffic modelling approach was appropriate to the nature of the project; Projected traffic growth rates were benchmarked against recent trends; Project traffic growth rates were compatible with NRA guidelines or other planning documents, and The sensitivity of traffic forecasts to relevant factors was considered. Route selection The options considered were sufficiently different to offer real choices; The project appraisal processes were fully complied with at route / option selection stage, and Appropriate weighting was given to the different impacts of the project in making route choices. Project appraisal Project appraisal was carried at all the relevant project phases; Relevant appraisal techniques / software were used (COBA or other NRA accepted techniques); Appropriate application rules and parameter values as per the Department of Finance, Department of Transport and NRA guidelines were used, and Sensitivity testing was undertaken. Project scope, value and risk management Active management of scope changes was undertaken; Risk management was actively pursued throughout the planning and implementation phases, and Opportunities for value management were identified and actively pursued. Preliminary design Road capacity decisions had a sound basis, either in the project brief or the preliminary design analysis; The preliminary design proved to be a sound basis for project implementation, and Ad-hoc alterations to the design were necessary during the implementation phase and whether these reflected on the quality of the preliminary design process. Procurement EU and national rules were adhered to, and Procurement decision-making processes were sound. Consultation Consultation processes were of good quality. Project management Project management was in line with existing NRA guidance; Monitoring reports were timely and of good quality; The project remained within budget; The project met target costs; The project met the target schedule, and The project design requirements were fully met.

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Project operational performance The project objectives were met; Post opening traffic volumes are in line with those predicted and used in the project appraisal; Any departure of traffic volumes from those predicted has implications for the predicted economic return to the project; There are any problems with traffic operation on the road; There are any road safety problems emerging, and There are any further actions necessary to secure the anticipated benefits of the project. Contents of the report 8.13 The PPR should be arranged in the following chapters: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Executive summary. Background to the project. Traffic analysis and forecasting. Project appraisal procedures. Route selection. Preliminary design. Procurement and statutory processes. Project implementation. Project operational performance. Overview of issues arising. Conclusions and recommendations.

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Non-Major Schemes

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Non-Major Schemes

Background 9.1 This chapter sets out an outline methodology to be followed by Local Authorities in the preparation of Business Cases (BCs) and Post Project Reviews (PPRs) for non-Major road schemes 7 . The Department of Finance requires that all capital projects be subject to an assessment, with the complexity of that assessment being commensurate with the project capital value and the nature of the works. It is intended that, for non-major road schemes, BCs and PPRs will be prepared that will fulfil the requirements of the Department in this regard. Business Cases compatible with this chapter of the Guidelines should be prepared for all non-major schemes in excess of 0.5m capital value. While this chapter focuses on the appraisal of minor road improvement schemes, BCs shall be produced for other types of non-major schemes with projected expenditure in excess of 0.5m, comprising the elements outlined in this chapter where applicable, and any other elements deemed to be relevant to the appraisal of the types of scheme in question. Separate guidance will be issued for non-major schemes of less than 0.5m in value, which will provide for a simplified single BC to be presented, prior to contract award and based on a robust cost estimate, and comprising the same elements where applicable, but not to the same level of detail. The requirements set out in the remainder of this chapter relate to non-major schemes with projected capital expenditure in excess of 0.5m. This chapter presents an overview of the BC and sets out how it meshes with current scheme planning and implementation procedures. The chapter also considers the identification and analysis of need, and objective setting along with the design and appraisal of options. An overview of scheme budgeting, costing, and risk assessment is presented. The procurement of and proposals for implementing the works are also discussed along with a proposed layout for the BC report. This chapter also outlines the requirements for PPRs, which are required for a sample of schemes, comprising no less than 5% of total. Overview of the Business Case Purpose of the Business Case The BC is a single document that describes the proposed scheme, establishes the rationale for it, and informs a decision to proceed with it. It encompasses not only the appraisal of the scheme but also the assessment of risks and an outline of proposed method of implementation. The BC will form the basis on which the National Roads Authority makes a decision to provide the grant allocation for a particular element of work. It constitutes a bringingtogether of the data and analyses undertaken by the Local Authority in support of their grant application. The Business Case and Current Planning and Implementation Procedures The Interim Guidelines for Pavement and Maintenance Works (NRA, 2007) sets out a six-stage planning and implementation process as follows: Stage 1: Outline application for grant; Stage 2: Programming, planning and design; Stage 3: Contract documents;
7

9.2

9.3

9.4 9.5

9.6

9.7

9.8

See Section 1.55 for a definition of Major Projects and non-Major Schemes.

