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the review

Steer Davies Gleave's news & reviews

UK's first ever global high-speed rail summit · An interview with Sir David Rowlands What is the future of the UK's national motorway network?

The wider role of transport in the economy and society

Issue 36 July 2009

www.steerdaviesgleave.com

Features

t Interview with Sir David Rowlands / p4 The Chair of High Speed Two speaks to SDG about the prospects of the next high speed rail route in Britain. t The future is urban transit / p5-7 Urban transit is playing an integral part in the cities of tomorrow. We feature just some of the projects from around the world. t The wider role of transport in the economy and society / p8-9 The UK government's new guidance on developing transport plans and policies focuses on how transport effects ­ and is affected by ­ the wider world. SDG takes a closer look. t Lessons from the recession / p11 The most significant lesson for modelling and forecasting that we can take from the recession is that we can no longer ignore uncertainty. t What is the future of the UK's national motorway network? / p14-15 Does road pricing have a place in the national motorway network's future?

Wider Impacts seminar

Steer Davies Gleave held a seminar for selected industry individuals to discuss the contents and implications of the UK Department for Transport's (DfT) recently published guidance for consultation on Wider Impacts of transport. The guidance builds on the 2005 discussion paper on Wider Economic Benefits, and is intended to be included in WebTAG (DfT's web-based guidance on appraising transport projects and proposals) by April 2010. As one of the presentations demonstrated, Wider Impacts typically add between 10% and 30% to the conventionally measured benefits of schemes. The seminar, chaired by Tom Worsley, DfT's Head of Rail Network Analysis and Modelling Division, covered why Wider Impacts are now being introduced as part of WebTAG that will be compulsory for most major schemes. Presentations by Centre for Cities and East of England Development Agency looked at practical applications of the guidance. The seminar stimulated healthy debate among delegates, some of which raised concern about any increased burden placed on promoters. But generally delegates were interested in how the new method could be used to improve their ability to prioritise and promote transport schemes and strategies. DfT is inviting consultation responses to the draft WebTAG unit by the end of July. For more information or to request copies of the presentation contact Lars Rognlien t +44 (0)20 7910 5000 e [email protected]

Engaging with local businesses on sustainability

Keeping sustainable travel on the agenda of SMEs can be challenging. Steer Davies Gleave has found that an effective way to do this is to offer advice on a broader range of sustainability issues. We worked with the Royal Borough of Kensington & Chelsea to put on a `Network & Learn' event to help local businesses engage with environmental experts and explore the services and initiatives available to them in areas such as energy, transport and waste. As a trigger to act on what they had learnt, attendees were given a branded `pledge form' so they could write down advice and whom to contact. To keep paper to a minimum, attendees were also given a branded USB `flipcard' with useful policy, guidance and best practice documents. To find out more or discuss further contact Katherine Fellows t +44 (0)20 7910 5000 e [email protected]

CEO's comment

The big question looming over the transport sector is this: how deep will be the inevitable cuts in public sector spending on transport? What will survive the cuts and what will be sacrificed in an attempt to reduce the highest level of indebtedness since the Second World War? The answers to these questions will start to emerge over the next twelve months. The impacts of the answers will be with us for a decade or more. What should be our response in the months ahead? It will be more important than ever to have clearly argued, robust and evidence based implementation plans that fully reflect the broad range of goals set by DaSTs. As Simon Nielsen and John Swanson's article explains, these goals are about the broader impacts of transport within society and the economy. By linking transport outcomes with these wider impacts we can ensure that the case for investment in transport is given a fair hearing alongside competing claims on the public purse. This edition of The Review also looks at some recent and prospective candidates for major investment: profiling global developments in urban transit, introducing the UK's first ever global High Speed Rail summit and asking what the recent M25 PFI scheme means for the future of the UK's motorway network. Best regards Stephen Crouch CEO

SDG appoints new directors

Over the past 10 years Steer Davies Gleave experienced a period of uninterrupted growth. However, as the company faces the most challenging economic conditions of almost two decades, we want to ensure that we provide leadership that can create new opportunities for both the business and clients, as well as continue to offer staff the space to grow and excel. We are therefore delighted to announce the appointment of the following three new Directors. Stephen Wainwright Stephen leads our aviation and business modelling practices, drawing on 17 years' experience in the transport sector. His expertise in the aviation sector covers traffic projections, business planning and regulation. He has also been instrumental in building our reputation in business and financial modelling that support transactions in the air, rail and toll road sectors. Hugh Jones Hugh heads our Transactions and Strategy Division. During his 12-year career he has supported transactions across the full spectrum of the transport sector and has specialised in the procurement of rail operators, rolling stock and infrastructure. As a Director, Hugh will apply his energy and experience to open up new market opportunities.

