Economic evaluation manual Volume 1
Amendment No.1, October 2007
© 2007, Land Transport New Zealand, www.landtransport.govt.nz
ISBN 0-478-28983-9
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
Date of Issue: 7 November 2007
Amendment No 1 to the Land Transport New Zealand Economic evaluation manual – volume 1
Approved By: Ian Melsom, Manager Assessment and Forecasting
Purpose To issue Amendment No 1 to the Economic evaluation manual – volume 1
(EEM1) that is to be used for new evaluations started from the effective date of 1
October 2007 for activities submitted to the 2007/08 National Land Transport
Programme (NLTP) and future programmes.
Circulation All registered holders of EEM1.
Attached Amendment No 1 to Land Transport NZ EEM1.
Effective date 1 October 2007
Your actions Insert the pages from Amendment No 1 into EEM1 as outlined in the attached
Amendment Table, and discard the old pages
Main changes The main changes contained in Amendment No. 1 of EEM1 are:
• Clarification of treating disbenefits during construction or implementation
• Addition of accident rates for cyclists.
• The calculation of CO2 emissions has been refined.
• Variable trip matrix methods should be used when congestion is expected in
the do minimum or option in the analysis of networks.
• Revaluation of noise impacts
• Alignment of risk analysis and assessment terminology.
• 2007 update factors for benefits and costs.
Identification of changes
All changes to the manual are identified by a vertical line in the outside margin of
the replacement pages.
Software Economic evaluation software for simplified procedures and accident analysis
has been updated. The revised software will soon be available via the Land
Transport NZ website at
http://www.landtransport.govt.nz/funding/eem-software/index.html
Further copies Further copies of this amendment to the EEM1 and other Land Transport NZ
manuals are available by emailing to: [email protected]. An order
from to attach to the email is available from
http://www.landtransport.govt.nz/publications.html
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
Economic evaluation manual – volume 1 Amendment list
Amendment No.
Effective Date Description:
Section 2.3, page 2-6
Section 2.12, page 2-23
Section 3.2, pages 3-2 to 3-3
Section 3.8, page 3-16
Simplified procedure 2, pages SP2-2, SP2-5, SP2-11 and SP2-13
Simplified procedure 3, pages SP3-10 and SP3-13
Simplified procedure 4, pages SP4-10 and SP4-13
Simplified procedure 5, pages SP5-11 and SP5-13
Section 5.3, pages 5-3 and 5-4
Chapter 5, worksheet PFR, page 5-6
Chapter 5, worksheet accident analysis PFR, page 5-9
Chapter 5, worksheet A6.2, page 5-95
Chapter 5, worksheet A6.3, page 5-97
Chapter 5, worksheet A6.5, page 5-101
Chapter 5, worksheet A9.2, page 5-122
Appendix A5, table A5.21, page A5-30
Appendix A6, section A6.2, page A6-9
Appendix A6, table A6.2(a), page A6-24
Appendix A6, tables A6.11(a) and A6.11(b), pages A6-36 and A6-37
Appendix A6, tables A6.15(a) and A6.15(b), pages A6-42
Appendix A6, tables A6.19(a), A6.19(b), A6.19(c), A6.20(a), pages A6-57 to A6-58
Appendix A6, tables A6.21(a) to A6.21(h), pages A6-59 to A6-62
Section A7.2, page A7-5
Section A8.2, page A8-7
Section A9.6 and A9.7, pages A9-9 and A9-10
Section A11.9, page A11-11
1 1 October 2007
Appendix A12, tables A12.1 and A12.2, pages A12-2 and A12-3
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
Economic evaluation manual – volume 1 Amendment list, continued
Amendment No.
Effective Date Description:
Appendix A13, sections A13.1 and A13.2, pages A13-1 and A13-2
Appendix A13, section A13.4, pages A13-4 to A13-6
Appendix A13, section A13.5, pages A13-8 to A13-9
Appendix A13, section A13.7, pages A13-14
Appendix A14, worksheet accident analysis PFR
1 1 October 2007
Appendix A14, worksheets A6.3 and A6.5
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
2.3 Benefits, continued
National strategic factors
When evaluating projects it is expected that most, and in many cases all, of the
benefits will relate to the monetised and non-monetised impacts described in this
section and 2.5. However, despite the wide range of factors currently taken into
account, there may also be certain national strategic factors that should be
included in the analysis, particularly for large projects.
National strategic factors are defined as national benefits that are valued by
transport users or communities, but are not included elsewhere in the procedures
in this manual. National strategic factors may be incorporated as benefits in the
evaluation of a project where they:
• will have a material impact on a project’s importance
• comprise national economic benefits
• have not already been counted in the core analysis
• would likely be valued in a ‘normal’ market.
• The criteria for assessing national strategic factors and their valuation are
discussed in more detail in appendix A10.
National strategic factors currently recognised by Land Transport NZ for road
projects are described in section 3.5 of this volume. National strategic factors for
transport demand management projects are identified in section 3.8 of volume 2
and for transport services proposals in section 7.6 of volume 2.
Other national strategic factor categories may be added to the list over time
(particularly where project promoters can show that transport users are willing to
pay for a benefit not included in the current procedures), as long as they can be
shown to meet the criteria above. Land Transport NZ will consider other potential
instances of national strategic factors on a case-by-case basis.
Economies of scale
In some rare situations, it is possible that increased economic activity within an
area resulting from a transport improvement may give rise to economies of scale
and, therefore, additional economic efficiency improvements. If these efficiency
improvements can be clearly identified, they can also be included as benefits in the
analysis.
If economies of scale are considered, care must be taken to ensure:
• only the efficiency gain as a result of the economies of scale is included as an
additional benefit
• there are no diseconomies of scale created in other areas as a result of
transferred economic activity
• there is a clear connection between the efficiency gain and the project being
evaluated.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
2.3 Benefits, continued
Business benefits
Benefits to businesses are economic transfers rather than national economic
benefits and are therefore not included in the economic efficiency calculation.
However, they may be quantified and reported as part of the funding allocation
process where appropriate – refer to chapter 6 of Land Transport NZ’s
Programme and funding manual. This is particularly relevant to transport demand
management projects.
Double counting of benefits
The standard benefits listed in this manual generally constitute the total
economic impact of improved levels of service, accessibility or safety. Certain
external impacts of projects, such as increased land values, may arise because of
the improved level of service and accessibility to nearby areas. These impacts
shall be excluded from the evaluation because including them would be double
counting.
For example, it would be double counting to claim increased land values as
additional benefits if these benefits are merely a capitalisation of road-user
benefits. In the case of a TDM project, it would be double counting to include
‘saved energy’ benefits, vehicle operating costs savings and travel time savings in
the same evaluation.
Disbenefits during implementation/construction
Disbenefits considered in the economic evaluation may be restricted to travel
time delays only, and do not need to include vehicle operating costs, accident
cost, noise, dust, etc.
Where the project/option is offline and the disruption is minimal, there is no need
to incorporate the disbenefits in the economic evaluation. Where the impact of
disruption is material then the disbenefits of the project/option need to be
included in the evaluation.
The impact should be determined through sensitivity analysis, eg. a preliminary
estimate of the disbenefits to adjust the BCR. If the adjusted BCR remains within
its funding profile level (low, medium, or high), then there is no need to
undertake a detailed evaluation of the disbenefits, provided the difference
between the BCRs is less than 10%. However, if the adjusted BCR falls to a lower
profile level, which could impact the project's priority or funding source, then a
detailed evaluation of the disbenefits needs to be undertaken. If the adjusted
BCR falls more than 10%, regardless of the funding profile level, then a detailed
evaluation should be considered.
Seek guidance from Land Transport NZ if there is any doubt whether or not
disbenefits should be taken into account for a particular project.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
2.12 Uncertainty and risk, continued
Choosing the appropriate analysis
Sensitivity analysis - for most projects the completion of a sensitivity analysis will
be considered an adequate assessment of uncertainty.
Risk assessment must be undertaken for all projects with any of the following
characteristics:
• the principal objective of the project is reduction or elimination of an
unpredictable event (eg, a landslip or accident)
• there is a significant element of uncertainty
• the project capital value exceeds $4 million.
Land Transport NZ’s Programme and funding manual provides addition guidance
on risk analysis.
Methods for sensitivity and risk analyses
Guidance on completing a sensitivity analysis for road projects is given in section
3.8 of this volume. Sensitivity analysis for other types of project is described in
volume 2.
Appendix A13 outlines the methodology for a risk assessment of road projects.
Chapter 12 of volume 2 describes how these risk assessment procedures can be
applied to other types of project.
The general procedure for evaluating risk by an analysis of probabilities and
expected values comprises the following steps:
1. Identify the uncertain elements in the project and the chain of consequences
for any unpredictable events.
2. Determine the benefits or disbenefits to transport users and the costs to the
project for each possible outcome.
3. Identify an annual probability of occurrence and the period of years over which
this probability applies for each uncertain element.
4. Compute the expected values of benefits and costs for the uncertain elements
in each year as the product of the costs and the annual probability of
occurrence. Include these in the project benefit and cost streams when
discounting the cash flows.
A numerical-simulation approach may be required in cases where the number and
interaction of uncertain variables makes an analytical approach impractical.
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
2.13 Alternatives and options
Need to consider alternatives and options
Early and full consideration must be given to alternatives and options (sections
20(3)(d) and 68(2)(b)(ii) of the LTMA 2003).
Alternatives are different means of achieving the same objective as the proposal,
either totally or partially replacing the proposal. For example, TDM programmes
are generally alternatives to the provision of road capacity.
Options are variations on the proposal, including scale and scope of components.
It is common for economic evaluations to concentrate on one preferred project
option. Narrowing the scope of the analyses too early can cause serious errors,
such as:
• neglecting options that differ in type or scale, eg, a road realignment that may
eliminate a bridge renewal
• neglecting significant externalities, eg, the impacts of change in traffic flow
upon adjoining properties
• inconsistencies with wider strategic policies and plans, eg, the impacts of
improvements to a major urban arterial on downtown congestion.
All realistic project options shall be evaluated to identify the optimal economic
solution. Rigorous consideration of alternatives and options is also a key
component of Land Transport NZ’s funding allocation process.
Mutually exclusive alternatives and options
Mutually exclusive alternatives and options (and package options) occur when
acceptance of one alternative or option precludes the acceptance of others, eg,
when a new road is proposed and there is a choice between two different
alignments. The choice of one alignment obviously precludes the choice of the
other alignment and therefore the two options are mutually exclusive.
Mutually exclusive options shall be evaluated in accordance with the incremental
cost benefit analysis procedure in section 2.10.
Independent stages
Project stages shall be treated as independent projects if the different stages could
be executed separately, and if their benefits are independent of other projects or
stages.
Features to mitigate external impacts
Where alternatives or options include features to mitigate or otherwise address
external impacts or concerns and the features significantly increase the cost of the
options, the options with the features must be compared with the project option
without these features. This analysis shall be undertaken irrespective of whether
the features are independent of the project or mutually exclusive.
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
Chapter 3 Evaluation of road projects
3.1 Overview
Introduction This chapter describes the specific procedures to be used for economic efficiency
evaluation of road projects submitted to Land Transport NZ for funding.
In this chapter This chapter contains the following topics:
Topic Page
3.1 Overview 3-1
3.2 Stages of analysis 3-2
3.3 The do minimum 3-4
3.4 Road and traffic data 3-5
3.5 Benefits of road projects 3-8
3.6 Costs of road projects 3-12
3.7 Period of analysis 3-15
3.8 Uncertainty and risk for road projects 3-16
3.9 Roading packages 3-17
3.10 References 3-19
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
3.2 Stages of analysis
Introduction At every stage of the economic evaluation of road projects, the analysis is carried
out for the do minimum and any other options as outlined in the table below with
references to the relevant section. A similar table is provide in chapter 5 that
refers to the specific procedures and worksheets. The final stages of the economic
evaluation involve a check on the quality and completeness of the evaluation.
Stage Description Section
1 Where appropriate, complete a project feasibility report (PFR).
chapter 5
2 Describe the do minimum, alternatives and options and consider packages.
2.8, 2.13, 2.14, 3.3 and 3.9
3 Assemble road and traffic data. 3.4
4 Undertake transport model checks as required. 2.15
5 Calculate travel times for the do minimum and options.
3.4
6 Quantify and calculate the appropriate monetised benefits and disbenefits for the do minimum and options, including:
• travel time cost savings
• vehicle operating cost savings
• accident cost savings
• seal extension comfort and productivity benefits
• driver frustration reduction benefits
• risk reduction benefits
• vehicle emission reduction benefits
• disbenefits during construction
• other external benefits.
3.5
7 Describe and quantify where possible any significant non-monetised external impacts.
3.5
8 Describe and quantify any national strategic factors relevant to the project and if possible determine the monetary value(s).
3.5
Stages
9 Estimate the appropriate project costs, including:
• investigation and design
• property
• construction, including preconstruction and supervision
• maintenance, renewal and operating
• risk management
• mitigation of external impacts.
3.6
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
3.2 Stages of analysis, continued
Stage Description Section
10 Summarise the benefits and costs of the do minimum and project options, including their:
• type
• timing
• estimated value
• year in which estimate was made
• growth rate over project evaluation period.
2.6, 2.7, 3.7, chapters 4 and 5
11 Where appropriate, describe and evaluate the benefits and costs of mitigation measures.
2.13 and 3.6
12 Discount the benefits, disbenefits and costs for the do minimum and project options over the period of analysis and sum them to obtain the present value (PV) of net national economic benefits and costs.
Apply update factors as necessary.
2.6, 2.7 and 3.7
13 Calculate the national benefit cost ratio, BCRN and if appropriate, the government benefit cost ratio, BCRG.
2.9
14 Where there is more than one mutually exclusive option, use incremental analysis to select the preferred option.
2.10
15 Calculate the first year rate of return for the preferred project option.
2.11
16 When the full procedures for project evaluation are used, conduct a sensitivity analysis on the uncertain elements of the preferred project option.
2.12 and 3.8
17 Where the project costs are greater than $4 million or there are other unpredictable events that may affect the project, undertake a risk analysis.
2.12 and 3.8
18 When the full procedures for project evaluation are used, complete the project evaluation checklist to verify completeness of information, accuracy of calculations and validity of assumptions.
Chapter 5
Stages, continued
19 Complete the project evaluation summary, including the project details, location, do minimum, alternatives and options, timing, PV of costs for the do minimum, PV of net costs and net benefits for the preferred option, BCR and FYRR.
Chapter 4 or 5
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
3.3 The do minimum
Introduction Generally, the do minimum for road projects shall only include work that is
absolutely essential to preserve a minimum level of service. However, in some
cases, as described below, the do minimum may need to be specified differently.
It is important that the do minimum is fully described in the evaluation.
Low volume roads
For some projects on low volume roads, the existing level of maintenance
expenditure may not be the do minimum. In such cases, particularly where the
existing level of maintenance expenditure is high, the maintenance expenditure
shall be justified as an option along with other improvement options, and the do
minimum shall only be the work necessary to keep the road open.
Bridges serving little traffic
Similarly, if a bridge serves little traffic and is expensive to replace, a replacement
option should not automatically be taken as the do minimum, particularly if
alternative routes are available to traffic presently using the bridge. In this case
the do minimum may be to not replace the existing bridge and to have no bridge.
If it is unacceptable to have no bridge at all, then another possible do minimum
could be rehabilitating the existing bridge.
Pavement rehabilitation
The do minimum generally should not include pavement rehabilitation to an
improved standard. The only exception is when the present value of the cost of the
project and its future maintenance is less than the present value of continued
maintenance of the existing situation.
For example, on steep unsealed roads, which need frequent grading, to remove
corrugations the continued maintenance of the unsealed road can be more costly
than sealing the road. In such a situation it is possible that sealing the road may be
the do minimum, so long as it is the lowest-cost option available (eg, there is not a
realignment option available that is even cheaper).
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
3.7 Period of analysis
Period of analysis
The analysis period for road projects shall start at time zero and finish 25 years
(unless otherwise agreed with Land Transport NZ) from the year in which
significant benefit or cost commences. Where several options are being evaluated,
the analysis period for all options shall be determined by the option with the
earliest benefit or cost. The start of construction/implementation shall be the
earliest feasible date, irrespective of expectations of funding.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
3.8 Uncertainty and risk for road projects
Introduction See section 2.12 for discussion and application of sensitivity analysis and risk
analysis.