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Stage 4: Procurement and tender; Stage 5: Construction, and Stage 6: Closeout. 9.9 For minor improvement works, at the end of Stage 1, the Local Authority is required to submit grant application form AF1. Advice on completing this form is available from the NRAs Interim Advice Note on Minor Improvements to Existing National Roads (NRA IAN 85/06). The Stage 1 grant application will now take the form of an Interim Business Case, which for minor improvement schemes will contain, as an appendix, the completed AF1 form. This Interim Business Case will contain an analysis of the need for the proposed works and the objectives set for them. In the case of pavement overlay schemes the Business Case is defined by Pavement Management criteria, including pavement condition, rate of deterioration and overall funding envelope. It will start the process of developing a Final Business Case. At the Contract Documents Stage 3, the Local Authority submits the finalised design and contract documents for approval prior to proceeding to the tendering Stage 4. At this stage, the Local Authority will now be required to submit the Detailed Business Case, which will set out a detailed case for grant-aiding the proposed works. For minor improvement works it will be accompanied by a revised form AF1, which reflects any changes made of foot of Stage 2 analyses. When tenders have been assessed (Stage 4), the Local Authority submits details of the successful tender and the tender sum. The NRA then gives final approval to proceed with the contract. The Local Authority will now be required to submit a Final Business Case describing the procurement process and incorporating details of the successful tender and the tender sum. For minor improvement schemes a finalised Form AF1 will also be required. Overview of the Business Case structure The Final Business Case will comprise of the following elements where applicable: Identification of need for the works; Analysis of need; Objective setting; Design and evaluation of options; Budgeting and costing; Risk assessment of preferred option; Procurement of the works, and Proposals for implementing the works. 9.14 The Interim Business Case will contain the first three elements, which amount to a Project Brief. The Detailed Business Case will comprise all but the last two. Table 9.1 depicts the coverage of the BC at each of the relevant stages. The elements of Table 9.1 are further discussed below.

9.10

9.11

9.12

9.13

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Table 9.1 The Planning Process and Business Case Structure and Elements Stage 1: Outline Application Stage 3: Contract Documents Detailed Business Case Identification of need Analysis of need Objective setting Design of options Appraisal of options Budget and initial target cost Risk assessment of preferred option Stage 4: Procurement and Tender Final Business Case Identification of need Analysis of need Objective setting Design of options Appraisal of options Budget and final target cost Risk assessment of preferred option Procurement of the works Proposals for implementing the works Form AF1 Form AF1 revised Form AF1 finalised

Interim Business Case

Identification of need Analysis of need Objective setting Feasibility working cost

Analysis of need and objective setting Identified of need National transport planning is now focused on improving transport systems based on five criteria: Economy; Safety; Environment; Accessibility, and Integration. 9.16 In the context of minor road improvements, needs may arise under the first three of these headings in the following manner: Economy The road may be inefficient or ineffective in terms of its use or maintenance costs. Use: the road may be deficient in terms of the: Number of road users it can accommodate; Speed at which they can travel, or The quality of travel experience it offers (rough or potholed surface etc.) 9.19 Maintenance costs: the road may be exhibiting frequent potholing or deformation giving rise to excessive maintenance or restoration costs.

9.15

9.17 9.18

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9.20

Safety The road has features that are giving rise to safety concerns such as: Lack of consistency with adjoining route sections; Poor sight distances, and Hazardous junctions etc.

