DOCSLIB.ORG

Generalised Cost Benefit Analysis for Large Infrastructure Projects

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Generalised Cost Benefit Analysis for Large Infrastructure Projects GENERALISED COST BENEFIT ANALYSIS FOR LARGE INFRASTRUCTURE PROJECTS: THE CASE OF THE CHANNEL TUNNEL RAIL LINK A thesis submitted in fulfilment of the requirements for the degree of DOCTOR OF PHILOSOPHY by MOHAMMAD HOSSEIN NAGHASHIAN School of Mechanical Engineering University of Birmingham December 2014 University of Birmingham Research Archive e-theses repository This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder. I hereby declare that I am the sole author of this thesis. I authorize the University of Birmingham to lend this thesis to other institutions or individuals for the purpose of scholarly research. Mohammad Hossein Naghashian Signature I further authorize the University of Birmingham to reproduce this thesis by photocopying or by other means, in total or in part, at the request of other institutions or individuals for the purpose of scholarly research. Mohammad Hossein Naghashian Signature I This thesis is dedicated to my parents, Fatemeh Javaherian and Hamid Reza Naghashian for their continual support throughout the years. III Acknowledgements Writing a thesis is not something one does on one‘s own, as evidenced by the long list of people here. There are a myriad of others involved in the process and my thanks are due to all of them. This research was undertaken by the University of Birmingham, School of Mechanical Engineering. I would like to thank everyone in the department who have helped me to do what I wanted to do. I apologise if I have missed anyone out. First and foremost I want to thank my supervisor, Dr. Andrew Tobias, who has encouraged me through the process, rekindled my enthusiasm for the project when I was flagging and without whom this thesis could not have been completed. I would like to show my appreciation to my co supervisor, Dr. Michael Burrow and my reviewers Dr. Harry Evdorides and Professor Kyle Jiang for their supportive comments and helping me to find suitable answers to my questions. I would also like to thank Dr. Paul Drake for the suggestions that he made in the light of examining this thesis ahead of printing the final version. I am very grateful to Mr. Ahmad Reza Hamouni Haghighat for encouraging me to continue my study for PhD with his insightful comments and motivating discussions. IV I would like to thank Mrs. Janet Hingley of ‘Janet’s Proofreading Service’ for proofreading my thesis for conventions of language, spelling and grammar. I am also grateful to my friends Hamid Rakhodaei, Shokoufeh Sardarian, Kaveh Vosoughi, Farzad Farahmand, Amin Khosravi, Taher Oliya and Ali Zohouri for supporting me with everything they could throughout my entire time doing research. Most of all I would like to express my gratitude to my father who supported me financially and emotionally during the time of my research. I am appreciative of my family who have supported me unconditionally and forgiven me for neglecting them all too often. V Abstract Even in the absence of specific evidence it is surely unthinkable to imagine Napolean Bonaparte himself, when considering the potential benefits of invading England, failing to weigh against them the costs of building a tunnel under La Manche. In the light of the considerable literature of cost benefit analysis (CBA) and by gathering together several analyses that have been performed on the Channel Tunnel in more recent times, this thesis demonstrates that a comprehensive ‘big picture’ CBA framework is missing, and then provides one: a new methodology, represented in Data Flow Diagram (DFD) form, for the generalised cost benefit analysis of large infrastructure projects. Now, almost two hundred years after Napoleon’s death, the world spends nearly $40 trillion (almost £24 trillion) on constructing and upgrading roads, railways, power plants and other infrastructures so as to keep up with demand. Such huge investments require realistic plans, clear deadlines and tight budgets for the best allocation of resources but cost overruns and delays are all too frequent. What exactly causes the cost overruns or delay is difficult to identify, but better planning and focus on the accuracy of the appraisal is one way to reduce the problems. The new model presented herein should prove useful in assisting decision-makers for all large infrastructure projects, and as a foundation for developing an appropriate decision making tool for different categories of projects too, based upon the experience of the VI Channel Tunnel. This, after all, was a project that the Government had financed through the private sector with high investment risks and significant degrees of uncertainty and had then put out for construction and operation in two different tenders. In spite of never being viable for the private sector, the Eurotunnel Company looks in a better shape now and the tunnel is working properly, but the construction cost and deadlines were clearly exceeded. VII Table of Contents 1 INTRODUCTION ......................................................................................................... - 2 - 1.1 Background ............................................................................................................. - 2 - 1.2 Aims and Objectives ............................................................................................... - 7 - 1.3 Research Methodology ........................................................................................... - 7 - 1.4 Layout of the Thesis ............................................................................................. - 10 - 2 LITERATURE SURVEY............................................................................................ - 14 - 2.1 Introduction ........................................................................................................... - 14 - 2.2 Cost Benefit Analysis ........................................................................................... - 14 - 2.3 Types of CBA ....................................................................................................... - 16 - 2.4 Why Decisions Go Wrong .................................................................................... - 19 - 2.5 Approach to Cost Benefit Analysis ...................................................................... - 22 - 2.6 Surplus .................................................................................................................. - 24 - 2.7 Discounting ........................................................................................................... - 25 - 2.7.1 NPV .......................................................................................................... - 25 - 2.7.2 IRR ........................................................................................................... - 26 - 2.7.3 BCR .......................................................................................................... - 27 - 2.8 CBA Tools ............................................................................................................ - 28 - 2.9 Period of Analysis ................................................................................................. - 29 - 2.10 Short Comings of CBA ......................................................................................... - 29 - 2.11 CBA Framework ................................................................................................... - 30 - 2.12 Selected Approaches to CBA ............................................................................... - 31 - 2.13 Conclusion ............................................................................................................ - 33 - 3 THE CHANNEL TUNNEL ........................................................................................ - 35 - 3.1 Introduction ........................................................................................................... - 35 - 3.2 History of the Channel Tunnel Rail Link (CTRL) ............................................... - 36 - 3.3 Past Appraisals of the Channel Tunnel ................................................................. - 45 - 3.3.1 Proposals for a Fixed Channel Link (Ministry of Transport, 1963) ......... - 45 - 3.3.2 The Channel Tunnel: A United Kingdom Transport Cost Benefit Study (Coopers & Lybrand Associates Ltd., 1973) .......................................................... - 46 - VIII 3.3.3 The Channel Tunnel and Alternative Cross-Channel Services (Channel Tunnel Advisory Group, 1975) .............................................................................. - 47 - 3.3.4 Fixed Channel Link Report (UK/French Study Group, 1982) ................. - 47 - 3.3.5 The Channel Tunnel; an Ex-Post Economic Evaluation (Anguera, 2006) - 49 - 3.4 Comparison ........................................................................................................... - 50 - 3.5 Eurotunnel ............................................................................................................. - 52 - 3.6 Construction .........................................................................................................
Load more

Recommended publications
  • Eurotunnel Rail Freight Solutions Introduction a Vital Transport Link
    Rail Freight Eurotunnel Rail Freight Solutions Introduction A vital transport link The North / Scotland BIRMINGHAM AMSTERDAM THE HAGUE LONDON Hamburg Waterloo GHENT ASHFORD CALAIS BRUGES LILLE BRUSSELS PARIS DISNEYLAND Frankfurt PARIS LE MANS LAVAL BREST TOURS RENNES Zurich Bordeaux Barcelona LYON Rome EurotunnelEurotunnel isis thethe bi-nationalbi-national operatoroperator of of thethe ChannelChannel TunnelTunnel linkinglinking the the UKUK andand ContinentalContinental EuropeanEuropean railrail andand motorwaymotorway networksnetworks 2 Eurotunnel ACTIVITY Shuttle Services / Navettes Freight and passenger Railway Services / Infrastructure manager passengers - Eurostar & freight - SNCF fret & EWS railfreight Retail / Distribution shops on terminal Property /Développement immobilier Source: Eurotunnel Solutions and Mercer 3 Railway Services / Infrastructure manager 4 Shuttle Services / Navettes 5 Key Figures • AVERAGE DAILY TOTALS FOR TRAINS Freight Shuttles 219 per day Passenger Shuttles 102 per day Eurostar 70 per day Railfreight 15 per day • 3300 EMPLOYEES • 2003 TURNOVER = m € 812 6 Freight Shuttles • Leader on Channel crossings with 42% market share • 1.2 million trucks ==> 14 million tonnes annually • 16 FREIGHT SHUTTLES offers six departures an hour ==>a shuttle every ten minutes • Eurotunnel Freight is the fastest, way to cross the Channel ==>35 mn transit time • Average transit time ==> 82 mns from check-in to unloading • Compared to average transit time by ferry = 2 hours saved per crossing = 4 hours per rotation • Punctuality
    [Show full text]
  • Working Paper Document
    Implementation of EU legislation on rail liberalisation in Belgium, France, Germany and The Netherlands Working Paper Document by Xavier Deville and Fabienne Verduyn March 2012 No 221 National Bank of Belgium Limited liability company RLP Brussels – Company’s number : 0203.201.340 Registered office : boulevard de Berlaimont 14 – BE -1000 Brussels www.nbb.be Editor Jan Smets Member of the Board of directors of the National Bank of Belgium © Illustrations : National Bank of Belgium Layout : NBB Microeconomic Analysis Cover : NBB AG – Prepress & Image Published in March 2012 ABSTRACT This study provides a detailed and easy-to read overview of the railway liberalisation in Belgium and the three neighbouring countries. The European Union's liberalisation Directives are often complex and are implemented in very specific ways in the different Member States. The analysis goes into some detail about the Commission's underlying motives and economic theories for letting network industries, which had previously been regarded as natural monopolies, convert into competitive enterprises with the separation of infrastructure from operations. The study takes a look at the impact of the European rail liberalisation Directives in Belgium and its neighbouring countries - France, Germany and the Netherlands. There are considerable variations in the way in which the Directives are applied. It is reflected in the way in which the separation of the infrastructure and the transport services within the railway companies was carried out, and in the degree of opening of the market in freight and passenger transport. The analysis shows that the dominance of the former monopolists in the different Member States means that private rail operators face major obstacles.
