• Save
Cost-Benefit Analysis of Gautrain Vs Rea Vaya BRT System
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share

Cost-Benefit Analysis of Gautrain Vs Rea Vaya BRT System

  • 600 views
Uploaded on

This report is an effort to evaluate the best or most optimal combination of public transport systems for the province as it plans to roll out more extensive network of both systems in the near......

This report is an effort to evaluate the best or most optimal combination of public transport systems for the province as it plans to roll out more extensive network of both systems in the near future. The Cost-Benefit Analysis method is used for the assessment; an argument is also presented for use of Cost-Benefit Analysis over the Multi-criteria Decision Analysis Method.
The Bus Rapid Transit alternative was found to the most cost effective option and offer the highest benefit overtime. The Gautrain option was found to beneficial only at very high ridership values <3million while the Status quo was the worst alternative out of the four alternatives assessed.

For more details on assumptions & calculations: fried7rich@gmail.com

More in: Technology , Business
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
600
On Slideshare
600
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. A COMPARATIVE ASSESSMENT OF PUBLIC MASS TRANSIT ALTERNATIVES FOR GAUTENG PROVINCE. A MSc. Engineering (Transport Studies) MAJOR ASSIGNMENT Prepared for: Assoc. Prof Marianne Vanderschuren By: Friedrich Chitauka
  • 2. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. University of Cape Town | Acknowledgement i Table of Contents List of Figures.................................................................................................................................................................iii List of Tables ..................................................................................................................................................................iii Acknowledgement........................................................................................................................................................1-1 Abstract.........................................................................................................................................................................1-2 1 Introduction..........................................................................................................................................................1-3 1.1 Subject and Motivation for Assessment.........................................................................................................1-3 1.2 Background to Investigation ..........................................................................................................................1-3 1.3 Objectives of Report ......................................................................................................................................1-4 1.4 Limitation and Scope of Investigation...........................................................................................................1-4 1.5 Plan of Development......................................................................................................................................1-4 2 Public Mass Transit Systems: An Overview.......................................................................................................2-5 2.1 Characteristics of Public Mass Transport ......................................................................................................2-5 2.2 The Options....................................................................................................................................................2-5 2.2.1 Rail Based Systems................................................................................................................................2-5 2.2.2 Bus Based Systems ................................................................................................................................2-6 3 Public Mass Transit Systems in South Africa ...................................................................................................3-7 3.1 Context: Why PMT is needed in SA?..............................................................................................................3-7 3.2 Singular vs. Multimodal Approach: Adapting PMT to SA’s Needs ...............................................................3-7 3.3 BRT Networks: Alternative 1 ........................................................................................................................3-7 3.4 IRTPN: Alternative 2....................................................................................................................................3-8 3.5 Status quo Remains or Business As Usual (BAU): Alternative 3..................................................................3-9 4 Evaluation of Public Transport Alternatives ..................................................................................................4-10 4.1 Overview of Evaluation Methods ................................................................................................................4-10 4.1.1 Cost-Benefit Analysis (CBA) ...............................................................................................................4-10 4.1.2 Multi-Criteria Decision Analysis (MCDA) Methods...........................................................................4-11 4.2 Selection of Evaluation Method................................................................................................................4-11 4.2.1 Direct Comparison of CBA and MCA..................................................................................................4-11 4.2.2 Justification for selection of Cost Benefit Analysis Method.................................................................4-11 5 Methodology of Evaluation ...............................................................................................................................5-13 5.1 Steps of CBA ...............................................................................................................................................5-13 5.2 Selection of Criteria .....................................................................................................................................5-13 5.3 Quantification of Impacts/Criteria ...............................................................................................................5-14 5.4 Calculation of Annual costs .........................................................................................................................5-14 6 Results of CBA and Analysis.............................................................................................................................6-15 6.1 Critical Discount Rates ................................................................................................................................6-15 6.2 Full Design Life Performance......................................................................................................................6-16
  • 3. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. University of Cape Town | Acknowledgement ii 7 Sensitivity Analysis of Results...........................................................................................................................7-17 7.1 Effect of Discount Rate Design Life or Project Life Cycle .........................................................................7-17 7.2 Effect of Ridership Increases on Benefit/Cost (B/C) Ratio .......................................................................7-17 7.3 Feasible Range of Discount Rates & Cost Elasticity...................................................................................7-18 7.4 Discussion of Results...................................................................................................................................7-19 8 Conclusions.........................................................................................................................................................8-20 8.1 BRT is the most Cost Effective option ........................................................................................................8-20 8.2 Implementation of IRPTN is a viable and practical alternative...................................................................8-20 8.3 Gautrain needs very high passenger ridership numbers...............................................................................8-20 8.4 Parameters have varying degree of effects on outcomes .............................................................................8-20 9 Recommendations..............................................................................................................................................9-21 9.1 Extend the BRT System and make the basis for PT in Gauteng..................................................................9-21 9.2 Regular maintenance....................................................................................................................................9-21 9.3 Choose discount rate of 3.0% - 5.0%...........................................................................................................9-21 10 Appendix.......................................................................................................................................................10-22 10.1 Excel Spread Sheet developed for the Assessment (CBA)........................................................................10-22 10.2 Some Key Input Data.................................................................................................................................10-23 11 Bibliography.................................................................................................................................................11-24