9.21

Environment The road has negative environmental impacts along one or more dimensions: Air quality; Noise; Cultural heritage archaeological remains, historic buildings and landscapes, and Water resources impacts on the flows, levels and quality of ground, surface and coastal waters.

9.22

Analysis of needs The Business Case should provide an analysis of these needs. It should do this by incorporating three Statements of Need as appropriate: The economy statement of need; The safety statement of need, and The environmental statement of need.

9.23

The statements should articulate how the road is deficient under one or more of these headings as appropriate. In devising these statements, use should be made of the data and information that is currently being submitted (e.g. Form AF1). For example, the road may be deficient in economic terms and the economy statement of need might refer to the fact that the road currently suffers from poor overtaking sight distance, excessive bendiness, and excessive undulation, and that these give rise to low AADT volumes, as potential road users are deterred. Reference could be made to relevant IRI, FOSD and AADT values in support of the statement. For pavement overlay schemes the economy statement of need may refer to the impact on the asset value of the section of road being replaced. Similarly, if there is a safety problem, the safety statement of need should describe its nature. Again, reference should be made to relevant data submitted for example in Form AF1, such as accident statistics and SCRIM measurements. With regard to the environmental statement of need, mention should be made of environmental problems that the proposed works would solve. Problems to which the works will give rise should be treated in the economic appraisal of the works, as described below. Objective setting Based on above analyses, a statement of objectives for the road scheme should be presented in the BC. In the first instance, this statement should be qualitative in nature, recording what the works are intended to achieve. The statement should be accompanied by relevant performance targets as appropriate. Performance targets should refer to relevant engineering, geometric, safety, capacity and environmental indicators. In the case of minor improvement works these are contained in Form AF1. The performance targets identify in quantitative terms the outputs that the works are intended to achieve, Form AF1 is now being revised to facilitate project proposers in setting quantitative targets as appropriate. For example, where currently the road suffers skid resistance deficiencies, a performance target could be set of achieving SCRIM values consistent with adequate skid resistance properties. The new form is presented at the end of this chapter. Form AF1 should be revised at Stages 3 and 4 to reflect any changes in performance targets, resulting from scheme design or procurement.

9.24

9.25

9.26

9.27

9.28

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Design and appraisal of options Introduction This element of the Business Case should summarise the analyses of alternative design options which were undertaken to comply with the Interim Guidelines for Pavement and Maintenance works. In order to comply with Department of Finance guidelines, there will now be a requirement to: Formalise the consideration of options, and Assess the options using the five criteria identified below. 9.31 9.32 This section offers guidance on the revised procedure for the appraisal of options. The base case The objective of the appraisal of options is to identify the approach that would best achieve the schemes objectives. The assessment of options requires the development of a base case, against which the options will be appraised. For the purpose of the assessment, the base case should be a consideration of what will occur if the scheme does not go ahead (do-nothing option). Identification of alternative options In identifying alternative (do-something) options, consideration should be given to low cost measures, including road management measures such as speed restrictions. The scale of investment required is an important consideration and low-scale and incremental solutions should be explicitly considered. Elements of the assessment The appraisal of options involves a comparison of the costs and benefits of each option. Guidelines for developing the costs of each option are considered below. Benefits should be assessed using the five criteria: Economy; Safety; Environment; Accessibility, and Integration. 9.36 The first three of this are familiar and have been discussed previously. The remaining two accessibility and integration require some explanation. Accessibility Current road systems may be providing poor access to people in remote areas or to deprived communities and the proposed scheme will help remedy this. Integration There may be need to better integrate the road with the rest of the road network or cross border road networks in terms of consistent quality or layout. Similarly, there may be a need to integrate the road network more fully with other transport modes e.g. with the rail mode, or to create cycling or walking facilities. Benefits may not arise in these two areas as frequently as with economy, safety and environment. Nevertheless, they should be considered in each case. For further guidance see Chapter 6: Project Appraisal Balance Sheet. With regard to assessment of environmental impacts, consideration should be given to both positive and negative impacts i.e. both the impact of the works in addressing environmental problems and any problems to which the works could give rise.

