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Author Topic: BAN on Negative BCR projects?  (Read 1386 times)

Offline #Metro

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BAN on Negative BCR projects?
« on: June 14, 2016, 09:41:29 AM »
I am thinking - should there be a legislative ban on projects where the BCR is below 1?

Mandatory disclosure of BCRs and NPVs before contract signings?

Other suggestions?
Negative people... have a problem for every solution.
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Offline SurfRail

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Re: BAN on Negative BCR projects?
« Reply #1 on: June 14, 2016, 10:21:54 AM »
If we are talking solely in public transport project terms then yes.  Too wobbly otherwise.
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Online ozbob

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Re: BAN on Negative BCR projects?
« Reply #2 on: June 14, 2016, 10:30:48 AM »
The issue is being able to get the information.  Much is kept secret under the psuedo cloak of ' commercial in confidence ' .

Real concerns in NSW at present re rail and road project details being kept ' confidential ' ..

All projects should have all details made public, not just public transport but all major infrastructure.  After all it is our money folks.

Half baked projects, have long term consequences ...
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Offline tazzer9

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Re: BAN on Negative BCR projects?
« Reply #3 on: June 14, 2016, 11:40:54 AM »
You cannot have a simple flat out ban against them, simply because there are many projects that have to be done, for the good of the community that will always have negative BCR's. 
Eg the Bruce highway needs alot of upgrades, mainly north of gympie.   These would be safety related projects, rather than easing congestion or travel times.

Online ozbob

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Re: BAN on Negative BCR projects?
« Reply #4 on: June 14, 2016, 11:45:32 AM »
Yope.  There will always be variations.   To my mind it is making the information publicly available is the pressing issue at present.

Hopefully the CRR Business Case will be made public soon  :fo:
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Offline Gazza

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Re: BAN on Negative BCR projects?
« Reply #5 on: June 14, 2016, 12:06:18 PM »
Also, there are different methods for calculating BCRs, and they rely on assigning a dollar value to social, environmental, cultural benefits.
That in itself I think  is really  just throwing darts, and hard  to quantify accurately.

But it should still be published, so that conversation can be had

Offline nathandavid88

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Re: BAN on Negative BCR projects?
« Reply #6 on: June 14, 2016, 12:32:03 PM »
There's nothing inherently wrong with negative BCR projects, as many may have other benefits that don't filter into the BCR numbers. Even in the case of the Townsville Stadium, I personally don't have an issue with that project as such (although the belief that it will not break even is pretty concerning), it's more the fact that during a time when the Government is so short on cash to put towards critical infrastructure like CRR, their choice has been to fund this. 

Offline #Metro

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Re: BAN on Negative BCR projects?
« Reply #7 on: June 14, 2016, 03:46:43 PM »
Quote
There's nothing inherently wrong with negative BCR projects, as many may have other benefits that don't filter into the BCR numbers.

Well some of these 'other' benefits include 'get myself/my mates elected'.

Business cases should be published. A lot of this "commercial in confidence" is actually "government in confidence" because a lot of the projects aren't "commercial". If the government decides to build a loss making (from a commercial perspective) railway line, a private competitor is not going to suddenly come in and undercut the project.

It is important to note that government and private sector calculate BCRs and NPVs differently. An identical project would have different numbers depending on whether the gov or private sector was undertaking the project. Making a profit should not be confused with negative BCR - many loss-making gov't projects are BCR positive (due to social and enviro returns being taken into account).

Having these numbers PUBLIC is important because it can also drive construction efficiency.

I don't see banning it or at least putting it to some form of review (ballot?) as going too far. At least in the infrastructure sphere, where approving low or negative BCR projects to be happening - e.g. East West link, WestConnex, Townsville Stadium etc.


Negative people... have a problem for every solution.
Posts are commentary and are not necessarily endorsed by RAIL Back on Track or its members. Not affiliated with, paid by or in conspiracy with MTR/Metro.

Offline James

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Re: BAN on Negative BCR projects?
« Reply #8 on: June 15, 2016, 07:35:06 AM »
I don't see banning it or at least putting it to some form of review (ballot?) as going too far. At least in the infrastructure sphere, where approving low or negative BCR projects to be happening - e.g. East West link, WestConnex, Townsville Stadium etc.

I know the number of sh%t projects getting up is starting to drive us all insane, but I think putting up suggestions like this just put in another bureaucratic hurdle which can be easily bypassed by a future government. If the negative BCR projects are that awful, the government will just get booted out (much like what happened with the Libs in Victoria and East-West Link).

I'm putting on my cynics hat here, but the old saying is that "the people get the politicians they deserve". If the people of Townsville are happy to sit in traffic over the next 10 years in exchange for a shiny new stadium, all the more power to them. It is a shame I have to phrase debate like how you phrase an argument to a child (you can get a nice shiny toy, but no lollies for 10 weeks), but I guess that's a reflection on society these days.
Is it really that hard to run frequent, reliable public transport?

Online ozbob

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Re: BAN on Negative BCR projects?
« Reply #9 on: June 15, 2016, 10:33:42 AM »
An interesting observation ..

===============

Half baked projects, have long term consequences ...
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Offline #Metro

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Re: BAN on Negative BCR projects?
« Reply #10 on: August 18, 2016, 09:07:01 PM »
Townsville stadium could be the Opera House of the north: Turnbull minister
http://www.brisbanetimes.com.au/federal-politics/political-news/townsville-stadium-could-be-the-opera-house-of-the-north-turnbull-minister-20160818-gqvflf.html

Quote
The poor cost-benefit ratio for the proposed Townsville stadium was outweighed by its transformative potential, a Turnbull government minister said on Thursday as he compared the project to the Sydney Opera House.

The minister is correct that financial metrics are there to guide. Ultimately decisions must be political in nature. Raw information alone isn't going to make the decision for you.

The poor BCR has simply been ignored in favour of hand-waving "transformative potential" and appeal to unquantifiability. The problem with this argument is that if you can't quantify the benefits, then you can't really claim to know anything about whether benefits exist at all.

The BCR does not say anything about whether a project is worthwhile or not (The NPV does that). It simply makes a statement about how efficient a project is at creating benefits. I have used CRR as an example to illustrate this - If CRR was built using gold rail and gold bars as sleepers, its benefits would be exactly the same as the CRR proposed. Time savings, increased urban amenity and so forth would all be identical. However, the BCR would be rock bottom as the cost of creating those benefits would be massively increased.

Where benefits cannot be quantified in money terms (entirely possible that this is the case), they should be quantified in ordinary terms - number of people who could use the stadium per year, for example. There are also other approaches such as cost effectiveness analysis, which is different from BCR, and is often used where monetary units are seen as inappropriate (i.e. health settings).

Quote
Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more courses of action. Cost-effectiveness analysis is distinct from cost–benefit analysis, which assigns a monetary value to the measure of effect.[1] Cost-effectiveness analysis is often used in the field of health services, where it may be inappropriate to monetize health effect.
https://en.wikipedia.org/wiki/Cost-effectiveness_analysis

The current political approach is very sloppy and means that we are building stadiums to be federally and state funded, while very important projects, crucial, are left to languish on the Sunshine Coast and in Brisbane.
Negative people... have a problem for every solution.
Posts are commentary and are not necessarily endorsed by RAIL Back on Track or its members. Not affiliated with, paid by or in conspiracy with MTR/Metro.

 

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