  • 4. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. University of Cape Town | Acknowledgement iii List of Figures Figure 1-1 Complete Gautrain Route as of June, 2012..................................................................................................1-3 Figure 3-1 A Conceptual Design Showing the Main elements of a BRT System source :( http://www.city-data.com/forum/urban-planning/1216372-will-any-msa-have-better-brt.html)...................3-8 Figure 3-2 Integration of Rail (Tram) and Bus Services in Bern, Switzerland Source: (http://citytransport.info/Nondhtml.htm) ..........................................................................................................3-8 Figure 3-3 Modal Split of South Africa Urban Areas((City of Cape Town) 2011)......................................................3-9 Figure 6-1 Cost Benefit Ratios at Prescribed Discount Rate of 3.0%........................................................................6-15 Figure 6-2 Benefit/Cost Ratio at 5.5% and 7.2 %( Critical Rates) ..............................................................................6-15 Figure 6-3 Net Total Cost of Each Alternative............................................................................................................6-16 Figure 6-4 Cost Benefit Ratios at Prescribed Discount Rate of 3.0% after 50 years...................................................6-16 Figure 7-1 Effect of Time (10years) on Benefit/Cost Fraction or Ratio......................................................................7-17 Figure 7-2 Effect of Ridership increase on Benefit/Cost Fraction or Ratios ...............................................................7-17 Figure 7-3 Region of Feasible Discount Rates (Operating Costs)...............................................................................7-18 Figure 7-4 Effect of Discount/Interest Rate Fluctuations on Operating Costs Over Project Life Cycle .....................7-18 List of Tables Table 2-1 Some Average Daily Train Ridership Figures from Diifferent Countries.....................................................2-5 Table 4-1 Common Project Assessment Methods .......................................................................................................4-10 Table 4-2 Strengths and Weaknesses of CBA and MCDA: A Direct Comparison .....................................................4-11 Table 5-1 Parameters Used To Represent Criteria.......................................................................................................5-14
  • 5. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. University of Cape Town | Acknowledgement iv “…The reasonable man adapts himself to the world. The unreasonable man adapts the world to himself. All progress depends upon the unreasonable man…” - George Bernard Shaw
  • 6. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Acknowledgement 1-1 Acknowledgement I would like extend my gratitude to following people who have made this effort possible; firstly, Associate Professor Marianne Vanderschuren for giving me this opportunity for deeper learning and my fellow postgraduate students in the CfTS for their advice.
  • 7. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Abstract 1-2 Abstract The province of Gauteng (Sotho: “Place of Gold”) occupies 1.5% of South Africa’s surface area but is home to nearly 20% of the national population .i.e. 9 million. It is an economic and political hub with Johannesburg and Tshwane (Pretoria) Metropolis being it largest urban zones. Gauteng is suffering from the effects of rapid urbanisation, inadequate infra-structure and the legacy of apartheid-era city planning. This is manifested itself in many ways including severe traffic congestion and poor public transport that is dominated by profit-driven informal paratransit operators. To alleviate this situation the respective transport authorities have initiated with a number of different public transport projects firstly the Gautrain (Rapid Rail) and Rea Vaya (BRT). Both transport systems technologies are different but all offer a drastic improvement in public transport and service speed and quality. This report is an effort to evaluate the best or most optimal combination of public transport systems for the province as it plans to roll out more extensive network of both systems. The Cost- Benefit Analysis method is used for the assessment; an argument is also presented for use of Cost-Benefit Analysis over the Multi-criteria Decision Analysis Method. The Bus Rapid Transit alternative was found to the most cost effective option and offer the highest benefit overtime. The Gautrain option was found to beneficial only at very high ridership values <3million while the Status quo was the worst alternative out of the four alternatives assessed.
  • 8. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Introduction 1-3 1 Introduction 1.1 Subject and Motivation for Assessment This report describes the results and methods used to evaluate the possible alternatives for provision of public mass transit services between Gauteng’s two largest urban centres namely Johannesburg and Pretoria. Severe traffic congestion and inadequate public transport in South Africa’s cities calls for implementation of cost effective, environmentally and socially sustainable solutions. 1.2 Background to Investigation In February, 2000, the Gauteng Provincial Government announced the initiation of the Gauteng Rapid Rail Link Project. The contract was to be executed through a Private Public Partnership (PPP) and it was granted to a consortium of major construction and rail equipment companies called the Bombela Concession Consortium. By September, 2006 construction the of the initially estimated R7.0 Billion Gautrain rail infra- structure commenced but by late 2005 the contract value for project had been reported to have escalated to at least 20 billion(Gautrain Management Agency, 2013)(Wikipedia 2013). The construction of the Gautrain project has raised debate and in cases legal action from stakeholders mainly relating to project costs, transparency of administration and property rights especially concerning the rail link’s alignments in some sections. According to available information, the primary objective of the construction of the Gautrain Rail link was to alleviate Johannesburg-Pretoria traffic congestion especially along the Ben Schoeman Highway. Currently sources place ridership values between 40,000 to 77000 passengers per day with an additional 12,000 bus passengers on its dedicated bus service(Accountancy SA 2010). In view of all the above information; this leads to the guiding question: “Is the Gautrain the best way to provide dignified public transport in Gauteng or are there other equivalent and possibly less costly options?” Figure 1-1 Complete Gautrain Route as of June, 2012
  • 9. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Introduction 1-4 1.3 Objectives of Report The objectives of this report are therefore to:  Formulate at least two alternative public transport systems  Select an appropriate evaluation method for the suggested alternatives  Draw conclusions on the results and method of the evaluations  Make Recommendations about the best alternative based on the findings Overall this exercise will seek to objectively answer the above guiding question (Section 1.2) with some consideration of the current socio-economic context in South Africa. 1.4 Limitation and Scope of Investigation Despite, the broad range of factors that can be considered on a transport project of this magnitude, this report will focus on the suggested two alternatives public mass transit schemes and compare them with the now complete Gautrain urban rail link (completed in June, 2012).The comparison will be done using a Cost Benefit Analysis (CBA) . 1.5 Plan of Development This report consists of mainly 5 sections .It begins with an general introduction to mass public transit systems around the world and then specifically looks at how a number of these systems have or can been adapted in a South African context. The report then focuses on methods of transport project or system assessment and evaluation while highlighting strengths and weakness of each of the documented methods. Conclusions are the drawn based on the results from the selected method with particular attention to methodological details and finally recommendations are made.