Cost benefit analysis of road projects will involve making assumptions and
estimates, which may involve uncertainty or be subjective in nature. The input
value of significant factors must be subject to sensitivity testing (and a risk
analysis if appropriate) for the effect on the economic efficiency of the project.
Significant inputs
Inputs to road projects that should be considered for testing include:
• maintenance costs, particularly where there are significant savings
• traffic volumes, particularly model results, growth rates, and the assessment of
diverted and induced traffic
• travel speeds
• road roughness
• accident reductions.
For each significant input the following shall be listed:
• the assumptions and estimates on which the evaluation has been based
• an upper and lower bound of the range of the estimate, and the resultant BCR
at the upper and lower bound of each estimate.
Risk analysis Risk analysis must be undertaken for all road projects with any of the following
characteristics:
• the principal objective of the project is reduction or elimination of an
unpredictable event (eg, a landslip or accident)
• there is a significant element of uncertainty
• the capital value of the project exceeds $4 million.
Appendix A13 outlines the procedures for risk analysis of road projects and gives
examples. These risk analysis procedures are not intended for projects subject to
minor risks, such as occasional small slips from adjacent hills onto the road, etc.
SP2-1
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
SP2 Structural bridge renewals
Introduction These procedures (SP2) provide a simplified method for appraising the economic
efficiency of replacing a bridge for structural reasons. The benefits analysis focuses
on the change in heavy commercial vehicle (HCV) users’ costs as a result of the
project. Guidance on the application of these procedures is found in section 4.2 and
through the decision chart on the following page.
If road improvements are being considered in conjunction with the bridge renewal,
then the improvements are to be evaluated separately (using SP3, if applicable –
refer section 4.2), when it is confirmed that bridge renewal is the preferred option.
The procedure for analysing structural bridge renewals is somewhat different to
other projects, in that all options are identified and costed at the outset, including:
• cost of replacement bridge
• average daily traffic
• viability and cost of a concrete ford
• the HCV users of the bridge
• existence of an alternative route, its length and any necessary upgrade costs
• the cost to repair the bridge to a posted limit of 10 tonnes.
Once this has been done, the decision chart on the following page can be used to
determine the appropriate course of action and analysis procedure.
The worksheets use a 10% discount rate and 25 year evaluation period. The
procedures assume that funded projects will be completed within the first year and
will be in service by the start of year 2. Where costs are common to all the options,
they are not included in the analysis. All costs are to be exclusive of GST.
This procedure does not allow for the possibility of total bridge failure. If this is a
real possibility when certain options are chosen, then account should be taken of
the extra costs this would impose on road users multiplied by the probability of
failure occurring. The calculation of these probabilities should be undertaken by the
same engineers who make the decisions regarding posting the bridge.
Worksheet Description
1 Building a ford on a low volume road
2 Evaluation summary for bridge renewal
3 Costs of the option(s)
4 HCV user costs when there is an alternative route
5 HCV user costs when there is no alternative route
Total bridge
failure
6 BCR and incremental analysis
SP2-2
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
SP2 Structural bridge renewals, continued
Decision chart for bridge replacements on low volume roads
Yes
Yes Yes
Yes Yes
Yes
Yes
Yes
Yes
No
No No
No
No
No
No No
No
Does the council maintain this section
of road?
Close the bridge
Is the replacement cost less than that
specified in section 4.2(a)
Is the replacement cost less than that
specified in section 4.2(b)
Is AADT less than 50?
Is constructing a
suitable concrete
ford viable and the
cost of acceptable
under the criteria
specified in section
4.2(c)
Is the bridge on a regular HCV route?
(list the regular HCV users)
Does the alternative route require
upgrading at a cost >50% of the bridge cost?
Can it be repaired and posted at 10 tonne gross for <50% of the bridge cost?
Is the detour >5km?
Replace the bridge. Complete only worksheet 1
Evaluate options using the EEM full
procedures
Evaluate options using worksheets
2 to 6
Build a ford. Complete only
worksheet 1
Post the bridge
Replacement not eligible for financial
assistance
SP2-5
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
SP2 Structural bridge renewals, continued
Bridge renewal on a low volume road Worksheet 1
1 Evaluator(s)
Reviewer(s)
2 Project/package details
Approved organisation name
Project/package name
Your reference
Project description
Describe the problem to be addressed
3 Location
Brief description of location
4 Alternatives and options
Describe the do minimum
Summarise the options assessed
5 Timing
Time zero (assumed construction start date) 1 July
Expected duration of construction (months)
6 Economic efficiency
Date economic evaluation completed (mm/yyyy)
Base date for costs and benefits 1 July
AADT at time zero
Traffic growth rate at time zero (%)
%HCVI Number = Existing bridge posting weight limit % Class I
%HCVII Number = Existing route length = km
Attach list of regular HCV users with contact details
Load factor % Is alternative route available Yes No
If yes, length of alternative = km
7 PV cost of do minimum $ A
8 PV cost of building the chosen option $ B
9 Present value cost saving (A – B) = $
Note: The ford is justified if the PV cost saving is positive
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
SP2 Structural bridge renewals, continued
Explanation for worksheet 2 Evaluation summary for bridge renewal
Worksheet 2 provides a summary of the general data used for the evaluation where a decision is
for a structural bridge renewal.
1. Evaluator(s)/reviewer(s): Enter the full name, contact details, name of organisation, office
location, etc, of the evaluator(s) and reviewer(s).
2. Project/package details: Provide a general description of the project and package (where
relevant), describe the problem with the existing bridge and the problems to be addressed.
3. Location: A brief description of the project location including:
• a location/route map
• a layout plan of the project.
4. Alternatives and options: Describe the do minimum. The do minimum should be chosen after
analysis of low-cost options. The do minimum will not necessarily maintain the capacity of the
bridge to carry 100% Class I loading or even maintain a crossing at all. Describe the options
assessed and how the preferred option will affect traffic, particularly HCVs.
5. Timing: For purposes of the economic efficiency evaluation, the construction start is assumed
to be 1 July of the financial year in which the project is submitted for a commitment to
funding..
6. Economic efficiency: Enter the timeframe information and road and traffic data for the
economic efficiency calculation. Identify the existing route length, the length of any available
alternative route(s); the proportion of HCVI and HCVII vehicles using the existing bridge; the
load factor of the bridge and the existing bridge posting weight limit. If the bridge is on a
route regularly used by HCVs provide a (separate) list of common users together with contact
details.
7. PV cost of do minimum: Use worksheet 3 to calculate the PV cost of all possible options and
select the least cost option as the do minimum.
8. PV cost of preferred option: Use worksheet 3 to estimate the PV cost of the preferred option.
9. Enter the economic evaluation data from worksheet 4 or 5. To convert the road user costs to
base date values use the update factors in appendix A12.3. If the road user costs of the do
minimum are less than the road user costs of the chosen option, then the option should be
abandoned.
10. The national BCR is calculated by dividing the PV of the net benefits (PV benefits of the do
minimum subtracted from the PV benefits of the option) by PV of the net costs (PV costs of
the do minimum subtracted from the PV costs of the option).
11. First year rate of return (FYRR) is calculated as the benefits in the first full year following
completion divided by the project costs. The first year benefits are calculated by dividing the
totals at Y and Z by the BDF from table 1 of worksheet 4. Then multiply by 0.91 to get the
present value.
SP2-11
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
SP2 Structural bridge renewals, continued
HCV user costs when there is an alternative route Worksheet 4
1 Option (circle option being considered)
existing route at % Class I/alternative longer route/existing route at 100% Class I (bridge retained)/existing route at 100% Class I (bridge downgraded) with a ford crossing
2 The existing route at % Class I loading
L x ADT HCVI x LF x FCF x $1.30 x 365 = $
L x ADT HCVII x LF x FCF x $1.95 x 365 = $
Sum of HCVI and HCVII user costs = $ (a)
PV total HCV user costs for 25 years = $ (a) x BDF = $ (b)
3 The alternative longer route
LA x ADT HCVI x LF x FCF* x $1.30 x 365 = $
LA x ADT HCVII x LF x FCF* x $1.95 x 365 = $
Sum of HCVI and HCVII user costs = $ (c)
PV total HCV user costs for 25 years = $ (c) x BDF = $ (d)
*FCF will normally be 1.0 for the alternative route – if not use value from FCF table 2.
4 The existing route at 100% Class I loading (bridge retained)
L x ADT HCVI x LF x FCF x 1.30 x 365 = $
L x ADT HCVII x LF x FCF x 1.95 x 365 = $
Sum of HCVI and HCVII user costs = $ (e)
PV total HCV user costs for 25 years = $ (e) x BDF =$ (f)
5 The existing route at 100% Class I loading (bridge downgraded and a ford constructed)
ADT HCVI x LF x $1.10 x 365 = $
ADT HCVII x LF x $1.75 x 365 = $
Sum of HCVI and HCVII user costs = $ (g)
PV user costs for using ford for 25 years = $ (g) x BDF = $ (h)
PV total HCV user costs for existing route at 100% class I loading where a ford is provided:
Sum of HCVI and HCVII user costs for existing route (f) + using ford (h) = $ (j)
6 Transfer (b), (d), (f) or (j) to A (if do minimum) or to B (if preferred option) on worksheet 2, as appropriate.
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
SP2 Structural bridge renewals, continued
Explanation for worksheet 5 HCV user costs when there is no alternative route
Worksheet 5 provides a method for calculating HCV road user costs when no alternative route is
available. In this situation, the HCV user costs for bridge crossings should be calculated for the
distance between the origin and destination of the trips.
1. Circle the option being considered.
2. Calculate the HCV user costs for the existing route at ______% Class I loading as follows by
entering the information indicated below. Multiply across the lines to get the annual user costs for
HCVI and HCVII. Sum these two values to get the total HCV user costs (a). Multiply the total in
(a) by the appropriate bridge discount factor (BDF in table 1 of worksheet 4) to give the PV of
HCV user costs for 25 years (b).
Required information:
L length of existing route in kilometres (between intersections with the alternative route). A survey of local transport operators and businesses will provide data to allow an estimate of the trip lengths for HCVs on trips that cross the bridge.
ADT HCVI the average daily tally of HCVI on the existing route
ADT HCVII the average daily tally of HCVII on the existing route
LF load factor (the percentage of fully loaded vehicles) for HCVs. Use 0.7 (70%) unless better data is available
FCF freight cost factor (from table 2 of worksheet 4) used to calculate increased costs due to extra trips required by posting a load restriction on a highway
3. Repeat step 1 for the option of the existing route at 100% Class I loading (bridge retained), to
derive the values for (c) and (d).
4. Where the option to maintain the existing route at 100% Class I loading requires downgrading the
bridge and constructing a ford, the additional user costs of a ford must be calculated and added to
(d) to get the total HCV user costs for the option (g).
5. Transfer the HCV user costs for the selected do minimum to C and preferred option to D on
worksheet 2.
SP2-13
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
SP2 Structural bridge renewals, continued
HCV user costs when there is no alternative route Worksheet 5
1 Option (circle option being considered)
existing route at _____% Class I loading/existing route at 100% class I loading (bridge retained)/ existing route at 100% class I loading (bridge downgraded and ford constructed)
2 The existing route at % Class I loading
L x ADT HCVI x LF1 x FCF x $1.30 x 365 = $
L x ADT HCVII x LF1 x FCF x $1.95 x 365 = $
Sum of HCVI and HCVII user costs = $ (a)
PV total HCV user costs for 25 years = $ (a) x BDF = $ (b)
1LF is likely to be greater than 0.7 when there is not alternative route.
3 The existing route at 100% Class I loading (bridge retained)
L x ADT HCVI x LF x 1.30 x 365 = $
L x ADT HCVII x LF x 1.95 x 365 = $
Sum of HCVI and HCVII user costs = $ (c)
PV total HCV user costs for 25 years = $ (c) x BDF =$ (d)
4 The existing route at 100% Class I loading (bridge downgraded and a ford constructed)
ADT HCVI x LF x $1.10 x 365 = $
ADT HCVII x LF x $1.75 x 365 = $
Sum of HCVI and HCVII user costs = $ (e)
PV user costs for using ford for 25 years = $ (e) x BDF = $ (f)
PV total HCV user costs for existing route at 100% class I loading where a ford is provided:
Sum of HCVI and HCVII user costs for existing route (d) + using ford (f) = $ (g)
5 Transfer (b), (d) or (g) to A (if do minimum) or to B (if preferred option) on worksheet 2, as appropriate.
SP2-14
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
SP2 Structural bridge renewals, continued
Explanation for worksheet 6 BCR and incremental analysis
Cost benefit analysis
1. Under benefits, enter the PVs for the benefits for the do minimum and for each option. Then
subtract the benefits for the options from the benefits for the do minimum to get the net benefits
of each option.
2. Under costs, enter the PVs of the capital and maintenance costs for the do minimum and each
option. Subtract the PV costs for the do minimum from the costs for the options to get the net
costs of each option.
3. Calculate the national BCR by dividing the net benefits by the net costs.
Incremental analysis
1. Select the appropriate target incremental BCR from appendix A12.4.
2. Rank the options in order of increasing cost.
3. Compare the lowest cost option with the next higher cost option to calculate the incremental BCR.
4. If the incremental BCR is less than the target incremental BCR, discard the second option in favour
of the first and compare the first option with the next higher cost option.
5. If the incremental BCR is greater than the target incremental BCR, the second option becomes the
basis for comparison against the next higher cost option.
6. Repeat the procedure until no higher cost options are available that have an incremental BCR
greater than the target incremental BCR. The highest cost option with an incremental BCR greater
than the target incremental BCR is generally considered as the preferred option.
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SP4-9
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
SP4 Seal extensions, continued
Travel time cost savings and seal extension benefits Worksheet 4
1 Road type (circle) urban other/rural strategic/rural other
2 Base data
AADT (or the traffic volumes affected by the improvement)
Traffic growth rate (per annum)
Travel time cost, TTC $
Do minimum Option
Length of route in km Ldm Lopt
Mean vehicle speed VSdm VSopt
3 Annual travel time costs for the do minimum
AADT x 365 x Ldm x TTC (a)
VSdm
= $
4 Annual travel time costs for the option
AADT x 365 x Lopt x TTC (b)
VSopt
= $
5 Value of annual travel time cost savings (a) – (b) = $ (c)
6 PV of travel time cost savings (c) x DFTTC = $ C
Transfer PV of travel time cost savings, C for the preferred option to C on worksheet 1
7 Value of annual seal extension benefits
Annual comfort benefit AADT x 365 x Ldm x 0.10 = $ (d)
Annual productivity gain Ldm x = $ (e)
8 PV of seal extension benefits [(d) + (e)] x DFTTC = $ K
Transfer PV of seal extension benefits, K for the preferred option to K on worksheet 1
SP4-10
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
SP4 Seal extensions, continued
Explanation for worksheet 5 Vehicle operating cost savings
Worksheet 5 is used for calculating vehicle operating cost (VOC) savings.
1. Enter the base data required for analysis of VOC savings. Table 1 provides the base VOCs (CB) in
cents/km for different gradients and mean vehicle speeds, while table 2 provides roughness costs
(CR) in cents/km for different road roughness.
2. Calculate the annual VOCs (a) for the do minimum using the formula provided.
3. Calculate the annual VOCs (b) for the option using the formula provided.
4. Calculate the annual VOC savings by subtracting the VOCs for the option (b) from the do
minimum VOCs (a) to get (c).
5. Determine the PV of the VOC savings, D by multiplying (c) by the appropriate discount factor from
table 3. Transfer the PV of VOC savings, D for the preferred option to worksheet 1.
Table 1 Base vehicle operating costs (CB) including CO2 - in cents/km (July 2002)
Mean vehicle speed (over length of route) % gradient
0–30 km/h 31-50 km/h 51-70 km/h 71-90 km/h 91-105 km/h
0 24.1 20.1 19.7 20.3 21.3
1 to 3 24.4 20.4 19.9 20.6 21.6
4 to 6 25.3 21.5 21.0 21.7 22.7
7 to 9 26.7 23.2 22.9 23.6 24.7
10 to 12 28.5 25.3 25.2 26.2 27.4
Table 2 Roughness costs (CR) in cents/km (July 2002)
Unsealed road roughness before sealing can be assumed to be 6.5 IRI (≈170 NAASRA counts) and 2.5 IRI (≈66 NAASRA counts) after sealing. If values higher than 6.5 IRI (or 170 NAASRA) for initial roughness of unsealed roads are used these need to be substantiated.
