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Bus Rapid Transit System cost-benefit analysis
Prof. Shivanand Swamy Centre Of Excellence for Urban Transport
An ini?a?ve of the Ministry of Urban Development) CEPT University ([email protected])
Contents } What is Cost –Benefit Analysis? } Why do we undertake Cost –Benefit Analysis of BRTS? } The Framework for Economic Analysis } Step -1: Defining project boundaries } Step -2: Economic analysis } Step -3: Financial Viability Assessment } Step – 4 & 5: Examining Financing Options
} Case Study- Hubli Dharwad BRT
Cost-Benefit Analysis (CBA) An Investment Appraisal Tool
} The CBA is the implicit or explicit assessment of the benefits and costs (i.e., advantages and disadvantages) associated with a investment project. Benefits and costs may be monetary (pecuniary) or non-monetary (non-pecuniary, “psychic”).
} The economic analysis appraises the project contribution to the social and economic welfare of the city, region or country. It is made on behalf of the whole society (region or country).
} The financial analysis appraises the project in terms of return on investment. It is made on behalf of the entity investing in the project (Owner of the project).
} Multicriteria analysis enables evaluation of projects with regard to its various objectives
Financial V/s Economic Analysis Point of Comparison Economic Analysis Financial Analysis
Point of View Public, Society Private, Project sponsoring
En:ty
Objec:ve Maximising Public Benefits Maximising Benefits to
Private / Project Sponsoring En:ty
Types of Effect All benefits and costs to society (including external
costs)
All receipts and outlays that affects the financial return
from the project. Taxes, Subsidies and Interest payment
Excluded Included
Prices used in valua:on Real Prices Actual domes:c market prices/current prices
Evalua:on Parameters Economic IRR, Economic NPV, Benefit Cost Ra:o.
Financial IRR, Financial NPV, Debt Service Coverage Ra:o
Project Economic and Financial Analysis Framework
Step 1 Defining Project Boundaries
Step 2
Economic Analysis of Project
Step 3 Assessment of Financial
Viability of the Project
Step 5 Examine Public Finance Option
( Balance sheet Financing Option along with multilateral/Central
State Government Grant
Is Project Economically Viable?
(Is EIRR >12%)
Estimation of Capital Cost and O&M Cost for the Project
Project Should not be Undertaken
Is Project Financially Viable? (Is FIRR >Cost of Fund?
Net Cash flow is sufficient for Debt Service?
No
Step 4 Examine Private Finance
Option (PPP)
No
If project Commercially Viable considering VGF or Project structure
Modification
Yes
Yes
No
Yes
Contents } What is Cost –Benefit Analysis? } Why do we undertake Cost –Benefit Analysis of
BRTS? } The Framework for Economic Analysis } Step -1: Defining project boundaries } Step -2: Economic analysis } Step -3: Financial Viability Assessment } Step – 4 & 5: Examining Financing Options
} Case Study- Hubli Dharwad BRT
Public Works
Do we carryout Cost – Benefit Analysis for all urban transport investments? If no, then why BRTS?
S l No
U r b a n T r a n s p o r t Project
B / C A n a l y s i s done?
1 Roads No 2 Foot paths No 3 Bus system No 4 Flyover/Bridges No (Some Times) 5 PARKING No 6 BRTS Yes 7 MRT/Mono Yes
External Funding? Size of the Project?
Basis for Economic Analysis of BRTS } BRTS is:
} A Bus Transit System } It is Rapid – Hence the comparison with Rail/ assessment /Competetion } It is low cost (when compared to Rail Based Solutions) 1/20th } It is a Concept and Not a Technology – Brings about flexibility (a Mix
and Match, quick building and addition) } It is OPEN – Multiple Stakeholders, Multiple Users } It is QUICK (NOT EASY) to build (Integration requirements are easy to
provide) } People scale (Not huge structures) – accessible } Barring one or two systems, in most cases it is an URBAN INSERT –
Involves multiple stakeholders and people } It reallocates the use rights of road space - (dislocate some
users – feeling?) } Such large socio-technological projects can’t be built
unilaterally by public authorities.