  • 10. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Public Mass Transit Systems: An Overview 2-5 2 Public Mass Transit Systems: An Overview Public Mass Transit (PMT) systems refer to technologies used to move large groups of people in urban areas. The essential feature of mass transport is that allow for a group of people to be carried in one vehicle like in a bus or a set of attached or guided carriages such as trains. They form the basis of any functional public transportation scheme. 2.1 Characteristics of Public Mass Transport The term mass transportation or more commonly public transport is used to describe systems which exhibit the following characteristics:  Transport relatively large groups of people typically ranging from 5,000 to 170,000 passengers per hour.  Operate on fixed routes  Follow a set timetable or schedules  Particularly suited to catering to peak hour commuting 2.2 The Options There are a variety of modes that are in use for Mass Transit .The PMTs with the largest capacity are usually rail based or metro systems. There also a renewed interest in bus-based mass transit options given the distinct advantages they offer. However, the most developing countries have inadequate or non-existent public transportation systems which leaves gap between travel demands especially at peak times. This service gap is often filled by private operator of transit vehicles which is less structured; this type of public transit is called paratransit. 2.2.1 Rail Based Systems There three main variations deduced from the literature which is Heavy, Light and Metro Rail configurations. All of the aforementioned use their flanged wheels to move along parallel guide tracks called railways. Heavy Rail and Metro are railways usually meet the same national railway standard with the primary different being that Heavy rail can support freight trains .i.e. heavier loads in addition to larger passengers load. Metro rail often do not form part of the national railway or long distance network thus are limited to the boundaries of the metropolitan areas they serve(David Catling (Interfleet Technology Limited et al. 2005). The nature of rail infra-structure most often allows it to benefit from exclusive right-of-way. This means only approved vehicles .i.e. trains that conform to the national rail standard can use the track and it has higher priority at intersections (e.g. railway crossings) than road traffic. Similarly, Light rail is also highly localised to urban areas or sections of the city with high PT passenger volumes. It has lower capacity than Metro. Light Rail or Trams are designed for carriages of passengers and usually have sections that operate within normal vehicle traffic .i.e. guide tracks or rail run along sections of the road but in exclusive lanes(David Catling (Interfleet Technology Limited et al. 2005). Table 2-1 Some Average Daily Train Ridership Figures from Diifferent Countries Passenger Rail Service Name Location Daily Capacity New York Metro New York City, USA +7,900,000 Tokyo Metro Tokyo Japan +6,300,000 Delhi Metro New Delhi ,India +2,300,000
  • 11. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Public Mass Transit Systems: An Overview 2-6 2.2.2 Bus Based Systems The bus based public transport systems make use of different types of buses to provide a PT service to customers. Bus is conventional operate on urban roads and can carry anything from 12 to 300 passengers per bus depending on capacity and regulations. The vehicle is usually supported by infra-structure such as bus stops and modal interchanges to allow for boarding and alighting of passengers at a pre-determined point on a fixed route that the bus follows. Ideally, an established PT bus service operates according to specific schedule or timetable(Lloyd Wright : Walter Hook 2007). Paratransit represents a deviation from the conventional bus PT service model as outlined above. The buses are usually having a smaller capacity of less than 40 passengers and do not follow a fixed timetable and route. This is the most common form of public transport especially in most African cities.
