12.0 economic evaluation

September 2002 North Otaki to Peka Peka Road 98

12.0 Economic Evaluation

The economic analysis has been carried out in accordance with the procedures contained in the Transfund New Zealand Project Evaluation Manual.

12.1 Scheme Options

The scheme options are: • Do Minimum

The existing two-lane alignment from Taylors Road in the north to Peka Peka Road in the south. The road goes through the urban area of Otaki.

The northern section commenced at Taylors Road and concluded at the south abutment of the Otaki River Bridge plus a link to the Otaki Gorge Road underpass. • Option NR: North Railway Route

A proposed four -lane alignment north of the Otaki River Bridge, in proximity to the railway line. The option includes the existing carriageway, resulting in a total of six lanes.

• Option NE: North Eastern Route

A proposed four -lane alignment north of the Otaki River Bridge, east of the existing two- lane road. The option includes the existing carriageway, resulting in a total of six lanes.

• Option NW: North Western Route

A proposed four -lane alignment north of the Otaki River Bridge, west of the existing two- lane road. The option includes the existing carriageway, resulting in a total of six lanes.


The southern section commenced from the south abutme nt of the Otaki River Bridge and concluded immediately north of Peka Peka Road. • Option SE: South Eastern Route

A proposed four -lane alignment south of the Otaki River Bridge, east of the existing two- lane road. The option includes the existing carriageway, resulting in a total of six lanes.

• Option SW: South Western Route (6 lanes)

A proposed four -lane alignment south of the Otaki River Bridge, west of the existing two- lane road. The option includes the existing carriageway, resulting in a total of six lanes.

Interim options were considered for each of the sections. • Option NE1: North Eastern Stage 1 Route

A proposed two- lane alignment north of the Otaki River Bridge, east of the existing two- lane road. The option includes the existing carriageway, result ing in a total of four lanes.

• Option NW1: North Western Stage 1 Route

A proposed two- lane alignment north of the Otaki River Bridge, west of the existing two- lane road. The option includes the existing carriageway, resulting in a total of four lanes.

• Option NW1-B: North Western Stage 1 Route (no additional Otaki River Bridge)

A proposed two- lane alignment north of the Otaki River Bridge, west of the existing two- lane road. The option includes the existing carriageway, resulting in a total of four lanes .

The option would not include a second Otaki River Bridge. All vehicles must cross the existing two- lane bridge.


• Option SE1: South Eastern Stage 1 Route

A proposed two- lane alignment south of the Otaki River Bridge, east of the existing two- lane road. The option includes the existing carriageway, resulting in a total of four lanes acting as a one -way pair.

• Option SE1B: South Eastern Stage 1b Route

A proposed two- lane alignment south of the Otaki River Bridge, east of the existing two- lane road and railway, continuing to Mary Crest. At this point the two carriageways merge and the road continues as a single carriageway four -lane cross-section.

The option includes the existing carriageway, resulting in a total of four lanes. They constitute two two-way roads to the north of Mary Crest and one two-way road (four lanes) in the southern section.

• Option SW1: South Western Stage 1 Route

A proposed two- lane alignment south of the Otaki River Bridge, west of the existing two- lane road. The option includes t he existing carriageway, resulting in a total of four lanes.

The benefits for the options comprise: ( i ) Travel time savings on SH 1

( i i ) Vehicle operating cost savings on SH 1

( i i i ) Crash reductions on SH 1

(iv) Driver frustration reduction.

The fully developed options have parallel side roads linking all major side roads to intersections with SH 1, enabling minimal trip reassignment. For comparative purposes all fully developed options are assumed to commence construction in 2013 with user benefits becoming available in 2015. Similarly for the interim stages the timings were consistent for each section.


The northern section stages commenced construction in 2013 with user benefits becoming available in 2015. The southern section stages commenced construction in 2006 with user benefits becoming available in 2008.

12.2 Travel Time Savings & Vehicle Operating Costs

The travel time and percentage of time spent following have been derived for all options using the TRARR computer simulation programme. The model has been calibrated on the results of travel time and percentage following surveys conducted in April 2002. The results of TRARR analysis are presented in Appendix R. The arrangement of the interim NW1B and SE1B options requires a ‘T’ intersection at their southern ends. The effects of these intersections have been included.

12.3 Mill Road / Rahui Road Intersection

Travel Time Savings and Vehicle Operating Cost Savings were calculated for the Mill Road/Rahui Road Intersection by the reduction of State Highway traffic as a result of the bypass. These savings had very little effect on the economic analysis.

12.4 Driver Frustration Savings

Driver Frustration savings were calculated from the reduction in time spent following arising from the TRARR model.

12.5 Crash Reductions

The proposed upgraded highway includes limiting access to the highway by providing parallel service roads. These roads would service demands for access from minor side roads and properties. Staging the construction by initially four -laning the highway, with subsequent provision of the service roads, reduces the cost of the highway. This potentially improves its viability in terms of benefit cost ratio. An analysis was performed to determine the benefits of providing the full highway over an interim treatment without service roads.