Origin - Destination Length With BRT Without BRT Saving
Average Delay (s) Savings (s)
Average Delay (s)
Average Delays w/o BRT over with
BRT From To (Km) BRT Mix Traffic
Helmet Keshavbaug 2.1 103.5 338.605 235 394.49 3.8 times Helmet Shivaranajani 2.6 138 368 230 430.88 3.1 times
SIMULATION RESULTS FROM VISSIM -- FROM HELMET TO SHIVARAJANI INTERSECTION
• The evaluation results indicate the average speed of 27.2 and 22-24 kmph for BRT and mixed traffic respectively. • The evaluation results indicate the average speed under mixed traffic situation is 16-19
KMPH
‘It is difficult to carryout an analysis to prove the most obvious’
People moved – 280 Area occupied – 135 sq. m
Queue length – 37 m.
People moved -155 Queue length – 210 m. Phase time – 70 Seconds Cycle Length – 180 Seconds
Janmarg Mixed traffic
MORE CARS – Same No of people – Longer Queue MORE CARS MEANS LONGER
QUES
Janmarg – Focus on Moving People..
18 M ARTICULATED BUS CAPACITY- 140
People moved -240 Queue length - 165 m. (Increase from 54 meters) Phase time – 100 Seconds Cycle Length > 180 Seconds (Not Desirable)
Mixed traffic
Present scenario- without BRTS MORE CARS MEANS LONGER
QUES
Janmarg – Focus on Moving People..
Contents } What is Cost –Benefit Analysis? } Why do we undertake Cost –Benefit Analysis of BRTS? } The Framework for Economic Analysis } Step -1: Defining project boundaries } Step -2: Economic analysis } Step -3: Financial Viability Assessment } Step – 4 & 5: Examining Financing Options
} Case Study- Hubli Dharwad BRT
Step -1: Defining project boundaries
Step 1 Deciding the Mode of Urban Transport
Step 2 Deciding Project Components
Categorized into three parts namely (1) Infrastructure (2) Rolling stocks (2 ) IT
Step 3 Estimating Project Cost
Step 4 Estimating Operation and Maintenance Cost for the
Project
• Estimation of Cost of Project Components. • Phasing of Investment Requirement based on
Implementation Plan
• Defining Project Operation Period. • Estimation of O&M Cost during project
operation period considering the current prices and industry standards.
i.e. City Bus Service, BRTS, Rail based Urban Transport, NMT based on Urban Transport
Demand
PROJECT BOUNDARIES } A project, is an economically indivisible series of tasks related
to a specific technical function and with identifiable objectives; } Transport is Interconnected and hence boundaries are
difficult to draw. } A group of projects, that is projects that satisfy the following
three conditions: } they are located in the same area } they belong to a general plan for that area or transport corridor; } they are supervised by the same agency
} DO NOTHING/MINIMUM, DO SOME THING
Two BRTS Projects
Hubli-Dharwad Twin Cities 1 milllion people; 22 kms BRTS;
Ahmedabad - 6 million city – 88 km network
Chandkheda
Narodavillage
Odhav
Bopal
Narol
KalupurRly. Stn.
ManinagarRly. stn,.
RTOSola RoB
Shivranjani Nehrunagar
AECNaroda
Soni nichaali
Phase 1 corridors (58 kms.)
Phase 2 corridors (30.5 kms.)
Rolling Stock
ITS
Land Acquisition and R&R
Contingencies
Component Amount (INR Crore)
Trunk corridor (CBT connec:on) 18.45
Foot overbridges and VuP 37.5 Ligh:ng KRDCL corridor 8 Bus sta:ons 23.45 Terminals & Depots (BRT) 31.43 Terminals and Depots (Feeder services) 62.29 Interchanges 8.8 NMT facili:es 9 Adap:ve Traffic Signal System 7 BRTS Infrastructure on KRDCL corridor 72
85.1
30.06
240
59.8
Total Project Cost :
Rs 692 crores
Infrastructure
Defining project boundaries for Hubli- Dharwad BRTS Project
Project Components
Hubli-Dharwad Ahmedabad
} 22km long 2 lane road was proposed to be upgraded to 4 lane divided highway. Project is to insert 4 lane BRTS (8 lane with 4 lane BRTS) and regional transport infrastructure
} BAU: 4 lane Road } Project: Addition of 4 lane
BRTS
} Built 88 kms of BRTS } Complete Street Approach;
18 Rail-over bridges on and outside BRT network; 2 river bridges; 8 flyovers (3 along and 5 across)
} BAU: Minimal Road Network
} DO Some Thing: Comprehensive Network Improvements
} Do BRTS: Above + BRTS
Step -2: Project Economic Analysis
Urban Transport Project
Inputs from Traffic demand Model (Passenger forecast, diverted trips etc.)