IRI m/km
NAASRA counts/
km
CR cents/km
urban
CR cents/km
rural
IRI m/km
NAASRA counts/
km
CR cents/km
urban
CR cents/km
rural
2.5 66 0.0 0.0 6.0 158 5.9 11.4
3.0 79 0.2 0.1 6.5 172 7.5 13.8
3.5 92 0.4 0.7 7.0 185 9.2 16.1
4.0 106 1.0 2.2 7.5 198 10.9 18.5
4.5 119 1.8 4.3 8.0 211 12.6 19.4
5.0 132 3.0 6.7 8.5 224 14.3 20.0
5.5 145 4.3 9.1 9.0 238 15.9 20.7
Table 3 VOC discount factors (DFVOC) for different traffic growth rates for years 2 to 25 inclusive
Growth rate 0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
Discount factor (DFVOC) 8.57 8.95 9.32 9.70 10.07 10.45 10.83 11.20 11.58
SP4-13
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
SP4 Seal extensions, continued
Accident cost savings Worksheet 6
Movement category Vehicle involvement
1 Do minimum mean speed Road category
Posted speed limit Traffic growth rate
2 Option mean speed
Do minimum Severity
Fatal Serious Minor
Non-injury
3 Number of years of typical accident rate records
4 Number of reported accidents over period
5 Fatal/serious severity ratio (tables A6.19(a) to (c)) 1 1
6 Number of reported accidents adjusted by severity (4) × (5)
7 Accidents per year = (6)/(3)
8 Adjustment factor for accident trend (table A6.1(a))
9 Adjusted accidents per year = (7) x (8)
10 Under-reporting factors (tables A6.20(a) and (b))
11 Total estimated accidents per year = (9) x (10)
12 Accident cost, 100 km/h limit (tables A6.21(e) to (h))
13 Accident cost, 50 km/h limit (tables A6.21(a) to (d))
14 Mean speed adjustment = ((1) - 50)/50
15 Cost per accident = (13) + (14) x [(12) – (13)]
16 Accident cost per year = (11) x (15)
17 Total cost of accidents per year (sum of columns in row (16) fatal + serious + minor + non-injury)
$
Option
18 Percentage accident reduction
19 Percentage of accidents ‘remaining’ [100 – (18)]
20 Predicted accidents per year (11) x (19)
21 Accident cost, 100km/h speed limit (tables A6.21(e) to (h))
22 Accident cost, 50km/h speed limit (tables A6.21(a) to (d))
23 Mean speed adjustment = ((2) - 50)/50
24 Cost per accident = (22) + (23) x [(21) – (22)]
25 Accident cost per year = (20) x (24)
26 Total cost of accidents per year (sum of columns in row (25) fatal + serious + minor + non-injury)
$
27 Annual accident cost savings = (17) – (26) $
28 PV accident cost savings = (27) x DFAC $ E
Transfer PV of accident cost savings, E for the preferred option to E on worksheet 1
SP4-14
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
SP4 Seal extensions, continued
Explanation for worksheet 7 BCR and incremental analysis
Cost benefit analysis
1. Under benefits, enter the PVs for the benefits for the do minimum and for each option. Then
subtract the benefits for the options from the benefits for the do minimum to get the net benefits
for each option.
2. Under costs, enter the PVs for the capital, maintenance and operating costs for the do minimum
and each option. Subtract the PV costs for the do minimum from the costs for each of the options
to get the net costs of each option.
3. Calculate the national BCR by dividing the net benefits by the net costs.
Incremental analysis
1. Select the appropriate target incremental BCR from appendix A12.4.
2. Rank the options in order of increasing cost.
3. Compare the lowest cost option with the next higher cost option to calculate the incremental BCR.
4. If the incremental BCR is less than the target incremental BCR, discard the second option in favour
of the first and compare the first option with the next higher cost option.
5. If the incremental BCR is greater than the target incremental BCR, the second option becomes the
basis for comparison against the next higher cost option.
6. Repeat the procedure until no higher cost options are available that have an incremental BCR
greater than the target incremental BCR. The highest cost option with an incremental BCR greater
than the target incremental BCR is generally the preferred option.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
SP5 Isolated intersection improvements, continued
Vehicle operating cost savings Worksheet 5
Annual VOC
Period 1 2 3 4
Period start year 2 8 14 20
Period end year 7 13 19 25
Mid point at end of year 4 10 16 22
Duration of period 6 6 6 6
1 Do minimum VOC at midpoint
2 Option VOC at midpoint
c1 c2 c3 c4
3 Midpoint benefits (1) – (2)
4 PV VOC and CO2 savings
[(c1 x 6 x 0.68) + (c2 x 6 x 0.39) + (c3 x 6 x 0.22) + (c4 x 6 x 0.12)] x 1.075 = $ D
Transfer PV of VOC and CO2 savings, D for the preferred option to D on worksheet 1
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Land Transport NZ’s Economic evaluation manual – Volume 1 First edition Effective from 1 October 2006
SP5 Isolated intersection improvements, continued
Explanation for worksheet 6 Accident cost savings
These simplified procedures are suitable only for accident-by-accident analysis (method A in appendix A6).
There must be 5 years or more accident data for the site and the number and types of accidents must meet the
specifications set out in appendix A6.1 and A6.2. If not, either the accident rate analysis or weighted accident
procedure described in appendix A6.2 should be used. The annual accident cost savings determined from such an
evaluation are multiplied by the appropriate discount factor and entered in worksheet 1 as total E.
1. Enter number of years of typical accident rate records at (3) and the number of reported accidents in the
reporting period for each of the severity categories at (4).
2. Fatal and serious severity ratio: If the number of fatal and serious accidents at the site is greater than the
limiting number specified in appendix A6.1, leave line (5) blank and go to line (6). Otherwise, in line (5) enter
the ratio of fatal/(fatal + serious) and serious/(fatal + serious) from the table A6.19 series (all movements, all
vehicles).
3. Multiply the total fatal + serious accidents (4) by the ratios (5) to get the adjusted fatal and serious accidents (6) for the reporting period. For minor and non-injury accidents, transfer the accident numbers from (4). To get the accidents per year (7), divide (6) by (3).
4. Enter the adjustment factor for the accident trend from table A6.1(a) in line (8). Multiply (7) by (8) to obtain the accidents per year (at time zero) for each accident category (9).
5. Enter the under-reporting factors from tables A6.20(a) and A6.20(b) in line (10). Multiply (9) by (10) to get the total estimated accidents per year (11).
6. Enter the accident costs for 100km/h speed limit (12) and 50 km/h speed limit (13) for each accident category (all movements, all vehicles) from the table A6.21 series. Calculate the mean speed adjustment for the do minimum [((1) - 50) divided by 50] in (14).
7. Calculate the cost per accident for the do minimum (15) by adding (13) plus (14) and then multiplying this by the difference between accident costs in (12) and (13).
8. Multiply accidents per year (11) by (15) to get cost per accident per year (16). Add the costs for fatal, serious, minor and non-injury accidents in line (16) to get the total accident cost per year (17).
9. Determine the forecast percentage accident reduction for each accident category (18). Determine the proportion of accidents remaining [100% minus the percentage reduction in (18)] and record in (19).
10. Calculate the predicted accidents per year (20) by multiplying the accidents per year of the do minimum (11) by the percentage of accidents remaining (19).
11. Repeat the calculations from lines (12) through (15), in lines (21) through (24) using the option mean speed (2), to obtain the cost per accident for the option (24).
12. Multiply the predicted number of accidents per year (20) by the cost per accident (24) to get the total accident costs per year for each accident category in line (25). Add together the costs for fatal, serious, minor and non-injury accidents to get total accident costs per year (26).
13. Calculate the annual accident cost savings by subtracting the values in (26) from (17). Multiply the annual accident cost savings (27) – or the total from the accident rate or weighted accident analysis – by the discount factor in table 1 for the appropriate speed limit and traffic growth rate to determine the PV accident cost savings. Transfer this total, E for the preferred option to worksheet 1.
Table 1 Accident cost discount factor (DFAC) for different traffic growth rates and speed limits for years 2 to 25 inclusive
Traffic growth rate 0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%
50 and 60 km/h 6.31 6.69 7.07 7.44 7.82 8.19 8.57 8.95 9.32
≥ 70 km/h 7.82 8.19 8.57 8.95 9.32 9.70 10.07 10.45 10.83
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SP5 Isolated intersection improvements, continued
Accident cost savings Worksheet 6
Movement category Vehicle involvement
1 Do minimum mean speed Road category
Posted speed limit Traffic growth rate
2 Option mean speed
Do minimum Severity
Fatal Serious Minor
Non-injury
3 Number of years of typical accident rate records
4 Number of reported accidents over period
5 Fatal/serious severity ratio (tables A6.19(a) to (c)) 1 1
6 Number of reported accidents adjusted by severity (4) × (5)
7 Accidents per year = (6)/(3)
8 Adjustment factor for accident trend (table A6.1(a))
9 Adjusted accidents per year = (7) x (8)
10 Under-reporting factors (tables A6.20(a) and (b))
11 Total estimated accidents per year = (9) x (10)
12 Accident cost, 100 km/h limit (tables A6.21(e) to (h))
13 Accident cost, 50 km/h limit (tables A6.21(a) to (d))
14 Mean speed adjustment = ((1) - 50)/50
15 Cost per accident = (13) + (14) x [(12) – (13)]
16 Accident cost per year = (11) x (15)
17 Total cost of accidents per year (sum of columns in row (16) fatal + serious + minor + non-injury)
$
Option
18 Percentage accident reduction
19 Percentage of accidents ‘remaining’ [100 – (18)]
20 Predicted accidents per year (11) x (19)
21 Accident cost, 100km/h speed limit (tables A6.21(e) to (h))
22 Accident cost, 50km/h speed limit (tables A6.21(a) to (d))
23 Mean speed adjustment = ((2) - 50)/50
24 Cost per accident = (22) + (23) x [(21) – (22)]
25 Accident cost per year = (20) x (24)
26 Total cost of accidents per year (sum of columns in row (25) fatal + serious + minor + non-injury)
$
27 Annual accident cost savings = (17) – (26) $
28 PV accident cost savings = (27) x DFAC $ E
Transfer PV of accident cost savings, E for the preferred option to E on worksheet 1
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Land Transport NZ’s Economic evaluation manual – Volume 1 First edition Effective from 1 October 2006
SP5 Isolated intersection improvements, continued
Explanation for worksheet 7 BCR and incremental analysis
Cost benefit analysis
1. Under benefits, enter the PVs for the benefits for the do minimum and for each option. Then
subtract the benefits for the options from the benefits for the do minimum to get the net benefits
for each option.
2. Under costs, enter the PVs for the capital, maintenance and operating costs for the do minimum
and each option. Subtract the PV costs for the do minimum from the costs for each of the options
to get the net costs of each option.
3. Calculate the national BCR by dividing the net benefits by the net costs.
Incremental analysis
1. Select the appropriate target incremental BCR from appendix A12.4.
2. Rank the options in order of increasing cost.
3. Compare the lowest cost option with the next higher cost option to calculate the incremental BCR.
4. If the incremental BCR is less than the target incremental BCR, discard the second option in favour
of the first and compare the first option with the next higher cost option.
5. If the incremental BCR is greater than the target incremental BCR, the second option becomes the
basis for comparison against the next higher cost option.
6. Repeat the procedure until no higher cost options are available that have an incremental BCR
greater than the target incremental BCR. The highest cost option with an incremental BCR greater
than the target incremental BCR is generally the preferred option.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
5.3 Stages of analysis
Introduction The stages of the full economic evaluation are outlined in the table below. The
final stages of the economic evaluation involve a check on the quality and
completeness of the evaluation and completion of the project summary. The
worksheets relevant to each stage are shown.
Stage Description See
1 Where appropriate, complete a project feasibility report. PFR
2 Describe the do minimum, alternatives and options and consider packages.
WS 1
3 Assemble basic information on route, traffic, demand estimates, travel impacts, etc as appropriate.
WS A2
4 Undertake transport model checks as required. WS 8
5 Where appropriate, calculate travel times for the do minimum and options.
WS A3
6 Quantify and calculate the appropriate monetised project benefits and disbenefits for the do minimum and options, including:
• travel time cost savings, including disbenefits during
construction, if appropriate (WS A4)
• vehicle operating cost savings (WS A5)
• accident cost savings (WS A6)
• vehicle passing lane benefits (WS A7)
• monetised external impacts (WS A8)
• vehicle emissions (WS A9)
• national strategic factors (WS A10)
WS A4 to WS A10
7 Describe and quantify where possible any significant non-monetised external impacts.
WS A8
8 Estimate the appropriate project costs WS 2
9 Summarise the benefits and costs of do minimum and project options, including their:
• type
• timing
• estimated value
• year in which estimate was made
• growth rate over project evaluation period
WS 2
Stages
10 Describe and evaluate the benefits and costs of mitigation measures for external impacts
WS A8.2
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
5.3 Stages of analysis, continued
Stage Description See
11 If appropriate, describe business benefits and equity impacts (particularly those relating to transport disadvantaged).
12 Discount the benefits, disbenefits and costs for the do minimum and project options over the period of analysis and sum them to obtain the total present value (PV) of benefits and costs.
Apply update factors as necessary.
WS A1
13 List the PV of benefits and costs for the do minimum and each option, calculate the benefit and cost differentials for each option (compared to the do minimum) and calculate the national benefit cost ratio and the government benefit cost ratio (if appropriate) for all options.
WS 3
14 Where there is more than one mutually exclusive option (including different mitigation measures), use incremental analysis to select the preferred option.
WS 4
15 Calculate the first year rate of return for the preferred project option.
WS 5
16 Conduct a sensitivity analysis on the uncertain elements of the preferred project option.
WS 6
17 Where the project costs are greater than $4 million for infrastructure activities or $1 million for travel demand management, rail and sea freight activities or there are other unpredictable events that may affect the project, undertake a risk analysis
WS A13
18 Complete the project evaluation checklist to verify completeness of information, accuracy of calculations and validity of assumptions.
WS 7
Stages, continued
19 Complete the project evaluation summary, including the project description (which is the same as LTP online); road and traffic data; travel times, etc PV of benefits and costs; BCR and FYRR for the do minimum and preferred option
WS 1
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
5.4 Project feasibility report
Introduction The project feasibility report (PFR) is provided as a shortened form of appraisal to
decide initially if a project is worth pursuing, and if so, to assist in pre-selection of
project options before carrying out more detailed appraisal.
The PFR is not intended as a complete evaluation procedure in itself but rather as a
quick evaluation method before proceeding to a full evaluation.
In the context of the funding allocation process, the PFR is used in conjunction with
project development as follows:
• identifying projects for the National Land Transport Programme – a PFR is
submitted with the rough order of cost estimate.
• investigation activities (work categories 311, 411 and 412)
• property purchase (work categories 331, 332 and 333).
There are certain types of project for which the PFR will not be applicable, ie, traffic
signalisation, intersection analysis, passing lanes, etc. In such cases, the simplified
procedures in chapter 4 of this manual or another similar assessment process could
be used. In a few instances, it may be necessary to use the full procedures
contained in this chapter.
PFR The PFR is comprised of two worksheets, one which provides a summary of the
proposed project and completes a simple economic evaluation and the other which
provides a simplified accident analysis.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
PFR: Project feasibility report
Explanation sheet for preliminary evaluation PFR
For this preliminary evaluation, the PFR assumes that project costs are incurred in time zero (and
therefore are not discounted); maintenance cost savings occur in years 2 to 25, and benefits occur in
years 2 to 27. Growth rates are assumed to be 2% per annum across the board.
1. Project description: Provide a general description of the project, including the do minimum and
project options. Apart from the details about the evaluator(s) and checker(s), the information
required corresponds directly with the information entered in LTP online.
2. Summarise the inputs to the analysis, including do minimum and option costs, route length,
average roughness, average vehicle speed, and AADT. Default values for travel time costs, base
vehicle operating costs and roughness costs are provided in Tables 1, 2, and 3 respectively.
3. Calculate the potential project benefits and maintenance cost savings, using the formulae provided
in the worksheet.