    [Show full text]
  • Development of Rail Freight in Europe: What Regulation Can and Cannot Do
    Development of rail freight in Europe: What regulation can and cannot do United Kingdom Case Study Professor Allan Woodburn (University of Westminster) Brussels, 11 December 2014 141211_CERRE_RailFreight_UK_Case_Study_Final 1/43 Table of Contents 1. Introduction ........................................................................................................................... 3 2. The demand side.................................................................................................................... 3 2.1 Key bulk freight markets ................................................................................................ 3 2.2 Other freight markets .................................................................................................... 4 2.3 Summary ........................................................................................................................ 5 3. The supply side ...................................................................................................................... 8 3.1 Trends in rail freight activity .......................................................................................... 8 3.2 Structure of the rail freight market .............................................................................. 14 3.3 Key characteristics of the rail freight operators .......................................................... 18 4. Rail freight regulation .........................................................................................................
    [Show full text]
  • The Channel Tunnel
    Source: Getlink Group The Channel Tunnel Procuring authorities Government of the United Kingdom, Government of the Republic of France Project company Getlink Group (previously Eurotunnel) Contract obligations Design, build, finance, maintain, operate, transfer (DBFMOT) Start of operations 1994 Financial closure year 1987 (syndication of the Project Finance Facility) Capital value Location GBP9.5 billion (USD11.8 billion – 1994 value) The English Channel between Folkestone (England) and Coquelles (France) Contract period (years) 99 Sector Water crossing, fixed link, rail and road Key facts No governmental subsidies, 100% Project Finance 8 | GLOBAL INFRASTRUCTURE HUB CASE STUDY: THE CHANNEL TUNNEL Project highlights The Channel Tunnel is a roughly 50 km rail tunnel countries initially for a period of 55 years, then linking Folkestone, Kent, in England, with Coquelles, extended to 99 years until 2086. Getlink’s head Pas-de-Calais, near Calais in northern France. The office is located in Paris. tunnel extends beneath the English Channel at the Originally estimated at GBP 4.8 billion in 1985 Strait of Dover. It is the only fixed link between the (about USD6.2 billion, 1985 prices), the Channel island of Great Britain and the European mainland. Tunnel’s total cost was much higher than It allows the city of London to be directly connected expected, reaching GBP9.5 billion by the end of by train to Paris, Lille, Brussels, Amsterdam and its construction (about USD14.5 billion in 1994).2 Cologne – thanks to the Eurostar and Thalys Project costs were vastly underestimated and an train lines. overrun of 80% was incurred.3 This was due to The Channel Tunnel was officially opened in 1994.
    [Show full text]
  • Hs1 New Operator Guide
    HS1 NEW OPERATOR GUIDE FEBRUARY 2013 HS1 New Operator Guide - February 2013 Table of Contents 1. Introduction .................................................................................................................................... 3 1.1. HS1 overview .......................................................................................................................... 3 1.2. Benefits of using HS1 .............................................................................................................. 6 1.3. Stations and onward connections......................................................................................... 10 1.4. Key industry relationships ..................................................................................................... 14 1.5. Document structure .............................................................................................................. 15 2. Stakeholders ................................................................................................................................. 16 3. Regulatory bodies and approvals required ................................................................................... 19 3.1. ORR........................................................................................................................................ 20 3.2. Department for Transport (DfT) ........................................................................................... 22 3.3. DfT, Land Transport Security Division (LTSD) .......................................................................