  • 12. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Public Mass Transit Systems in South Africa 3-7 3 Public Mass Transit Systems in South Africa This section presents the alternatives to the rail based PT system that has been constructed between Johannesburg and Pretoria. Furthermore, it explores the need and urgency for quality and dignified public transport in a South African context. 3.1 Context: Why PMT is needed in SA? Public Transportation in South Africa is in a poor state and suffers from negative perception. It is primarily a mode of transit for captive user’s .i.e. those cannot afford to use a more comfortable, safer and dignified mode. South Africa’s urban areas have a characteristic pattern of spatial disaggregation of area based on economic activity and income levels. This means that areas of the city are allocated for a particular type of activity based on the municipal zoning schemes .i.e. areas can be/are designated as commercial, industrial or residential. There is also a more subtle separation between areas of comprising mainly of lower income groups from more affluent areas. This is one of the remnants of Apartheid era (1948 – 1994) town planning. This means that the people from lower income areas usually live far from their work places and other social amenities. This translates into an average travel time of 65 minutes for most urban commuter when using PT. The status quo is exacerbated by the inadequate PT services to most townships and informal settlements.((City of Cape Town) 2011) The aforementioned service gap is filled by the Mini Bus Taxis(MBT).These are privately own and profit driven operations; the lack of strict regulation of the MBT industry has resulted in intense competition between operating resulting in violence and high accident rates due to unsafe driving practices. Therefore, the need for quality and dignified PT systems cannot be over-emphasized. 3.2 Singular vs. Multimodal Approach: Adapting PMT to SA’s Needs The information in presented in Section 2.0 (PMT Options) indicates that urban centres like Johannesburg and Pretoria can either implement a mono-modal or multimodal public transport system. The mono-modal system uses a single PT mode such as buses in the TransMilenio® BRT system in Bogota, Colombia. Although some auxiliary modes such as cycling can be included especially where bus stop access is difficult but the bus remains the primary mode. Multi-modal PT systems are designed from inception to transport customers by integrating at least two primary transit modes such as rail, bus, ferry, private car and cycling. New York City’s public transport system is a good example of an inter-modal transport system which formally accommodates the water based PT modes (ferry and water taxis), buses and train (Metro).It clearly shows that PT can be adapted to a specific city’s geographical, social and economic constraints for examples some part of New York can only be connected to the Metro by ferry .i.e. Long Island. 3.3 BRT Networks: Alternative 1 Bus Rapid Transit (BRT) is refers to a bus based set of PT technologies which aims to provide higher passenger carrying capacity through dedicated right-of-way to increase speeds and quality customer service. It generally seeks to emulate the capacity and speed performance of rail mass transit but with the added flexibility of bus services. Overall, the construction and operation of a full specification BRT system costs less 4 – 5 times less than an equivalent rail PT system. This system focuses on a primary PT mode in this case buses and providing infra- structure to link it to the access modes at specific points on its route e.g. walking or cycling.
  • 13. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Public Mass Transit Systems in South Africa 3-8 Figure 3-1 A Conceptual Design Showing the Main elements of a BRT System source :( http://www.city-data.com/forum/urban-planning/1216372-will-any-msa-have-better-brt.html) 3.4 IRTPN: Alternative 2 The Integrated Rapid Public Transit are an extension of the BRT concept to include all implemented PT modes such rail, bus and non-motorised transport .This means there has to be deliberate system wide measures to increase speeds, user comfort, safety, and universal access on all modes which form the PT system; additionally it involves the integration operations between modes to ensure ease of transfer between travel modes. Figure 3-2 Integration of Rail (Tram) and Bus Services in Bern, Switzerland Source: (http://citytransport.info/Nondhtml.htm) In South Africa, the City Of Cape Town has chosen this model and is in the early phases of implementation; although currently the functional portion of the MyCiti® IRT is essentially a BRT Network. This PT alternative places an emphasis on integration of a selection of mass transit modes and speed((City of Cape Town) 2012). This study made the assumption that the IRPTN will consist of a mix of 30% Rail based and 70% road based PT infra-structure.
  • 14. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Public Mass Transit Systems in South Africa 3-9 3.5 Status quo Remains or Business As Usual (BAU): Alternative 3 The completion of Gautrain phases 1 and 2 and initiation of Rea Vaya especially within the CBD and on the Soweto-CBD route. The Metrorail and MBT taxis remain a substantial part of Gauteng PT landscape. As shown in Fig 3-3 “Modal Split of South Africa Urban Areas” though for the Johannesburg area; the MBT say it commands as much as 72% of the modal share by some estimates. The province has existing trains’ lines which are predominately located in the southern sector of Gauteng .i.e. linking areas such as Soweto with the Johannesburg CBD but in the context of this alternative these lines would still need to be upgraded to High Speed Rail links in accordance with the policy objectives regarding marked improvements in travel speed and service quality. Figure 3-3 Modal Split of South Africa Urban Areas((City of Cape Town) 2011) In line with Multi-Criteria Analysis best practice, this alternative will also be evaluated within the framework of the available information.
  • 15. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Evaluation of Public Transport Alternatives 4-10 4 Evaluation of Public Transport Alternatives This section outlines some of the assessment methods available to evaluate transport projects and gives the reasoning for the selected method of evaluation. 4.1 Overview of Evaluation Methods Project evaluation refers to a set of techniques used to determine the value or impacts of a certain activity or program. Every evaluation in based on assumptions which differ according to selected method and seek to capture the qualitative and quantitative aspects of a project. A survey of literature indicates that there two main forms of transport project evaluation namely: Cost-Benefit Analysis (CBA) and Multi-Criteria Decision Analysis (MCDA) Methods. Table 4-1 Common Project Assessment Methods Popular Cost-Benefit Analysis (CBA) methods Popular Multi-Criteria Decision Analysis (MCDA) Methods Net Present Value (NPV) Weighted Sum Model (WSM) Equivalent Uniform Annual Cost (EUAC) Weighted Product Model (WPM) Internal Rate Of Return (IRR) Analytic Hierarchy Process (AHP) Benefit-Cost Ratio (B/C) 4.1.1 Cost-Benefit Analysis (CBA) The Cost Benefit Analysis (CBA) is an assessment technique that identifies, quantifies and attaches an economic value to the costs and benefits of a transport project over a multiyear time-frame .It allows for transport authorities with scare resources to prioritise project which maximise benefit to the public and account for their decisions(Mattila & Mukherjee 2007)((US Department of Transport) 2003). The advantages and disadvantages of CBA are summarised below: Advantages: 1. It allows for externalities of project to be factored into an assessment. 2. The economics of time such as depreciation and inflation of various capital goods can be accounted for by discounting. 3. It is easy to use results .i.e. monetary values to do other evaluations especially when operating in multi- disciplinary teams. 4. Allows alternatives to be ranked according to selected criteria Disadvantages: 1. Difficulties in accurately valuating some items like happiness, social equity, human life environmental costs and benefits. 2. Distributional Effects may not be captured properly given that the cost and benefits of project often affect different income level groups in different and sometimes unforeseen ways. 3. Intrinsic omissions of some stakeholders for example future generations are generally not included in CBAs.