Life Cycle Economic Cost
Life Cycle Economic Benefits
Conversion of Financial Cost to Economic Cost by excluding taxes, subsidies, interest payment and considering only real prices. 1. Project Cost 2. O&M Cost 3. Capital Replacement Cost
Benefits derived by Comparing user cost in With Project and Do- Noting or Alternative scenario. 1. Quantifiable Benefits .
a) Time Savings b) Savings in VOC c) Accident Benefits. d) Pollution Reduction e) Reduced Road Stress
2. Non Quantifiable Benefits
Economic Viability Parameters • Economic Internal Rate of Return • Economic Net Present Value • Benefit/Cost Ratio
Sensitivity Analysis and Switching Value Analysis with respect to key parameters.
PROJECT LIFE - 20-25 yrs
Benefits of BRTS (Objectives) } Reduction in congestion - Increased capacity (widen road, missing link
development – new links, bridges, Rail over-bridges)
} Improved performance - Increase travel speeds, by minimising jay walking, turning movements, segregation, signal management, level boarding, pre-board ticketing etc.,
} Reduce operating costs (Trunk-feeder, more kms/bus) } Reduction in accidents - through the adoption of safety measures
} Improve Environment & Health (Mode Shift from polluting to non-polluting, Reduced VKT and Cleaner Vehicles)
} Reduced GHG emissions, Local Air Quality, Increased physical activity (Health)
} Mode Shift - In favour of walking, bicycles, bus (Mode Balance) } Economic Development - More competitive city, Productivity
} Accessibility } Economic : work-home relationship, safety & security } Social: Physically challenged, women and children (Safety and security) } Physical: Affordable transport within a certain distance (Core city; Periphery) More……………………………………… NOT ALL ARE MEASURABLE
• Vehicle Kilometers Travelled • Vehicle Hours Travelled • Vehicle Passenger Hours Travelled • Access is another important contributor
THINGS THAT MATTER IN BCA
Scenarios Development
(2006-2014-2031)
Business As Usual (2006)
Scenario 1
Scenario Development
AMTS Road Network Administrative limit Railway
Legends
Business As Usual (2006)
+ Road widening
5.5 % (69.36km )
addition of Lane
capacity
Scenario 2
Scenario Development
AMTS Road Network Administrative limit Railway
Legends
Scenario 3
Scenario Development
Total 25 Bridges
11 Flyovers 9 Rail over bridge (ROB)
3 Rail under bridge (RUB) 2 River bridges
AMTS Road Network Administrative limit Railway
Legends
Business As Usual (2006)
+ Bridges
Scenario 4
Scenario Development
AMTS Road Network Administrative limit Railway
Legends
Business As Usual (2006)
+ Bridges
+ Road widening
Business As Usual (2006)
+ Bridges
+ Road widening
+ Exclusive BRT
Corridor
Scenario 5
Scenario Development
AMTS Road Network Administrative limit Railway
Legends
AMTS & BRT routes runs parallel
Business As Usual (2006) +
Bridges +
Road widening +
Exclusive BRT Corridor
(no parallel AMTS routes) (2014)
Scenario 6
Scenario Development
AMTS Road Network Administrative limit Railway
Legends
No AMTS routes on BRT corridor
Benefits assessment of BRT: Travel Reductions: Base Year 2006-2014
Scenarios VKT % change from BAU PKT % change
from BAU
Business As Usual (BAU) 13,369,865 25,971,245
Road infrastrucutre improvement 12,710,657 -‐5% 24,271,572 -‐7%
