PROJECT ORPHEUS PHASE 1B
SIFT RECOMMENDATIONS
Report
Final 6th March 2003
Prepared for:
Prepared by:
Nexus Steer
Davies
Gleave
Jacobs Gibb
Ernst & Young
CONTENTS
1.
INTRODUCTION 3
Context 3
Summary of Approach and Recommendations
3
2.
ISSUES TO CONSIDER IN APPRAISAL OF PHASE 1A ROUTES
5
Phase 1A Pre-feasibility NATA Assessment
5
Demand and Benefit Estimate Risks and Opportunities
5
Cost Estimate Risks and Opportunities
7
Practicality / Implementability Risks and Opportunities
9
Future Potential Changes in Appraisal Guidance
11
Potential Synergy between Orpheus Extensions and Other Policy Measures
Under Consideration in Achieving Local Transport Plan Objectives
11
Potential Impacts
11
Appraisal Issues
12
Metro Financial Performance
13
Indicative Timescales for Implementation of Wider Policy Measures
13
3.
RECOMMENDATIONS 15
Summary 15
Asset Renewal Issues
19
Recommended Short-term Phase 1B Actions
19
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1. INTRODUCTION
Context
1.1
The purpose of this working note is to present to Nexus and their study partners the
recommendations of the Orpheus study team arising from the review process
undertaken during the initial stage of the Phase 1B study. The note summarises the
potential risks and opportunities in the route-based analysis of the ten shortlisted
Orpheus extensions that were identified as being likely to generate significant benefits
during Phase 1A, and draws conclusions regarding the case for their continued
inclusion in Orpheus. In the final section, two potential approaches to the remainder of
the Phase 1B process are set out for discussion, and a number of short-term action
recommendations are listed.
1.2
This review process is aimed at ensuring that the Phase 1B study is appropriately
focused, so that the achievement of the objectives of the Outline Business Case, in
delivering renewal and extension of the Metro system, is strengthened by the inclusion
of fundable extension proposals. Whilst this note focuses primarily on the potential
extensions to Metro, the importance of developing the renewal options for the existing
system to the overall Orpheus project is also highlighted.
1.3
It is worth noting that whilst the DfT will consider a package of extensions where the
economic and financial advantages of doing this are clear, they will still expect each
extension to pass the fundability and economic viability thresholds individually. It
should be anticipated the DfT will pay close attention to the financial impact of any
renewal proposals and when considering extensions the DfT will wish to have
confidence in a positive financial case for the extension and the Metro extensions as a
whole.
1.4
The note builds on the information provided in Working Note 31. It is also informed
by a draft report provided by JacobsGibb into potential cost variances within the Phase
1A scheme cost estimates2, and further work undertaken by the study team as a whole.
Summary of Approach and Recommendations
1.5
The approach taken in making the recommendations has been informed both by the
NATA assessment and also by an assessment of the potential risks to the Outline
Business Case both for the Orpheus project as a whole, and for each of the 10
potential extensions individually.
1.6
Inevitably, the assessment of risk is largely a matter of the informed judgement of the
consortium: however this process has identified some clear differences in levels of risk
between the potential extensions, some of these risks being largely outwith the control
of the study partners.
1
Steer Davies Gleave, 4th February 2003. Working Note 3, 1st Draft: Potential Impact of Supportive
Planning Policy Measures on Economic Appraisal of Orpheus Extensions
2
JacobsGibb, February 2003. A Consideration of Potential Cost Variances on Shortlisted 1B Routes
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1.7
The note makes recommendations that a phased approach to the assessment be
considered in order, prior to submission of a bid for funding from the DfT, to:
i)
ensure that resources are appropriately targeted;
ii)
allow time to explore the implications and attitudes of local authority partners
to the nature and detail of potential complementary policy measures and to
ensure a satisfactory level of commitment;
iii)
understand the potential impacts of these complementary policy measures on
the case for central Government funding, where appropriate, once the likely
impact of these measures is better understood and tested within a overall
Local Transport Plan strategy for the study area; and to
iv)
allow time to fully explore any significant interface or implementation risks
with third parties (such as the SRA and Network Rail) so that an
understanding can be arrived at with these third parties.
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2.
ISSUES TO CONSIDER IN APPRAISAL OF PHASE 1A ROUTES
Phase 1A Pre-feasibility NATA Assessment
2.1
The initial economic assessment of the ten shortlisted Orpheus routes was set out in
Working Note 3, incorporating recent changes to Government guidance regarding
discount rates and treatment of costs (Table 1).