12.5.1 September 2000 Strategy

In the September 2000 Strategy Report the crash record for 1995–1999 was extracted from the LTSA database for the section of state highway from Levin to Peka Peka and a sample of surrounding local roads. To evaluate the additional safety benefits of providing service roads over four- laning the highway, the accidents resulting from access manoeuvres were separated out from non -access accidents. The access related accidents were then further split into those occurring at side road intersections and those occurring at other accesses (i.e. driveways etc). The results of the analysis revealed that four- laning the state highway could achieve a 27% reduction in crashes, and that a further reduction of between 24% and 38% is possible when service roads are provided (depending on the volume of traffic using the service and side roads). The September 2000 Strategy Report crash analysis supports the crash rates adopted for the options. 12.5.2 Do Minimum Annual Cost

The annual cost in r oad crashes of the Do Minimum option is $7,207,103. 12.5.3 Options

Crash costs for the options have been assessed by Crash Rate analysis. Typical crash rates adopted are summarised in Table 24.

Carriageway Formation Crash Rate

(108 Vehicle -Kilometres) Two Lane Two-way 18

Expressway 10 Two Lane One-Way 12

Table 24 Typical Crash Rates A crash rate of 12 was adopted for a two-lane one-way road to take account of the numerous crossing and/or turning movements that would be made between the one-way pairs.


Crash costs for the various alignment options are summarised in Table 25.

Options Cost

( $ 000s)

North of Otaki River Eastern Route Four Lane Expressway 274.0

NE Two Lane Local Road 217.6

491.9

Two Lane Local Road 217.6

NE1 Two Lane State Highway 1 032.4

1250.1

Railway Route Four Lane Expressway 266.9

NR Two Lane Local Road 211.7

478.6

Western Route Four Lane Expressway 259.5

NW Two Lane Local Road 205.7

465.2

Two Lane Local Road 205.7

NW1 Two Lane State Highway 976.6

1 182.4

South of Otaki River Western Route Four Lane Expressway 768.5

S W Two Lane Local Road 1 557.5

2 326.0

Four Lane Expressway – Partial 304.0

SW1 Two One -Way Pairs – Partial 1 748.3

2 048.3

Eastern R oute Four Lane Expressway 768.5

SE Two Lane Local Road 1 557.5

2 326.0

Four Lane Expressway – Partial 304.0 SE1 Stage 1) Two One -Way Pairs – Partial 1 748.3

2 048.3

Four Lane Expressway – Partial 304.0 Two Lane Two-Way Local Road – Partial 941.4

SE1B Stage 1b)

Two Lane Two-Way State Highway – Partial 1 748.3 2 993.7

Table 25 Crash Costs 12.5.4 Annual Savings

Annual savings for the various possible route combinations range from $2,963,335 to $4,693,558.


12.6 Trip Reassignment

Trip reassignment was considered for all local traffic on the southern section that would be detrimentally affected by an interim option(s) limiting all side road connections to left -in/left -out movements. Trip reassignment was assessed via volume (assuming a north/south split of 50/50) and additional distances required to be travelled, and is summarised in Table 26.

Side Road Daily Volume

(Assumes 50/50 Split)

Additional Distance (km)

Annual Vehicle-Kilometres

(000s)

Peka Peka Negligible Effect 1 Hadfield Negligible Effect 1

Te Kowhai 75 9.86 270 Te Hapua 153 7.48 418

School 772 1.25 35 Te Horo Beach 4042 1.25 184

Te Waka 116 6.20 263 Old Hautere 85 5.20 161 Addington 350 1.25 160

Otaki Gorge Negligible Effect 1 TOTAL 1 260 32.49 1 491

Table 26 Trip Reassi gnment

1 Proposed intersections (and available movements) are very similar (if not identical) to existing intersection/movements.

2 Only right turners are affected (therefore assume 25% of traffic). The annual level of trip reassignment is assessed as 1,491,000 vehicle -ki lometres compared to a total project value of some 164,250,000 vehicle-kilometres (less than 1%). The assessed trip reassignment value of 1,491,000 vehicle-kilometres is a disadvantage of the interim one-way pair option for the souther n section.