4. Determine the PV total benefits using the formula provided and calculate the provisional BCR.
Table 1 Travel time costs (TT) for standard traffic mixes in $/h (July 2002)
Road type Description $/h
Urban arterial Arterial and collector roads within urban areas carrying traffic volumes greater than 7,000 vehicles/day
16.27
Urban other Other urban roads carrying less than 7,000 vehicles/day 16.23
Rural strategic Arterial and collector roads connecting main centres of population and carrying traffic of over 2,500 vehicles per day
23.25
Rural other Rural roads other than rural strategic 22.72
Table 2 Base vehicle operating costs (CB) in cents/km (July 2002)
Average speed 30-50km/h >50-70km/h >70-90km/h >90km/h
CB (cents/km) 20.4 19.9 20.6 21.6
Table 3 Roughness costs (CR) in cents/km (July 2002)
IRI (m/km)
NAASRA (counts/
km)
CR urban (cents/
km)
CR rural (cents/
km)
IRI (m/km)
NAASRA (counts/
km)
CR urban (cents/
km)
CR rural (cents/
km)
2.5 66 0.0 0.0 6.0 158 5.9 11.4
3.0 79 0.2 0.1 6.5 172 7.5 13.8
3.5 92 0.4 0.7 7.0 185 9.2 16.1
4.0 106 1.0 2.2 7.5 198 10.9 18.5
4.5 119 1.8 4.3 8.0 211 12.6 19.4
5.0 132 3.0 6.7 8.5 224 14.3 20.0
5.5 145 4.3 9.1 9.0 238 15.9 20.7
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Page 5-95
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
Worksheets A6: Accident cost savings, continued
Accident by accident analysis - do minimum - EXAMPLE Worksheet A6.2
Project option Oblong realignment
Movement category Head on Vehicle involvement All vehicles
1 Do minimum mean speed 65 km/h Road category Rural strategic
Posted speed limit 100 km/h Traffic growth rate 2%
Do minimum Severity
Fatal Serious Minor
Non-injury
3 Number of years of typical accident rate records 5
4 Number of reported accidents over period 1 1 5 7
5 Fatal/serious severity ratio (tables A6.19(a) to (c)) 0.33 0.67
6 Number of reported accidents adjusted by severity (4) × (5)
0.66 1.33 5 7
7 Accidents per year = (6)/(3) 0.136 0.264 1 1.4
8 Adjustment factor for accident trend (table A6.1(a)) 1.02
9 Adjusted accidents per year = (7) x (8) 0.139 0.269 1.02 1.43
10 Under-reporting factors (tables A6.20(a) and (b)) 1.0 2.0 4.0 20
11 Total estimated accidents per year = (9) x (10) 0.139 0.538 4.08 28.60
12 Accident cost, 100 km/h limit (tables A6.21(e) to (h)) 3,900,000 440,000 30,000 4,000
13 Accident cost, 50 km/h limit (tables A6.21(a) to (d)) 3,100,000 370,000 23,000 2,400
14 Mean speed adjustment = ((1) - 50)/50 0.3
15 Cost per accident = (13) + (14) x [(12) – (13)] 3,340,000 391,000 25,100 2,880
16 Accident cost per year = (11) x (15) 464,260 210,358 102,408 82,368
17 Total cost of accidents per year (sum of columns in row (16) fatal + serious + minor + non-injury)
$ 859,394
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
Worksheets A6: Accident cost savings, continued
Explanation for worksheet A6.3 Accident by accident analysis - options
There must be 5 years or more accident data for the site and the number and types of accidents must
meet the specifications set out in appendix A6.1 and A6.2.
1. Determine the forecast percentage accident reduction for each accident category (18). Determine
the proportion of accidents remaining [100% minus the percentage reduction in (18)] and record
in (19).
2. Calculate the predicted accidents per year (20) by multiplying the accidents per year of the do
minimum (11) by the percentage of accidents remaining (19).
3. Repeat the calculations from lines (12) through (15), in lines (21) through (24) using the option
mean speed (2), to obtain the cost per accident for the option (24).
4. Multiply the predicted number of accidents per year (20) by the cost per accident (24) to get the
total accident costs per year for each accident category in line (25). Add together the costs for
fatal, serious, minor and non-injury accidents to get total accident costs per year (26).
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
Worksheets A6: Accident cost savings, continued
Accident by accident analysis - option Worksheet A6.3
Project option Oblong realignment
Movement category Head on Vehicle involvement All vehicles
2 Option mean speed 70 km/h Road category Rural strategic
Posted speed limit 100 km/h
Option Severity
Fatal Serious Minor
Non-injury
18 Percentage accident reduction 30 30 30 30
19 Percentage of accidents ‘remaining’ [100 – (18)] 70 70 70 70
20 Predicted accidents per year (11) x (19) 0.097 0.377 2.856 20.0
21 Accident cost, 100 km/h limit (tables A6.21(e) to (h)) 3,900,000 440,000 30,000 4,000
22 Accident cost, 50 km/h limit (tables A6.21(a) to (d)) 3,100,000 370,000 23,000 2,400
23 Mean speed adjustment = ((2) - 50)/50 0.4
24 Cost per accident = (22) + (23) x [(21) – (22)] 3,420,000 398,000 25,800 3,040
25 Accident cost per year = (20) x (24) 331,740 150,046 73,685 60,860
26 Total cost of accidents per year (sum of columns in row (25) fatal + serious + minor + non-injury)
$ 616,331
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Land Transport NZ’s Economic evaluation manual – Volume 1 First edition Effective from 1 October 2006
Worksheets A6: Accident cost savings, continued
Explanation sheet for accident rate analysis Worksheet A6.4
Worksheet A6.4 is used for accident rate analysis of the do minimum and/or project option(s) (or part
of an option). This worksheet is used with accident costs from table A6.22 in appendix A6.9. Use
several worksheets as necessary.
Header Fill in the boxes for project option, posted speed limit and road category.
1 or 1a Determine whether an accident prediction model or exposure-based accident prediction equation will be used to establish the typical accident rate (see appendix A6.5), and enter the reference number in (1) or (1a).
Then, either
2 Enter parameter b0 from table identified in (1).
3 Enter parameter b1 from table identified in (1).
4 Enter parameter b2 from table identified in (1), if applicable.
5 Enter traffic volume of the minor approach.
6 Enter traffic volume of the major approach.
7 Calculate the typical accident rate by using the appropriate formula from appendix A6.5.
Or
2a Enter the b0 coefficient from the table/section identified in (1a).
3a Enter the cross-section adjustment factor from table A6.13, if appropriate (if not, use 1.0 for (3a)). Adjustment is only applied when the seal width differs from the base seal width given for each flow band (6.7, 8.2 and 9.5 m).
4a Adjust the b0 coefficient using the cross-section adjustment factor, by multiplying (2a) by (3a).
5a Determine the exposure X for the traffic volume at time zero.
7 Calculate the typical accident rate by multiplying (4a) by (5a).
8 Determine the factor for adjusting the typical accident rate based on the posted speed limit from appendix A6.4 method B.
9 Calculate the adjustment factor for accident trend from (8) and the time in years from the time zero year to year 2006, refer to appendix A6.4 method B.
10 Adjust the typical accident rate for accident trends by multiplying (7) by (9).
11 Enter the cost per accident from table A6.22 in appendix A6.9. Use the appropriate accident costs for the posted speed limit.
12 Calculate the total accident cost per year by multiplying the typical accident rate (10) by the cost per reported injury accident (11).
Page 5-101
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
Worksheets A6: Accident cost savings, continued
Weighted accident procedure – do minimum Worksheet A6.5
Project option
Posted speed limit Traffic growth rate
Road category Time zero
Site specific accident rate
1 Number of years of accident records
2 Number of reported injury accidents over period
3 Number of accidents per year (2)/(1)
4 Trend adjustment factor (table A6.1(a))
5 Site-specific accident rate (accidents per year), AS (3) x (4)
Accident prediction model
6 Table used
7 Parameter b0
8 Parameter b1
9 Parameter b2
10 Lowest or sideroad AADT, Qminor
11 Highest or primary AADT, Qmajor
12 Typical accident rate (accidents per year), AT,dm (formula from appendix A6.5)
Go to step 13
Exposure based accident prediction equation
6a Table used
7a Coefficient b0 (/108 veh-km or /108 vehicles)
8a Cross-section adjustment factor from table A6.13 (1.0 for no adjustment)
9a Adjusted coefficient (7a) x (8a)
10a Exposure at time zero (108 veh-km or 108 vehicles)
12 Typical accident rate (accidents per year), AT,dm (9a) x (10a)
13 Accident trend factor for adjusting typical accident rate, ft (appendix A6.4 method B).
14 Adjustment factor for accident trend (1 + (8) x (time zero year - 2006) (appendix A6.4 method B).
15 Typical accident rate per year adjusted for accident trends, AT,dm (12) x (14)*
Weighting factor
16 k value (appendix A6.5)
17 Reliability of accident history, αX (default is 1.0)
18 Reliability of accident prediction model or equation, αM (default is 1.0)
19 Weighting factor, w, (17)2 x (16) / ((17)2 x (16) + (18)2 x (15)))
20 Do minimum weighted accident rate, AW,dm [(19) x (15)] + [1 – (19)] x (5)
21 Cost per reported injury accident (table A6.22)
22 Total do minimum accident cost per year (20) x (21)
• * For all mid-block analyses, the typical accident rate (15) must be divided by the mid-block length (in km).
Page 5-102
Land Transport NZ’s Economic evaluation manual – Volume 1 First edition Effective from 1 October 2006
Worksheets A6: Accident cost savings, continued
Explanation sheet for weighted accident procedure – option Worksheet A6.6
Worksheet A6.6 is used for weighted accident procedure analysis of the project options. This
worksheet uses the accident costs from table A6.22 in appendix A6. Use one worksheet for each
option.
Header Fill in the boxes for project option, posted speed limit and road category.
1 or 1a
Determine whether an accident prediction model or exposure-based accident prediction equation will be used to establish the typical accident rate (see appendix A6.5), and enter the reference in (1) or (1a).
Then, either
2 Enter parameter b0 from table identified in (1).
3 Enter parameter b1 from table identified in (1).
4 Enter parameter b2 from table identified in (1), if applicable.
5 Enter traffic volume of the minor approach.
6 Enter traffic volume of the major approach.
7 Calculate the typical accident rate by using the appropriate formula from appendix A6.
Or
2a Enter the b0 coefficient from the reference identified in (1a).
3a Enter the cross-section adjustment factor from table A6.13, when the seal width differs from the base seal width given for each flow band (6.7, 8.2 and 9.5 m). If not, use 1.0 for (3a).
4a Adjust the b0 coefficient using the cross-section adjustment factor, by multiplying (2a) by (3a).
5a Determine the exposure X for the traffic volume at time zero.
7 Calculate the typical accident rate by multiplying (4a) by (5a).
8 Determine the factor for adjusting the typical accident rate based on the posted speed limit from appendix A6.4 method B.
9 Calculate the adjustment factor for accident trend from (8) and the time in years from the time zero year to year 2006, refer to appendix A6.4 method B.
10 Adjust the typical accident rate for accident trends by multiplying (7) by (9).
11 Obtain the do minimum typical accident rate (AT,dm) from worksheet A6.5 row (15).
12 Obtain the weighted accident rate for the do minimum (AW,dm) from worksheet A6.5 row (20).
13 Calculate the weighted accident rate for the option (AW,opt) using the formula provided.
14 Enter the cost per accident from table A6.22 in appendix A6. Use the appropriate accident costs for the posted speed limit.
15 Calculate the total accident cost per year by multiplying the option weighted accident rate (13) by the cost per reported injury accident (14).
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Page A5-29
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A5.7 Vehicle operating cost tables, continued
Table A5.20 Additional VOC due to congestion regression coefficient by vehicle class
For equation… Use the expression… For VC ratio
A VOCCONG = e(a0 + a1 VC ratio + a2 VC ratio2) All
VOCCONG = a0 VC8 + a1 VC7 + a2 VC6 + a3 VC5 + a4 VC4 + a5 VC3 + a6 VC2 + a7 VC + a8
> VC ratio min B
VOCCONG = 0 < VC ratio min
Notes: VOCCONG = Additional vehicle operating costs due to congestion in cents/km
VC ratio = Volume to capacity ratio
VC = minimum(1.0, VC ratio)
Regression coefficient by vehicle class Road type Parameter
PC LCV MCV HCVI HCVII Bus
Equation A A A A B B a0 -12.2911 -13.0391 -13.3075 -9.6530 0 0 a1 26.6027 28.4746 30.5677 25.2847 3845.7716 444.0676 a2 -13.0656 -13.9637 -15.6630 -12.8644 -12828.17 -1589.5 a3 - - - - 15944.44 2066.24 a4 - - - - -9224.74 -1208.67 a5 - - - - 2634.0060 341.6788 a6 - - - - -349.5035 -44.2510 a7 - - - - 17.2916 2.1182 a8 - - - - -0.13015 -0.01506
Urban
VC ratio min 0.0 0.0 0.0 0.0 0.2 0.2 Equation A A B B B B a0 -18.2515 -23.0643 0 0 -4077.1234 0 a1 38.2254 48.8934 236.7032 205.0043 15158.6400 0 a2 -18.8159 -24.4849 -685.1407 -169.9105 -21008.7846 249.8613 a3 - - 686.7616 -571.7029 13145.0574 -791.9639 a4 - - -281.5338 835.2876 -3647.0357 863.1741 a5 - - 52.1363 -327.5159 492.4254 -372.0891 a6 - - -4.8606 45.8825 -24.7847 65.0512 a7 - - 0.2532 -1.9454 1.6754 -3.8747 a8 - - -0.00364 0.00701 0.00898 0.03432
2 lane highway
VC ratio min 0.0 0.0 0.35 0.30 0.0 0.38 Equation A A A A A A a0 -131.8912 -137.7901 -51.4201 -40.2957 -39.0039 -47.0705 a1 266.8652 278.4161 107.0245 87.0223 86.5483 98.6165 a2 -133.9751 -139.4647 -54.2123 -44.0602 -43.8797 -49.2987 a3 - - - - - - a4 - - - - - - a5 - - - - - - a6 - - - - - - a7 - - - - - - a8 - - - - - -
Motorway
VC ratio min 0.0 0.0 0.0 0.0 0.0 0.0
Page A5-30
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A5.7 Vehicle operating cost tables, continued
Table A5.21 Additional VOC due to congestion regression coefficients by road category
VOCCONG = exp(a0 + a1 × VC ratio + a2 × VC ratio2)
Rural 2 lane Regression coefficient Urban
Strategic Other Motorway
a0 -11.7813 -5.9111 -6.4977 -54.4197
a1 26.2995 14.3851 15.2277 110.8108
a2 -13.0587 -6.8104 -7.1393 -54.8299
Notes: VOCCONG = Additional vehicle operating costs due to congestion in cents/km
VC ratio = Volume to capacity ratio
VC = minimum(1.0, VC ratio)
Table A5.22 Additional VOC due to bottleneck delay by vehicle class (cents/minute – July 2002)
PC LCV MCV HCVI HCVII Bus
1.11 1.24 1.38 2.06 2.06 1.62
Table A5.23 Additional VOC due to bottleneck delay by road category (cents/minute – July 2002)
Rural other Rural strategic Urban arterial Urban other
1.197 1.211 1.158 1.158
Page A6-9
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.2 Choosing to undertake an accident analysis, continued
4 Determine whether or not there are the minimum number of accidents at
the site as follows:
Selecting the accident analysis method, continued If the site is …
and the minimum number of
accidents is … Then …
An intersection or road section <1
km long
≥5 injury accidents
or
≥2 serious and fatal accidents
Go to step 7.
An intersection or road section <1
km long
<5 injury accidents
or
<2 serious and fatal accidents
Go to step 5
A road section >1 km
≥3 injury accidents/km
or
≥1 serious and fatal accidents/km
Go to step 7.
A road section >1
km
<3 injury accidents/km
or
<1 serious and fatal accidents/km
Go to step 5
Consider whether or not an accident analysis is feasible using accident
prediction models or exposure-based accident prediction equations (as
given in appendix A6.5) as follows:
Is there an accident prediction
model or exposure-based accident
prediction equation available for the
do minimum and project option(s)?
Then …
Yes Go to step 6
5
No Go to step 9
6 Where there is not a sufficient accident history and models or exposure
equations are available, choose the accident analysis method as follows:
Fundamental change is defined earlier in appendix A6.2.
Will the project result in a
fundamental change at the site?