2.2
This Working Note indicated that the Phase 1A route sifting and assessment process
has identified a number of Metro extensions that clearly merit further examination
during the Orpheus study. It should be noted, however, that although all the Phase 1A
shortlisted routes are likely to generate important levels of economic benefits, none of
the routes clearly demonstrates, at this stage, a Cost:Benefit case which would meet all
the criteria set by the DfT for major scheme funding. It should be noted that all ten
shortlisted proposals have been selected from a long list of 29 using the NATA
appraisal framework as a sifting tool, and thus all ten routes should perform well
under the other NATA appraisal headings, although this is not sufficient in itself to
achieve central Government funding.
2.3
Inevitably in a pre-feasibility study of this nature, the analysis of costs and benefits
has been based on illustrative or specimen routes within the corridors identified as
being worthy of detailed analysis, and this has guided the interpretation of the
economic indicators developed for each potential extension.
2.4
In making recommendations regarding the extensions options to be taken forward
within Phase 1B, it is prudent to take into account the areas of potential risk and
opportunity inherent in the estimation of project costs and forecasts of benefits at this
stage in the development process of any such project. These risks and opportunities
may have implications for the timing of further development of some of the shortlisted
routes. An outline assessment of the extent of potential up-side and down-side factors
is set out in this section under the following headings:
i)
Demand and benefit levels;
ii)
Cost estimates; and
iii)
Practicality / implementability issues.
2.5
Where there are differences in the level of risks and opportunities between the ten
shortlisted extensions this is noted: others may apply uniformly to all extensions. The
assessment presented here is inevitably subjective, but is based on the combined
judgement and experience of the Orpheus project team.
Demand and Benefit Estimate Risks and Opportunities
2.6
The key areas of risk and opportunity in the demand and benefit estimates relate to the
following issues:
• Base year demand levels and patterns. The economic assessment assumes that the
travel and land use patterns forecast by the TAMMS study provide an adequate
indication of travel volumes and patterns throughout the Tyne & Wear area. This
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is likely to be the case for routes centred on the area central to that study, namely
Newcastle & Gateshead. Further away from this focus (and particularly for routes
in Sunderland, Durham and Northumberland) it is likely to be a less reliable
information source. Further work in this area, particularly the collection of new
bus trip origin-destination data, will significantly improve confidence in this
element of the assessment in the remainder of Phase 1B (and this is a key lesson
learnt from the Sunderland Direct development process). The effects, however
may equally be upside or downside.
• Future demand levels and patterns. The assessment uses the TAMMS projections
of changes in demand and travel patterns to 2011. Following 2011 it has been
assumed that public transport growth will occur at a rate of 1% per annum over
the project life. While the approach is consistent with other studies, this has not
been the recent experience in Tyne & Wear and therefore an assessment using a
different level of outturn growth may be required.
• Mode choice and potential competitive position of Orpheus routes. The Phase 1A
appraisal has assumed that bus services will not change following introduction of
Orpheus. This is seen as a central position, which could be down-side (if new
competing services are introduced) or up-side (if the network is redrawn to
reduce parallel services). There are, however, some route-specific issues relating
to level of segregation (and thus ability to maintain service attractiveness – as
implicit in the mode constant and other mode choice parameters - with increasing
congestion levels) and to proposals for other services. Further assessment of the
potential synergy of Orpheus extensions with other policy measures is set out in
the next section. It should also me noted that other initiatives to improve bus
services are contained within the Local Transport Plan, and these improvements
will need to be taken into account in any future more detailed assessment.
• Potential for additional travel markets not currently included in case. The
provision of Park and Ride facilities has been excluded from the analysis
undertaken to date in view of the lack of detailed knowledge of site availability
and size, but a qualitative assessment (see Working Note 3) indicates that Routes
9, 19 and 21 show potential for park and ride provision.
2.7
A summary of the potential demand and benefit risks as they relate to individual
extension is set out in Table 2.1.
TABLE 2.1
POTENTIAL LEVEL OF RISK TO ECONOMIC CASE ARISING FROM
DEMAND AND BENEFIT ESTIMATION
Base
Future
Segregation
Changes to
Additional
Route
Year
year
Level
Other Services
Markets
Demand Demand
Route 1 – Seaham to
-
Sunderland
+/- -
0 (Inc. in rail freqs.
