Institute for Transport Studies
FACULTY OF ENVIRONMENT
UCL Seminar - Catalysing development through
transport investment – the role of appraisal and
decision making
Understanding the DfT’s Approach to Valuing
the Impacts of Transport Investment
6 February 2014
Tom Worsley
Visiting Fellow, ITS
Transport Cost Benefit
Analysis – the main features
• Comparative form of analysis compare one option with another
• Comprehensive coverage of all of the impacts of a scheme
• A national level, society wide assessment
• Deals with the future through forecasting and discounting
• Relies on transport model to estimate changes in user costs and
responses
• Money values, based on market prices or willingness to pay, used to
value impacts where possible plus information on other effects
• An output is a value for money metric
• Methods capable of repeated application and by different levels in an
administration - WebTAG
DfT WebTAG Impacts
Impacts
• Economy
• Business and CV time (and time related) and other cost savings, agglomeration, labour
market effects, regeneration
• Society
• Commuting and other time and cost savings, accidents, security, accessibility,
severance, physical activity
• Environment
• Climate change, air quality, noise, bio-diversity, townscape, landscape, water, heritage
• Public Accounts
• Capital and on-going costs less revenues and private sector funding, changes in tax
receipts
DfT WebTAG Valuation
Market prices
• Capital, maintenance, operating costs, revenues (a transfer)
Willingness-to-pay
• SP and RP - time savings, noise, accidents
Cost based values
• eg MACC for carbon
Unquantified impacts
• Descriptive scale – serious, moderate, slight – negative, positive.
Measuring the benefits of a
transport scheme
Transport has wide reaching effects – an influence on economic growth,
makes cities function, regenerates peripheral regions, facilitates social
interaction
Improvements/ stopping deterioration of transport and travel conditions
also contribute at the margin to all of these objectives
However, measuring the impact of a transport scheme on how a city might
function is ‘too difficult’ – no direct link
However, we can estimate travel time savings from analysis of changes in
demand and supply in the transport model
In the longer run, travel time savings are often used to provide for changes
in the level and location of economic activity, benefits from which time
savings provide an approximate measure.
Metrics and decisions
Appraisal is aimed at informing the decision maker
The initial metric is the BCR – ‘bangs for buck’ measure
DfT sets categories;
• Low 1.0:1 – 1.5:1
• Medium 1.5:1 – 2.0:1
• High 2.0:1 – 4.0:1
• Very high >4.0:1
Steps to determining VfM
• Take BCR category
• Review unquantifiables – might they be enough to change category?
Most schemes approved are ‘high’ or ‘v. high’ VfM
DfT’s New Analytical Strategy
Evidence review:
•
International comparisons, reviews of value of travel time savings, review of
regional economic impacts
Promulgation, better explanation of methods and simplification
of WebTAG:
• Understanding and Valuing the Impact of Transport Investment (gov.uk)
Programme of research:
• Impact of transport investment on productivity and economic geography
• To work out how best to update and improve the current values o travel time
savings
• To make better allowance for risk and uncertainty in forecasts and hence in
appraisal