Annex 3
1. INTRODUCTION
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. COST SAVINGS
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. ROLE OF
PTEG
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.
4. PROSPECTS
FOR NON-LIGHT
RAIL SYSTEMS
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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