Act TravelWise Autumn Conference 2014 - The Economics of Sustainable Travel "The Winning Ingredients for Success: Case Studies of Successful and Unsuccessful Business Cases"

1. The Winning Ingredients for Success
Case Studies of Successful and Unsuccessful
Business Cases
Andrew Gordon and Lucy Malone

2. Business cases integral to gaining funding
in the current climate

3. Contents
• What can go into the economic appraisal?
• Where have we been successful?
• And unsuccessful?
• Conclusion – what are the winning ingredients?

4. What goes into the economic appraisal?
Improvements to sustainable modes
Mode shift
Reduced car traffic
Decongestion Noise
Air quality
Carbon
Accidents
Maintenance
Accessibility
Increased walk/cycle
Mortality Absenteeism
Time benefits Journey quality
Jobs & GVA

5. What are the challenges?
• Gaps in WebTAG guidance, e.g.:
– Health
• Includes mortality and absenteeism
• What about other morbidity-related impacts?
– ‘Liveability’/quality of life
• What makes cities attractive places to live and work?
– How to measure the ‘catalyst effect’
• Not all about BCR
• Green Book appraisal suggests that we should assess all benefits
(qualitative if too difficult to quantify)
• Local growth fund – competing against non-transport schemes

6. CASE STUDIES

7. Birmingham Cycle City Ambition Grant
• Birmingham’s Cycle Revolution – Long-term investment in cycling
infrastructure and facilities to build a comprehensive on and off road
network across Birmingham
• Benefits v Costs (millions)
• BCR = 3.08 = High Value for Money

8. Birmingham Cycle City Ambition Grant
• Key data sources and evidence bases used:
– Household Interviews, Mott MacDonald 2009-2012
– Cycling Demonstrations Towns DfT Report, Cycle England 2009
– Cycling Trends in Birmingham Technical Report, Sustrans 2011
• Followed WebTAG, particularly:
– A4.1 Social Impact Appraisal
– A5.1 Active Mode Appraisal
– A5.4 marginal external costs

9. Birmingham Cycle City Ambition Grant
• Strategic Case
– Visionary & aspirational
– Clear message
– Well defined scheme
– In-depth discussion of key issues and how they will be addressed
– Strong qualitative assessment of non-monetised impacts
– Clear links to other policies and initiatives

10. Birmingham Cycle City Ambition Grant
• Economic Case
– Well evidenced appraisal
– Significant monetised benefits
• Management Case
– Evidence of robust procurement, management and delivery
processes

11. Merseyside LSTF
• Supporting Sustainable
Access to Opportunity in
Merseyside:
– Sustainable transport
infrastructure
– Support for bus services
– Working with employers to
raise use of sustainable
modes
– Travel solutions for people
accessing employment &
training

12. Merseyside LSTF
• BCR = 13.04 = Very High Value for Money
• DfT adjusted BCR = 4.2 = Very High Value for Money
• Aligns with DfT assessment of overall LSTF BCR at 5.1
• Benefits v Costs (millions)

13. Merseyside LSTF
• Strategic Case
– Visionary & aspirational
– In-depth discussion of key issues and opportunities and how they
will be addressed, overall and for each package – socio-demographics
/ mode of travel / travel distance / congestion /
employment opportunities
– Strong evidence of working in partnership with the private sector in
development and delivery (e.g. Liverpool Chamber of Commerce)
• Finance Case
– High level of match funding from private, public and community
sector partners – £16.75m

14. Merseyside LSTF
• Economic Case
– TUBA Assessment in accordance with WebTAG
– Utilised Liverpool City Region Transport Model (LCRTM)
– Less robust evidence base
– No appraisal of health benefits
– Significant monetised benefits (submitted & adjusted)

15. March – Wisbech Rail Service
• Line closed to passenger
services in 1968 and freight in
2000
• Local support for reopening to
help relieve traffic congestion
• Previous studies concluded a
low BCR ranging 0.99 to 1.98

16. March – Wisbech Rail Service
• Mott MacDonald undertook an assessment of wider
economic benefits
• Utilising the Mott MacDonald Transparent Economic
Assessment Model (TEAM)
Direct
Impacts
Indirect
Impacts
• WebTAG compliant Wider Impacts in Transport
Appraisal (WITA) analysis
• Assessment of secondary indirect benefits and labour
market effects
Induced
Impacts
Jobs /
Salaries
GVA
Gross
Benefits
Gross minus
deadweight,
displacement,
leakage etc
Net
Economic
Gain
Project
Intervention

17. March – Wisbech Rail Service
- 161 additional
FTE jobs
- £9.0m of
additional GVA
benefits per
annum
Increasing to
£56.7m based
upon a direct
service to
Cambridge
Secondary
indirect benefits
- 392 houses
- £39.2m of
house building
expenditure
Primary
indirect
benefits for
Wisbech –
£39.7m
BCRs in the range of 2.3 to 3.04
for various options assessed

18. March – Wisbech Rail Service
• Significantly strengthened the case for investment
• Increased the BCR of the scheme by >1
0.99 – 1.98 2.3 – 3.04
• Enabled recommendation of the option offering the greatest
potential for delivering wider economic benefit – a direct rail
link between Wisbech and Cambridge
• Prompted progression of scheme to GRIP 2 Feasibility
Study now being undertaken by Mott MacDonald

19. Common Failings of Documents Seeking to
Make a Case for Funding
Through evaluating unsuccessful business cases, we have
identified common failings:
• Strategic Case
– Weak narrative and vision
– Did not meet requirements of the funding / aspirations of
promoter did not align with objectives of funder
– Political reasons for application rather than based on evidence
– Lack of evidence of problem and in-depth discussion of issues
– Retrospective / unrealistic & non-transparent option assessment

20. Common Failings of Documents Seeking to
Make a Case for Funding
• Economic Case
– Based upon qualitative assessment
– Lack of quantitative evidence and monetised benefits
– Lack of robust evidence and analysis to support claims of VfM
– No assessment of wider benefits
• Finance Case
– Uncertainty over third party / private sector funding contributions
• Management & Commercial Cases
– Lack of detail on management and delivery processes including
governance structures, consultation & procurement procedures.

21. The Key to a Successful Business Case
• Strategic Case
– Clear vision and objectives
– Aspirational and innovative
– Strong narrative with in-depth discussion of issues & opportunities
– Well defined schemes
– Sells the scheme using the evidence and information available
• Finance Case
– High level of match funding
– Private sector contribution

22. The Key to a Successful Business Case
• Economic Case
– Well defined schemes
– Evidenced and robust analysis to support VfM
– Doesn’t matter if BCR is low if you can evidence additional benefits
– Supports economic growth / comment or quantification of wider
benefits
• Management & Commercial Case
– Evidence of deliverability
– Robust and considered procedures and processes

23. The Key to a Successful Business Case
• Overall:
– Scheme addresses identified problem
– Strong case for investment
– Bidding to appropriate fund
– Meets requirements of guidance
– Scheme promoter input

24. www.mottmac.com