+
on Durham Coast)
Route 2 – Sunderland to
+/- - +/-
+
Doxford/Ryhope
Routes 5/6– Sunderland
to Washington
via S Hylton
+/- -
0
+
via Southwick
+/-
-
+/-
+
Route 8 – Washington to
+/- - +++/---
- (Leamside Line
+
Gateshead/Heworth
reopening)
Route 9 – Team Valley
+/- -
0
+++
to Gateshead
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Base
Future
Segregation
Changes to
Additional
Route
Year
year
Level
Other Services
Markets
Demand Demand
Route 12 – West Harton
+/- -
0
0
to Biddick Hal
Route 19 - Gateshead to
+/- -
0 Centrelink service
++
MetroCentre
development
Route 21 – West End
St James to Walbottle
+/-
-
+++/---
+++
St James to MetroCentre
+/-
-
++/--
++
Route 23
K’worth to 4 Lane Ends
+/-
-
++/--
+
C’lington to 4 Lane Ends
+ (ECML-driven
+/- - ++/--
reductions in local
+
rail services)
Route 28 – Byker to
Walkergate
+/- - +/-
0
Note: Scale runs between --- (risk of significant negative impact) through 0 (neutral) to +++ (risk of
significant positive impact)
Cost Estimate Risks and Opportunities
2.8
JacobsGibb has assessed the potential level of cost risk associated with the extensions
under the following headings:
• Alignment (and particularly dependence on parallel Masterplanning work)
• Isolation from existing system (a standalone system likely to be higher cost)
• Rolling stock (need for bespoke vehicles)
• Heavy rail interface (where use of Network Rail alignments may be required)
• Structures (need for, and extent of, structures)
• Utilities (level of cost relating to diversion of Statutory Undertaker’s utilities)
• Integration with Metro (if means of access to the existing Metro system is not yet
fully established)
2.9
The conclusions of this exercise are set out in the Table overleaf. All risks to the costs
have currently been identified as having a down-side effect. Some specific exclusions
from the cost estimates have been identified, and (with the general exception of land
costs and – potentially - the use of 20% for utility diversions rather than 10%
employed here). These are largely route-specific. Examples include amendments to
heavy rail signalling and power supply on Network Rail routes, bespoke LRVs for the
gradients on Route 21, and additional allowances for difficult structures.
2.10
It should be noted that the application of the Green Book recommendations (and in
particular the uplift applied to capital costs to reflect optimism bias3) are intended to
3
The Green Book provides a range of outturn cost overruns for non-standard civil engineering
projects. It is not possible at this stage to assess the applicability of a specific value with confidence
– however for the purposes of this exercise a factor of 1.66 has been used, representing the top end
of the quoted range. As the project definition becomes sharper in scope, and as risk management
processes are identified and adopted, it should be possible in later stages of the appraisal to agree a
lower figure with the DfT.
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account for many of these down-side risks which can be difficult to quantify at this
stage of project development. Note therefore that the costs or impacts shown in the
Table overleaf are merely for information to show differences by routes – the costs
should only be added in addition to the Green Book uplift where there may be
omissions from the cost headings.
2.11
Any reduction in the level of optimism bias uplift would require evidence of the
outcome of quantified risk assessments or particular consideration of key risks or
elements of the proposed design which have not been undertaken (or would
necessarily be expected to have been undertaken) at this stage of the development of
the Orpheus project.
TABLE 2.2
POTENTIAL LEVEL OF RISK TO ECONOMIC CASE ARISING FROM
DEMAND AND BENEFIT ESTIMATION
n
i
l
a
es
tro
e
t
Route
t
ainty
f
ace
ctur
cer
u
Cos
Rolling
Stock
eavy R
Utilities
Impact
Alignment
n
Isolatio
Inter
Potential
U
H
Str
Integration
with M
Route 1 – Seaham to
-
- +10
to
15%
Sunderland
Route 2 – Sunderland to
+10-15%
Doxford/Ryhope
-
-4 - - plus £0.6 -
£0.8m
Routes 5/6– Sunderland to
Washington
via S Hylton
- -
- -
+£3-£4m
via Southwick
- - 4 -
-
+£5-£7m
Route 8 – Washington to
- - -
-
-
- +£5-6m +
Gateshead/Heworth
10-20% utils
Route 9 – Team Valley to
-
-
-
+£9-£11m
Gateshead
Route 12 – West Harton to
-
-4
N/a
Biddick Hall
Route 19 - Gateshead to
-
-
+£9-£11m
MetroCentre
Route 21 – West End
St James to Walbottle
- -
- -
-
+£10-£15m
St James to MetroCentre
- -
- -
-
+£10-£15m
Route 23
K’worth to 4 Lane Ends
+ / -
- -
N/a
C’lington to 4 Lane Ends
+ / -
- -
N/a
Route 28 – Byker to
Walkergate
- - - - N/a
Note:
Scale runs between --- (significant negative impact) through 0 (neutral) to +++ (significant positive impact)
4
If service extended beyond Sunderland
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Practicality / Implementability Risks and Opportunities
2.12
An internal workshop was held by Nexus and the study team on the 27th January 2003
to assist in the process of understanding:
• The potential risks in integrating LRT, Metro and Heavy Rail technologies, and
• Risks relating to asset life and replacement strategy.
