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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 3.2, pages 3-2 to 3-3


Simplified procedure 2, pages SP2-2, SP2-5, SP2-11 and SP2-13

Simplified procedure 3, pages SP3-10 and SP3-13



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




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 A9.6 and A9.7, pages A9-9 and A9-10


1 1 October 2007

Appendix A12, tables A12.1 and A12.2, pages A12-2 and A12-3


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

5

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.

6


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.

23


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.

24


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.

1


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

2


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

3


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

4


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).

15


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.

16


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


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


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



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

SP2-6



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



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.

SP2-12



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



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



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


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



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



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))





$

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







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.












than the target incremental BCR is generally the preferred option.

SP5-11


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

SP5-12

Land Transport NZ’s Economic evaluation manual – Volume 1 First edition Effective from 1 October 2006


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

SP5-13



Accident cost savings Worksheet 6


1 Do minimum mean speed Road category


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


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)







$

Option




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))





$

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

SP5-14







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.












than the target incremental BCR is generally the preferred option.

3


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

4


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

5


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.

6


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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95


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


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


$ 859,394

96



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).

97



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


$ 616,331

98



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).


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).

101



Weighted accident procedure – do minimum Worksheet A6.5

Project option


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).

102



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



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


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


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


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


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


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



(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



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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



(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



(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



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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



(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



(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


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



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



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


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



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


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



Miscellaneous Q 15,000 17,000 15,000 25,000 18,000 19,000






FA,GA-GC,GO 16,000 16,000 18,000 27,000 21,000 20,000



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


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


Pedestrian/Cyclist N,P 500 1,100 200 4,900 1,100 1,200




FA,GA-GC,GO 1,100 1,100 3,000 5,900 2,000 2,500



All movements 1,000 1,100 2,800 5,800 1,800 2,100

Page A6-61



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


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


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



Miscellaneous Q 325,000 370,000 345,000 375,000 345,000 355,000






FA,GA-GC,GO 335,000 370,000 350,000 385,000 420,000 380,000



All movements 330,000 370,000 345,000 400,000 415,000 405,000

Page A6-62



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


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



Miscellaneous Q 18,000 18,000 16,000 22,000 20,000 21,000






FA,GA-GC,GO 16,000 15,000 22,000 28,000 23,000 24,000



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


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 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






FA,GA-GC,GO 1,200 1,300 5,200 7,500 2,500 3,300



All movements 1,200 1,500 2,900 7,100 1,800 2,400

Page A7-5


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


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


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).

Page A8-8


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.

Page A9-9


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.

Page A9-10


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.

Page A11-11


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.

Page A11-12


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.

Page A12-1


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

Page A12-2

Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment 1 Effective from 1 October 2007

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

Page A12-3

Land Transport NZ’s Economic evaluation manual – Volume 1 Amendment 1 Effective from 1 October 2007

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

Page A12-4


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.

Page A13-1


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

Page A13-2


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

Page A13-3


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 -

Page A13-4


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

Co

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un

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on

sult

Mo

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or

an

d r

evie

w

Man

ag

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en

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Ris

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t

Page A13-5


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.

Page A13-6


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.

Page A13-7


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%.

Page A13-8


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.

Page A13-9



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.

Page A13-10



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.

Page A13-13


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.

Page A13-14


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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Worksheets A6: Accident cost savings

Accident by accident analysis - option Worksheet A6.3

Project option


2 Option mean speed Road category

Posted speed limit

Option Severity

Fatal Serious Minor

Non-injury










$



Accident rate analysis Worksheet A6.4

Project option




1 Table used

2 Parameter b0

3 Parameter b1

4 Parameter b2



7 Typical accident rate (accidents per year), AT (appendix A6.5).

Go to step 8

Exposure-based accident prediction equation

1a Table used





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)


12 Total accident cost per year (10) x (11)



Weighted accident procedure – do minimum Worksheet A6.5

Project option



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)


6 Table used

7 Parameter b0

8 Parameter b1

9 Parameter b2



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





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)


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).



Weighted accident procedure – option Worksheet A6.6

Project option




1 Table used

2 Parameter b0

3 Parameter b1

4 Parameter b2



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)



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)


15 Total option accident cost per year (13) x (14)

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