  • 16. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Evaluation of Public Transport Alternatives 4-11 4.1.2 Multi-Criteria Decision Analysis (MCDA) Methods Multi Criteria Decision Analysis (MCDA) describes a suite of assessment of methods which are used in decision problems which involve the selection between alternatives: each alternative is subject to the same set of criteria that often has to fulfil competing social, environmental, economic and technical specifications(Bhagtani 2008). It allows for a group of heterogeneous factors .i.e. quantitative and qualitative to be evaluated typically by attaching a score and weighting to each criterion. Eventually, all calculated results are compared and an alternative is selected. The advantages and disadvantages of MCDA are summarised below: Advantages: 1. Easily deals with qualitative and quantitative data during evaluation by reducing all to a unit-less score. 2. It is quick and easy to carry out especially when trying to obtain indicative figures or alternatives from a large range of options at an initial stage. Disadvantages: 1. The weighting procedure which is a key step of the MCDA is subjective. 2. It can produce conflicting ranking of alternatives for same set of information by slightly adjusting weighting. 3. It can sometimes be unrealistic, because it does not factor in the possibility of an underlying preferred option. 4. Different MCDA methods give considerably different out outcomes about same set of alternatives. 4.2 Selection of Evaluation Method In view of the above set of information in Section 4.1.1 – 4.1.2 and the type of available appraisal data .i.e. mostly numerical over multi-year frames the Cost Benefit Analysis method was selected to evaluate the alternative and existing public transport systems in Gauteng Province. 4.2.1 Direct Comparison of CBA and MCA A review of information from literature on the subject matter has been summarised in the Table 4.2 “Strengths and Weaknesses of CBA and MCDA: A Direct Comparison” Table 4-2 Strengths and Weaknesses of CBA and MCDA: A Direct Comparison Evaluation Method Strength Weakness Cost Benefit Analysis  Robust  Objective  Easily replicable  Incorporates time horizon effects and changes  Focus on placing a monetary value on all criteria. Multi-Criteria Decision Analysis  Inclusive .i.e. easily accounts for environmental, economic social factors etc.  Subjective  Time consuming .i.e. public participation dependant. 4.2.2 Justification for selection of Cost Benefit Analysis Method Ultimately, this is a financial decision which in addition to capital costs ;will need to address social equity, accessibility and related non-market factors which are often difficult to evaluate or weight objectively even when extensive public participation processes are carried out.
  • 17. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Evaluation of Public Transport Alternatives 4-12 CBA uses discount rates based on current economic conditions and market forces which are actually indicate a society’s inadvertent valuation of commodities and other intangibles such as time, comfort and quality of life .While as stakeholders determine the weightings in MCAs, making it intrinsically biased. The strength of the MCA compared to CBA is only the fact that it is better at capturing non quantitative data from multiple sources. The ability of the CBA to clearly and concisely capture the benefit of a project in monetary terms also provides a common basis for decision support for stakeholders from different backgrounds and communities. The costs and benefits associated with non-monetary factors or qualitative criteria such as the environment, social cohesion, equity and quality of life can be accounted for more accurately after public debate. The CBA’s robustness in handling quantitative information and dealing with multi-year time frames of project budgets of this nature make it an ideal method for assessing the alternatives to Gautrain formulated in Section 3.3 -3.5.
  • 18. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Methodology of Evaluation 5-13 5 Methodology of Evaluation This section explains the steps of the methodology used outlines the assumptions made and presents the results of the CBA. 5.1 Steps of CBA A Cost Benefit Analysis consists of 6 critical steps. These are: 1. Project Definition: it is in this step that the project scope is determined which may include the geographical foot print of project. The resources requirements and alternatives are usually formulated at this stage. 2. Impact Identification: at this stage the interested and affected parties are identified. The potential positive and negative consequences of the project are documented in relation to the affected part of society and the environment. 3. Quantifying Impacts: the value of the project predicted effects is determined. This is based on the price of raw materials and services required for the project implementation but are more challenging to assess value of non-market components of a project. 4. Discounting: this key step adjusts for the time value of money because the purchase ability of money changes over time. The main determining factors of the discount rate are the prevailing interest and inflation rate. The discount rate is prescribed by a public authority such as the government or reserve bank or the project funders. 5. Conversion of Costs to Net Present Value (NPV): by using the discount rate the costs especially the life cycle cost .i.e. occur over project duration/operation usually 25 – 50 years for public works are corrected to present work. 6. Sensitivity Analysis: this step is an acknowledgement of the uncertainty involved in the calculation of various values and quantities used in the CBA process so different key parameters such discount rate and initial cost are varied within feasible ranges to check their effect on the CBA outcomes. 5.2 Selection of Criteria The author used six criteria selected on the basis of the geographical context, social and stipulated policy outcomes of the currently implemented phases of the Gautrain and Status Quo of public transport or “Business As Usual” (BAU) in the study area. The six criteria are as follows: Costs or Debits 1. Project Costs (Initial and Operating Costs) 2. Pollution and Environmental Costs 3. Safety Costs which were taken as the financial cost of road related fatalities on the South African economy (GDP) which is been calculated to be ZAR 12.0 Billion.. Benefits or predicted gains to society 1. Travel Time Savings to users; this was based on the average of the legal minimum wage (R1910.0) and median earnings (20,000) which was then converted to an hourly wage of R 62/hr. but a more conservative figure of R60/hr. was used . 2. Social Development Impacts: this factor was directly related to job creation ability of each respective alternative.