    [Show full text]
  • International Rail Freight Post-Brexit
    ›Transport Advisory ›International rail freight post-Brexit › Rail Delivery Group Important Notice This document contains the expression of the professional opinion of SNC-Lavalin Transport Advisory Ltd. (“Transport Advisory”) as to the matters set out herein, using its professional judgment and reasonable care. It is to be read in the context of the agreement dated 22nd January 2018 (the “Agreement”) between Transport Advisory and Rail Delivery Group (RDG) (the “Client”), and the methodology, procedures and techniques used, Transport Advisory assumptions, and the circumstances and constraints under which its mandate was performed. This document is written solely for the purpose stated in the Agreement and for the sole and exclusive benefit of the Client, whose remedies are limited to those set out in the Agreement. This document is meant to be read as a whole, and sections or parts thereof should thus not be read or relied upon out of context. Transport Advisory has, in preparing any projections of revenues, costs or other outcomes, followed methodologies and procedures, and exercised due care consistent with the intended level of accuracy, using its professional judgement and reasonable care, and is thus of the opinion that there is a high probability that actual revenues, costs or other outcomes will fall within the specified error margin. However, no warranty should be implied as to the accuracy of projections. Unless expressly stated otherwise, assumptions, data and information supplied by, or gathered from other sources (including the Client, other consultants, etc.) upon which Transport Advisory’s opinion as set out herein is based has not been verified by Transport Advisory; Transport Advisory makes no representation as to its accuracy and disclaims all liability with respect thereto.
    [Show full text]
  • Governance of Competition in the Swiss and European Railway Sector
    Governance of competition in the Swiss and European railway sector Final research report to the SBB lab, University of St.Gallen May 2012 “Rail companies’ fiercest competition comes from other transport modes. Efficient competition between modes of transport depends on achieving appropriate pricing and investment policies.” (Nash and Matthews, 2009) Authors Prof Matthias Finger, Ecole Polytechnique Fédérale de Lausanne and European University Institute Dr Andrea Rosa, European University Institute With the collaboration of Dr Marc Laperrouza, Ecole Polytechnique Fédérale de Lausanne Dr Martin Holterman, European University Institute Ian Brand-Weiner, European University Institute Nadia Bert, European University Institute 1 Robert Schuman Centre for Advanced Studies Within the European University Institute (EUI), the Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Stefano Bartolini since September 2006, aims to develop inter-disciplinary and comparative research and to promote work on the major issues facing the process of integration and European society. The Centre is home to a large post-doctoral programme and hosts major research programmes and projects, and a range of working groups and ad hoc initiatives. The research agenda is organised around a set of core themes and is continuously evolving, reflecting the changing agenda of European integration and the expanding membership of the European Union. Details of the research of the Centre can be found on: http://www.eui.eu/RSCAS/Research/ Research publications take the form of Working Papers, Policy Papers, Distinguished Lectures and books. Most of these are also available on the RSCAS website: http://www.eui.eu/RSCAS/Publications/ The EUI and the RSCAS are not responsible for the opinion expressed by the author(s).
    [Show full text]
  • Germany Case Study
    Appendix A Final Report APPENDIX A NATIONAL CASE STUDIES Appendix A Appendix A Final Report France Case Study Appendix A Appendix A Final Report 1 Background Implementation Activity to date 1.1 Key strategic policy for domestic transport in France was established by the “Loi portant organisation des transports intérieurs” (LOTI) of 30th December 1982. This included a formalisation of the monopoly role for SNCF for the provision of domestic passenger services. 1.2 The French Infrastructure Manager, RFF, was established by the “Loi n°97-135 du 13 février 1997 portant création de l'établissement public "Réseau ferré de France" en vue du renouveau du transport ferroviaire”. As is noted later in this case study, this mandated the ‘delegation’ of most responsibilities for infrastructure maintenance and management to the incumbent, SNCF. This legislation had the objective of separating the accounts of the IM and the incumbent RU, both to meet the requirements of the First Railway Package and to freeze SNCF’s historic debt. 1.3 The Railway Safety Directive was implemented into French legislation through the “Décret n°2006-1279 du 19 octobre 2006 relatif à la sécurité des circulations ferroviaires et à l'interopérabilité du système ferroviaire”. Also adopted in the same year there were a “loi” for the establishment of the national safety authority (EPSF) and a “décret” for its organisation and functions. Institutions Economic regulator 1.4 The Autorité de régulation des activités ferroviaires (ARAF) replaced the previous regulatory authority Mission de contrôle des activités ferroviaires (MCAF), which was a branch of the ministry, on 1 December 2010.