2.13
Notes of this meeting were issued on the 13th February to Nexus, and JacobsGibb is
currently preparing a report. The main issues as they relate to the Phase 1B sift relate
to costs (considered above) and to implementation risk (often driven by the nature and
extent of the interfaces between the Promoter and other interested bodies.)
2.14
In the absence of the report, it is possible to make some general points that may affect
the Phase 1B sift. In particular, these relate to
• The potential for low floor LRV operation on the existing system; and
• Whether the project may impact on the capacity (and therefore the performance)
of the heavy rail network.
2.15
The workshop identified that the potential for operation of low floor LRV through the
central area Metro tunnels may involve a considerable risk that the station boxes may
need to be extended, and that it is possible that these changes may result in the need to
apply the standards of safety applicable to underground stations since the Kings Cross
fire. This could result in a significant level of additional cost to the project through, for
example, the provision of additional exits from central stations, specialist fire fighting
equipment and may require modified working practices. No conclusion on this area of
risk has yet been made by the study team, and it is not yet clear whether this may have
implications on route selection.
2.16
Regarding Orpheus extensions onto heavy rail alignments, the SRA has made two
relevant statements recently regarding spending priorities. First, they have indicated
that the SRA is interested in assessing options for replacing heavy rail local services
with light rail where they are likely to achieve a robust economic case. Although it is
understood that Nexus is intending to discuss this further with the SRA, it is thought
that at this stage the focus of this interest is likely to be Birmingham and Manchester
where there are major rail capacity and/or subsidy issues which light rail could
address. In the North East, the options are less obvious, with no lines providing only
local rail services and most having significant volumes of freight and/or intercity
traffic. Indeed, as part of the Capacity Utilisation Strategy process, local services on
the ECML north of Newcastle are believed to be under examination in an attempt to
increase capacity for longer-distance services, and there are few opportunities to divert
freight services from the Durham Coast and ECML north of Newcastle.
2.17
Secondly, the SRA has clearly set out, in the Second Strategic Plan and in the
announcement regarding steps to improving rail network performance of 16th January
2003, that in the next few years it is unlikely to fund schemes which may add to
congestion on the network. In this context, the main conclusions that can be drawn is
that the routes involving use of Network Rail infrastructure are likely to involve a
considerable level of implementation and institutional risk, and that this risk is likely
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to continue through 2003/4 and beyond. Moreover, the de-scoping of ECML upgrade
proposals is, in the short to medium term, likely to limit opportunities for enhancing
local rail capacity (for shared or sole use) as well as limiting the potential for new
local rail services. On the Durham Coast and Hexham lines, however, it may be that
potential changes to the level of service in response to the capacity utilisation review
could have a positive effect on the case for Orpheus extensions.
2.18
The main implication of this for the Phase 1B study is in relation to the timing of any
funding submission to Government for routes involving heavy rail alignments
(although there may be a cost impact as well), specifically routes 1, 2, 9, 12 and 19
and potentially 5 & 6 (if through-running beyond Park Lane is envisaged). In the case
of the Sunderland to Pelaw line, for example, it has been indicated that an additional
six paths per hour would be operable were the Durham Coast services to terminate at
Sunderland from the south. It may be sensible in this case to establish a dialogue
during Phase 1B with the study partners regarding the optimal use of the capacity of
this line prior to further work on the transportation case for Orpheus extensions, as the
final outcome may affect not only scheme costs but service characteristics (tram type,
speeds, frequencies, reliability and so on) and therefore passenger preferences.
TABLE
2.3
POTENTIAL LEVEL OF RISK RELATING TO INTERFACES WITH
NETWORK RAIL
Route
Network Rail Interface Risk
Route 1 – Seaham to
- -
Capacity on Sunderland – Pelaw
Sunderland
– Seaham
Route 2 – Sunderland to
- -
Capacity on Sunderland – Pelaw
Doxford/Ryhope
(if through running)
Routes 5/6– Sunderland to
Washington
via S Hylton
- -
Capacity on Sunderland – Pelaw
(if through running)
via Southwick
- -
Capacity on Sunderland – Pelaw
(if through running)
Route 8 – Washington to
N/a
Gateshead/Heworth
Route 9 – Team Valley to
- -
Current alignment utilises
Gateshead
Hexham - Newcastle line
Route 12 – West Harton to
Capacity on Sunderland – Pelaw
Biddick Hall
- - -
(if through running). Introduces
new conflicts at the south end of
the alignment
Route 19 - Gateshead to
- -
Current alignment utilises
MetroCentre
Hexham - Newcastle line
Route 21 – West End
St James to Walbottle
N/a
St James to MetroCentre
N/a
Route 23
K’worth to 4 Lane Ends
N/a
C’lington to 4 Lane Ends
Reduction of services to
+
Cramlington could improve case
for Orpheus extension
Route 28 – Byker to
Walkergate
N/a
Note:
Scale runs between --- (significant negative impact) through 0 (neutral) to +++ (significant positive impact)
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Future Potential Changes in Appraisal Guidance
2.19
Although the appraisal guidance changes announced with the publication of the
Treasury Green Book have already been incorporated into the assessment presented in
Working Note 3, further changes are likely.