Road infra. Improvement + BRT 12,525,928 -‐6% 22,950,421 -‐12%
Scenarios VHT % change from BAU PHT % change
from BAU
Business As Usual (BAU) 418,643 1,110,769
Road infrastrucutre improvement 394,369 -‐6% 972,857 -‐12%
Road infra. Improvement + BRT 389,150 -‐7% 877,256 -‐21%
Vehicle Hours Travelled (VHT) & Passenger Hours Travelled (PHT)
Vehicle KM Travelled (VKT) & Passenger KM Travelled (PKT)
2014 Network
Future Road Network
Future 2031 Sprawl Network
(Business As Usual)
Total road Network length – 6411 km
Future 2031 Compact Network
(Do something – Gradual growth)
Total road Network length- 6090 km
Total road Network length- 5632 km
14.1 % Addition of road network length w.r.t to 2014 network
8.3 % addition of road network length w.r.t to 2014 network
5.3 % Decrease in road network length w.r.t to 2031 Sprawl scenario
Scenario 1 – Sprawl Network
Future Scenario Development
AMTS Road Network Administrative limit
Legends
Business As Usual (2031)
+ AMTS
+ Exclusive BRT
Corridor 30% PT share
Scenario 2 – Sprawl Network
Future Scenario Development
AMTS Road Network Administrative limit
Legends
Business As Usual (2031)
+ AMTS
+ Exclusive BRT
Corridor 35% PT share
Scenario 3 – Sprawl Network
Future Scenario Development
AMTS Road Network Administrative limit
Legends
Business As Usual (2031)
+ AMTS
+ Exclusive BRT
Corridor +
Metro
40% PT share
Scenario 4 & 5– Compact Network
Future Scenario Development
AMTS Road Network Administrative limit
Legends
Gradual Growth (2031)
+ AMTS
+ Exclusive BRT
Corridor +
Metro
40% PT share & 50% PT
share
Benefits assessment of BRT: Travel Reductions: Future Scenarios 2031
Vehicle Hours Travelled (VHT) & Passenger Hours Travelled (PHT)
Vehicle KM Travelled (VKT) & Passenger KM Travelled (PKT) Urban growth Scenarios VKT % change
from BAU PKT % change from BAU
Urban sprawl
Business As Usual (BAU with City bus) -‐30% PT share 37,058,752 62,781,430
Urban sprawl
BAU + City bus + BRT -‐35% PT share 34,567,596 -‐7% 59,359,411 -‐5%
Urban sprawl
BAU + City bus + BRT + Metro -‐40% PT share 31,378,129 -‐15% 54,696,517 -‐13%
Compact city
City bus + BRT + Metro -‐ 40% PT share 30,977,742 -‐16% 53,630,910 -‐15%
Compact city
City bus + BRT + Metro) -‐ 50% PT share 25,453,405 -‐31% 46,203,740 -‐26%
Urban growth Scenarios VHT % change
from BAU PHT % change from BAU
Urban sprawl
Business As Usual (BAU with City bus) -‐30% PT share 1,247,615 2,331,951
Urban sprawl
BAU + City bus + BRT -‐35% PT share 1,172,363 -‐6% 2,176,741 -‐7%
Urban sprawl
BAU + City bus + BRT + Metro -‐40% PT share 1,026,865 -‐18% 1,968,453 -‐16%
Compact city
City bus + BRT + Metro -‐ 40% PT share 1,022,709 -‐18% 1,932,609 -‐17%
Compact city
City bus + BRT + Metro) -‐ 50% PT share 797,156 -‐36% 1,630,217 -‐30%
No. Parameters Interpreta?on / Decision Criteria
1 Outcome of project analysis and sensi:vity analysis in terms of EIRR, ENPV and Benefit to Cost Ra?o.
• Outcome of EIRR is compared with social opportunity cost of capital. Generally in developing countries Social Cost of Capital is considered as 12%.
• If EIRR is above this 12%, ENPV is a posi:ve value
and Benefit to Cost ra:o is more than 1 then the project is considered economically viable.