  • 19. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Methodology of Evaluation 5-14 3. Land Value Increases: this factor was selected because public transport improvement initiatives such BRT and Metros have been proven to stimulate economic activity and increase property values along their respective corridors. 5.3 Quantification of Impacts/Criteria This is the stage where a monetary value was attached to each of the criteria. The information was retrieved from a variety of official and academic sources. Table 5-1 Parameters Used To Represent Criteria Criteria Proxy/Parameter Used Source Project Costs Publically stated Tender Value: 25.6 billion ZAR. Gautrain and City of Johannesburg Website. Pollution Total CO2 Emissions in the Gauteng Province Gauteng Province Air Quality Management Plan Safety Costs Financial Cost of Road Fatalities on GDP The estimation of unit costs of road traffic accidents in South Africa(DoT,2002) Travel Time Savings 32% time saving obtained by TransMilenio Bogota and 65mins (1.08hrs) mean travel time in SA. Energy Sector Management Assistance Program (ESMAP) Social Development Impacts Number of jobs created per installed km of system and total employees for BAU scenario. Rea Vaya, Gautrain and City of Johannesburg Websites. Land Value Increases Mean increase in Rand/m2 value of land within a 1 km radius of corridor. Various Estate Agents’ Website reviewed. ‘ 5.4 Calculation of Annual costs The steps were followed and executed in Excel® in the order stated in Section 5.1(Six Steps of CBA). Where: n = is the number of years i = is the discount rate The number of years (n) was taken as 25 years since most literature sources concurred that public infra- structure projects usually have a design life of 25 – 50 years which includes will at least a major maintenance or upgrade. The discount rate (i) was taken as the difference between the prime interest rate current interest (8.5%) and inflation rate (5.6%) which is ~3.0%. idis ≈ iint - iinf Please refer to Appendix and attached digital copy of spread sheet for detailed outline of formulas and outputs in addition to the main results given in Section 6.0 “Results”.
  • 20. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Results of CBA and Analysis 6-15 6 Results of CBA and Analysis The results of the CBA calculations are summarised in the figures below. The results generally indicate that the BRT alternative is the best option of the four scenarios considered (Refer to Figure 5.1 “Cost Benefit Ratios at Prescribed Discount Rate of 3.0 %”) while BAU alternative is consistently the worst option. Figure 6-1 Cost Benefit Ratios at Prescribed Discount Rate of 3.0% 6.1 Critical Discount Rates The Figure 6.2 “Benefit/Cost Ratio at 5.5% and 7.2 %( Critical Rate)” , shows the performance of the alternatives under different discount rates to account for uncertainties in predicting macroeconomic effects of variation in interest rates and inflation .i.e. shows that any greater than 5.5% discount rate leaves BRT as the only positive alternative(benefits > costs) and any discount rate >7.2% .i.e. costs exceed benefits for all options. Figure 6-2 Benefit/Cost Ratio at 5.5% and 7.2 %( Critical Rates)
  • 21. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Results of CBA and Analysis 6-16 The Figure 6-3 “Total Cost of Each Alternative” below indicates that generally the BRT and IRPTN alternative have negative costs below the discount rate 5.5% threshold; which implies that their positive value and impacts are greater than their respective costs. Figure 6-3 Net Total Cost of Each Alternative Furthermore the Fig 6-3 shows that the Gautrain costs still exceed its beneficial impacts; which implies that it will need to operate under subsidy at its current ridership levels to offset this situation. BAU still consistently remains the most negative options in terms on net cost to society. 6.2 Full Design Life Performance The CBA was also evaluated for long-term performance by inputting a design life of 50 years and discount rate of 3.0% hereby assuming minimal maintenance during term. As Fig 6-4 shows the despite all alternative systems’ B/C ratios or net benefits reducing by 50% BRT still remains the most beneficial in the long run. Figure 6-4 Cost Benefit Ratios at Prescribed Discount Rate of 3.0% after 50 years
  • 22. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Sensitivity Analysis of Results 7-17 7 Sensitivity Analysis of Results The valuation of different project components, costs and externalities are subject to changes and error, thus this section explores the sensitivity of the results to variations in inputs. 7.1 Effect of Discount Rate Design Life or Project Life Cycle The design life of project or period and discount rate of analysis has a substantial impact on the benefit-cost ratio. The ten year period from 25th to 35th year the B/C ratios all reduce by approximately 60%.As illustrated in Fig 7-1 “Effect of Time (10years) on Benefit/Cost Fraction or Ratio”. Figure 7-1 Effect of Time (10years) on Benefit/Cost Fraction or Ratio 7.2 Effect of Ridership Increases on Benefit/Cost (B/C) Ratio The increase in ridership is predicted to have a relatively minor effect on the B/C ratios of the alternatives with the BRT alternative being the most inelastic at 5% increase and BAU being the sensitive with a 56% increase in B/C ratio (more negative to society).As shown in Fig 7-2 below: Figure 7-2 Effect of Ridership increase on Benefit/Cost Fraction or Ratios