LONDON. 09.09.09

upcoming event

GERMANY FRANCE USA SPAIN ITALY

CHINA JAPAN SOUTH KOREA

The UK's first ever global HSR Summit

The Japanese first introduced high-speed trains to the world over 50 years ago. Europe soon followed ­ and there are now extensive highspeed networks around the continent. America's new president seems determined to bring high-speed rail to its shores with the vision that it will help create jobs, ease congestion on its roads and save energy.

So what does the future hold for a high-speed rail network in Britain? What is obvious is that there is much we can learn from other countries. As Britain considers a new high-speed rail route, Steer Davies Gleave will be holding a unique event that brings together a number

of important international players to offer their insights and to increase awareness of the development and potential of highspeed railways from their own countries. Taking place on Wednesday 9th September 2009 at King's Place in London, the HSR Summit provides an especially valuable and timely opportunity to learn and debate with colleagues. Speakers include: t Lord Andrew Adonis (keynote) t Nicholas Owen, BBC (chair) t Yoshiyuki Kasai, JR Central t David Azema, SNCF t Ignacio Barron, UIC t Giuseppe Sciarrone, NTV

There will also be break-out sessions and a panel discussion with Sir David Rowlands, Richard Brown, David Begg and Julie Mills. Visit www.HSRsummit.com To find out more contact Catherine Connolly t +44 (0)20 7910 5000 e [email protected]

Keith Sowerby A transport economist by background, Keith has over 30 year's experience across appraisal, modelling, research, environment and development planning. He directs a number of teams and has built a leading reputation in interchange work with recent projects including London Euston, Liverpool Street and Canary Wharf stations.

www.HSRsummit.com

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An interview with Sir David Rowlands

In each edition of The Review, we feature an interview with a key transport figure. For this issue, Marion Gourlay spent time with Sir David Rowlands, ex-Permanent Secretary to the UK Department for Transport, and now Chair of High Speed Two (HS2).

Blackpool tramway receives £68.3m

By David Mack and Steve Hunter On 10th June 2009, the UK Transport Minister Sadiq Khan announced full approval for the upgrading of the Blackpool and Fleetwood Tramway, with a government contribution of £68.3m towards the £102m scheme. The Blackpool Tramway is the last survivor of the UK's first-generation tram systems and one of the seaside resort's iconic symbols. It was opened in 1885 and later linked to the neighbouring Fleetwood tram system. But after years of post-war decline, it has operated as a single route from Starr Gate to Fleetwood Ferry since 1963. In 2000, Steer Davies Gleave was appointed by Blackpool Borough and Lancashire County councils to conduct a review of the Tramway. We concluded that, in addition to being a tourist attraction, it still has a significant public transport role, carrying almost four million passengers a year. With much of the infrastructure and a vehicle fleet dating back to the 1930s, the report concluded that without significant investment much of the system would have to close. The regeneration of Blackpool's economy is a council and government priority and an urban regeneration company, ReBlackpool, has been established to spearhead this activity. A modernised Blackpool and Fleetwood Tramway is seen as a crucial part of this process. Between 2002 and 2005 the councils funded the renewal of 4.6 km of the worst condition sections of the track through a combination of internal resources and a Local Transport Plan `Exceptional Maintenance' bid, but it was apparent that more substantial external funding would be required for the full upgrading. Steer Davies Gleave prepared an appraisal for an initial package of `Emergency Works' necessary to address the shortterm requirements to keep the Tramway operational. Government funding of £10.7m towards the £11.8m cost of these works was announced in 2006. The Emergency Works were carried out in conjunction with the construction of the DEFRA-funded new sea wall, resulting in both significant cost savings and reduced disruption for residents and visitors. Working with the councils and other project advisors, we put together a major scheme business case funding application for the rest of the full upgrading scheme. This was given provisional approval in February 2008, enabling the promoters to put the scheme out to tender. The funding application was resubmitted to DfT based on firm tender prices, leading to last month's announcement. The further improvements will include additional track renewal, new tram stops and a new tram depot at Starr Gate. An improved year-round service will be provided by a fleet of 16 new fully accessible trams. Work is expected to be complete by 2012, ensuring the historic tramway's place in Blackpool's future. David has 28 years' experience of developing public transport schemes across all modes. Steve's expertise in preparing business cases has resulted in successfully obtaining funding for several projects. To find out more or discuss further contact David Mack or Steve Hunter t +44 (0)113 389 6400 e [email protected] e [email protected]

The future is urban transit . . .