2 Outcome of Switching value analysis
Quantum of change in parameters determines the economic viability of a project. If such changes are considerably higher, then the project is economically robust.
Interpretation of outcome of Economic Analysis
• Financial Analysis of the Project should be undertaken if;
(1) Project is evaluated to be economically viable.
(2) Even if Project is not evaluated to be economically viable but in case of strategic important cases in which the qualita:ve (Unquan:fiable) social benefits are very high, it can be considered for recommenda:on.
• Alterna?ve Projects should be considered or modifica?on in proposed project should be considered if Project is evaluated for economic viability
Actions Points after Interpretation
Economic and Financial Appraisal Hubli-‐Dharwad BRT Project, India
Economic Analysis
Economic Analysis Framework
Ø Economic appraisal for Hubli-‐Dharwad BRT has been done through broad framework of social cost – Benefit Analysis Technique.
Ø Involves comparison of project cost and benefits of undertaking the BRT Project as
follows:
Economic Analysis involves the following : • The incremental cost of undertaking the BRT Project over the Base Situa?on is
compared with the economic benefits through quan?fica?on • Stream of benefits and costs over a 30 year period are discounted at 12%
discount rate as per standard prac:ce for social projects to calculate their Net Present Value.
Op?ons Descrip?on
Base Situa:on Four lane facility without BRT (under construc:on)
BRT Project Four lane facility upgraded to four lane mixed traffic facility plus 4 lane BRTS
Economic Costs of BRT Project
Project Capital Costs
Incremental Maintenance and Fare Collection Costs
Corridor / Bus Station Main. Costs
ITMS/ ATCS Main Costs
Junction Mgt./ Security at Bus Station
Housekeeping
Economic Benefits for BRTS Projects – Conceptual framework
Economic Benefits - 1
Modal Shift from private mode to BRT
Passengers remaining in public transport
Private Mode passengers not shifting
Time Savings due to better speeds
Cost Savings due to higher Ops cost of
pvt vehicles
Time Savings due to better speed
of BRT
Cost Savings due to lower number of
buses required and lower cost / km in
later years
Time Savings due to lower
congestion
Cost Savings due to lower Ops cost
of pvt vehicles due to lower congestion
Economic Benefits -2
Savings from Accident Reduction
Savings from Lower Emissions
Savings from lower number of fatal and non fatal accidents
due to lower congestion levels
and better organization
Savings from lower carbon emissions arising from lower usage of fuel by all
modes
Economic Benefits for BRTS Projects – Conceptual framework Continued….
Key Inputs/Assumptions
BRT Non BRT
Km/bus operated pd 350 275
Passengers per Bus per day 1600 1000
Bus Variable Cost (Rs. Per Km) 24 10
Financial Project Capital Cost (Rs. Crore)*
692 79
Bus Cost (Rs lakh per Bus ) 35 26
Analysis limited to corridor alone. Costs or revenues are not system-wide.
Analysis Period • Construction Period : Two Years upto 2014 • Operation Period – 30 years
*Number of buses required up to 2016 are included in the project cost. In the BRT option, it is 190 buses, while in the Without BRT alternative, it is 264 buses
Pax under BRT and Non BRT System
0
100
200
300
400
500
600
700Pax (Thousand) (Regular System)
Pax (Thousand) (BRT)
Inputs/Assumptions for Cost Estimation
No. Cost Key Input/Assump?ons 1 Capital Cost of the
project • Financial costs of BRTS are converted to economic (or shadow) costs by applying a factor
of 0.9 as per standard prac:ce in order to remove all the distor:ons in prices rela:ng to labour wages, capital market, transfer payments, taxes .
• Economic Capital Cost of Project : Rs 692 crore x 0.9 = Rs 623 crore .*
2 I n c r e m e n t a l Maintenance and Fare Col lec:on Cost
• Incremental Maintenance and fare collec:on cost as compared to base case op:on is considered. (Detailed Inputs are specified in Financial Analysis)
Ø Corridor/Bus Sta:on/ Depot Maintenance Costs.
