Title How assumptions influence the results of a cost benefit analysis
Author Davies, W (Building Queensland)
Conference or Journal ARRB Conference, 27th, 2016, Melbourne, Victoria, Australia
Date published 2016
Number 1.8
Pagination 14p
Publisher ARRB Group Ltd
Document type Conference Paper
Subject Cost benefit analysis
Transport management
Case study
Methodology
Evaluation
Abstract The national guidelines for transport systems management (NGTSM) provides guidance for how cost benefit analysis (CBA) should be conducted for transport and road projects. These guidelines are supplemented by material provided by the Bureau of Infrastructure, Transport and Regional Economics (BITRE), Austroads and the state road authorities. This paper attempts to investigate if following the guidelines alone is always sufficient to achieve both transparency and consistency for CBAs. In this paper, a number of real life case studies from Queensland have been included. These case studies include road interchange upgrades, bridge upgrades, flood immunity improvements, and public transport projects. The CBAs of the case studies follow the guidelines provided (consistent unit values and formulae) but the results of the CBAs fluctuate for reasons outside of the material provided in the guidelines. These reasons largely relate to the adoption of assumptions. The assumptions considered in this paper relate to the base case, the use of transport models, treatment of incomplete information and data, road user behaviour, and forecast demand. The paper proposes evaluating projects as part of a program as an approach to mitigate or resolve inconsistencies between CBAs that might use different assumptions if evaluated as individual projects. The problems identified in the case studies are revisited and discussed in the context of a program approach. The paper discusses how the application of a program approach enhances the value of CBA outputs to decision-makers.
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