Where there is insufficient accident
history, conduct an accident
analysis using
Yes
Method C for do minimum
Method B for project option
No
Method C for do minimum and
project option
Page A6-10
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A6.2 Choosing to undertake an accident analysis, continued
7 Where there is a well-established accident history, choose the accident
analysis method as follows:
Fundamental change is defined earlier in appendix A6.2.
Selecting the accident analysis method, continued
Will the project result in a
fundamental change at the site?
Where there is good accident
history information, conduct an
accident analysis using
Yes
Method A for do minimum
Method B for project option
No Method A for do minimum and
project option
8 Where there is no or unreliable accident, use Method B for do minimum
and project option where accident prediction models or exposure-based
accident prediction equations are available.
Where a site fails to meet any of the preceding criteria for undertaking an
accident analysis, it may be possible to undertake an accident analysis if
the following criterion is met:
9
Is the site a rural re-alignment and
does a recognised accident
investigation specialist consider the
site to have significant safety
deficiencies?
Yes
Conduct a peer reviewed accident
by accident analysis (Method A)
No Go to step 10
10 Where there is insufficient accident history and no accident prediction
models or exposure-based accident prediction equations available, contact
Land Transport NZ.
Page A6-23
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A6.5 Typical injury accident rates and prediction models, continued
Application of models and equations
All accident prediction models and exposure-based accident prediction equations
calculate total injury and fatal accidents per year. The models and equations are
valid within the flow ranges provided. Analysts should exercise caution when using
the models and equations outside these ranges.
The accident prediction models and exposure-based accident prediction equations
in this section have been developed for the most common types of site in each
category. For example, traffic signal models were developed for two and three
phase signals, and are therefore not as accurate for signals with four or more
phases, or where there are a lot of phase changes during set periods of the day.
The more unusual a site is from the typical site type, the less appropriate the
general models and equations will be for predicting the typical accident rate. In
most cases where there is a feature of a site, such as the site’s layout, that has a
significant effect on the accident rate, the models and equations in this section are
not likely to be appropriate.
Models and equations from other sources
Analysts are permitted to use accident prediction models and exposure-based
accident prediction equations from other sources, as long as the robustness of
these other sources can be demonstrated. These sources need to be referenced
(eg, papers, research reports or unpublished material), along with information on
sample size, modelling technique and goodness-of-fit statistics.
For intersection and mid-block accident prediction models, analysts are referred to
the appropriate research report on accident prediction models. The accident
prediction models in these reports are useful for determining the effects of varying
traffic demands on particular movements at intersections, mode split and site
specific features.
Page A6-24
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.5 Typical injury accident rates and prediction models, continued
(1)
General cross and T urban intersection 50-70 km/h
The ‘general’ model is suitable for most urban cross and T intersection types and
uses two-way link volumes where the posted speed limit is 50-70 km/h. Where a
breakdown by accident type and road user type is required, or where the
proportion of turning vehicles is high compared to through vehicles, then the
appropriate conflicting flow models should be used.
For urban intersections on the primary road network (excluding roundabouts), the
typical accident rate (reported injury accidents per year) is calculated using:
AT = b0 × Qmajorb1 × Qminor/side
b2
where:
Qmajor the highest two-way link volume (AADT) for cross-roads and the
primary road volume for T-junctions
Qminor/side the lowest of the daily two-way link volumes (AADT) for cross-roads
and the side road flow for T-junctions
b0, b1 and b2 are given in table A6.2(a).
Table A6.2(b) shows the range of flows over which the accident prediction models
should be applied. The k values are for use in the weighted accident procedure.
Caution Caution should be exercised when using the prediction models for intersections
where opposing approach flows (on Qmajor or Qminor) differ by more than 25 percent.
In such cases, conflicting flow models should be used.
Table A6.2(a) Urban intersection injury accident prediction model parameters (2006)
Intersection type b0 b1 b2
Uncontrolled – T 2.53 × 10-3 0.36 0.19
Priority – Cross 1.25 × 10-3 0.21 0.51
Priority – T 5.65 × 10-5 0.76 0.20
Traffic signals – Cross 3.25 × 10-3 0.46 0.14
Traffic signals – T 1.52 × 10-1 0.04 0.12
Table A6.2(b) Urban intersection injury accident flow ranges and k values
Intersection type Range Qmajor AADT Range Qminor AADT k value
Uncontrolled – T 3,000 – 30,000 500 – 4,000 2.6
Priority – Cross 5,000 – 22,000 1,500 – 7,000 2.3
Priority – T 5,000 – 26,000 1,000 – 5,000 3.8
Traffic signals – Cross 10,000 – 32,000 5,000 – 16,000 4.8
Traffic signals – T 11,000 – 34,000 2,000 – 9,000 4.6
Page A6-35
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A6.5 Typical injury accident rates and prediction models, continued
(9)
Conflict – high speed priority crossroads, > 70 km/h, continued
The number of reported injury accidents per year for each accident type is
calculated table A6.10(b). These models calculate the number of accidents per
approach. However, unlike urban roundabout and signalised crossroad models,
each model is only applied to two approaches only (not all four). These approaches
are specified as either ‘major road’ or ‘minor road’ with the minor road being the
road with stop or give way control.
Table A6.10(b) High speed priority crossroad accident prediction models (per approach -2006)
Accident types Model k value
Crossing – hit from right
(major road approaches only) AT = 1.15 × 10-4 × q2
0.60 × q50.40 0.9
Crossing – hit from right
(minor road approaches only) AT = 1.97 × 10-4 × q2
0.40 × q110.44 2.0
Right turning and following vehicle (major road approaches only)
AT = 1.04 × 10-6 × q40.36 × q5
1.08× ΦRTB
ΦRTB = 0.22 (if right-turn bay present)
ΦRTB = 1.00 (if right-turn bay absent)
2.6
Other
(major road approaches only) AT = 1.09 × 10-4 × Qe(Major)
0.76 1.1
Other
(minor road approaches only) AT = 3.30 × 10-3 × Qe(Minor)
0.27 0.2
Page A6-36
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.5 Typical injury accident rates and prediction models, continued
(10)
Conflict – high speed priority T-junctions, > 70 km/h
The conflicting flow models for priority T-junctions in high-speed areas are suitable
for situations where a breakdown of accidents by accident type is required, where
one turning movement from the side road is greater than the other, or where the
intersection has a visibility deficiency.
For high speed (speed limit > 70 km/h) priority T-junctions on two lane, two way
roads the typical accident rates can be calculated for the five accident types in
table A6.11(a).
Table A6.11(a) High speed priority T-junctions accident prediction models types
Accident types Variables CAS movement
categories
Crossing – vehicle turning
(major road approach to right of side road)
JA
Right-turning and following vehicle
(major road approach to left of side road)
GC, GD, GE
Other
(major road approach to left of side road)
-
Other
(major road approach to right of side road)
-
Other
(side road approach)
-
q5 = Through vehicle flow along major road to right of minor road vehicles in veh/day q1 = Right-turning flow from minor road in veh/day VD = Sum of visibility deficiency in both directions when compared with Austorads SISD (3)
q4 = Through vehicle flow along major road to right of minor road vehicles in veh/day q3 = Right-turning flow from major road in veh/day SL = Mean free speed of vehicles approaching from the left of vehicles minor road
q5 = Through vehicle flow along major road to right of minor road vehicles in veh/day q3 = Right-turning flow from major road in veh/day
q5 = Through vehicle flow along major road to left of minor road vehicles in veh/day q6 = Left-turning flow from major road in veh/day
q1 = Right-turning flow from minor major road in veh/day q2 = Left-turning flow from minor road in veh/day
Page A6-37
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.5 Typical injury accident rates and prediction models, continued
(10)
Conflict – high speed priority T-junctions, > 70 km/h, continued
The typical accident rate (number of reported injury accidents) per year for each
accident type is calculated using table A6.11(b). Unlike models for other
intersections, these models are each for a specific approach.
Table A6.11(b) High speed priority T-junction accident prediction models (2006)
Accident types Model k value
Crossing – Vehicle turning
(major road approach to right of side road) AT= 5.08 × 10-6 × q1
1.33× q50.15 ×VD
0.33 8.1
Right-turning and following vehicle
(major road approach to left of side road) AT = 5.08 × 10-27 × q3
0.46× q40.67 ×SL
11 0.2
Other
(major road approach to left of side road) AT = 2.87 × 10-4 × (q3 + q4)
0.51 3.0
Other
(major road approach to right of side road) AT = 1.53 × 10-5 × (q5 + q6)
0.91 1.0
Other
(side road approach) AT = 1.41 × 10-2 × (q1 + q2)
-0.02 0.6
Page A6-38
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A6.5 Typical injury accident rates and prediction models, continued
(11)
Rural two-lane roads, ≥ 80 km/h
For two-lane rural roads in 80 and 100 km/h speed limit areas, the typical accident
rate (reported injury accidents per year) is calculated using the exposure-based
equation:
AT = (b0 × Sadj) × X
where:
Sadj is the cross section adjustment factor for seal widths
X is the exposure in 100 million vehicle kilometres per year.
Coefficient b0 is provided in table A6.12(a). The coefficient b0 is applicable to a
given mean seal width. Sadj is found in table A6.13, and varies according to traffic
flow, seal shoulder width and lane width.
The terrain type for b0 can be selected by analysing the route gradient data. The
gradient ranges should generally be maintained throughout the road section.
Portions of road that are less steep can occur in mountainous sections for short
lengths. Provided that the lower gradient length is followed by another
mountainous gradient, then the entire section can be classified as mountainous.
Table A6.12(b) shows the k values per kilometre that should be used in the
weighted accident procedure.
Table A6.12(a) Rural mid-block equation coefficients (b0) (2006)
Coefficients b0 by terrain type
AADT Mean seal
width (m) Level (0 to 3 %)
Rolling (>3 to 6 %)
Mountainous (> 6 %)
< 1,000 6.7 16 21 30
1,000 – 4,000 8.2 16 18 26
> 4,000 9.5 11 16 22
Table A6.12(b) Rural mid-block k values per km
k values per km by terrain type AADT
Level terrain (0 to 3%)
Rolling terrain (>3 to 6%)
Mountainous terrain (> 6%)
< 1,000 0.4 0.2 0.5
1,000 – 4,000 0.8 0.2 0.5
> 4,000 0.7 0.7 1.3
Page A6-41
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A6.5 Typical injury accident rates and prediction models, continued
(12)
Rural two-lane roads: heavy vehicles, ≥ 80 km/h
For freight transport service proposals, where the road network affected by the
proposal are primarily two-lane rural roads in 80 and 100 km/h rural areas,
accident rate equations for accidents involving heavy vehicles can be used to
estimate the change in freight related accidents.
The typical heavy vehicle accident rate (reported injury accidents involving heavy
vehicles per year) is calculated using the exposure-based equation:
AH = b0 X
where: X is the exposure in 100 million heavy vehicle kilometres per year.
Coefficient b0 is provided in table A6.14.
Table A6.14 Rural mid-block equation coefficients (b0) for heavy vehicles (2006)
Coefficients b0 by terrain type
AADT Level terrain (0 to 3 %)
Rolling terrain (> 3 to 6 %)
Mountainous terrain (> 6 %)
≤ 4000 19 40 50
> 4000 19 19 41
Page A6-42
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.5 Typical injury accident rates and prediction models, continued
(13)
Motorways and 4-lane divided rural roads
The typical accident rate (reported injury accidents per year) for motorways and
four-lane divided rural roads is for a one directional link only and is dependent on
the one-way traffic volume.
Motorways The typical accident rate is calculated using the model:
AT = b0 × QOb1 × L
where: QO is the daily one-way traffic volume (AADT) on the link, and
L is the length of the motorway link.
b0 and b1 are given in table A6.15(a).
Table A6.15(b) shows the range of one-way flows over which the accident
prediction models should be applied. The k values are for use in the weighted
accident procedure.
4-lane divided rural roads
For four-lane divided rural roads, the same motorway accident prediction model is
used. The b0 coefficient from this model has been increased by 20% to take into
account the presence of pedestrians, cyclists and limited access provisions of rural
roads compared to motorways.