2.20
Further possible changes are set out in the table overleaf. The inclusion of an
assessment of distributional impacts may, if translated into guidance, go some way to
countering the effects of the optimism bias factors – however the DfT’s position on
this is not clear at the present time.
TABLE 2.4
CHANGES IN APPRAISAL GUIDANCE
Change
Effect
Source
Status
Negative for all
Confirmed and
Accounting for
schemes at initial
Treasury Green
included in
optimism bias
stages of
Book
assessment
development
Confirmed and
Discount rate
Positive for all
Treasury Green
included in
reduced 6% to 3.5%
schemes5
Book
assessment
Appraisal period
Slight Positive for all
Department for
Not confirmed - but
increased beyond 30
schemes6
Transport
likely
years
Effect varying
Precise application
between schemes
Equity considerations
Treasury Green
to transport projects
and areas, could be
in appraisal
Book
under consideration
positive in North
but not confirmed
East
Effect varying
Economic Impact
Promoter will still
between schemes
report (Establishes
need to pass
and areas, could be
DfT
regeneration
established financial
positive in North
impacts)
and economic tests
East
Potential Synergy between Orpheus Extensions and Other Policy Measures
Under Consideration in Achieving Local Transport Plan Objectives
Potential Impacts
2.21
Fiscal measures of road user charging have been assessed (reported in Working Note
3) as having a very broad range of potential effects, with the magnitude of the impact
likely to be dependent on the extent to which car travel is currently faster and cheaper
than public transport travel (and thus more generally on the levels of traffic congestion
in the area).
5
Unless on-going revenue support is significant
6
But note that this may have negative implications in terms of the need to incorporate renewal costs
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2.22
In areas of limited congestion, the effects of fiscal restraint could be less than a 10%
increase in demand for a new public transport scheme. In areas of significant
congestion, the effects could be greater, with levels of increase of up to around 50%
being forecast in Edinburgh and in the south-east outside London.
2.23
It should be noted that with the exception of Route 21, an increase of 20% in the
forecast level of benefits for all Orpheus routes does not significantly change the
economic Cost:Benefit case for the routes, which remain poor. Furthermore, it is
likely that the magnitude of change would be significantly lower for schemes outside
Newcastle/Gateshead, given the significantly lower levels of traffic congestion that
occur there and the forecast future year network conditions.
Appraisal Issues
2.24
There is undoubted potential for synergy between Orpheus extensions and other
potential Local Transport Plan policies. It is difficult to estimate with any certainty the
magnitude of this effect at this stage, however. This is due principally to two reasons:
i)
The variety of potential policy measures, particularly those which aim to
change the relative balance between the costs of car travel and that of public
transport, their differing effects on the market for Orpheus (and on travel
generally), and the currently-uncertain implementation routes which some
measures may require; and
ii)
The importance of treating the policy measures within a holistic transport
strategy package (and the lack at this stage of a firm plan by the Local
Transport Plan partners to implement such measures in a committed do-
minimum scenario against which Orpheus extensions could be compared,
compounded by the absence of a tool by which the potentially-supportive
measures could be assessed in terms of an overall transport strategy for the
Local Transport Plan area.)
2.25
Steer Davies Gleave has undertaken further work in attempting to examine the DfT’s
potential viewpoint on this issue, as it relates particularly to recent evidence in other
light rapid transit scheme submissions. The conclusions of this work indicate that:
• The submission of Annex E documentation in which the case depends upon a do-
minimum situation that is not yet committed in the LTP strategy (and that are in
line with stated LTP objectives) is unprecedented to date. It is therefore crucial
that this issue is explored with the DfT to establish their specific view on this
relative to the Orpheus project;
• Another option would be where a do-something scenario is created that includes
certain complementary measures as well as the Orpheus extensions. This
approach has been accepted by the DfT in the past, although experience suggests
that this is only acceptable if the measure is directly related to construction of the
scheme itself (such as physically reducing roadspace along the corridors to be
served by Light Rail, rather than any form of fiscal restraint). This would also be
worthy of further exploration with the DfT.