9.29

9.30

9.33

9.34 9.35

9.37

9.38

9.39

9.40

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Assessment of benefits of each option 9.41 The assessment of the benefits of each option should be undertaken within a multicriteria assessment framework. This means that benefits should be assessed using each of the criteria set out above. Each option should be assessed on a seven-point scale in terms of each criterion. Under the five criteria of: Economy; Safety; Environment; Accessibility and Social Inclusion, and Integration, the assessment should score each option, distinguishing between impacts that are: Highly positive (+++); Moderately positive (++); Slightly positive (+); Neutral (0); Slightly negative (-); Moderately negative (--), and Highly negative (---). 9.43 As well as qualitatively assessing the impact of Scheme options under each of these headings, reference should also be made to quantitative data. In particular, consideration should be given to the extent to which each of the options attains the performance targets identified and the scale of the improvement to which the works give rise. Comparison of benefits and costs 9.44 9.45 The benefits and costs of each option should be summarised in the manner of Table 9.2. This Table should be accompanied by a discussion of why the options receive the scores that they do. Where one option scores better on one criterion (say, economy) and worse than another option on another criterion (say, safety) or on cost, the rationale for choosing the preferred option should be clearly outlined. This is the case for the example shown. Option three is inferior to Option 1 on all criteria and may be discarded. However, Options 1 and 2 are each better on some criteria and so the importance of each criterion needs to be taken into account. In such situations, the objectives of the works (as identified in Section 2 of these guidelines should be referred to. For example, if the need identified at the outset was increased road capacity, then option 1 might be preferred as it contributes most to this objective, with a moderate increase in costs over Option 2. Table 9.2 Comparison of Options Safety Environment Accessibility Integration Cost (m)

9.42

Option 1

14.7

Option 2

++

12.0

Option 3

16.2

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Budgeting, costing, and risk assessment Introduction The BC should include information on budget, costs and assessment of risks, as set out below. Budgeting and costing The NRA has adopted a new approach to establishing budgets and costs for major road schemes. This approach which distinguishes between working cost estimates, budgets and target costs is elaborated in an appendix to these guidelines (see Appendix 12 Guidance Note on the Preparation of Scheme Costs). At present, the Interim Guidelines for Pavement and Maintenance Works requires that a cost estimate be made at the end of Stage 1, and incorporated in Form AF1. Subsequently, at the end of Stage 4 a final tender sum is notified. This process is now amended as follows: The cost estimate presented at the end of Stage 1 is to be regarded as a feasibility working cost; At Stage 3, a Scheme budget and initial target cost should be set, and Finally, at the end of Stage 4, a final target cost should be set. 9.50 The Scheme Budget is the formal estimate for the Scheme incorporating the identified core cost elements, and an appropriate contingency in respect of these elements. If the Scheme is to be constructed over a number of years, or is to be constructed in a specified future year the budget should include an appropriate allowance for inflation. The Target Cost is a realistic estimate of the final outturn for the Scheme based on the assumptions made, identified risks and defined scope of the work inclusive of VAT and inflation. It does not take into account exceptional events happening on the Scheme. In line with this approach, the Business Cases should contain the following Budget and cost estimates. Initial Business Case: feasibility working cost; Detailed Business Case: Scheme budget and initial target cost, and Final Business Case: Scheme budget and final target cost. 9.53 Budgets and cost should comprise the following elements separately identified: Preliminaries; Boundary treatment; Drainage/ducting; Earthworks; Pavements; Accommodation works; Ancillary works; Design costs; Land acquisition; Other, and Contingencies as appropriate. Assessment of risks 9.54 The BC should include an assessment of risks. In the context of minor road improvements, the most common risks that require consideration are: Construction risk: The risk that the works will not be completed on time, to budget and to specification; Design risk: The risk that the design will not deliver the outputs desired or to the quality demanded, and

