California's need for speed - Steer Davies Gleave

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How accurate are toll road forecasts By Anita Mauchan and Charles Russell Planners and decision makers have always needed traffic forecasts – they relied on good analysis to develop their plans and determine what new infrastructure should be built. But what was the penalty if their forecasts were wrong Now, with private investment decisions depending on traffic and revenue projections, the pressure has surely changed. Steer Davies Gleave regularly prepares traffic demand and revenue forecasts for privately funded infrastructure projects, especially toll roads, tunnels and bridges. We acknowledge that predicting the future isn’t easy and consequently, although deriving a view of the future is a key aspect of the work, equal effort is put into quantifying areas of uncertainty and risk. A few years ago, there was real concern when ratings agency Standard and Poor’s published a paper claiming that traffic levels on toll roads are typically over forecast by 20-30%, which they attributed to a clear case of “optimism bias”. While we had never formally reviewed our forecasts, feedback from clients didn’t match this finding. There was only one thing to do. We carried out our own research to determine the accuracy of our toll road forecasts. Frequency There were four factors, however, that didn’t make it as simple as it sounds: Client confidentiality – our reporting must be general and can’t reveal specific schemes or figures. Scheme definition – opening dates and even toll levels and categories are all subject to change post-forecast. Which forecasts – our forecasts reflect different levels of probability, the values adopted are ultimately the choice of our client and may not represent what we believe to be a most likely outcome. Ramp up – it may take time for users to adjust to new or changed routes and this can be enhanced by delayed opening of sections etc. Comparison of forecast and actual traffic (outturn) should be undertaken once the system has settled down. Despite these challenges, we have established a library of forecasts and outturn traffic and revenue values. Using this data, we assessed the accuracy of our forecasts and learned some valuable lessons. Our research findings The following comparison of forecasts and actual traffic provide a broad indication of our track record for schemes in which outturn data are available. Our research data is based on forecasts for seven shadow toll roads in the UK and user paid toll roads in Canada, Jamaica, South Africa and Poland. 10 9876543210 9 3 2 0 1 0.8 0.9 1 1.1 1.2 Actual / Forecast Traffic The results are tabulated in the figure below which compares outturn and forecast traffic on these 15 examples, where, importantly ‘ramp-up’ was considered to be complete. We over-predicted by more than 5% in one case, we were within 5% of outturn in nine and we under-predicted by more than 5% in five cases. The only scheme that underperformed was influenced by an unexpected external factor. The majority of schemes that we under-forecast were affected by a post-forecast toll reduction which resulted in higher traffic flows. The accuracy of our forecasts for two toll roads in South Africa has also been investigated by MTH Pycraft and I Macaulay in their paper Demand Forecasting Risk in Project Financing of Toll Facilities, University of Witswatersrand (2006). With reference to Standard & Poor’s paper, the authors concluded that: “The South African user-paid toll roads scheduled performance [ratio of actual traffic volume to forecast traffic volume] is significantly greater or better than not only the entire world results, but also the developing nations scheduled performance results.” In light of both these results, we are confident that we deliver accurate forecasts and a clear analysis of uncertainty and risk. We will continue to update the database of research, drawing on our findings to improve our understanding of the demand for toll facilities worldwide and are grateful for the support our clients have given in assisting us with this analysis. Charles leads our infrastructure finance team. His main focus is in the US where we have advised on more than 20 transport infrastructure projects in the last three years, valuing $50 billion. Anita leads our work in this area in Europe and Africa. To find out more or discuss further contact charles.russell@sdgworld.net anita.mauchan@sdgworld.net 4
Fire and ice: Sacramento and Edmonton share a vision for the future By Alan Jones It’s a tale of two cities. Sacramento, California’s state capital, has a moderate climate but its summers can easily reach over 100F degrees. A thousand miles north in Edmonton, Alberta’s capital, temperatures can drop to as low as -40F degrees in the winter. Despite these differences, both cities are facing very similar challenges regarding the future shape and form of their land use, and deciding how transit can play a part in delivering a ‘smart growth’ future as they anticipate continuing concerns of climate change, greenhouse gas emissions, energy prices and growing but aging populations. Steer Davies Gleave is working with both cities developing their long-term transit plans. In Sacramento the region has made a major effort to develop a 50 year land use plan. Known as The Blueprint, the plan is based on smart growth principles with mixed use, higher density development and greater transportation choice. To support The Blueprint we are developing a long-term Transit Master Plan (TMP) which will address all aspects of the existing transit network. Sacramento already has an enviable LRT system with extensions and new lines being planned. In addition, its bus fleet is CNG-powered so there is already much to build on. However, with a market share of just 1%, there is still a long way to go in changing the perceptions of what transit can deliver and shift the thinking from it as a lifeline service to a lifestyle choice. This is where a European-style approach can help produce an integrated solution. Addressing the basics, we start by “putting the passenger first”. Service frequencies and coverage are being examined alongside a consideration of the whole transit trip: where do I find transit information on routes and fares, how do I get to the transit stop, how long will I have to wait, do I need exact fare, can I get a seat, do I feel safe, is it comfortable, will I need to transfer and how do I get to my final destination and back again With so many barriers it is often just easier to drive. But in answering these questions we start to build a convenient and friendly transit system with up-to-date information; high quality, frequency and capacity across all transit modes; easy-to-use fares systems; easy access vehicles and helpful way-finding linked to key destinations. The links between land use and transit investment are also key to the future with transit-oriented development (TOD) policies central to the TMP. In Edmonton similar conditions apply. The city already has an LRT system as its transit backbone, with extensions to the early 1980’s system now underway. But Edmonton has bigger plans for transit after 25 years of car-oriented, low density development. Five new LRT corridors are being planned with the Mayor’s call for a 90-day Action Plan driving the process forward. Steer Davies Gleave is developing Edmonton’s long-term public transportation plan incorporating the LRT Expansion Plan as well as a major review of the city’s bus network. The links with land use again feature in the development of the transit plan. A TOD Planning Framework is being developed with a range of station types being defined to help shape the land use around each new station. Complete streets are also being proposed for high frequency bus corridors providing active frontages, footways and bike facilities. A recent design charrette focused on a new development area in Heritage Valley, a green-field site to the south of the city where LRT is planned. The charrette brought together city staff from planning, engineering, smarter choices, parks, traffic, transportation and transit together with land owners, developers, school board and Alberta Province representatives. Over three days all the participants contributed, moving from the original plan for a car-dominated town centre plan to an urban grid layout designed with the LRT station as a focal point. This finer grain street pattern provides wide sidewalks and active building frontages, encouraging a more interesting and higher value mix of land uses. The charrette allowed us to test the emerging TOD Planning Framework and acted as a “decision accelerator”. If all the participants follow through with the new plan then Edmonton will be on its way to a new, more transit-friendly future. Alan has over 25 years’ experience leading multi-disciplinary planning and design teams to deliver high-quality integrated transport solutions. To find out more or discuss further contact alan.jones@sdgworld.net ian.druce@sdgworld.net dan.gomez-duran@sdgworld.net 5
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