SIMON Corbell says a second independent review of the Capital Metro stage one business case shows the methodology used in establishing the 1.2 benefit cost ratio for the project was conservative and robust.
“The independent review by Professor Roger Vickerman from the University of Kent, released today, was one of two undertaken prior to the public release of the business case,” Simon said.
“The other review, by Professor Derek Scrafton from University of South Australia, was released last year. Both academics have extensive experience in the public transportation field.
“Both reviews confirmed that the methodology used in the business case is sound and that the document overall contains sufficient details and makes realistic conclusions and recommendations.
“The review also states that the overall benefits of the project could be higher than those presented in the business case.”
“Professor Vickerman’s analysis of the business case found that ‘methodology used is a sound one and provides a reasonable estimate of the likely impact of the project on the transportation system and economy of the proposed corridor and the Canberra region more widely’.
“It could be argued to be more likely that the case as presented underestimates the final impact due to unquantified factors or changes in behaviour occasioned by the project,” Professor Vickerman said.
Simon said Professor Vickerman’s overall conclusion of the review was that “a careful and robust appraisal of the project has been undertaken suggesting that reasonable confidence can be held in the Business Case as presented”.
“The review also suggested that less conservative methodology could have resulted in a higher BCR,” Simon said.
“The real discount rate of 7% is clearly a standard public sector value, although it does seem to be on the high side in comparison with the discount rates used in other developed countries, e.g. in Europe in recent years,” Professor Vickerman said.
“The effect of this is demonstrated when the UK value of 3.5% is used together with a more optimistic assumption for rising values of time through time; the BCR increases from 1.2 to 1.7.”
Mr Corbell said the Canberra community can now be even more confident in the Capital Metro project now that they have the knowledge that, once again, the project’s business case has been validated by two leading experts in their fields.
“The Capital Metro business case has been thoroughly reviewed by two highly qualified academics with expertise in this field and both have found it to be robust, conservative and reliable,” Simon said.
“The review released last year produced by Professor Scrafton review also concluded that the business case was fit for the purpose for which it was prepared, used appropriate and realistic methodologies in the analytical sections and followed guidelines which were recommended and approved by national organisations.”