Table A6.15(a) Motorways and 4-lane divided rural roads mid-block injury accident prediction model parameters
b0 b1
Motorway 2.96 × 10-7 1.45
4-lane divided rural road 3.55 × 10-7 1.45
Table A6.15(b) Motorways and 4-lane divided rural roads mid-block injury accident prediction model flow ranges and k values
Flow range AADT k value
Motorway 15,000 – 68,000 10.2
4-lane divided rural road 15,000 – 68,000 10.2
Page A6-57
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.9 Tables, continued
Table A6.19(a) Ratio of fatal to serious accident severities by movement for 50 km/h speed limit areas
Movement category CAS movement codes Fatal/ (fatal + serious)
Serious/ (fatal + serious)
Head on AB,B 0.13 0.87 Hit object E 0.04 0.96 Lost control off Road AD,CB,CC,CO,D 0.11 0.89 Lost control on road CA 0.08 0.92 Miscellaneous Q 0.17 0.83 Overtaking AA,AC,AE-AO,GE 0.05 0.95 Pedestrian N,P 0.10 0.90 Cyclist - 0.03 0.97
Rear end, crossing FB,FC,GD 0.07 0.93 Rear end, queuing FD,FE,FF,FO 0.08 0.92 Rear end, slow vehicle FA,GA-GC,GO 0.06 0.94 Crossing, direct H 0.07 0.93 Crossing, turning J,K,L,M 0.03 0.97 All movements 0.08 0.92
Table A6.19(b) Ratio of fatal to serious accident severities by movement for 70 km/h
speed limit areas
Movement category CAS movement codes Fatal/ (fatal + serious)
Serious/ (fatal + serious)
Head on AB,B 0.24 0.76 Hit object E 0.10 0.90 Lost control off road AD,CB,CC,CO,D 0.20 0.80 Lost control on road CA 0.14 0.86 Miscellaneous Q 0.30 0.70 Overtaking AA,AC,AE-AO,GE 0.12 0.88 Pedestrian N,P 0.30 0.70 Cyclist - 0.14 0.86
Rear end, crossing FB,FC,GD 0.16 0.84 Rear end, queuing FD,FE,FF,FO 0.14 0.86 Rear end, slow vehicle FA,GA-GC,GO 0.15 0.85 Crossing, direct H 0.21 0.79 Crossing, turning J,K,L,M 0.09 0.91 All movements 0.18 0.82
Page A6-58
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.9 Tables, continued
Table A6.19(c) Ratio of fatal to serious accident severities by movement for 100 km/h speed limit areas
Movement category CAS movement codes Fatal /
(fatal + serious) Serious /
(fatal + serious)
Head on AB,B 0.33 0.67
Hit object E 0.11 0.89
Lost control off road AD,CB,CC,CO,D 0.17 0.83
Lost control on road CA 0.16 0.84
Miscellaneous Q 0.34 0.66
Overtaking AA,AC,AE-AO,GE 0.14 0.86
Pedestrian N,P 0.45 0.55
Cyclist - 0.25 0.75
Rear end, crossing FB,FC,GD 0.19 0.81
Rear end, queuing FD,FE,FF,FO 0.16 0.84
Rear end, slow vehicle FA,GA-GC,GO 0.17 0.83
Crossing, direct H 0.25 0.75
Crossing, turning J,K,L,M 0.15 0.85
All movements 0.21 0.79
Table A6.20(a) Factors for converting from reported injury accidents to total injury accident
Fatal Serious Minor
Pedestrian 1.5 4.5
Push cyclist 3.3 5.5
50, 60 and 70 km/h speed limit
Other
1.0
1.5 2.8
Pedestrian 1.9 7.5
Push cyclist 4.2 9.5 80 and 100 km/h speed limit (excluding motorways)
Other
1.0
1.9 4.5
Pedestrian 2.3 13.0
Push cyclist 5.0 15.9 100 km/h speed limit remote rural area
Other
1.0
2.3 7.5
Motorway All 1.0 1.9 1.9
All All 1.0 1.7 3.6
Table A6.20(b) Factor for converting from reported non-injury accidents to total non-injury accidents
Speed limit area 50,60 or 70 km/h 80 or 100 km/h Motorway
All movements 7 18.5 7
Page A6-59
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.9 Tables, continued
Table A6.21(a) Cost per accident by movement and vehicle involvement for fatal injury accidents in 50 km/h speed limit areas
50 km/h speed limit fatal injury accidents
Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push cycle
Motor cycle
Bus Truck Car, van
& other
All vehicles
Head on AB,B 3,100,000 3,350,000 3,100,000 3,200,000 4,100,000 3,750,000
Hit object E 3,100,000 3,350,000 3,100,000 3,100,000 3,400,000 3,050,000
Lost control off road AD,CB,CC,CO,D 3,100,000 3,350,000 3,050,000 3,150,000 3,600,000 3,550,000
Lost control on road CA 3,100,000 3,350,000 3,100,000 3,150,000 3,450,000 3,150,000
Miscellaneous Q 3,100,000 3,350,000 3,100,000 3,100,000 3,050,000 3,050,000
Overtaking AA,AC,AE-AO,GE 3,100,000 3,350,000 3,100,000 3,150,000 3,450,000 3,350,000
Pedestrian/Cyclist N,P 3,100,000 3,350,000 3,100,000 3,100,000 3,050,000 3,050,000
Rear end, crossing FB,FC,GD 3,100,000 3,350,000 3,100,000 3,100,000 3,400,000 3,350,000
Rear end, queuing FD,FE,FF,FO 3,100,000 3,350,000 3,100,000 3,150,000 3,450,000 3,350,000
Rear end, slow vehicle
FA,GA-GC,GO 3,100,000 3,350,000 3,100,000 3,100,000 3,400,000 3,050,000
Crossing, direct H 3,100,000 3,350,000 3,100,000 3,100,000 3,400,000 3,300,000
Crossing, turning J,K,L,M 3,100,000 3,350,000 3,100,000 3,200,000 3,100,000 3,150,000
All movements 3,100,000 3,350,000 3,100,000 3,150,000 3,400,000 3,350,000
Table A6.21(b) Cost per accident by movement and vehicle involvement for serious injury accidents in 50 km/h speed limit areas
50 km/h speed limit serious injury accidents
Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push cycle
Motor cycle
Bus Truck Car, van & other
All vehicles
Head on AB,B 325,000 340,000 370,000 410,000 480,000 450,000
Hit object E 320,000 335,000 325,000 360,000 360,000 345,000
Lost control off road AD,CB,CC,CO,D 340,000 335,000 330,000 415,000 385,000 380,000
Lost control on road CA 320,000 345,000 325,000 375,000 380,000 355,000
Miscellaneous Q 325,000 335,000 335,000 370,000 360,000 360,000
Overtaking AA,AC,AE-AO,GE 325,000 320,000 325,000 330,000 410,000 345,000
Pedestrian/Cyclist N,P 330,000 335,000 365,000 335,000 330,000 330,000
Rear end, crossing FB,FC,GD 325,000 335,000 350,000 340,000 355,000 350,000
Rear end, queuing FD,FE,FF,FO 325,000 325,000 325,000 385,000 350,000 350,000
Rear end, slow vehicle
FA,GA-GC,GO 325,000 330,000 340,000 370,000 450,000 360,000
Crossing, direct H 325,000 335,000 370,000 375,000 395,000 375,000
Crossing, turning J,K,L,M 325,000 335,000 330,000 360,000 370,000 345,000
All movements 325,000 335,000 335,000 370,000 370,000 360,000
Page A6-60
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.9 Tables, continued
Table A6.21(c) Cost per accident by movement and vehicle involvement for minor injury accidents in 50 km/h speed limit areas
50 km/h speed limit
minor injury accidents Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push cycle
Motor cycle
Bus Truck Car, van & other
All vehicles
Head on AB,B 17,000 16,000 24,000 31,000 25,000 25,000
Hit object E 16,000 17,000 20,000 25,000 19,000 19,000
Lost control off road AD,CB,CC,CO,D 18,000 15,000 16,000 34,000 21,000 21,000
Lost control on road CA 15,000 15,000 16,000 41,000 21,000 20,000
Miscellaneous Q 15,000 17,000 15,000 25,000 18,000 19,000
Overtaking AA,AC,AE-AO,GE 17,000 17,000 18,000 26,000 22,000 20,000
Pedestrian/Cyclist N,P 22,000 18,000 19,000 30,000 18,000 18,000
Rear end, crossing FB,FC,GD 15,000 18,000 16,000 30,000 21,000 21,000
Rear end, queuing FD,FE,FF,FO 16,000 17,000 18,000 30,000 22,000 23,000
Rear end, slow vehicle
FA,GA-GC,GO 16,000 16,000 18,000 27,000 21,000 20,000
Crossing, direct H 17,000 18,000 21,000 31,000 24,000 23,000
Crossing, turning J,K,L,M 16,000 17,000 17,000 30,000 23,000 21,000
All movements 17,000 18,000 18,000 30,000 21,000 21,000
Table A6.21(d) Cost per accident by movement and vehicle involvement for non-injury accidents in 50 km/h speed limit areas
50 km/h speed limit non-injury accidents Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push cycle
Motor cycle
Bus Truck Car, van & other
All vehicles
Head on AB,B 1,000 1,100 4,200 5,900 2,000 2,400
Hit object E 1,000 1,100 4,900 5,800 2,000 2,500
Lost control off road AD,CB,CC,CO,D 900 1,400 2,000 5,200 1,200 1,300
Lost control on road CA 700 1,100 1,100 5,400 1,500 1,700
Miscellaneous Q 1,000 1,100 5,500 5,300 1,600 2,500
Overtaking AA,AC,AE-AO,GE 1,500 1,300 3,100 5,900 2,100 2,800
Pedestrian/Cyclist N,P 500 1,100 200 4,900 1,100 1,200
Rear end, crossing FB,FC,GD 1,400 1,100 2,500 5,800 2,000 2,200
Rear end, queuing FD,FE,FF,FO 1,200 1,100 3,400 5,900 2,000 2,200
Rear end, slow vehicle
FA,GA-GC,GO 1,100 1,100 3,000 5,900 2,000 2,500
Crossing, direct H 1,000 1,000 3,400 5,900 1,900 2,100
Crossing, turning J,K,L,M 1,000 1,100 2,400 5,800 2,000 2,200
All movements 1,000 1,100 2,800 5,800 1,800 2,100
Page A6-61
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.9 Tables, continued
Table A6.21(e) Cost per accident by movement and vehicle involvement for fatal injury accidents in 100 km/h speed limit areas
100 km/h speed limit fatal injury accidents Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push
cycle
Motor
cycle Bus Truck
Car, van
& other
All
vehicles
Head on AB,B 3,100,000 3,650,000 3,950,000 4,000,000 4,500,000 4,300,000
Hit object E 3,100,000 3,550,000 3,400,000 3,850,000 3,700,000 3,550,000
Lost control off road AD,CB,CC,CO,D 3,100,000 3,550,000 3,100,000 3,350,000 3,600,000 3,550,000
Lost control on road CA 3,100,000 3,550,000 3,400,000 3,850,000 3,850,000 3,800,000
Miscellaneous Q 3,100,000 3,550,000 3,400,000 3,750,000 3,250,000 3,300,000
Overtaking AA,AC,AE-AO,GE 3,100,000 3,550,000 3,200,000 3,100,000 3,800,000 3,300,000
Pedestrian/Cyclist N,P 3,100,000 3,550,000 3,400,000 3,100,000 3,100,000 3,100,000
Rear end, crossing FB,FC,GD 3,100,000 3,550,000 3,400,000 3,850,000 3,850,000 3,700,000
Rear end, queuing FD,FE,FF,FO 3,100,000 3,550,000 3,400,000 3,800,000 3,850,000 3,800,000
Rear end, slow vehicle
FA,GA-GC,GO 3,050,000 3,550,000 3,400,000 3,150,000 3,850,000 3,250,000
Crossing, direct H 3,100,000 3,550,000 3,400,000 4,400,000 3,650,000 3,900,000
Crossing, turning J,K,L,M 3,100,000 3,550,000 3,200,000 4,000,000 3,750,000 3,750,000
All movements 3,100,000 3,550,000 3,400,000 3,800,000 3,850,000 3,800,000
Table A6.21(f) Cost per accident by movement and vehicle involvement for serious injury accidents in 100 km/h speed limit areas
100 km/h speed limit serious injury accidents Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push cycle
Motor cycle
Bus Truck Car, van & other
All vehicles
Head on AB,B 325,000 405,000 360,000 435,000 535,000 495,000
Hit object E 330,000 370,000 320,000 380,000 370,000 360,000
Lost control off road AD,CB,CC,CO,D 320,000 375,000 335,000 375,000 385,000 375,000
Lost control on road CA 330,000 375,000 345,000 390,000 445,000 415,000
Miscellaneous Q 325,000 370,000 345,000 375,000 345,000 355,000
Overtaking AA,AC,AE-AO,GE 325,000 325,000 370,000 425,000 395,000 390,000
Pedestrian/Cyclist N,P 330,000 370,000 345,000 335,000 350,000 350,000
Rear end, crossing FB,FC,GD 330,000 370,000 365,000 400,000 435,000 415,000
Rear end, queuing FD,FE,FF,FO 330,000 370,000 395,000 355,000 385,000 375,000
Rear end, slow vehicle
FA,GA-GC,GO 335,000 370,000 350,000 385,000 420,000 380,000
Crossing, direct H 330,000 370,000 330,000 390,000 460,000 435,000
Crossing, turning J,K,L,M 325,000 330,000 370,000 400,000 420,000 405,000
All movements 330,000 370,000 345,000 400,000 415,000 405,000
Page A6-62
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A6.9 Tables, continued
Table A6.21(g) Cost per accident by movement and vehicle involvement for minor injury accidents in 100 km/h speed limit areas
100 km/h speed limit minor injury accidents Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push cycle
Motor cycle
Bus Truck Car, van & other
All vehicles
Head on AB,B 19,000 20,000 21,000 31,000 28,000 28,000
Hit object E 18,000 19,000 15,000 30,000 20,000 21,000
Lost control off road AD,CB,CC,CO,D 18,000 19,000 16,000 34,000 22,000 22,000
Lost control on road CA 18,000 19,000 18,000 32,000 25,000 24,000
Miscellaneous Q 18,000 18,000 16,000 22,000 20,000 21,000
Overtaking AA,AC,AE-AO,GE 17,000 16,000 19,000 27,000 21,000 22,000
Pedestrian/Cyclist N,P 18,000 19,000 18,000 30,000 18,000 19,000
Rear end, crossing FB,FC,GD 17,000 18,000 20,000 31,000 27,000 27,000
Rear end, queuing FD,FE,FF,FO 20,000 16,000 18,000 31,000 23,000 23,000
Rear end, slow vehicle
FA,GA-GC,GO 16,000 15,000 22,000 28,000 23,000 24,000
Crossing, direct H 18,000 18,000 20,000 31,000 29,000 29,000
Crossing, turning J,K,L,M 17,000 17,000 19,000 31,000 27,000 27,000
All movements 18,000 19,000 18,000 32,000 23,000 24,000
Table A6.21(h) Cost per accident by movement and vehicle involvement for non-injury accidents in 100 km/h speed limit areas
100 km/h speed limit non-injury accidents Total cost per accident ($ July 2006)
Movement category
CAS movement codes
Push cycle
Motor cycle
Bus Truck Car, van & other
All vehicles
Head on AB,B 1,200 1,600 4,300 7,700 2,500 3,500
Hit object E 1,200 1,600 3,200 6,800 1,500 2,400
Lost control off road AD,CB,CC,CO,D 1,200 1,300 1,100 6,300 1,300 1,600
Lost control on road CA 1,200 1,300 800 6,700 1,700 2,600
Miscellaneous Q 1,200 1,300 6,700 6,500 1,700 3,700
Overtaking AA,AC,AE-AO,GE 1,200 1,500 4,100 7,400 2,500 3,900
Pedestrian/Cyclist N,P 1,200 1,500 2,900 6,700 1,400 2,700
Rear end, crossing FB,FC,GD 1,200 1,300 5,100 7,700 2,400 3,000
Rear end, queuing FD,FE,FF,FO 1,200 1,900 4,400 7,500 2,500 2,900
Rear end, slow vehicle
FA,GA-GC,GO 1,200 1,300 5,200 7,500 2,500 3,300
Crossing, direct H 1,200 1,500 4,900 7,600 2,500 3,200
Crossing, turning J,K,L,M 1,200 1,300 3,200 7,500 2,400 3,200
All movements 1,200 1,500 2,900 7,100 1,800 2,400
Page A7-5
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A7.2 Background, continued
Accident rates An accident rate analysis has been undertaken to produce the accident reduction
benefit graphs shown in figures A7.9 to A7.12. The typical accident rate by terrain
type is taken from table A6.12(a). The accident rate at the passing lane and
downstream of the passing lane is less than the typical rate and varies depending
on proximity to the passing lane. The maximum reduction is along the passing lane
where the reduction in the typical rate is 25%. The reduction in the accident rate
reduces linearly to zero from the end of the passing lane to either the location
where vehicle platooning returns to normal (generally 5 to 10 km downstream), or
where another passing lane begins.
Table A7.1 shows the accident rate before the installation of a passing site. The
typical accident rates for hilly terrain have been interpolated as mid-way between
the accident rates for rolling and mountainous terrain.
If the passing lane forms part of a rural realignment or there are 5 or more injury
accidents or two or more serious and fatal accidents in any 1 kilometre section (up to
10 kilometres downstream of the passing lane) then accident-by accident analysis
may be suitable. To determine if such an analysis is appropriate refer to section
A6.2.
For accident by accident analysis, table A6.18(d) provides accident reductions for
up to 10 km downstream of the passing lane. In the majority of cases however
accident benefits should only be claimed up to 5 km downstream of a passing lane
unless a rural simulation analysis indicates that vehicle platooning will not return to
normal until more than 5 km downstream. No upstream accident benefits can be
included unless international or local research is produced to justify such benefits.
Passing lane length
A standard passing lane length of 1 km is assumed in these procedures. When
evaluating passing lanes with a length greater or shorter than 1 km, the
appropriate factors in table A7.8 should be applied to the road user benefits.
Table A7.1 Accident rates for rural mid-block locations (/108 veh-km)
Terrain type Typical accident rate – no passing lane
Flat 16
Rolling 20
Hilly 24 (interpolated from rolling and mountainous accident rates)
Mountainous 28
Page A7-6
Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A7.2 Background, continued
Proportion of heavy traffic
Two traffic streams, ‘cars’ (passenger cars and light commercial vehicles) and
‘trucks’ (medium/heavy commercial vehicles and buses) are assumed. The relative
proportions are based on the All periods composition for a rural strategic road,
which is 88 percent light vehicles and 12 percent heavy vehicles (refer table A2.1).
This assumption impacts on both the level of travel time benefits and on the value
of these benefits. The adjustment in equation 1 (appendix A7.4) can be applied
when the percentage of heavy vehicles is above or below 12%.
Traffic flow profile
The benefits of passing lanes are a function of the traffic using the road during a
particular period (vehicles/hour). To express the benefits of passing lanes as a
function of AADT, it is necessary to assume a traffic flow profile and the number of
hours per year that this particular level of traffic flow (percentage of AADT) occurs.
The traffic flow profile assumed for these procedures is based on that recorded for
rural State Highways that do not carry high volumes of seasonal holiday or
recreational traffic.
Although it may be expected that additional benefits will accrue to passing lanes on
roads that do carry high volumes of recreational traffic, the differences have been
found to be insignificant. The exceptional peaks of the roads with high volumes of
recreational traffic are offset by a reduction in the proportion of time the road
operates at around 7 percent of AADT (refer table A7.2 below).
The relationship between the benefits and the flow profile is relatively robust. In
situations where the traffic flow profile differs significantly from the above, the
simplified procedure may not be applicable, and more detailed analysis using
ruralsimulation (eg, TRARR) may be required.
Table A7.2 Traffic flow profiles
Roads with low volumes of recreational traffic
Roads with high volumes of recreational traffic
Hourly flow as % of AADT
hours/year % hours % AADT hours/yr % hours % AADT
0.9 3,979 45.42 9.7% 3,797 43.35 9.3%
3.5 933 10.65 8.9% 2,062 23.54 19.8%
7.0 3,210 36.64 61.6% 1,819 20.76 34.9%
10.5 541 6.18 15.6% 822 9.38 23.6%
14.0 97 1.11 3.7% 96 1.10 3.7%
17.5 10 0.11 0.5% 120 1.37 5.8%
21.0 - - - 6 0.07 0.4%
25.0 - - - 38 0.43 2.6%
Total 8,760 100% 100% 8,760 100% 100%
Page A8-7
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A8.2 Road traffic noise, continued
Valuation of road traffic noise impacts
There have been no specific studies carried out in New Zealand to determine the cost of road traffic noise however there is evidence to suggest that road traffic noise levels of 53 to 62 dBA do encourage people to move out of an area more quickly (Dravitzki et al, 2001).