9.46

9.47

9.48

9.49

9.51

9.52

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Risk of obsolescence: The risk that changes in technology or provision of other transport infrastructure or services will render the works redundant or of lower value. Procurement of and proposals for implementing the works Procurement The BC should record the main features of the procurement process including: The number of tenderers prequalified; Confirmation of their having met pre-qualification requirements; The number of tenderers short listed; The number of tenders received, and The tender sum. Proposals for implementing the works The BC should present the following information on implementation: Start and completion dates for the works; Arrangements for supervision of works; Arrangements for compliance testing; Monitoring and progress reporting arrangements, and Close out reporting. Layout of the Business Case 9.57 The Final Business Case should follow the following layout: 1. 2. 3. 4. 5. 6. 7. 8. 9. Identification of need; Analysis of need; Objective setting; Design of options; Appraisal of options; Risk assessment of preferred option; Budget and final target cost; Procurement of the works, and Proposals for implementing the works.

9.55

9.56

Post Project Reviews 9.58 The Department of Finance Guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector require PPRs to be carried out on all projects costing in excess of 50 million this threshold was subsequently reduced to 30 million on foot of a DoF circular and a representative sample, covering at least 5% of projects, of other schemes. At closeout phase, the project team should contact the relevant section of the NRA to determine whether a PPR should be undertaken according to the standards outlined in Chapter 8, where applicable though the resources devoted to the PPR should be commensurate with the size of the project.

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MINOR IMPROVEMENT SCHEME GRANT APPLICATION FORM AF1

Scheme Name N503 Overlay

Speed Limit (kph) Location Grid Reference (Attach Location Map 1:50,000)

100 Waterloo Road, Dublin 4 Start Easting 10000 Northing 10000 Easting 30000

Route No

N503

Road Type

S2

End Northing 30000

Cross Section Segment Length (Km)

Attach 1.2 Km

CURRENT CONDITION Engineering

Scrim IRI FWD Visual FOSD SSD * Surface Type Other

60 Geometric Consistency (2Km either direction)

Attached

Attached

154

N/A

S.D.

Flooding

Route Consistency (Attach Info)

Bendiness

C/way Width

FOSD

SSD *

Yes

No Attached 7.5m 154 N/A

Alignment Constraint (Ac)

Layout Constraint (Lc)

Attached

23

Safety

Accident Statistics (If Yes Attach Info) Yes No

Safety Schemes (If Yes Attach Info) Yes No

Environmental Constraints

(If Yes Attach Info) Yes No

S.A.C. Capacity / Operational

Traffic Count Source

AADT

% HGV

% Overtaking

Bridges / Structures

Yes (Attach Info)

No

5322 Improvement Purpose

12.8%

40%

RT 620

IRI Value Indicates relatively undulating road. RWD Survey indicates a number of structurally deficient sections, however the geometric characteristics are adequate, hence the proposal is to provide an overlay commensurate with the structural analysis. The horizontal alignment indicates some adverse camber which will be rectified in the overlay design utilising the appropriate design speed as determined from NRA TA 85/06.

Category of Improvement (Tick Box)

CAT 1

CAT 2

CAT 3

Proposed Surface Type

HRA
Additional Capacity (AADT) Change in Route Distance

Envisaged Programme (Tick Box)