12.7 Summary of Benefits

12.7.1 Fully Developed Options

Option Description Discounted

TTC Discounted Frustration

Discounted VOC

Discounted CO2

Discounted Accidents

Total

NE North Eastern 13,218,807 1,962,266 623,529 31,176 901,788 16,737,566

NR North Railway 13,325,298 1,946,532 628,552 31,428 953,939 16,885,749

NW North Western 14,216,766 1,942,718 670,602 33,530 1,006,094 17,869,710

Table 27 Northern



Discounted VOC

Discounted CO2


Total

SE South Eastern 17,220,833 4,000,276 812,303 40,615 16,239,131 38,313,159

S W South Western 16,960,239 3,603,335 800,011 40,001 16,239,131 37,642,717

Table 28 Southern 12.7.2 Interim Options



Discounted VOC

Discounted CO2


Total

NE1 North Eastern Stage 1 12,046,234 1,219,609 568,219 28,411 -2,058,891 11,803,581

NW1 North Western Stage 1 12,643,735 1,239,028 596,403 29,820 -1,794,552 12,714,434

NW1B North Western Stage 1B 11,964,237 1,239,028 480,900 29,820 -1,794,552 11,919,433

Table 29 Northern




Discounted VOC

Discounted CO2


Total

SE1 South Eastern Stage 1 22,718,520 6,040,679 1,071,628 53,581 29,465,488 59,349,897

SE1B South Eastern Stage 1B -1,673,817 4,805,156 -78,954 -3,948 24,421,075 27,469,512

SW1 South Western Stage 1 26,724,149 5,965,052 1,260,573 63,029 31,035,350 65,048,152

Table 30 Southern

12.8 Project Costs

The costs for the options support the preferred option arising from the preliminary assessment of effects. The cost of the fully developed options have been estimated based on previous construction costs and land costs provided by The Property Group. Estimates and a report from The Property Group are provided in Appendix O. Note the Improved Eastern Alignment has been determined from interpolation between the Railway Option and Eastern Option. Construction cost estimates are provided in Appendix R. These costs include c ontingencies but do not include a risk based assessment. It was not considered appropriate to complete a risk based analysis for each option at this time. The preliminary risk assessments in Sections 7 and 8 indicate the few differential risks between options generally counterbalance each other. 12.8.1 Fully Developed Option Costs

Option Alignment Construction

Costs $ Land Costs $ Total Costs $

NE Eastern Improved 52,900,000 3,600,000 56,500,000 NR Railway 59,480,000 4,200,000 63,680,000 NW Western 53,000,000 10,300,000 63,300,000

Table 31 Northern Section including Otaki River Bridge




SE Eastern 54,140,000 3,500,000 57,640,000 S W Western 44,720,000 12,850,000 57,570,000 Table 32 Southern Section 12.8.2 Interim Option Costs

Interim Option Costs have been determined on the premise that all land is purchased for the fully developed options.



NE1 Eastern Improved Stage 1

37,150,000 3,600,000 40,750,000

NW1 Western Stage 1 including 2n d Otaki River Bridge

30,350,000 10,300,000 40,650,000

NW1-B Western Stage 1 excluding 2n d Otaki River Bridge

20,730,000 10,300,000 31,030,000

Table 33 Northern Section



SE1 Eastern Stage 1 33,970,000 3,500,000 37,470,000 SE1B Eastern Stage 1B 34,660,000 3,500,000 38,160,000 SW1 Western Stage 1 29,050,000 12,850,000 41,900,000 Table 34 Southern Section

12.9 Maintenance Costs

Maintenance Cos ts were determined as additional maintenance over the existing maintenance based on $10,000/km/year for each additional two-lane width.

12.10 Fees

Design and construction supervision fees have been allowed as 10% of the construction estimate.


12.11 Contingencies

The Preliminary Assessed Cost (PAC) for each option has been compiled with the following contingency allowances: • Earthworks 25%

• Other Works 15%

• Land – Property and Buildings 20%

• D & PD Fees 20%

• MS & QA Fees 15%

12.12 Benefit Cost Ratios

The Northern Options were compared as fully developed options, each with six lanes crossing the Otaki River.

Option Description Benefits Costs BCR

NE Eastern Improved 16,737,593 20,203,746 0.8 NR Railway 16,885,777 22,531,663 0.7 NW Western 17,869,738 22,818,749 0.8 Table 35 Northern The fully developed Southern Options were also compared.


SE Eastern 38,313,160 19,164,374 2.0 S W Western 37,642,719 19,767,701 1.9

Table 36 Southern


The Interim Options were similarly compared.


NE1 Eastern Improved Stage 1

11,803,581 14,205,201 0.8

NW1 Western Stage 1 including 2n d Otaki River Bridge

12,714,434 12,269,837 1.0

NW1-B Western Stage 1 excluding 2n d Otaki River Bridge

11,919,433 11,556,423 1.0

Table 37 Northern


SE1 Eastern Stage 1 59,349,898 24,272,159 2.4 SE1B Western Stage 1B 26,117,210 24,700,595 1.1 SW1 Western Stage 1 65,048,153 28,242,020 2.3 Table 38 Southern

12.13 Sensitivity Analysis

Sensitivity analysis of the interim southern option confirms the robustness of the calculated BCR, with an expected range of 1.9 to 3.1. The project is most sensitive to: • Construction cost estimate

• Land cost

• Travel time benefits

• Crash reduction benefits.

The construction cos t estimate, which is the most sensitive project input, includes the appropriate Transit contingency allowances.

12.0 economic evaluation

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