Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence

Annex 3


  1.1  PTEG submitted evidence to the Transport Sub-Committee in October 1999 and oral evidence was given on 26 January 2000. Supplementary information was subsequently requested by the Committee (letter dated 28 January 2000 from Kevin Lee) on a number of points. This note refers to two specific issues:

    —  How large are the cost savings which could be achieved by adopting a common approach to funding and procuring LRT systems in the UK? What scope is there for reducing the cost of LRT projects by standardising system specifications and the equipment used? What role could PTEG play in promoting a common approach to this issue?

    —  The PTEG memorandum (para 4.5) refers to research undertaken by Environmental and Transport Planning into the prospects of non-light rail systems for achieving commercial and planning objectives. Would it be possible to provide a summary of the findings of the initial and follow up research?


  2.1  A common approach to funding and procurement of LRT systems in the UK would significantly reduce the risks and the timescales associated with scheme development and hence reduce the overall project costs. For the past 15 years, each light rail project has been developed individually with each promoter evaluating the funding and procurement options in discussion and negotiation with central Government. This has often taken several years and has resulted in virtually every project being developed with different funding arrangements and different forms of contract. The cost of consultancy input alone has been substantial.

  2.2  It would be necessary to undertake a detailed study to provide quantified estimates of potential savings. Some estimates suggest that the additional cost of procurement through public private partnerships, each of which is tailored to a specific project, could be up to 30 per cent of the project cost compared with the cost of a conventional design and build contract. This figure is in effect the cost of transferring risk to the private sector. However it is necessary to consider total whole life project costs including operating costs and revenues and these render direct comparisons more difficult.

  2.3  Comparisons between the costs of LRT projects must be interpreted carefully because no two schemes are directly comparable and their differing characteristics have an important impact on costs. However some indications can be deduced from a number of sources.

  2.4  A major manufacturer has given a cost of £7 million per km for a typical new street running light rail system if they were able to supply "off the shelf" components under a complete design and build package. This compares with about £8 million per km for the Sheffield Supertram which could be considered to be a similar type of system. This would suggest a possible cost saving of around 12 per cent.

  2.5  The most profitable area for standardisation is in the rolling stock. The cost of the light rail vehicles for Croydon Tramlink is understood to be about £1.3 million per vehicle. This compares with £1.6 million for the Sheffield Supertram. The Croydon LRVs are a standard specification as supplied to another operator with very few modifications while those for Sheffield were individually specified. Although the specifications are not directly comparable, it would suggest a cost saving perhaps in the region of 15 per cent for a standard vehicle.

  2.6  Rolling stock costs are also determined by the number of vehicles ordered. Costs are significantly reduced as order size increases. It has been estimated for the Manchester Metrolink LRVs that the vehicle costs would be £6.75 million each for a single vehicle, £2.35 million each for five vehicles, £1.8 million each for 10 vehicles and £1.5 million each for 25 vehicles. If 100 vehicles could be purchased by several systems sharing an order to a common specification, the cost would reduce to £1.3 million each.

  2.7  Greater Manchester PTE are currently seeking approval for a package of three extensions rather than procuring each one separately. The cost of the three lines is estimated at £473 million but this would reduce to £445 million if procured as a single contract, a saving of £28 million. This represents a reduction of 6 per cent on total capital costs.

  2.8  It may be concluded that the scope for reducing costs by standardisation is probably in the range five per cent to 15 per cent. The cost savings from streamlining methods of funding and procurement may be considerably higher.


  3.1  PTEG could play a key role in promoting a common approach to these issues. The majority of LRT promoters in the UK are PTEG members and it maintains links with non-PTEG LRT promoters. It has in the past been closely involved in attempting to develop a standardised approach to LRV specifications in association with the Railway Industries Association. There was however a conflict between the objectives of standardisation and the need to permit maximum freedom for competitive tendering within a design, build operate and maintain form of contract.

  3.2  PTEG would welcome an opportunity to explore these issues further in the context of the approach to funding and procurement with the Government wishes to pursue. A more detailed study of the issues discussed in this note could be undertaken to gain a better understanding of the factors involved, their relative importance, and the scope for realising cost savings through changes to current procedures.


  3.1  The study undertaken by Environmental and Transport Planning (ETP) referred to in para. 4.5 of the PTEG Memorandum has still not been published although initial results have been presented to PTEG. The Report is expected to be published shortly.

  4.2  The purpose of the ETP study was to evaluate the experience of existing light rail, guided bus, busway and bus lane systems in expanding the role of public transport. It covered technical and financial aspects and attitudes of passengers and car users.

  4.3  The Study found that light rail was the dominant mode for expanding public transport in Europe and the USA. No city had a full guided bus network although busways have been built in a number of cities in North America, Brazil and Japan and more are proposed. There are few sections of busway in Europe, mainly because of lack of space.

  4.4  Light rail vehicles ranked slightly higher than buses in terms of space, speed, capacity, comfort, pollution and noise although buses could do equally well in terms of capacity and speed and modern buses also on pollution. Costs vary substantially for all modes with light rail generally being the most expensive and buses the cheapest.

  4.5  Complementary measures are vitally important to all public transport modes and some, for example pedestrianisation, are easier to implement with light rail than with buses. It was found that cities with significant light rail networks had gained more public transport passengers in the 10 years to 1996 than those which rely on buses although the reasons were not clear. The majority of passenger growth was from existing passengers with only modest transfer from private car, rarely more that 20 per cent for light rail and lower for bus based systems. More car drivers preferred light rail than guided bus.

  4.6  The Study concluded that the decisive influence on the success of a policy of expanding public transport was not mode specific but depended on the political commitment to an overall strategy to reduce the dominance of the car in urban areas. Any of the modes can secure expanding demand if a high quality service is provided and complementary measures are vigorously implemented.

  4.7  The inflexibility of light rail was seen as an advantage because it gives confidence that the system will be secure and not subject to political or financial change. People can plan their lives knowing it will be there in the future. It was a popular mode with few enemies. Bus service improvements, while overwhelmingly positive in terms of value for money, are too small to make a great impact. A much bolder political will is required to make bus priority networks successful; then the balance of advantage could be profound.

  4.8  Busways and guided busways were useful additions if the main strategy was right but were unlikely to be on the central element in a public transport strategy, probably being limited to a specific fringe role. Their main disadvantage was the required width which was hardly available in European urban areas. They were unlikely to be implemented in town centres in any country. New types of guided bus such as TVR or Translohr in France may have some future but more practical experience and research is needed.

  4.9  ETP have undertaken a separate study for DETR on "Light rail and complementary measures—Part 1". It was completed in January 1999 and examines the approach to light rail funding within the context of urban transport systems in Europe and the USA. Part two of the Study has recently been awarded by DETR to the MVA Consultancy in association with Systra (France) and TTK (Germany). It will take about six months and will recommend measures most likely to help LRT systems to contribute to the success of a Local Transport Plan and the broad range of Government objectives for transport. It will include an extensive review of European LRT systems and case studies of specific cities. Details of these studies can be provided if required.

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