• Regarding integration, the DfT have in the past accepted the reorganisation of the
bus network as part of the appraisal of bus transit schemes, but this is not yet been
done for a light rail scheme. There are examples, however, of LRT scheme
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appraisals where it has been an accepted assumption that there would be a
reduction in frequency of competing bus services in the do-something case on the
basis of an agreed view on what would constitute a reasonable competitive
response. It is worth noting that for a scheme to qualify for funding it should not
be reliant on bus operating cost savings to achieve the necessary economic
performance, however.
2.26
Overall, it is suggested that it will be necessary to demonstrate commitment to the
adopted measures, and to be able to demonstrate an understanding of the broader
impacts of the approach. This will enable a coherent holistic package to be presented
to the DfT in parallel with the Orpheus funding submissions.
Metro Financial Performance
2.27
Confidence in the case for extensions to Metro would be enhanced by a more robust
financial performance of the existing Metro system. Any programme of renewal is
unlikely to be supported by DfT if it results in an increased operating subvention for
Metro. Moreover, an enhanced operating performance (with increased revenue and/or
reduced operating costs) prior to any enhancement/extension programme would be
more than likely to make the case more robust.
Indicative Timescales for Implementation of Wider Policy Measures
2.28
To inform development of a way forward for Phase 1B, depending on the response
from DfT on the above issues, an assessment of the time period that might be required
to develop the case for certain complementary measures has been undertaken. This
assessment is based on an understanding of the statutory requirements of a promoter
of such measures, and any evidence from schemes in preparation or implemented to
date (notably London’s Congestion Charging scheme).
Road User Charging options
2.29
The practicalities and timescales for implementing road user charging are uncertain
given the lack of examples. However, our first assessment is as follows:
• Road user charging: this is likely to involve a period of three to five years from
conception to implementation.
• Workplace charging: about three to four years.
2.30
It is worth noting that the net revenues from both types of charge of must go directly
or indirectly to fund local authority transport policies. The likelihood of road user
charging in particular being implemented in the near future in the UK will very much
depend upon the perceived success of London's scheme, and this is too early to judge.
Statutory Bus Quality Contracts
2.31
Quality contracts: exclusive rights to serve a corridor or area are granted to one
operator. Quality of service is specified in terms of frequency, vehicles type and
reliability. The Transport Act establishes what has to be done to implement a Quality
Contract and the associated timetable: the timescales for implementation are likely to
be at least three years, but as there are no quality contracts in operation in the UK at
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present, it remains unproven. Coventry is currently awaiting a decision from Secretary
of State, due in September. If permission is granted then it is likely that there will be a
delay to see how this works before any other contracts are approved. Nexus
understood that Sunderland, as a designated Centre of Excellence, is currently
exploring the possibility of using powers contained under a “Freedoms and
Flexibilities" clause in the Local Govt Act 2000. It is possible that further
developments in this area may occur in the future: however a funding submission to
the DfT that was reliant on efficiency gains through this quality contracts, however,
would need to demonstrate local partner commitment and the deliverability of this
mechanism.
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3. RECOMMENDATIONS
Summary
3.1
Overall, the analysis undertaken during Phase 1A and in the Phase 1B sifting process
indicates that all routes will bring important benefits. However there are a number of
very significant risks and opportunities in the development and submission of a
funding application (Annex E) for the great majority the shortlisted 10 routes. At
present, of the illustrative routes examined within the 10 corridors identified as being
worth further analysis, one route (Route 21) appears to have the potential to present a
positive economic case under the current appraisal guidelines and within the existing
policy framework. It should also be noted that the development of the case for renewal
of the Metro, a key part of the Orpheus concept, will in itself deliver significant
benefits to all project stakeholders.
3.2
Overall, the levels of forecasting, appraisal and implementation risks and opportunities
vary considerably between routes. Whilst all routes would perform better in
conjunction with other complementary policy measures (albeit some better than
others), many of these take time to implement and have high levels of risk, and the
DfT will look for clarity from promoters as to means/timescales of implementation.
These risks are summarised in the table overleaf.
3.3
This table also re-presents the estimated economic benefit to cost ratios for each
extension option individually. This is done both with and without the additional
allowance on costs required by DfT to allow for potential optimism bias. In the case
where no optimism bias adjustment has been applied, the cost estimates represent the
latest position set out in JacobsGibb, February 2003 report “A Consideration of
Potential Cost Variances on Shortlisted 1B Routes”.
3.4
An alternative case for Route 6 is also presented here, assuming that the structures
cost for the new Wear crossing that is required for this route can be reduced through
advance passive provision within a new structure currently planned by Sunderland
City Council independently of the Orpheus scheme. It should be noted that
JacobsGibb originally estimated a cost for this structure at £3m.