A British survey (1995) of international (predominantly hedonic price) valuations suggests that the costs of noise are approximately 0.7% of affected property values per dB. A Canadian survey (Bein 1996) found that hedonic pricing revealed typical costs of 0.6% of affected property prices per dB, and the OECD recommends noise valuation based on 0.5% per dB. Bein argues that the total costs of noise are much higher than the change in property values because:
• consumers may not consider the full effects at time of purchase (supported by
a German study which showed increased willingness to pay with increased
understanding of noise);
• effects on other travellers and on occupants of commercial or institutional
buildings are not captured;
• hedonic studies typically consider values of homes which experience noise
above and below certain levels (a German study shows increasing willingness
to pay as base noise rises).
A reasonable figure for New Zealand is suggested as being 1.2% of value of properties affected per dB of noise increase, (0.6% multiplied by a factor of two to take into account the factors mentioned by Bein). Using the median house price of $327,000 (Real Estate Institute of NZ, 12 months to June 2007) and occupancy of 2.6 persons, this suggests a NPV cost of $3,924 per dB per property and $1,500 per dB per resident affected ($410 per household or $160 per person per year). This figure should be applied in all areas, since there is no reason to suppose that noise is less annoying to those in areas with low house prices. It is arguable as to what range of noise increase the cost should be applied to, but a conservative approach would be to apply it to any increase above existing ambient noise. This reflects a belief that most people dislike noise increases, even if the resulting noise is less than 50 dB.
Costs of road noise shall be incorporated into the external impact valuation (worksheet A8.1) and valued at:
$410 per year × dB change × number of households affected.
Where noise affects schools, hospitals, high concentrations of pedestrians and other sensitive situations an analysis may be required to determine the cost of noise that is site specific. The methodology for undertaking a valuation of noise at sensitive sites should be appropriate to the site (ie, willingness to pay surveys may be appropriate for sites with high concentrations of pedestrians and inappropriate for hospital sites).
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A8.2 Road traffic noise, continued
Reporting of road traffic noise impacts
The number of residential dwellings and the educational facilities affected by a
change in road traffic noise exposure shall be reported in terms of:
(a) the predicted change from the ambient noise level
(b) the difference between the predicted noise level and average noise design
levels given in table A8.1.
Predicted noise levels, which exceed the design guidelines given in Transit New
Zealand's Guidelines for the management of road traffic noise - State Highway
improvements, shall be reported on the worksheet A8.3.
Where noise is a significant issue, plans shall be prepared distinguishing each type
of land use. These plans shall show:
(a) contours of noise exposure in the do-minimum and for each project option, and
changes in noise exposure in bands of 3 dB(A), ie, 0 to 3 dB(A), > 3 to 6
dB(A), > 6 to 9 dB(A)
(b) the number of residents in each band
(c) where the predicted noise level is above the average noise design levels given
in table A8.1 or where the single event criterion should apply.
Where projects incorporate measures to mitigate noise, the incremental costs and
benefits of these measures shall be reported. If appropriate these costs and
benefits shall be reported for various levels of noise mitigation.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A9.6 Carbon dioxide emissions
Carbon dioxide
emissions
The greenhouse effect is the trapping of heat in the lower atmosphere by
greenhouse gases, particularly carbon dioxide and water vapour. These gases let
energy from the sun travel down to the earth relatively freely, but then trap some
of the heat radiated by the earth.
Impacts of carbon dioxide
While carbon dioxide occurs naturally, in the last 200 years the concentration of
carbon dioxide in the Earth's atmosphere has increased by 25 percent. As these
extra amounts of carbon dioxide are added to the atmosphere they trap more heat
causing the Earth to warm. This extra warming is called the enhanced greenhouse
effect and is predicted to significantly change the Earth's climate.
Carbon dioxide makes up about half of the extra greenhouse gases and a
significant proportion of this extra carbon dioxide is emitted by motor vehicles.
Valuation of carbon dioxide emissions
There has been considerable debate as to the cost of carbon dioxide emissions and
proposed values cover a wide range. The variation reflects uncertainty about the
levels and timing of damage as well as an appropriate discount rate. The Land
Transport Pricing Study (1996) determined an average cost of carbon dioxide
emissions of $30 per tonne, which is updated to $40 per tonne (2004 values) and
which equates to 12 cents per litre of fuel. Carbon emissions are approximately
valued at 7.5 per cent of total vehicle operating costs for default traffic
composition. These values shall be used in project evaluations. Light and heavy
vehicle carbon emissions can be individually determined in A9.7.
The monetary value adopted to reflect the damage costs of carbon dioxide
emissions in project evaluations has no relationship to the level of carbon tax that
the government might consider as a policy instrument to restrain carbon dioxide
emissions.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A9.7 Assessment of carbon dioxide emissions
Assessment of carbon dioxide emissions
There is a direct relationship between carbon dioxide emissions and fuel
consumption and emissions can be calculated using different procedures for road
inks and for intersections.
Emission classes
The emissions classes defined in step 2 of section 9.3 are applicable to the
assessment of carbon dioxide emissions.
Road links
For road links vehicle operating costs (VOC) are calculated by summing running
costs and roughness costs. The fuel cost component of running costs is in the
range 20-40%, depending on speed and gradient, while for roughness costs the
fuel cost component is negligible. The following formulae can be used to determine
carbon dioxide emissions:
Light CO2 (in tonnes) = VOC($) x 0.0015
Heavy CO2 (in tonnes) = VOC($) x 0.0028
Where VOC includes values due to speed and gradient (Tables A5.1 – A5.11) and
congestion (Tables A5.16 – A5.23), i.e. VOC due to roughness is excluded (Tables
A 5.12 – A5.15)
For shape correction projects the VOC benefits are due mainly to reduced
roughness costs and no change in carbon dioxide emissions shall be reported.
Intersections
Where computer-based models, such as SIDRA, INTANAL and SCATES, are used to
analyse intersection improvements, then fuel consumption, which is an output of
these models, can be used to determine carbon dioxide emissions by applying the
following formula:
Light CO2 (in tonnes) = Fuel consumption (in litres) x 0.0022
Heavy CO2 (in tonnes) = Fuel consumption (in litres) x 0.0025
These formula can also be used for projects evaluated using computer models.
Generated traffic
For generated traffic, the total VOC or carbon dioxide generated by the additional
trips shall be estimated, and the resulting values calculated.
Reporting of carbon dioxide emissions
The predicted value change in carbon dioxide emissions shall be calculated as $40
per tonne of carbon dioxide or five percent of the VOC changes, and shall be
included in the BCR. Carbon dioxide impacts shall also be quantified in tonnes and
reported in the project summary sheet.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A11.9 Applying variable trip matrix techniques
When to use Variable trip matrix (VTM) techniques should be used to model the effects of
induced traffic where high levels of congestion are expected in both or either the
do minimum or project option networks. Variable matrix methods differ from
conventional fixed trip matrix techniques in that demand in the project option
matrix is generally higher than that in the do minimum matrix for a given forecast
year. VTM methods also require more complex procedures to evaluate net project
benefits than fixed matrix methods.
VTM methods may not be necessary if induced traffic is expected to have similar
effects on the economic performance of each project option being compared. If this
exceptional case is considered to apply, advice should be sought from Land
Transport NZ or Transit NZ as to whether VTM methods should be used.
General guidance
The purpose of variable matrix methods is to provide estimates of the effects of a
project on travel patterns (that is, the difference between the do minimum and
project option matrices) and on the benefits of the scheme. Because these effects
may be small and the estimates should be unbiased, methods relying heavily on
professional judgement (such as many of the growth constraint techniques) are
inappropriate. Two variable matrix methods based on analytical techniques are
recommended: elasticity methods and demand models.
The options are:
(a) using these methods consistently for both the do minimum and project option
matrices or
(b) using growth constraint methods to establish the do minimum matrix and
variable matrix methods for estimating the effect of the project option on the
trip matrix (as an adjustment to the do minimum).
For demand modelling approaches, where the source of data is a strategic city
model, it may be considered unlikely that the strategic model will have sufficient
sensitivity to measure the impact on the trip matrix of a single scheme, and the
use of such models will therefore generally not be feasible. Elasticity methods are
therefore likely to be needed to supplement the strategic model.
For project demand models, it is likely that these would generally be applied
consistently for the do minimum and project option matrices.
Whatever method is applied, its results should be verified by comparison with an
FTM evaluation based on the do minimum trip matrix.
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A11.9 Applying variable trip matrix techniques, continued
Procedure Having decided that congestion will be significant in both the do minimum and
project option for a forecast year, follow the steps below to apply variable matrix
methods.
Step Action
Select an appropriate method to adjust the do minimum and project
option matrices:
Method Description Go to
A
Use elasticity methods
for both the do
minimum and project
option matrices.
Appendix A11.10
B
Use other growth
constraint techniques
(appendix A11.2) for
the do minimum
matrix and elasticity
techniques to estimate
the effects of the
project option on the
trip matrix.
Appendix A11.10
C
Use the project
demand model for
both the do minimum
and project option
matrices.
Appendix A11.11
1
Alternatively, use a fixed matrix approach, then apply a predetermined
correction factor to adjust benefits for variable matrix effects.
Note that project benefits will need to be calculated using a consumer
surplus evaluation and reported in worksheet 3.
2 Conduct a fixed matrix analysis (see appendix A11.2) and compare the
results with those obtained from the variable matrix analysis.
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A12 Update factors and incremental BCR
A12.1 Introduction
Introduction This appendix contains update factors for benefits and costs. Target incremental
BCR ratios are also contained in this appendix
This appendix contains the following topics:
Topic Page
A12.1 Introduction A12-1
A12.2 Update factors for construction and maintenance costs A12-2
A12.3 Update factors for benefits A12-3
In this appendix
A12.4 Target incremental BCR A12-4
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A12.2 Update factors for construction and maintenance costs
Cost update factors
The factors for updating construction and maintenance cost estimates prepared in
earlier years are:
Table A12.1 Cost update factors
Calendar year in which estimate prepared Factor to adjust to July 2007
2005 1.19
2006 1.09
2007 1.00
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A12.3 Update factors for benefits
Benefit update factors
The factors for updating the benefit values in this manual are:
Table A12.2 Benefit update factors
Variable Base date Factor to adjust to July 2007
Travel time cost savings TT July 2002 1.14
Vehicle operating cost savings VOC July 2002 1.30
Accident cost savings AC July 2006 1.04
Comfort benefits CB July 2002 1.14
Driver frustration DF July 2002 1.14
Passenger transport user benefits PT July 2002 1.14
Walking and cycling benefits WCB July 2002 1.14
Travel behaviour change benefits TBhC July 2004 1.09
A7 passing lane procedure accident cost savings
July 2002 1.16
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A12.4 Target incremental BCR
Target incremental BCR
The analyst shall choose and report the target incremental BCR used when
undertaking incremental analysis of project options. Where the selected target
incremental ratio differs to the guidance below, the analyst must provide a detailed
explanation supporting the chosen value. The following guidance is provided:
1. The minimum incremental BCR shall be 1.0, in order to ensure that a higher
cost project option is more efficient than a lower cost option.
2. Where the BCR of the preferred option is greater than 2.0 but less than 4.0,
the target incremental BCR shall be 2.0.
3. Where the BCR of the preferred option is greater than or equal to 4.0, the
target incremental BCR shall be 4.0.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A13 Risk analysis
A13.1 Introduction
Introduction This appendix follows the principles set out in the Australian/New Zealand Standard
AS/NZS 4360 on risk management. These principles are set out below and the
analysis covers all these principles with the exception of treatment:
1. Establish the strategic, organisational and risk management context in which
the process will take place.
2. Identify what, why and how risks can arise as the basis for analysis.
3. Assess risks in terms of their consequences and likelihood within the context of
any existing controls. Consequence and likelihood can be combined to produce
an estimate of risk.
4. Evaluate risks by comparing estimated levels of risk against pre-established
criteria. This enables the identification of management priorities.
5. Treat risks. This should involve the acceptance and monitoring of low-priority
risks and the development and implementation of risk management plans for
higher priority risks.
6. Communicate and consult with all stakeholders at each stage of the risk
management process. The process is often iterative.
7. Monitor and review the performance of the risk management system (plan)
and any changes that may affect it.
This appendix contains the following topics:
Topic Page
A13.1 Introduction A13-1
A13.2 Risk A13-2
A13.3 Risk management A13-3
A13.4 Risk analysis A13-4
A13.5 Benefit risks A13-7
A13.6 Cost risks A13-11
A13.7 High risks A13-14
A13.8 Relative risk A13-15
A13.9 Contingencies A13-18
In this appendix
A13.10 Example of risk analysis A13-19
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A13.2 Risk
Overview The purpose of considering risk is to develop ways of minimising, mitigating and
managing it. Risk assessment and risk management are continuous processes that
start at the project inception stage and proceed through to project completion and
ideally should involve all the relevant parties.
The extent of risk assessment needs to be appropriate to the stages of project
development. The critical project stages are from the rough order cost (ROC) stage
through to preliminary assessed cost (PAC) stage and then to final estimate of cost
(FEC) stage. It is intended that the scope and extent of analysis will progress
according to the stage of project development and be most comprehensive at the
FEC stage. The risk identified and evaluated in these various stages needs to be
monitored and managed, particularly in the final construction stage.
Detailed risk analysis such as Monte Carlo simulation may be a further action
following an initial risk assessment The requirements as to whether risk analysis is
necessary are specified in the Land Transport NZ Programme and Funding Manual
Risk management process
Start of project stage:
Identify risks
Assess risk management
strategies (reduction,
mitigation, avoidance,
quantification through date
collection etc.)
Choose preferred strategy *
During the project stage:
Implement preferred
strategy
At end of project stage:
Report on outcomes of
strategy (one aspect of
the reporting would be
that contained in
worksheets A13.1-
A13.3)
Assess implications for
next stage of project*
* The types of choices which may be addressed at these decision points are
illustrated in appendix A13.4.
Risk definition and
planning
Implementation and
monitoring
Review and
recommendations
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A13.3 Risk management
Do more work on issue in:
Purpose of investment is to:
Risk Examples of
alternative actions
No action, accept
risk this phase
later phase
quantify risk
reduce risk
Defer
Short term emphasis on matrix estimation, validation and additional validation data collection
X X X - X -
Medium term model improvement/ updating
X - X - X X
Base matrix
Longer term data collection
X - - - - X
Growth forecasts
Ensure that planning estimates are reliably based on best practice procedures
X X X - X X
Collect more validation data
X X X X - - Assignment
Improve model X X X - X X
Collect more accident data
X X X - X - Accidents
Defer project until accident rates can be determined with greater confidence
X - - - X X
Surveys X X X X X -
Relocation of services
X - X - X -
Services
Alternative road design
X X - - X X
Geotechnical Surveys; increase sampling density
X X X X X -
Scheme selection X X - - X X
Redesign/extend consultation procedure
X X X - X -
Environment and planning
Natural hazard X X X X X -
Alternative design X X - - X X Base engineering Can more be done to
reduce complexity risks?
X X X - X -
Scheme selection X X - - X X
Risk management options example
Land and property Early acquisition X X X - X -
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A13.4 Risk analysis
Risk assessment steps
Risk analysis structure
The analysis contain three separate worksheets A13.1 to A13.3:
Worksheet A13.1
Used for both an abbreviated summary of risks for projects that are at the
preliminary ROC stage of evaluation and for detailed reporting of risks for projects
that are past the ROC stage
Worksheet A13.2
Provides additional detailed information on the high risks identified in worksheet
A13.1 plus an indication of the projects relative risk to a typical project
Worksheet A13.3
Provides a summary of the project cost contingencies.
The risk analysis is not intended to be limiting and organisations are welcome to
use more advanced techniques such as Monte Carlo analysis if they consider this
appropriate. These guidelines do not cover every eventuality.
Establish the context
Identify risks
Assess risks
Evaluate risks
Treat risks
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
A13.4 Risk analysis, continued
Use of worksheets A13.1 to A13.3 in risk management
Some of the key features of a risk management process are illustrated in appendix
A13.2, the risk management process where risks are identified at the start of a
project stage and risk management strategies (or treatments) developed and
implemented through the project. On completion, the outcomes are reviewed and
their implications for the next stage established.