Ø ITMS and Fare Collec:on Cost.
Ø Junc:on Management / Security at Bus Sta:ons.
Ø Housekeeping cost.
Inputs/Assumptions for Benefit Estimation
No. Benefits Key Input/Assump?ons
1 T i m e Savings
• Travel :me under each of the op:ons has been compared with exis:ng travel :me.
1. Modal ShiW from Private Mode to BRT : Speeds of Private Mode vehicle shiming to BRT in base case is compared with speeds of Buses in BRT.
2. Passengers remaining in Public Transport : Speeds of Buses in With and Base case situa:on has been compared.
3. Private Mode Passengers not shiWing (Mixed lane Traffic) : Speeds of Private mode vehicles not shiming in BRT case has been compared with base case.
• Exis:ng speeds of vehicles are those that exist now without any of the two op:ons being implemented. Exis:ng speeds are already quite low and are further expected to slow down as conges:on levels rise.
• Time value of passengers travelling by different mode : Rs 41 per passenger hour.
Inputs/Assumptions for Benefit Estimation No. Benefits Key Input/Assump?ons
2 Savings in V e h i c l e O p e r a : n g Cost
1. Modal ShiW from Private Mode to BRT :
• The Vehicle Opera:ng cost of passengers shiming from private mode is calculated using the updated Road User Cost Study -‐2001 by CRRI in Base Case.
• These costs are compared with the Bus opera:ng costs under BRT to which above traffic would shim.
2. Passengers remaining in Public Transport :
• Sub op:mal use of Buses in base case as compared to BRT op:on. I.e Pax per Bus per day in Base case and BRT op:ons are 1000 and 1600 respec:vely. This is owing to lower speeds of Buses and higher conges:on in base case.
• Voc of Buses under Base case and BRT case has been compared to arrive at savings.
3. Private Mode Passengers not shiWing (Mixed lane Traffic) :
• VoC of passengers remaining is calculated using Updated Road User Cost Study (RUCS)-‐2001 by CRRI. Unit VOC value for each vehicle type specified in RUCS study which is used to arrive at the Vehicle Opera:ng cost under both with and without project op:on.
No. Benefit Key Input/Assump?ons
3 Sav ings f rom r e d u c : o n i n accidents
• A lowering in number of fatal and non fatal accidents has been considered under each op:on.
• The cost of each fatal accident is considered to be Rs. 6 lakh while that of each injury is taken at Rs 0.73 lakh.
4 P o l l u : o n Reduc:on
• Implementa:on of project leading to reduc:on in vehicle on mixed lane owing to modal shim leading to improvement in fuel efficiency and reduc:on in conges:on and therefore savings in carbon emission.
• Lower numbers of Buses owing to BRT .
• Lower carbon emissions would lead to lower health care and environmental costs.
• Vehicle wise per km emission norms specified in India Infrastructure Report , 2010 ,” Infrastructure Development in Low Carbon Economy“ is adopted to calculate the carbon emission.
• The price of per tone of CO2 is considered as 20 Euro, which was carbon trading price in spot market in European Energy Exchange as on 6th July , 2011.
Inputs/Assumptions for Benefit Estimation Continued…..
Outcome : Present Value of Economic Benefits and Cost
Particular Amount in Present Value terms
(Rs Lakh)
Economic Cost of Project Capital Cost 58947
Incremental Maintenance and Fare Collection Cost 10847
Total Cost 69793
Economic Benefits
Savings in Vehicle Operating Cost 165829
Savings in Vehicle Time 143686
Benefits due to Accident Reduction 1473
Savings due to Carbon Emission Reduction 1352
Reduction in dead KM 704
Amenities Benefits due to Hosur Depot 3165
Total Benefits 316209
Outcome : Pictorial Presentation of Present Value of Economic Benefits and Cost
Outcome of Economic Analysis
} The project corridor as a whole is found to be economically viable with posi:ve net present values and EIRR greater than 12%. The hurdle rate considered acceptable for India as per the prac?ce of World Bank and ADB is 12%. Thus EIRR level is acceptable for the project overall.
