CBA of transport infrastructure projects
in Germany

Dr. Catharina HornFederal Transport Infrastructure Planning, Investment Policy
Paris, 27th of February 2014www.bmvi.de1.

The Federal Transport Infrastructure Plan

2.

CBA as the main tool for project evaluation

3.

a.

Main componentsb.

Key issuesc.

Choices and difficulties with CBA

CBA for decision making

The Federal Transport Infrastructure Plan:
Central regulatory element of transport infrastructure policy
 The Federal Government is responsible for the construction andmaintenance of the federal transport infrastructure.

 The Federal Transport Infrastructure Plan indicates all infrastructure
projects that the Federal government decided to realize the next years.
…includes new construction of infrastructure but also upgrading and maintenance.
…covers three modes of transport: road, rail, inland waterway transport.
…identifies the need to invest in infrastructure and assesses the viability of projects.
…is in general valid for about 10 - 15 years.
…is drawn up by the Federal Government.
…marks the beginning of the planning process.
3Road Network in Federal Responsibility• Federal motorways 12 500 km length Average 50 000 veh./24h Peak 150 000 veh./24h• Federal highways
 41 000 km length Average 10 000 veh./24h
Federalmotorways(12 500 km)

Federalhighways

23% oftotallength(41 000 km)

50% of total
annual milage
District roads

State roads(92 000 km)(87 000 km)+ 400 000 km rural roads

4Federal Transport
Infrastructure Plan 2003




The current plan covers theperiod 2001 – 2015.
Contains two main categories
of projects:o high priority projects
o other projects
Map refers to federal roads:● Ongoing projects● First priority projects● Second priority projects● Existing infrastructure

1.

The Federal Transport Infrastructure Plan

2.

CBA as the main tool for project evaluation

3.

a.

Main componentsb.

Key issuesc.

Choices and difficulties with CBA

CBA for decision making

Project evaluation: CBA as the main tool
 CBA already used for evaluation of projects for the FTIPs 1992 and 2003.
 The Federal Ministry of Transport is preparing the new FTIP 2015 that will
cover the period 2016 to 2030. → revision of the evaluation methodology
 Notification of projects: road, rail and inland waterway infrastructure
projects registered for evaluation.
 Evaluation of projects shall be carried out in 2014/2015.
 Assessment of the project impacts → comparison between twoscenarios: with the project and without the project.

7

Traffic load without project

Traffic load with project

Traffic load difference
to be valuatedIncrease in traffic

Decrease in traffic81.

The Federal Transport Infrastructure Plan

2.

CBA as the main tool for project evaluation

3.

a.

Main componentsb.

Key issuesc.

Choices and difficulties with CBA

CBA for decision making

Cost-benefit analysis
 Benefit-cost ratio is calculated for each project: to see how much theproject-related benefits exceed the project’s investment costs.

 To calculate project-related benefits:
negative benefits
Costs
are deducted frompositive benefits.

Benefits

10Cost-benefit analysis(Federal Transport Infrastructure Plan 2003)

Benefit components – example of the road
Reduction in transport costs
Standby and operating costs for heavy goods vehicles and passenger cars, main benefit:
reduction in labour costs

Better accessibility
Time savings in commercial and non-commercial passenger transport

Share
62,0%
34,8%

Improvement in traffic safety

15,4%

Regional effects

1,4%

Impact on the employment situation

Environmental impact
Especially noise, emissions such as CO20,3%

Maintenance of the transport infrastructure-1,7%

Impact from induced traffic-12,3%

Only in passenger transport

11Revision of the evaluation methodology for the FTIP 2015
 Components with the most important influence: Decrease in transport costs: faster journeys, shorter distances andbetter use of vehicle capacities
 Effect on vehicle standby costs: time-dependent material costs
 Effect on vehicle operating costs: time-dependent personnel costsof the driving and accompanying staff, speed-dependent energy
and fuel consumption costs, mileage-dependent material costs Changes in transport costs due to modal shift

 Improved accessibility:
 Time savings due to decreased journey time in passenger
transport, now also for the transport of goods→ Update of the values of travel time savings according to thepurpose of the trip and traveling distance; values for timesavings in the transport of goods, handling of small travel
time savings (< 2min)

12

Revision of the evaluation methodology for the FTIP 2015
 Update of the other components:
 Improved traffic safety: decrease in accident costs by improving thelevel of safety, effect results from vehicles using route types with a higher level of safety in thesame mode of transport or displacing traffic to other modes with higher level of safety.
 Environmental impact: Changes in noise exposure in built-up areas and outside
 Impact from pollutant emissions:oooo

Climate change: CO2
Damage to vegetation: CO, CH, NOx, SO2, dust
Carcinogenic air pollutants: dust, benzene, benzo(a)pyrene
Damage to health and buildings: Nox13

Revision of the evaluation methodology for the FTIP 2015
 Transport infrastructure maintenance:
 Effect on maintenance costs due to change in traffic load Impact from induced traffic:
 Increased mobility leads to additional mileage and thus to higher
accident risks and pollution in road transport
 Components that should not longer be included:
 Employment effects:
 From building transport infrastructure and operating infrastructureby improving the attractiveness of the region as a location
 According to economic forecast: full employment in 2030