  • 23. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Sensitivity Analysis of Results 7-18 7.3 Feasible Range of Discount Rates & Cost Elasticity Overall the discount rates within the highlighted range produced the most visible changes to B/C fractions .i.e. any rates outside this range produced excessively positive results B/C ratio greater than 3.0 (for discount rates lower than 3.0%) and negative for discount rates greater than 7.5%. The Fig 7-3 “Region of Feasible Discount Rates (Operating Costs)” shows the expected operating costs corresponding to each respective discount rate, the IRPTN scenario was used to illustrate this effect. Figure 7-3 Region of Feasible Discount Rates (Operating Costs) The fluctuations in the interest rate was set to vary randomly annually between 5%-7% according to a uniform distribution .The operating costs seem to show a generally reducing trend for the BRT and IRPTN options; relative to the initial construction costs. The Figure 7-4 below shows the aforementioned. Figure 7-4 Effect of Discount/Interest Rate Fluctuations on Operating Costs Over Project Life Cycle
  • 24. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Sensitivity Analysis of Results 7-19 7.4 Discussion of Results The following interesting observations were made from the results:  Maintenance cycle of less than 30 years is deduced from the results because for any design life > 35 years the benefit begins to steadily reduce.  Drastic increases in passenger capacity and economy of scales are needed to improve the benefit /cost ratio of even inelastic options such as Gautrain (by over 500%) and BRT (10%); this implies that Gautrain is better suited to portions of the city/network with very high peak demands. BRT and IRPTN performed well under a wide range of test scenarios and changes to key parameters. The poor performance of the current state of public transport in Gauteng is consistent with very low score result (negative benefit) from this CBA.
  • 25. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Conclusions 8-20 8 Conclusions 8.1 BRT is the most Cost Effective option The results in Section 6-7 indicate that the BRT alternative is the most cost effective option. This means that it balances the required project outcomes and it produces the most positive externalities to society at lowest cost. It outperformed all the alternatives especially in terms of cost and ability to deal with ridership increases. The results showed that ≈15% increase would only cause a 5% reduction in B/C ratio or net benefit; this implies that the service quality of the BRT would remain relatively constant despite notable increase in usage .i.e. extra capacity. 8.2 Implementation of IRPTN is a viable and practical alternative The IRPTN’s results indicate that is also an ideal alternative for implementation. Despite its lower CBA score, it was within 20% -30% range of the predicted best alternative (BRT).The context of this project mean that this could actually be a more realistic option. Since, the IRPTN scenario consists of a mix of BRT (70%) and rapid Rail (30%) the future of public transit provision in Gauteng province is likely to integrate both modes .i.e. with rail connecting ultra-high volume and frequency and nodes while BRT’s flexibility enhances the service coverage throughout the PT network. 8.3 Gautrain needs very high passenger ridership numbers The model results how that the Gautrain’s current ridership is insufficient and disproportional to the initial investment into its infra-structure .i.e. highly under-utilised. According to the model outputs and holding all other variables constant: the ridership capacity of the Gautrain would have increase from its current projected 100,000 passengers/day to over 3,000,000 passengers/day to for its net benefits to exceed its net costs (B/C ≥1.0 ) ;from a usage perspective. 8.4 Parameters have varying degree of effects on outcomes The inputs parameters have different degrees of effects on the final B/C ratios. Some had greater effects on the model outputs and others were negligible. The following were identified as key parameters therefore in descending order of effect:  Initial Project Cost  Discount Rate  Length of Project Cycle or Period of Evaluation Given that discount rate and design life are key parameters careful consideration of these factors must be done when sourcing funding and establishing payments schemes.
  • 26. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Recommendations 9-21 9 Recommendations Based on the previously stated results and conclusions, the author makes the following recommendations: 9.1 Extend the BRT System and make the basis for PT in Gauteng A current BRT system .i.e. Rea Vaya must be extended and be used as the basis for provision of quality and dignified public transport in Gauteng Province. The results of the CBA undertaken clearly show that it is the best and most effective alternative. In lieu, of the BRT alternative the IRPTN option was the next best performing alternative and maybe it would be strongly recommended as an alternative to the BRT option. 9.2 Regular maintenance The public transport system selected must be overhauled or subjected to major maintenance at least every 25 years because the results indicate a rapid deterioration of benefits relative to operational cost after 30 years of service. 9.3 Choose discount rate of 3.0% - 5.0% The authorising agency must use a discount rate of between 3.0% -5.0%, for the calculations and selection of funding .i.e. interest on loans. As this range of rate produced the outcomes most consistent with reality and reflect current macro-economic conditions.
