The economic performance of transport projects: using and interpreting the benefit-cost ratio to compare different transport initiatives.

Economic evaluation plays an important role in the preparation of funding applications for transport projects in New Zealand, but has in the past been considered more useful for ranking similar projects than for comparing different types of transport investment. This was true, not least because of differences in the values used in the economic evaluation of different categories of transport project. The release of a new edition of economic evaluation manuals by the New Zealand Transport Agency in January 2009 created a consistent suite of procedures, based on the same underlying economic values, which now apply to transport projects from road building to travel plans. This paper picks up on the opportunity this creates, and examines the benefit/cost ratios calculated for a sample of road, public transport and travel demand management projects. The analysis shows no statistically significant differences between road capacity expansion, public transport and demand management projects in terms of their average benefit/cost ratios, due mainly to large differences in project benefit/cost ratios within work categories. Further insights are provided by a detailed analysis of the benefits and costs of a cluster of projects at the Kingsland end of Sandringham Rd. Taken together, both the broad and the detailed analysis provide insights into the projects themselves, the assumptions and drivers of the evaluation process, and how transport projects can best contribute to economic growth.