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TABLE 3.1
POTENTIAL LEVEL OF RISK AND OPPORTUNITY RELATING TO INTERFACES WITH THIRD PARTIES
Change
Change
Level of Risk and Opportunity through
to
to
Demand/
Route BCR
Benefits
BCR
Benefits
benefit
Supporting
Cost
Implement
Network
at which
at which
Charging
Overall
Estimate
Estimates
-ability
Integration
NPV = 0
NPV = 0
Policies
Inputs
No adjustment to costs to
Costs adjusted in line with
reflect Green Book
Green Book guidelines
guidelines
Route 1 – Seaham to Sunderland
1.0:1
1%
0.7:1
37%
0 / --
- -
- -
+
+
- -
Route 2 – Sunderland to
0.8:1
19%
0.6:1
60%
+ / --
- -
- -
+
+
- -
Doxford/Ryhope
Routes 5/6– Sunderland to
Washington
via S Hylton
0.5:1 112% 0.3:1 208% +
/
- -
- -
-
+
+
-
-
via
Southwick
0.3:1 208% 0.2:1 352% +
/
- -
- -
-
+
+
-
-
via Southwick (excluding cost of Wear
0.4:1 190% 0.2:1 342% +
/
- -
- -
-
+
+
-
-
Bridge)
Route 8 – Washington to
0.5:1 105% 0.3:1 210% ++
/
- -
-
0 ++ +
0
Gateshead/Heworth
Route 9 – Team Valley to Gateshead
0.5:1 106% 0.4:1 170% +
/
- -
- -
- ++ +
0
Route 12 – West Harton to Biddick
0.6:1
59%
0.5:1
105%
0 / -
- -
- - -
+
+
- -
Hall
Route 19 - Gateshead to MetroCentre
0.6:1 59% 0.5:1 113% +
/
- -
- ++ + 0
Route 21 – West End
-
-
St James to Walbottle
1.3:1
N/a
0.9:1
9%
++ / --
- -
0
++
+
+
St James to MetroCentre
1.2:1
N/a
0.9:1
12%
++ / --
- -
0
++
+
+
Route 23
K’worth to 4 Lane Ends
0.8:1
28%
0.5:1
92%
+ / -
-
0
++
+
+
C’lington to 4 Lane Ends
0.7:1
51%
0.4:1
123%
+ / -
-
+
++
+
+
Route 28 – Byker to Walkergate
0.7:1
41%
0.5:1
116%
+ / -
- -
0
++
+
0
Note:
Scale runs between --- (significant negative impact) through 0 (neutral) to +++ (significant positive impact)
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3.5
In view of these conclusions, it is suggested that there are two main options for Phase
1B of Project Orpheus, as follows:
i)
Submission of funding applications during Phase 1B should be staged, with
routes that appear to have the potential to be justified without complementary
policy change, and which are unlikely to face serious unresolved
interface/implementation risks, are developed first. Funding applications in
Autumn 2003 would then constitute the first phase of a longer-term
implementation plan. These areas of risk would be assessed in more detail in
parallel with this exercise and the development of the funding case for
remaining routes being progressed later during 2003 and into 2004 as parallel
workstream timescales dictate; or
ii)
The overall Phase 1B stage is extended considerably to encompass the
development of a holistic transport and demand management strategy, to be
enshrined within the forthcoming Local Transport Plan 2006-11 and
containing a wider assessment of the potential contribution of Orpheus
extensions within the overall local and regional plans for transport in the
region.
3.6
The second approach would have the advantage of considering the Orpheus project in
parallel with other LTP schemes, but would introduce a major delay in project
development that may be unacceptable.
3.7
On the basis of the first option, therefore, it is suggested here that Route 21 should be
taken forward to an Annex E submission during 2003 (with both the two identified
western variants and with Route 28 as an eastern variant), as originally envisaged,
subject to a valid case being developed during the remainder of 2003. The case for
route 23 appears the most likely to be assisted by complementary planning measures,
and there may therefore be some merit in considering these within a more holistic
assessment when the precise nature of these measures is understood and has local and
regional acceptance. However further work on investigation of alternative alignments
for this route may also improve the position of this route and it is recommended that
work on this route therefore continues in parallel with that for Route 21, with a
decision being taken on whether to proceed with an Annex E submission in 2003 as
the case develops. For both of these options, the work programme will include the
development of a lower cost alternative as a comparator.
3.8
Amongst the other routes, Routes 1, 2 & 12 in Sunderland/South Tyneside/Durham
show the potential to generate useful levels of benefits, but these routes are subject to
considerable implementation risks, largely dependent on an interface with Network
Rail that in the current policy framework may not be feasible in the short term, and
also are likely to benefit less than routes in more congested areas from parallel policy
measures to increase the relative costs of car travel. Routes 9 & 19 could also merit
further examination, but are also considered to be at risk from the interface with
Network Rail (and potentially also from serious cost risks, especially the tunnel
section).