    [Show full text]
  • Tunnel Vision? Completing the European Rail Market
    HOUSE OF LORDS European Union Committee 24th Report of Session 2010–12 Tunnel vision? Completing the European rail market Ordered to be printed 29 November 2011 and published 8 December 2011 Published by the Authority of the House of Lords London : The Stationery Office Limited £price HL Paper 229 The European Union Committee The Committee considers EU documents in advance of decisions being taken on them in Brussels, in order to influence the Government’s position and to hold them to account. The Government are required to deposit EU documents in Parliament, and to produce within two weeks an Explanatory Memorandum setting out the implications for the UK. The Committee examines these documents, and ‘holds under scrutiny’ any about which it has concerns, entering into correspondence with the relevant Minister until satisfied. Letters must be answered within two weeks. Under the ‘scrutiny reserve resolution’, the Government may not agree in the EU Council of Ministers to any proposal still held under scrutiny; reasons must be given for any breach. The Committee also conducts inquiries and makes reports. The Government are required to respond in writing to a report’s recommendations within two months of publication. If the report is for debate, then there is a debate in the House of Lords, which a Minister attends and responds to. The Committee has seven Sub-Committees which are: Economic and Financial Affairs and International Trade (Sub-Committee A) Internal Market, Energy and Transport (Sub-Committee B) Foreign Affairs, Defence and Development
    [Show full text]
  • European Rail Market and the Role of the Channel Tunnel
    COMMITTEE ON THE EUROPEAN UNION INTERNAL MARKET, ENERGY AND TRANSPORT SUB-COMMITTEE European Rail Market and the role of the Channel Tunnel Written and corrected oral evidence Contents Alstom—Written evidence ...................................................................................................................... 3 Alstom—Oral evidence (QQ 199-233) .............................................................................................. 11 Lord Berkeley—Oral evidence (QQ 300-330) ................................................................................. 26 David Briginshaw, Editor-in-Chief, International Rail Journal—Written evidence .................... 41 Department for Transport—Written evidence ................................................................................ 44 Department for Transport—Oral evidence (QQ 253-299) .......................................................... 49 Deutsche Bahn AG—Written evidence ............................................................................................. 67 Deutsche Bahn AG—Oral evidence (QQ 87-131) .......................................................................... 73 European Rail Infrastructure Managers (EIM)—Written evidence ............................................... 87 European Railway Agency—Written evidence ................................................................................. 90 Eurostar—Written evidence ................................................................................................................
    [Show full text]
  • Groupe Eurotunnel Revenue and Traffic Figures Increase During Q1 2010
    PRESS RELEASE GET 2011/06 18 April 2011 For release at 07:45 Eurotunnel Group revenue figures Strong growth of 24% to €179.2 million for the first quarter of 2011 1 Total revenue increased by 24% to €179.2 million (+11% like-for-like ) Concession for the cross-Channel Fixed Link: Eurotunnel Shuttles: sustained revenue growth (+ 14%) Railway network: continued upward trend for Eurostar traffic (+ 8%) Europorte : a significant contribution to revenues with a 20% increase like-for-like Jacques Gounon, Chairman and Chief Executive Officer of the Eurotunnel Group stated: “Eurotunnel has made excellent progress in all its strategic activities as a result of its long term strengths: customer service and protection of the environment, whilst the ferries which use bunker fuel are having to apply fuel surcharges. Our rail freight business is developing as planned through the efforts of the dynamic teams at GBRf in the UK and Europorte in France.” *** Revenue Total revenues for the Eurotunnel Group for the first quarter of 2011 have increased to €179.2 million, not including insurance indemnities, a growth of 24% compared to 2010 at a constant exchange rate. On a like-for-like basis, the increase is 11%1. 1 Europorte acquired GB Railfreight (GBRf) on 28 May 2010 so GBRf did not contribute to revenues for the first quarter of 2010. On a like-for-like basis means at a constant exchange rate (that of the first quarter of 2011, £1=€1.132) and excluding the contribution from GBRf in the first quarter of 2011. 1st quarter 1st quarter 1st quarter REVENUE 2011 2010 % change 2010 € million unaudited restated* published** Shuttle Services 81.7 71.6 + 14% 71.3 Railway network 59.9 57.0 + 5% 56.9 Other revenues 1.9 1.9 - 1% 1.9 Sub-total Concession 143.5 130.5 + 10% 130.1 Europorte 35.7 14.3 + 150% 14.3 Revenue 179.2 144.8 + 24% 144.4 * Exchange rate 1st quarter 2011: £1=€1.132 ** Exchange rate 1st quarter 2010: £1=€1.124 A.
    [Show full text]