Annual

MultiAnnual

Performance Targets

Design Speed

FOSD Target

SSD Target

Scrim Target

IRI Target

Cost Breakdown
Prelims Boundary Treatment Drainage / Ducting

Construction ()
Earthworks Pavements Accomion Works Ancillary Works Design

9,198

9,198

15,330

21,462

177,828

30,660

24,528

18,396

Land Acq

Other

Cost Estimate

Total

/ m2

306,600

35

Glossary of terms

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Glossary of terms
Cost Benefit Analysis Appraisal period The period over which all costs and benefits are assessed. Base year The time period from which relative levels are measured and which is usually allocated the value of 100 in an index. Benefit / Cost Ratio (BCR) The BCR is given by the ratio of the discounted sum of all future benefits to the discounted sum of all future costs. Constant prices Constant prices allow figures to be represented so that the effects of inflation are removed. The values for each time period are expressed in terms of the prices in some base period. For example at the time of writing Gross National Product is presented in constant 1995 prices. Consumer Price Index (CPI) The Consumer Price Index is the main domestic measure of inflation. It measures the average change from month to month in the prices of goods and services purchased by most households. Consumer surplus The difference between what a consumer is willing to pay for a good or service and the price at which that good/service is available for. Current prices Current price figures show data where the value for each item is expressed in terms of the prices in that period. Deflator An index showing the price movements over a period of time. Constant price data are normally calculated by dividing current price data by the deflator. Discount rate The factor used to transform costs and benefits arising in different years to their present values. Factor costs Factor costs are those that are net of indirect taxation. Factor costs are referred to as resource costs throughout this document. Gross Domestic Product (GDP) GDP measures the total output of the economy in a period, i.e. the value of work done by employees, companies and self-employed persons. This work generates incomes but not all of the incomes earned in the economy remain the property of residents (and residents may earn some income abroad). The total income remaining with Irish residents is the Gross National Product (GNP) and it differs from GDP by the net amount of incomes sent to or received from abroad. Inelastic demand Demand remains constant, irrespective of price. Internal Rate of Return (IRR) The discount rate that makes the present value of the stream of benefits exactly equal to the present value of the stream of costs. Market prices Market price refers to the price paid by consumers for goods and services in the market and therefore includes all indirect taxation (indirect taxation refers to taxation levied on goods and services and therefore includes excises, duties and VAT). Net Present Value (NPV) The NPV is the discounted sum of all future benefits less the discounted sum of future costs over the appraisal period. In a world with no constraint on investment funds, there would be a strong case for taking forward all projects with a positive NPV. Perceived costs Perceived costs are those that are actually experienced by users. For example, perceived costs are different for work and non-work transactions because businesses can claim back VAT on purchases. Present Value of Benefits (PVB) The discounted sum of all future benefits. Present Value of Costs (PVC) The discounted sum of all future costs. Present Value Year The price base year in which the values of all costs and benefits are presented. Resource costs Resource costs are those that are net of indirect taxation. Resource costs can also be referred to as factor costs. Rule of half In the case where demand is elastic and where prices fall as a result of an overall increase in supply, the consumer surplus associated with the increase in demand is calculated as half the change in price multiplied by the increase in demand.

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Social cost calculus The social cost calculus seeks to measure the value of the resources used by, and the benefits created by, a project. The costs and benefits are those that fall on society as a whole, i.e. an aggregation of all individuals. Willingness to Pay (WTP) calculus The WTP calculus establishes a money measure of the net welfare change for each of the major stakeholders in the project and sums these to arrive at an overall cost-benefit. Modelling Assignment modelling modelling approach whereby trips are stored as matrices and are assigned to networks. This approach incorporates route choice and, usually, capacity restraint i.e. the route choice is affected by the volume of traffic on the network. Automatic Traffic Count (ATC) method of recording how many vehicles pass along a road. Installation can be permanent, using inductive loops cut in the road, or temporary, using pneumatic tubes. The counters can classify according to vehicle length, speed and in some instances vehicle type. Calibration involves the estimation and subsequent adjustment of parameters used within a model so that the model outputs are in line with observations (see also Validation). Capacity measure of how much traffic a link (road) or junction can accommodate. Cordon group of count sites which fully encompass an area such as a city centre. Can be used to compare model output to observations. Cycle time relates to traffic signal controlled junctions. The cycle time is the length of time in seconds for a complete stage sequence to run before it is repeated. Degree of saturation measure of the extent to which a junction (usually signal controlled), or arm thereof, can accommodate additional traffic. Equates to flow / capacity for one cycle and a practical maximum for efficient operation of traffic signals is taken to be 90%. Fixed demand modelling approach whereby the traffic demand is taken to be independent of the scheme being assessed e.g. there will be 1,200 vehicles travelling from A to C whether or not the new bypass of B is built. Flow profile method of showing how traffic flow varies across a time period (e.g. hourly, daily, monthly etc). Generalised cost combination of time and distance used by transport models to determine how traffic will route through a network. Link representation of a section of road within a transport model. A link connects two nodes. Macroscopic method of modelling which operates on the basis of aggregate traffic flow rather than individual vehicles. The approach assumes that average conditions apply and that all modelled vehicles making the same trip will experience the same conditions. It is the most common approach for assignment models. Matrix estimation technique for estimating trip matrices from traffic counts. It relies on a prior estimate of the trip matrix and a set of target counts. Micro-simulation modelling technique which seeks to replicate the behaviour of individual vehicles. Mode choice decision incorporated within a variable demand model which determines whether the trip will be made by car, bus or rail. Model period length of time that the model represents; typically either an actual hour (e.g. morning peak 08:00 to 09:00) or an average hour within a period (e.g. average morning peak 07:00 to 10:00). Multi-modal model another term commonly used for a variable demand model. A model capable of estimating demand responses as a consequence of changes in trip cost. Network representation of roads within a transport model. Node representation of a junction or change in network standard within a transport model. A node defines one end of a link. Origin Destination (O-D) data data where a trip is described by the place the trip started, the place the trip finished, and the trip purpose of each end. It is presented in the form of a matrix (from O to D). Each entry in the matrix represents one trip. OD Matrices are required for assignment models.

