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[article] Transport planning chiefs must dig deeper

  • 02-10-2006 1:16pm
    #1
    Closed Accounts Posts: 1,133 ✭✭✭


    Michael Casey, Sunday Times, September 17th 2006
    EVERYBODY is familiar with the phenomenon. The road outside your house is dug up by the ESB. The corporation comes along some time later — much later — and puts down a lovely new surface to cover the potholes left after the job. As soon as this has been done, the gas company arrives and digs up the same road. The corporation will eventually return and smooth things out, but in no time at all its handiwork will be destroyed by a succession of other utilities.
    This is NoJut, the “no joined-up thinking” disease that afflicts infrastructure projects, from the largest to the smallest, in this country.



    NoJut has reached epidemic proportions, with the current cost estimate for Transport 21 reaching €35 billion. Given this amount of money and the number of public bodies tripping over each other in their eagerness to assert their supremacy on infrastructural matters, the chances of co-ordination failure and vast wastage of taxpayers’ money are very high.

    In the current debate on our competitiveness and productivity, not enough attention is paid to the vital role of infrastructure in maintaining economic performance.

    Take the simple example of roads. Many countries have developed their motorways far in excess of their current requirements because they realise that demand will increase so quickly that they must provide a substantial margin for the future. Our own planning on roads is poor.

    Hundreds of millions of euros can be spent on a stretch of carriageway that merely shifts the jam from A to B. When road users are heavily tolled for such a dubious privilege, the hostile reaction is understandable. Unless the entire road system is designed carefully in the round, it is likely there will always be queues.

    There are also the well-documented problems of budget overruns, excessive fees charged by architects and engineers, demands from local towns and villages for on- and off-ramps, as well as objections from environmentalists to contend with. Is it any wonder that the cost of building a kilometre of road in Ireland seems to be so high by international standards? Given our difficulties with something as simple as roads, it is no surprise that much larger projects, including the Luas and the Dublin Port Tunnel, have proved so complex. The real problem with these and other projects occurred at a much earlier stage in the cycle, when two of the most vital planning stages seemed to have been ignored.

    The two neglected stages are project appraisal, including externalities, and appraisal of close alternatives. These crucial exercises are done in most countries by means of cost-benefit analysis. In the first stage, the expected future streams of costs and benefits are set out in detail and discounted back to the present. Externalities are the most important part of the exercise.

    For example, the project may have negative or positive effects on other areas of economic activity. A hydro-electric dam could have adverse effects on fishing, but positive effects on agriculture. All of these aspects have to be taken into account and quantified as far as possible.

    If project A comes out with a very low cost-benefit ratio, it should be re-evaluated against the closest alternatives. This is where the second neglected stage comes in. If the closest alternative to a hydroelectric dam is coal-produced electricity, then the cost-benefit analysis has to be repeated for that project. This process continues until the project with the best cost-benefit ratio is found.

    This goes beyond achieving value for money — the methodology tries to ensure the best possible value for money.

    It is also clear that interdisciplinary teams are needed for such appraisals.

    I am not suggesting that such a rigorous methodology be used for small projects, but where hundreds of millions of euros are involved it is essential that the best possible value for money is achieved.

    If this approach had been adopted in relation to the port tunnel, for example, there would have been a radical examination of the costs and benefits of relocating the port itself outside Dublin. Even if the same site had been chosen, the exercise would have prevented the mistakes that were subsequently made, and would have addressed the question of trucks coming from, and going to, the south side of the city.

    The Luas is an even better example of what happens when these two critical stages of project appraisal are neglected. Almost everybody likes the Luas. It looks good and it usually arrives on time. But is it the best possible system, taking into account the nearest alternatives? And what of the negative effects? It is impossible to answer this question definitively without going through the cost-benefit exercises outlined already, but let us look at some of the negative effects or externalities.

    The Luas track has deprived the car-driving public and Dublin Bus of a very significant amount of road space, and the trams themselves have crowded out other modes of transport.
    Consider a journey from Dublin to the Midlands and back. The benefits of the bypasses around Newbridge, Naas and Monasterevin are almost exactly offset by the chaos around the Red Cow roundabout and by the need to cross the Luas track on the Long Mile Road. Consequently, such a journey takes just about as long as it did before any of the vast infrastructural expenditures were incurred.



    Most drivers have similar experiences of one transport system offsetting the benefits of another, giving rise to a zero-sum result that seems to be endemic in this country.

    Maybe it is in the national interest to force private motorists off the roads, but wouldn’t it be much better to have an explicit policy to that effect rather than the current “death by a thousand cuts”? The problems between Dublin Bus and Luas came to a head recently when both companies vied for priority in Dublin city centre’s Nassau Street, College Green, Westmoreland Street area. Travel speeds in the city centre are now down to 5-8kph, depending on the time of day.

    It transpires that Dublin Bus’s investment plan, based on 425 new buses and new quality corridors, may not be viable because of Luas. It is unlikely that these displacement externalities were examined at the planning stage.

    It is also doubtful that a system of additional bus corridors, as an alternative to Luas, was ever studied. If it had been, this would have avoided the huge costs of laying track, disrupting businesses and acquiring rolling stock. It would also have had fewer negative effects on other transport modes.

    Given this experience, it is vital that the €35 billion Transport 21 programme be implemented on the basis of interdisciplinary teams, including project economists, utilising rigorous cost-benefit analysis. With so much public money at stake, it is simply not acceptable to repeat the mistakes of the past.


    PS: The energy regulator is allowing huge increases in gas and electricity prices on the grounds that the costs of the companies have gone up. But if the regulator merely passes on costs to the consumer, then what exactly is his purpose, apart from acting as a rubber stamp? And what will happen if oil prices fall back, as seems to be happening? Will the reductions be quickly passed back to consumers? It was well known in the bad old days of price control that every firm applying for a price increase exaggerated its costs and the price increase it wanted. When the prices were scaled back, the impression was created that consumers had been helped, but of course they hadn’t. The head of the Price Commission, a most enlightened man who saw through the cosmetics, helped to abolish the commission and put himself out of a job.

    Taxis were deregulated a few years ago on the grounds that competition would work. Now we have a taxi regulator. Why? The answer seems to be to make absolutely sure that the consumer is protected — but isn’t there a much more efficient way of doing this? Why not bring in much more severe penalties for sharp practice by regulated entities, and accompany it with a policy of zero tolerance? That would solve the problem, keep regulatory staff to a minimum and save the taxpayer money.


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