At the end of a project stage, depending on the nature of the risks, there are a
number of strategic decisions available: accept the risk or, otherwise, reduce its
likelihood or its consequences, or transfer or avoid the risk. These decision may in
turn lead to the following actions:
• abandon the project (this should normally be limited to the PFR stage)
• reformulate the project to capture the majority of the benefits at reduced cost
• conduct further investigation to reduce one or more of the identified
uncertainties (either physical investigations of more detailed assessment of
risks)
• defer further processing of the project until information comes available that
assists in reducing the uncertainties
• defer further processing of the project until the FYRR increases to the required
cut-off level
• proceed to the next stage of processing, or to tender.
In most cases, there are likely to be investigations or other actions which would
enable the risks, once identified, to be quantified or reduced. Examples of such
actions are illustrated in appendix A13.3 risk management options.
Worksheets A13.1 to A13.3 shall be used to indicate areas of especially high or low
risk in the project evaluation. Risks which are common to most projects (for
example, the effects of national economic growth on traffic levels or inflation in the
unit costs of construction) should not be included in the assessment. The
worksheet instructions give guidance on how high and low risks may be
distinguished from such common (‘medium’) risks. Only risks which are expected
to have such significant effects on project benefits or costs that they will be
material to decisions on the development of the project should be reported.
The procedures described in this worksheet are not reliant on quantitative methods
of risk analysis such as Monte-Carlo but, where these detailed and comprehensive
methods have been applied, in discussion with Land Transport NZ those results
may be used in place of or as a supplement to these worksheets.
The projects for which risk analysis is required are specified in the Land Transport
NZ Programme and Funding Manual.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A13.4 Risk analysis, continued
Summary of risk
Worksheet A13.1 shall be used to indicate areas of high or low risk in projects. In
this worksheet nine overall categories of risk are defined, within each of which a
number of risk sub-categories have been identified as being potentially material.
For each item in the worksheet, the analyst should assess the risk according to the
suggested criteria (discussed below) and indicate whether any risks fall into the
low or high categories. In some cases, additional sensitivity tests may be required
to determine the level of risk, and these are included in the instructions below.
The list may not be exhaustive and space is allowed for identifying other material
risks in the worksheet.
Although it will generally be appropriate to report on the risks for the detailed sub-
categories, in those circumstances where only broad risk information is available,
such as in early project stages, it would be acceptable to be report on the risks for
each category as a whole, and the worksheet is structured to permit this.
The criteria which are used to distinguish high and low risks in the guidance which
follows are based on professional experience of the key factors which affect level of
risk. Where there is any doubt as to the appropriate classification, the general rule
is that the risk should be classified as high if there is a 5% chance that the effect
on overall benefits or costs could be outside the range ±5% for costs and ±7.5%
for benefits (that is that the 95% confidence limits are in the region of ±5% for
costs and ±7.5% for benefits).
In cases of doubt, specific sensitivity tests are proposed, but these may be
amended if there are more appropriate tests.
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A13.5 Benefit risks
Benefit risks As a general principle, if there is at least a 5% risk that any of the following
categories could account for a variation in TOTAL project benefits of more than
±7.5% then it should be classified as ‘High risk’.
1 Base travel demand
Base demand data sources may be counts, intercept surveys or a strategic model usually based on household surveys. References to counts below are concerned with models derived solely from this source.
1.1 Age of data source Low risk: Intercept survey or traffic counts less than 1 year old.
Strategic model: household travel survey less than 5 years old.
High risk: Intercept survey or traffic counts greater than 3 years old.
Strategic model: household travel survey greater than 10 years old.
1.2 Data scope Low risk: Count and intercept sites in project corridor.
Strategic model has been reviewed and approved.
High risk: Count and intercept sites not in close vicinity of project and thus not encompassing most (>80%) of the relevant traffic.
No independent review of strategic model.
1.3 Data quantity and statistical reliability
Low risk: 5 or more years continuous count data.
Intercept data.
Strategic model: one-day household travel diary with either a sampling rate greater than 3% of population or a sample of at least 5,000 households.
High risk: Counts: a few weeks count data in context of seasonal traffic patterns, such that the 95% confidence level for annual traffic exceeds ±10%.
Strategic model: one-day household travel diary with either a sampling rate less than 1.5% of population or a sample of less than 2,500 households.
1.4 Travel demand validation to counts
Low risk: Very comprehensive count programme with close fit of demand matrix to counts.
High risk: Just adequate fit of the demand matrix to limited set of count screenlines.
1.5 Low risk: Derived from classified vehicle counts for an adequate sample of annual traffic.
Benefit risks – base travel demand
Traffic composition (model based on counts alone)
High risk: EEM standard values used without local validation, such that the HCV proportion of traffic flow could vary by more than ±50%.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A13.5 Benefit risks, continued
2 Growth forecasts The sensitivity tests proposed below may be varied if alternative ranges can be justified.
Low risk: Projected growth less than 0.5% per annum growth.
2.1 High city population
High risk: Projected growth greater than 1.5% per annum.
In this case, conduct sensitivity tests allowing for the growth rate to vary by ±50%. If project benefits are affected by more than 10%, classify as high risk, otherwise classify as medium risk.
Low risk: Development-related traffic is less than 5% of traffic using the project.
2.2 Development-related traffic as proportion of scheme traffic
High risk: Development-related traffic is greater than 15% of traffic using the project.
In this case, conduct sensitivity tests allowing for the development size to vary by ±50%. If project benefits affected by more than 10%, classify as high risk, otherwise classify as medium risk.
Low risk: Analysis based on more than 10 years count data.
Benefit risks – growth forecasts
2.3 Time series projection (for a model based on counts alone)
High risk: Analysis based on less than 5 years data, or on less than 10 years data where the historic trend is irregular, such that the annual average growth rate cannot be established within a 95% confidence limit of ±1% per annum.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No.1 Effective from 1 October 2007
A13.5 Benefit risks, continued
3 Assignment The sensitivity tests proposed below may be varied if alternative ranges can be justified.
3.1 Other future projects
Low risk: No planned or potential future projects will affect the project.
High risk: Future projects will significantly affect the project’s traffic flows (greater than 10%). In this case, conduct sensitivity tests to determine possible future project effects. If project benefits are likely to be affected by more than 10% (allowing for the likelihood of the project proceeding), classify as high risk, otherwise classify as medium risk.
3.2 Path derivation method
The path derivation method will include the assignment procedures used to load trips onto the network and select vehicle routes.
Low risk: Assignment procedure not used or the project is a simple improvement in a single corridor with no competing routes.
High risk: There are a number of closely competing alternative routes.
In this case, conduct an appropriate sensitivity test. Typical tests would include varying the parameters of the path derivation process, for example by changing the number of iterations used in assignment. Ensure the model specification is peer reviewed. If project benefits are affected by more than 10%, classify as high risk, otherwise classify as medium risk.
3.3 Routeing parameters
The routeing parameters control the relative effects of time and distance (and any other factors) on the choice of route.
Low risk: Assignment procedure not used or the project is of a similar standard and length to existing routes.
Benefit risks – assignment
High risk: The project is longer and of a much higher standard than existing routes.
In this case, conduct sensitivity tests allowing the nominal parameter value to vary by ±50% or some equivalent increment. If project benefits are affected by more than 10%, classify as high risk, otherwise classify as medium risk.
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Land Transport NZ’s Economic evaluation manual – Volume 1 First Edition Effective from 1 October 2006
A13.5 Benefit risks, continued
3.4 Supply relationships
Supply relationships will generally include link capacities, free flow speeds and speed-flow relationships (in the context of a traffic assignment).
Low risk: Assignment procedure not used or the network is uncongested.
High risk: Parts of the network are very congested.
In this case the analyst should conduct sensitivity tests allowing for a uniform matrix change of ±5% or a uniform change in all saturated junction and link capacities of ±5%. If project benefits are affected by more than 10%, classify as high risk, otherwise classify as medium risk.
3.5 Convergence Low risk: Assignment procedure not used or assignment convergence is substantially better than validation requirement (refer worksheet 8.4).
Benefit risks – assignment, continued
High risk: Assignment does not meet validation requirement.
4 Accidents Only consider 4.2 & 4.3 if 4.1 is judged to be high risk.
Low risk: Less than 10% of benefits accounted for by accidents (or accident analysis not used).
4.1 Proportion of benefits accounted for by accidents
High risk: More than 20% of benefits accounted for by accidents.
4.2 Observed accident sample size
Low risk: Historical accident record includes at least 100 accidents.
High risk: Historical accident record contains less than 40 accidents.
Low risk: Accident analysis not used.
Benefit risks – accidents
4.3 Judgemental accident reduction risk
High risk: Accident-by-accident analysis used for the project options.
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A13.6 Cost risks, continued
9 Services Underground and overhead services may include (but not be limited to) telecommunications cables, electricity cables, gas mains, water mains and sewers.
9.1 Existence, location and condition
Low risk: Complete certainty of the services that are present in the area, and a high degree of confidence in their location, construction details and condition.
High risk: Service authorities not contacted, or services data unreliable, engineering details and condition unknown or poorly defined.
9.2 Site flexibility Low risk: Wide reservation with few constraints to accommodate last minute service changes.
High risk: Constrained (normally urban) corridor with few options to accommodate changes.
9.3 Cooperation of utilities
Low risk: Single authority with an excellent track record of prompt attention to relocations
Cost risks – services
High risk: Several authorities to be coordinated in the same work area and/or poorly resourced and organised authority, or an authority in a state of major organisational change.
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A13.7 High risks
Identified high risks
There are two parts to treatment of identified high risks in worksheet A13.2(a) and
(b). In worksheet A13.2(a), additional information should be supplied on the
nature of the high risks identified in each of the main risk categories, and their
implications for project decisions. Where possible and appropriate, courses of
action for treating the risks should also be proposed and the costs of these actions
estimated; a brief discussion of courses of action is given at the end of this section.
In respect of ‘high’ risk categories identified in worksheet A13.1, additional
information should be supplied under the following 5 headings.
1. Risk category: (base travel demand, growth forecasts etc); only those
categories where high risks have been identified need be covered; if it is
judged that the identified low and high risks in any particular category are such
that, overall, the category risk is not material, this should be stated and
justified, and no further information is required.
2. Description: the risks should be described.
3. Estimated impacts on benefits/cost (as appropriate): Provide judgement as to
the potential size of the risks, in terms of the % impact on either benefits or
costs where feasible4. It is however accepted that it is the nature of some risks
that reliable estimation of their potential impacts is impossible.
4. Description of implications for option selection and/or project timing: risks may
impact on decisions on either option selection (where the risks are not common
to all options) or project timing (where, for example, the risks of a non-
qualifying BCR may be so high as to suggest a delay in project
implementation).
5. Recommended actions and estimated costs of those actions (where relevant):
Land Transport NZ will wish to consider the appropriate treatment for each risk
(the generic options are: accept, avoid or transfer risks, reduce likelihood or
reduce consequences of risks), and recommendations are sought on specific
actions and their potential costs.
4 This estimate should broadly correspond to a 95% confidence limit.
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Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
Worksheets A6: Accident cost savings
Accident by accident analysis - option Worksheet A6.3
Project option
Movement category Vehicle involvement
2 Option mean speed Road category
Posted speed limit
Option Severity
Fatal Serious Minor
Non-injury
18 Percentage accident reduction
19 Percentage of accidents ‘remaining’ [100 – (18)]
20 Predicted accidents per year (11) x (19)
21 Accident cost, 100 km/h limit (tables A6.21(e) to (h))
22 Accident cost, 50 km/h limit (tables A6.21(a) to (d))
23 Mean speed adjustment = ((2) - 50)/50
24 Cost per accident = (22) + (23) x [(21) – (22)]
25 Accident cost per year = (20) x (24)
26 Total cost of accidents per year (sum of columns in row (25) fatal + serious + minor + non-injury)
$
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
Worksheets A6: Accident cost savings
Accident rate analysis Worksheet A6.4
Project option
Posted speed limit Traffic growth rate
Road category Time zero
Accident prediction model
1 Table used
2 Parameter b0
3 Parameter b1
4 Parameter b2
5 Lowest or sideroad AADT, Qminor
6 Highest or primary AADT, Qmajor
7 Typical accident rate (accidents per year), AT (appendix A6.5).
Go to step 8
Exposure-based accident prediction equation
1a Table used
2a Coefficient b0 (/108 veh-km or /108 vehicles)
3a Cross-section adjustment factor from table A6.13 (1.0 for no adjustment)
4a Adjusted coefficient (2a) x (3a)
5a Exposure at time zero (108 veh-km or 108 vehicles)
7 Typical accident rate (accidents per year), AT (4a) x (5a)
8 Accident trends factor for adjusting typical accident rate (appendix A6.4 method B)
9 Adjustment factor for accident trend (1 + (8) x (time zero year - 2006) (appendix A6.4 method B)
10 Typical accident rate per year adjusted for accident trends, AT (7) x (9)
11 Cost per reported injury accident (table A6.22)
12 Total accident cost per year (10) x (11)
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
Worksheets A6: Accident cost savings
Weighted accident procedure – do minimum Worksheet A6.5
Project option
Posted speed limit Traffic growth rate
Road category Time zero
Site specific accident rate
1 Number of years of accident records
2 Number of reported injury accidents over period
3 Number of accidents per year (2)/(1)
4 Trend adjustment factor (table A6.1(a))
5 Site-specific accident rate (accidents per year), AS (3) x (4)
Accident prediction model
6 Table used
7 Parameter b0
8 Parameter b1
9 Parameter b2
10 Lowest or sideroad AADT, Qminor
11 Highest or primary AADT, Qmajor
12 Typical accident rate (accidents per year), AT,dm (formula from appendix A6.5)
Go to step 13
Exposure based accident prediction equation
6a Table used
7a Coefficient b0 (/108 veh-km or /108 vehicles)
8a Cross-section adjustment factor from table A6.13 (1.0 for no adjustment)
9a Adjusted coefficient (7a) x (8a)
10a Exposure at time zero (108 veh-km or 108 vehicles)
12 Typical accident rate (accidents per year), AT,dm (9a) x (10a)
13 Accident trend factor for adjusting typical accident rate, ft (appendix A6.4 method B).
14 Adjustment factor for accident trend (1 + (8) x (time zero year - 2006) (appendix A6.4 method B).
15 Typical accident rate per year adjusted for accident trends, AT,dm (12) x (14)*
Weighting factor
16 k value (appendix A6.5)
17 Reliability of accident history, αX (default is 1.0)
18 Reliability of accident prediction model or equation, αM (default is 1.0)
19 Weighting factor, w, (17)2 x (16) / ((17)2 x (16) + (18)2 x (15)))
20 Do minimum weighted accident rate, AW,dm [(19) x (15)] + [1 – (19)] x (5)
21 Cost per reported injury accident (table A6.22)
22 Total do minimum accident cost per year (20) x (21)
* For all mid-block analyses, the typical accident rate (15) must be divided by the mid-block length (in km).
Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment No. 1 Effective from 1 October 2007
Worksheets A6: Accident cost savings
Weighted accident procedure – option Worksheet A6.6
Project option
Posted speed limit Traffic growth rate
Road category Time zero
Accident prediction model
1 Table used
2 Parameter b0
3 Parameter b1
4 Parameter b2
5 Lowest or sideroad AADT, Qminor
6 Highest or primary AADT, Qmajor
7 Typical accident rate (per year), AT,opt (formula from appendix A6.5)
Go to step 8
Exposure-based accident prediction equation
1a Table used
2a Coefficient b0 (/108 veh-kms or /108 vehicles)
3a Cross-section adjustment factor from table A6.13 (1.0 for no adjustment)
4a Adjusted coefficient (2a) x (3a)
5a Exposure at time zero (108 veh-kms or 108 vehicles)
7 Typical accident rate (accidents per year), AT,opt (4a) x (5a)
8 Accident trends factor for adjusting typical accident rate (appendix A6.4 method B)
9 Adjustment factor for accident trend (1 + (8) x (year zero - 2006) (appendix A6.4 method B)
10 Typical accident rate per year adjusted for accident trends, AT (7) x (9)
Weighted accident rate
11 Do minimum typical accident rate, AT,dm (from worksheet A6.5)
12 Do minimum weighted accident rate, AW,dm (from worksheet A6.5)
13 Option weighted accident rate, AW,opt (10) x (12) / (11)
14 Cost per reported injury accident (table A6.22)
15 Total option accident cost per year (13) x (14)