  • 27. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Appendix 10-22 10 Appendix 10.1 Excel Spread Sheet developed for the Assessment (CBA) Criteria Gautrain BRT IRPTN BAU Initial cost ZAR 25,000,000,000 ZAR 15,000,000,000 ZAR 18,000,000,000 ZAR 0 Operating costs ZAR 861,000,000 ZAR 5,700,000,000 ZAR 3,764,400,000 ZAR 861,730,000 ZAR 170,000,000 ZAR 93,500,000 ZAR 124,100,000 ZAR 8,500,000,000 ZAR 1,864,883,206 ZAR 2,131,295,092 ZAR 2,024,730,338 ZAR 5,328,237,731 Total Costs ZAR 27,895,883,206 ZAR 22,924,795,092 ZAR 23,913,230,338 ZAR 14,689,967,731 Travel Time Savings ZAR 644,601,600 ZAR 12,892,032,000 ZAR 9,217,802,880 -ZAR 45,981,580,800 Social Development Impact ZAR 295,900,000 ZAR 92,961,000 ZAR 174,136,600 ZAR 36,300,000 Land Value Increase ZAR 32,000,000,000 ZAR 125,200,000,000 ZAR 87,920,000,000 ZAR 0 Total Benefits ZAR 940,501,600 ZAR 12,984,993,000 ZAR 9,391,939,480 -ZAR 45,945,280,800 Period(years) 25 discount rate 0.050 Criteria Gautrain BRT IRPTN BAU Initial cost ZAR 25,000,000,000 ZAR 15,000,000,000 ZAR 18,000,000,000 ZAR 0 Operating costs ZAR 861,000,000 ZAR 5,700,000,000 ZAR 3,764,400,000 ZAR 861,730,000 ZAR 170,000,000 ZAR 93,500,000 ZAR 124,100,000 ZAR 8,500,000,000 ZAR 1,864,883,206 ZAR 2,131,295,092 ZAR 2,024,730,338 ZAR 5,328,237,731 Total Costs ZAR 28,751,045,543 ZAR 25,265,009,048 ZAR 25,659,423,646 ZAR 19,027,955,917 Travel Time Savings ZAR 190,352,639 ZAR 3,807,052,782 ZAR 2,722,042,739 -ZAR 13,578,488,257 Development Impact ZAR 87,380,090 ZAR 27,451,641 ZAR 51,423,021 ZAR 10,719,491 Land Value Increase ZAR 9,449,688,694 ZAR 36,971,907,017 ZAR 25,963,019,688 ZAR 0 Total Benefits ZAR 9,727,421,424 ZAR 40,806,411,440 ZAR 28,736,485,448 -ZAR 13,567,768,767 Comparisons Benefits/Cost ratio 0.34 1.62 1.12 -0.71 Present Cost ZAR 19,023,624,119 -ZAR 15,541,402,392 -ZAR 3,077,061,802 ZAR 32,595,724,684 Benefits SafetyCosts Pollution Costs costsBenefitscosts SafetyCosts Pollution Costs
  • 28. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Appendix 10-23 10.2 Some Key Input Data Ridership Data Source:(Institute for Transportation and Development Policy & LOGIT 2007) TotalTravelPopulation CO2VehEmissions(tpa) BAU Avg TravelTime(hours) 2.00E+06 11,840,528.29 1.083 BRT(2020) 1.00E+06 11,840,528.29 gautrain 1.00E+05 Gautrain#ofjobs BRT(jobs per km) BAU alljobs 26900 8451 120000 direct 26900 27 28 length(km) 80 313 avg landincrease(ZAR/sqm) 200 200
  • 29. A Comparative Assessment of Public Mass Transit Alternatives for GAUTENG Province. Friedrich Chitauka University of Cape Town | Bibliography 11-24 11 Bibliography (City of Cape Town), 2012. 2012 MyCiTi Business Plan. , (September). (City of Cape Town), 2011. Integrated Transport Plan 2006 - 2011, Transport Planning Branch , Cape Town. (US Department of Transport), 2003. Economic Analysis Primer Economic Analysis Primer, Accountancy SA, 2010. Gautrain - An economic stimulus. Available at: http://www.accountancysa.org.za/resources/ShowItemArticle.asp?ArticleId=2041&Issue=1097 [Accessed July 7, 2013]. Bhagtani, N., 2008. A BETTER TOOL FOR ENVIRONMENTAL DECISION MAKING : COMPARING MCDA WITH CBA By NEHA BHAGTANI. University of East Anglia. David Catling (Interfleet Technology Limited, U. et al., 2005. HiTrans Best Practice Guide : Public transport – Mode options and technical solutions, Guatrain Management Agency, 2013. Milestones _ Gautrain - The Gautrain Project. Available at: http://www.gautrain.co.za/about/about-gautrain/milestones/ [Accessed July 4, 2013]. Institute for Transportation and Development Policy & LOGIT, 2007. Rea Vaya Operational Design Summary, Lloyd Wright : Walter Hook ed., 2007. Bus Rapid Transit Planning Guide third., Institute for Transport & Development Policy. Mattila, K.G. & Mukherjee, A., 2007. CE 4401 Pavement Design Introduction to Life Cycle Cost Analysis. In pp. 1–6. Wikipedia, 2013. Gautrain - Wikipedia, the free encyclopedia. Available at: http://en.wikipedia.org/wiki/Gautrain [Accessed July 1, 2013].