} The BRT project involves an addi?onal expenditure of Rs. 692 crore. However, the Economic
Internal Rate of Return available on spending this amount is around 30%.
Description Economic IRR PV of Benefits
(Rs Lakh)
PV of Cost
(Rs Lakh)
B:C ratio
Outcome Considering all eco.benefits and Costs
29.5% 316209 69793 4.55
Outcome considering only VOC benefit and all eco. costs
20% 165829 69793 2.38
Sr. No.
Sensitivity Parameters Economic IRR Net present value (ENPV) @ 12% discount rate (Rs Lakh)
1 Increase in Project Cost and Incremental O&M cost by 25%.
26.0% 228967
2 Reduction in Ridership in BRT alternatives by 25% in years post 2020.
24.9% 160214
3 Combined scenario of reduction in traffic by 25% and Increase in fuel cost by 25% under both with and without BRT alternatives.
23.8% 152608
4 Reduction in Benefits by 25%. 25.2% 167357 5 Combined effect of Increase in Cost by
25% and reduction in Benefits by 25%. 22.18% 149909
It is seen from the above table that under the different sensitivity tests, EIRR is determined to be more than 20% indicating that the project is robust
Switching Value Analysis
Sr. No. Parameter Switching Value
1 Increase in Construction Cost and Incremental O&M cost
354% from base
2 Total Benefit Reduction 78% reduction from base 3 Reduction in VOC benefits 148% reduction from base 4
Reduction in Time benefits 172% reduction from base 5 Combined effect of Increase in Cost and reduction
in Benefits 64% from base
• Switching values analysis for different parameters have been carried out . • Switching Value specifies Value of different parameters that will cause EIRR to be below
discount rate meaning NPV negative.
Above table indicates that project is robust with respect to variation in project cost and project benefits and Project is Economically Viable
Financial Analysis
Approach and Methodology } Comparison of Two alternatives and computation of Incremental
FIRR.
} With BRT Alternative: BRTS project being taken up with dedicated four lane facility for buses in addition to the current four lane mixed traffic facility which is under construction plus operation of new BRT services.
} Without BRT Alternative: Four lane mixed traffic facility without BRT
(currently under construction) being retained. BRT project not taken up plus continued operation of existing bus services as expanded to meet the needs of a growing population
} The second is a Business as Usual scenario where business
practices are left as they are currently practiced.
Summary of Key Assumptions and Inputs
BRT Non BRT
Km/bus operated pd 350 275
Passengers per Bus per day 1600 1000
Fare escalation pa 4.35% 4.35%
Bus Variable Cost (Rs. Per Km) 24 10
Project Capital Cost (Rs. Crore)* 692 79
Bus Cost (Rs lakh per Bus ) 35 26
Analysis limited to corridor alone. Costs or revenues are not system-wide.
Analysis Period • Construction Period : Two Years upto 2014 • Operation Period – 30 years
*Number of buses required up to 2016 are included in the project cost. In the BRT option, it is 190 buses, while in the Without BRT alternative, it is 264 buses
Outcome of Financial Analysis
Prts IRR NPV (Rs. Lakh)
With Land Cost 8.06% -25840 Without Land Cost 10.08% -3125 IRR is somewhat around 8%, which is not unusual for public transit systems However the BRT alternative is operationally viable and an increased surplus is observed over the years. Thus the BRT system is more financially sustainable as compared to Without BRT option in the long run.
Scenario Incremental FIRR (With Land Cost)
I n c r e m e n t a l FIRR (Without Land Cost)
Incremental Financial NPV@ 12% discount rate (Rs Lakh) (With Land Cost)
Incremental Financial NPV@ 12% discount r a t e ( R s L a k h ) (Without Land Cost)
Increase in Project Cost by 25% under BRT Alternative; no change in Without BRT Alt.
6.60% 8.10% -42214 -13820
Reduction in Ridership under BRT alternative by 25% in years post 2020; no change in Without BRT Alt.
7.40% 9.02% -29659 -6945
Combined scenario of reduction in ridership by 25% and Project Cost by 25%; no change in Without BRT Alt.
6.01% 7.15% -46033 -17640
Thank You