Keeping in mind that $2.6 billion worth of “Time Savings Benefits” have been ascribed to the Waterview Connection (almost single-handedly justifying the project), I guess it’d make sense to have a look internationally at these benefits, to make sure they’re robust and stack up well.

Luckily, a study in Melbourne into them has recently been conducted. Let’s have a look at its abstract:

The foremost economic benefit postulated and claimed for all road network investments is the value of travel time saved. This paper’s aim is to empirically test whether the very substantial economic resources that have been consumed over the last two or so decades in the construction and use of major road network additions in Melbourne have helped to achieve the travel time savings which formed the main foundation of their economic justification. The study uses the annual traffic system monitoring data prepared by VicRoads for the monitored urban road network, and compares these actual data against the results for Melbourne’s urban road system that were projected by various traffic modelling experts in the 1990s. In particular this study uses City Link as the case study to enable the comparison between such projections and actual traffic volumes and traffic behaviour.

One of the key findings of this study is that the average whole of day speed on Melbourne’s freeways overall has stayed at around the same level (78+ kms /hour) apart from 2000-01 (83.5 kms/ hour) and 2001-02 (79.5 kms’ hour). Second, the average speed in kilometres per hour in both the morning and evening peak periods for the whole monitored urban network in the most recent year for which data are available — the year ended June 30 2007 — is the lowest it has been since 1994-95. Third, average travel speeds in inner Melbourne post the opening of City Link have reduced in both the morning and evening peaks. Even more concerning is the fact that average speeds across the whole day for both freeways and all types of arterial roads in the inner Melbourne region have all similarly dropped over the years 2001-02 to 2006-07. Fourth, the projected volume of freeway traffic of 331,000 DVH by 2011 looks unlikely based on the reduced speed of freeway traffic volumes since 2003-04 and a total freeway volume of 244,700 DVH in 2006-07. Finally, the Net Present Value (NPV) of the extra travel time in actual daily vehicle hour equivalents over the years 1997-98 to 2006-07 as compared to the projected total saving in DVH of 161.2 million is -$349.4 million. Given this dissaving, the NPV of travel time savings on Melbourne’s’ urban road network from 2007-08 to 2030-31 inclusive would have to amount to $1.834.4 billion, as opposed to the projected NPV of $957.1 million by Allen consulting group and Cox (1996).

In sum, the results from this study suggest that the core of travel times savings benefits, which is an increase in average travel speeds, has not to date eventuated in Melbourne’s urban road network during the years under review. Indeed, based on the evidence presented and analysed in this paper, one could be led to the conclusion that investments in Melbourne’s urban road network have resulted in more time being used by Melbourne’s motorists rather than less time. Hence major road infrastructure initiatives and the consequent economic investments have not yet delivered a net economic benefit to either Melbourne’s motorists or the Victorian community. Equally concerning is the plausible conclusion from this analysis that over their remaining economic life such major urban road network investments are unlikely to result in major travel time savings.

I wonder if this will have implications into how we evaluate the anticipated benefits of the various transport projects we embark upon?

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    You see apparently even if it doesn’t save time it provided time savings…

  2. Well my next plan is to probe into induced demand a bit. The next thing that drives him nuts.

    For all those wondering who the heck Riggles is, he is a road engineer on the better transport forums. It drives him crazy to be told that the way projects are evaluated might be flawed.

  3. Another interesting lecture – tonight…


    Wednesday 30 September


    Ernst Zöllner is an urban planner and economist with urban design sensitivities. Before joining the NZTA, Ernst was Director of Planning and Urban Design at Wellington City Council, lectured in public policy, infrastructure planning and urban economics at the University of Auckland, and worked as a consultant and adviser to local and central governments in New Zealand and South Africa, based in Wellington, Auckland, Cape Town, and Johannesburg.

    Starts 6pm, Engineering Lecture Theatre 1.439, 20 Symonds Street, University of Auckland.

  4. Travel time savings are seem to be very overstated on roading projects. Travel time savings have an economic value when referring to commercial vehicles (freight, taxis, people traveling for work purposes). In these cases travel time savings are a real $$ benefit. But for the majority of private individuals traveling, they aren’t paid for the time they travel. If they spend 10 mins less each day traveling this isn’t converted into any extra income or productive output. Sure they can sleep in 10 mins longer but that doesn’t translate into any increased productivity or extra income.

    Perversely travel time of pedestrians is ether disregarded or given a lower value than vehicles so that a roading project that improves travel time at the expense of say pedestrian travel times, as can happen in central city area, doesn’t take account of longer walk times when considering travel time benefits.

    Throw in induced traffic and the rationale for many major roading projects is all smoke and mirrors.

    I guess the only rationale that would stand up is where a road is built that deliverers a time saving and users, private and commercial, are prepared to pay the toll required to use the the new road. With pricing in place the demand on the road can be managed to ensure it delivers the faster uncongested journey for those prepared to pay the extra cost.

    Of course the problem for toll roads in Sydney has been that when users are presented with an actual cost for using the faster toll road uptake has been well below forecast and the toll road companies have had real financial difficulty. Maybe suggesting that for most users the value of the time saving really is overstated. Faster trip, yes please. Faster trip for $5… um no thanks I’ll keep the cash and take a slower travel time.

  5. The calculation/theory of travel time savings just lacks any ecological validity (i.e. the theory does not relate to the acutal outcomes under real life conditions).

    Basically the calculation is X minutes saved per trip each day times Y many trips. This is then usually multiplied by Z dollars per hour to get a dollar figure.

    So say we have a project that save three minutes off the trip of 10,000 people each day, well accordingly the travel time savings are 500 man hours a day, or 182,500 man hours a year. The simple conclusion is that we have created 182,500 productive man hours a year. Multiply that by some arbitrary figure on the average wage (usually about $20 an hour) and voila, $3.6 million dollars a year in travel time benefits.

    But in reality, have we created 182 thousand productive man-hours for the economy, no. We have given 10,000 people an extra three minutes.

    Will those people work an extra three minutes every day as a result? I highly doubt it. Personally, I am at work my contracted 8.25 hours a day, day in day out, regardless of how long it takes me to get to work or back again. If my commute became 3 minutes shorter than I would probably just sleep in longer, drink my coffee a little slower. In all honesty I wouldn’t even notice. Saving a zillion people a small amount of time doesn’t actually add up to the sum of those minutes being used productively in practice.

    Really, in the most part what travel time savings does is give people more time to sleep, eat, relax or spend time with friends and family. These things are important, but the don’t contribute to the economy in the way that TTS calculations assume, certainly not at the average hourly wage. There are implications for freight and commercial traffic, but these are very poorly described by the travel time saving calculation.

    On an interesting note, becuase my train-bus combo to get to work can vary day to day by up to about 15 minutes (like most car commutes) I leave my house about 15 minutes earlier that I theoretically need to. This means that some days I get to work 15 minutes early, some days I am bang on time and every now and then I am late. So half the time I am at my desk and start working five or ten minutes before I need to. If my travel time reliability was improved and I could get to work bang on time every day, then there would be a slight decrease in the amount of time I spend at the desk each week. Thats not to say how much work I would get done, we all know about the gaseous nature of work (it expands or contracts to fit the amount of time available to it) 🙂

  6. And if giving people more spare time was so important, the government would buy us all a dish washer. It would be cheaper than the Waterview Connection.

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