3.9
It is therefore proposed that in view of the high level of risk to Nexus and partners in
further developing the case for these extensions at this stage routes 1, 2, 9, 12 and 19
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17
should form part of a later stage of the Orpheus project. This phase would also
encompass the process of choosing and developing complementary measures by the
Local Transport Plan partners, on the basis of their contribution to the objectives of
the 2006 – 11 Tyne & Wear Local Transport Plan.
3.10
It does not appear likely that a satisfactory case for routes 5, 6 & 8 is foreseeable
within the current timescales, even with supportive policy measures, and it is therefore
recommended that alternative solutions are sought to the transport problems for areas
served by these routes. A final view on Route 8 if treated as an extension of Route 9
through Team Valley as requested by Gateshead, would then form part of the
development of the case for Route 9 if the first assessment of this option appears
favourable.
3.11
An indicative programme for the two-stage approach is set out in the table.
TABLE 3.2
INDICATIVE PHASING FOR STAGED ORPHEUS ROUTE DEVELOPMENT
OPTION
Year 2003
2004
2005
2006
Quarter
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Original Orpheus
Phase 1B
Phase 2
Phase 3
Phasing
Orpheus Stage 1
Development case for
Routes 21, 23 and
Develop Annex E
OBC
Potential Procurement
TWA Process
potential variants
Submission
Submission
Start
(including lower cost
alternatives)
Explore policy
Implement
Development of Local
framework
Strategies
Transport Plan Strategy
changes,
Complementary
Summer
Define
Measures
2003 APR
Strategies
Assessment of
Explore capacity
Implementation risks
utilisation and Third
and capacity issues on
Party Interface Risks
Network rail routes
and Opportunities
Orpheus Stage 2 –
Preparatory works on
Develop
Potential development
Funding Case for
Annex E
of Funding Case for
Routes 1, 2, 9 & 19
Submission(s)
TWA Process commences
Routes 1, 2, 9, & 19
and OBC
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18
Asset Renewal Issues
3.12
During the early development of routes in the first stage of Phase 1B during 2003, it
will be crucial that the technical development of the asset replacement strategy for
Metro considers impacts on the potential second stage routes in order that the impacts
of any technology decisions on future extensions are fully understood and accepted.
Recommended Short-term Phase 1B Actions
3.13
Some early recommended actions for the Orpheus Team arising have been identified
as follows:
• Continued development of potential do-minimum scenarios for the existing Metro
system including consideration of a range of renewal options;
• Early discussions with DfT regarding the do-minimum scenarios and local
stakeholders’ proposals for the development of supporting policy measures and
potential interaction with the eventual Local Transport Plan strategy and the case
for Orpheus extensions (including feeder options which may improve the
financial performance of the existing Metro system);
• Travel demand data collection to be carried out in corridors serving routes 9, 19,
21, 23 and 28 and in March 2003 (according to timescale and resource
constraints), to be followed by additional data collection for 1 & 2 in late
April/May;
• Establishment of a forum for considering the options for future utilisation of
capacity on the Sunderland – Pelaw and Newcastle – MetroCentre heavy rail
routes, and potential levels of interface risks;
• Establishment of a working group to establish guidelines and principles for the
detailed development of route alignments and specifications, urban design prior
to further detailed technical or transport planning feasibility work on individual
corridors – this should include conclusions on the potential costs and benefits of
low-floor LRV operation in the central Newcastle tunnels and in Sunderland;
• Finally, establishment of route-specific working groups to develop the alignment
and service proposals in conjunction with study partners.
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19
CONTROL SHEET
Project/Proposal Name:
Project Orpheus
Document Title:
PROJECT ORPHEUS PHASE 1B SIFT
RECOMMENDATIONS
Client Contract/Project Number:
Document Number:
See footer
Originator: Luke
Miller
Other Contributors:
Nick Joyce / Peter Gross / Jim Woffenden / Neil Chadwick
Review By:
Print:
Tim Ryder
Sign:
Approved
remotely
ISSUE HISTORY
Issue No.
Date
Details
1
19 / 02 / 03
First Preliminary Draft
2
27 / 02 / 03
Second Internal Draft
3
06 / 03 / 03
Final
DISTRIBUTION
Clients:
Nexus internal
Study Team
Ernst & Young, Steer Davies Gleave,
JacobsGibb
\\Douglas\Work\Projects\4800s\4884\Outputs\Working Notes\Phase 1B Sift Recommendations _ Final Report.doc
Control Sheet