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Own-cost elasticity a simplified methodology for dealing with variable demand. All of the possible demand responses are dealt with by a single elasticity value and it is assumed that travel demand for any OD pair is a function of the cost for only that pair. It assumes that a proportionate change in trips is related to a proportionate change in costs. Production / Attraction a method for storing trip movement data which is required for full variable demand modelling. The trip pattern is defined from the viewpoint of the factors that produce or attract trips. As an example of the difference with OD matrices, on a P/A basis, the housing area 'generates' two commuter trips (there and back) and the centre 'attracts' two commuter trips. Ratio of Flow to Capacity (RFC) measure of the extent to which a link or junction (usually roundabout), or arm thereof, can accommodate additional traffic. Equates to flow / capacity for the time period and a practical maximum for efficient operation of a roundabout is taken to be 85%. Roadside interview (RSI) survey a data collection technique where a sample of drivers on a route are stopped and asked to respond to questions about their journey. The resulting data is a fundamental building block of trip matrices for assignment and variable demand models. Screenline a group of count sites which cover a corridor or group of corridors within a model area. Can be used to compare model output to observations. Skim a matrix which sums up link attributes across a network for each OD pair. The most common are time and distance skims which provide the average total time and distance for each OD pair following an assignment. Such matrices are required as inputs to variable demand economic appraisal. Speed Flow Curve a mathematical function which defines how speeds vary on a link as traffic flow increases. Stage relates to traffic signal controlled junctions. A stage is a period of the signalling cycle that gives right of way to one or more particular traffic movements. Stages usually, but not always, contain a green period. They are arranged to follow each other in a predetermined order. However, some stages can be omitted, if not demanded, to reduce needless delay. Time slice method of splitting a time period into smaller elements (e.g. 5 minute slices) as used by junction models. Trip distribution one of the primary responses of variable demand models whereby, in response to changes in cost, trips change origin or destination or both. The scale to which this occurs is influenced by the trip type. Trip matrix a simplified representation of travel patterns within an area used in assignment and variable demand modelling. The matrix size is determined by the zoning system used in the model. Validation the assessment of the validity of a calibrated model, either by the qualitative comparison of estimates produced by the model with information not used as a constraint in the model calibration, or by the direct estimation of the accuracy of model estimates. It typically involves comparing model output with observed traffic counts and journey times. Variable demand model A model capable of estimating demand responses as a consequence of changes in trip cost. Models will include one or more of the following (in addition to reassignment): change of destination or origin (trip distribution); change in the number of trips made (trip frequency); change from car to public transport or vice versa (trip mode); or change to time of travel (trip period). Zone an area within a transport model corresponding to a trip origin or destination within a trip matrix. Zones are typically uniform in terms of land use (particularly in the most detailed part of the model) and decrease in size the closer to the scheme or core area they become.