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Revision of the evaluation methodology for the FTIP 2015
 Components that should be added:
 Life cycle emissions: greenhouse gas emissions during the whole
life of an infrastructure Reliability of transport times: how to measure and evaluate morereliable transport times
 Feasibility study: how to define and measure reliability?
→ Difference between road and rail transport What are passengers willing to pay for an increase in reliability?
 Other components that were also considered: Negative effects during the construction phase: quite complex andrelatively small effect15

Revision of the evaluation methodology for the FTIP 2015
 Components that should be added:
 Life cycle emissions: greenhouse gas emissions during the whole
life of an infrastructure Reliability of transport times: how to measure and evaluate morereliable transport times
 Feasibility study: how to define and measure reliability?
→ Difference between road and rail transport What are passengers willing to pay for an increase in reliability?
 Other components that were also considered: Negative effects during the construction phase: quite complex andrelatively small effect16

1.

The Federal Transport Infrastructure Plan

2.

CBA as the main tool for project evaluation

3.

a.

Main componentsb.

Key issuesc.

Choices and difficulties with CBA

CBA for decision making

Key issues
 Discount rate: 3 % in the past
 Probably lower discount rate: 1 % - 2 %, recommendation: 1,7 %.
 How to cope with uncertainty?
 Risk premium or sensitivity test
 Carbon value: 205 €/t CO2 in the past (recommendation from the Federal
Environmental Agency: 165 - 205 €/t CO2)
 Probably lower value: 80 € for 2010, 145 € for 2030.

18

1.

The Federal Transport Infrastructure Plan

2.

CBA as the main tool for project evaluation

3.

a.

Main componentsb.

Key issuesc.

Choices and difficulties with CBA

CBA for decision making

Choices and difficulties CBA for FTIP has to take into account some specific features of Federaltransport infrastructure planning:
FTIP corresponds to the highest level of infrastructure planning→

Strategic planning: decision on new projects and on priorities istaken when a new FTIP is prepared every 10 to 15 years→For this reason: A very large number of projects to be evaluated Many projects in an early phase of the planning process, otherprojects in an advanced phase Different types of projects, different sizes Traffic forecast 2030 on a relatively detailed level
201.

The Federal Transport Infrastructure Plan

2.

CBA as the main tool for project evaluation

3.

a.

Main componentsb.

Key issuesc.

Choices and difficulties with CBA

CBA for decision making

CBA for decision making
 According to the Federal budget code: benefit-cost ratio > 1 !
 In 2003, 40 % of rail projects had a benefit-cost ratio > 3 and 35 % abenefit-cost ratio between 2 and 3. As regards road and waterway projects,
almost 70 % of all projects had a benefit-cost ratio > 3.
 For the FTIP 2003:
 classification according to priority level:
 VB … First priority projects: high benefit-cost ratio
 WB … Second priority projects
 Planning status of the projects and network design requirements arealso taken into account.
 If a project is realized, depends also on the amount to be invested:maintenance and ongoing projects vs. new projects (new construction,22
upgrading of existing infrastructure).

CBA for decision making
 For the FTIP 2015: How to set priorities?
 4 tools for project evaluation
 CBA is still the most important criteria for choosing projects
 New priority class: VB+ … first priority projects plus
→ high benefit-cost ratio + to eliminate bottlenecks→ no high environmental risks
 Further points:
 Maintenance and ongoing projects: what is an ongoing project?
 Better evaluation of investment costs (in particular for projects inan early phase of planning) Study of packages of projects, analysis of network deficiencies
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Procedure Federal Transport Infrastructure Plan 2015
Notification, network and project review“With” scenario calculation and project assessment
2030 traffic forecast

2030 forecast of maintenanceneeds

Environmental
assessment

Cost-benefit
analysis

SpatialimpactUrban
development

Overall plan and environmental reportincl. Strategic Environmental Assessment (SEA)
Quality assurance
Public participation

24

CBA for decision making
 On the basis of the FTIP, the government prepares a draft law to be voted
by the parliament in order to modify the existing law referring to theupgrading of transport infrastructure.

 In the appendix of the law figures the “requirements plan” = the list of all
projects (ongoing and new projects, i.e. upgrading existing infrastructureand new construction, according to priority classes) that shall be realized
during the period covered by the FTIP.
→ The need for these infrastructure projects is stipulated by law.
 The “requirements plan” is revised every 5 years: CBA conducted to see if
the project has still a benefit-cost ratio > 1.

25

Parliament

REQUIREMENTMEDIUM-TERMPLANNING

PLANNING

Upgrading acts withrequirements plans

Medium-term
financial planningevery 5 years
Bill

FINANCING

Annual budget

every 5 years

Planning mandate

Requirements
plan review
FederalMinistry ofTransportand Digital
Infrastructure

Federal Transport
Infrastructure
Plan (BVWP)

Five-year plans(framework investmentplan)

Annualconstruction
planning

Planning mandate

Project developer

Projectideas

Sectoralplanning

Construction
law

Execution of
construction project

IMPLEMENTATION
26

Thank you very much for your attention!

Dr. Catharina Horn
Bundesministerium für Verkehr und Digitale Infrastruktur (BMVI)
Invalidenstraße 44
10115 Berlin
E-mail: catharina.horn@bmvi.bund.dewww.bmvi.de