The United Nations recently reminded us that for the first time in history 50% of the world's population now lives in urban areas and importantly half of this population is under the age of 25. The demographics vary by region. In many regions, world urban growth is driven by a booming young population. In many western cities growth still continues but with an ageing population. Common to all the world's cities are the new agenda of climate change, energy security and sustainability. These factors are really shaping the development strategies of cities around the globe. While catering for car demand and providing an adequate network for car use is still a fundamental requirement, city authorities acknowledge the need to integrate public transit solutions into their citywide development plans. Wider transportation choice is now a key requirement in creating attractive and competitive cities. Transit is now expected as a lifestyle choice of a growing, and mobile population, regardless of age. On the following pages, we illustrate a world tour of urban transit projects that Steer Davies Gleave is currently working on. Though this coverage only includes part of our portfolio of transit projects, in many instances they involve project teams drawn from all our offices across the globe. This international experience provides us with invaluable insights into how to develop effective and successful urban transit solutions. To find out more or discuss further contact David Bowers or Alan Jones t +44 (0)20 7910 5000 e [email protected]

Fast train approaching

Good things come to those who wait. Many of us in the UK transport industry believe we've been waiting far too long for highspeed rail. But does UK Plc really need it? Sir David Rowlands, Chair of HS2, the limited company set up (and owned) by the Government in January 2009 and tasked to investigate the case for high-speed rail between London and Scotland, is the ideal person to ask. By virtue of its name HS2 (HS1 being the fully operational 107km high speed rail link between St Pancras and the channel tunnel, opened in November 2007) one would assume that Britain's second high-speed rail line is inevitable. Rowlands knows all about how Westminster works ­ a civil servant since 1974, he moved into the Depart for transport in 1983 and steadfastly remained in transport until his retirement in 2007 having reached the top as Permanent Secretary. Before accepting the HS2 post, Rowlands advised the DfT that the project needed focus, hence the arm's length company. "The reason why I was appointed Chair of HS2 is because highspeed rail is still at the politics stage, not the delivery stage", Rowlands points out. By 31st December 2009 he must submit his report to Government, with a preferred high-speed rail route (but including options) for London to the West Midlands and strategic corridors up to Scotland, backed up with a sound business case. Knowing that the decision on high speed rail may rest with a Conservative government, he wants to make sure that his final recommendations are acceptable to whoever is in Government after the Election. 4 In fact, high-speed rail as an economic imperative is one issue where both Lord Adonis and his Conservative shadow, Theresa Villiers, thankfully agree. Rowlands explains that the need to consider high-speed rail comes from acknowledgement by the DfT that by 2026 additional capacity, especially between London and the West Midlands was necessary. The DfT's own conclusion was based on a projection of 100% passenger growth on mainline services and 120% growth in regional and suburban services in the West Midlands. Today's recession will certainly have an impact on passenger growth, and hence on timing, but growth remained strongly above-trend from 2006-2008. Given the capacity constraints on the existing route to the West Midlands, Rowlands' HS2 study will give the Government two costed options for additional capacity: build a new conventional rail line or one capable of running high-speed trains. The Departement for Transport will assess the alternative of further upgrades, but given the recent completion of the West Coast Mainline upgrade at a cost £8 billion and taking around nine years to complete, this has dampened the appetite for further work to the existing network. However, there is no escaping the fact that high-speed rail will be very expensive. Rowlands says "HS2 is not going to happen without a significant proportion of taxpayers' money". The Treasury will need convincing. The business of spending taxpayers' money means, Rowlands explains modelling "assumptions based on reality, not wishful thinking". He does not think the market for domestic flights will simply stop, "people will still need to fly from Aberdeen and Belfast to London". If Rowlands' recommendations are taken forward, HS2 Ltd could ultimately become `the client' and procure the programme management to deliver Britain's second high speed railway. According to Rowlands, "the last thing you want are civil servants or Ministers project managing". The true value of his experience should please everyone in the transport industry. He does not take a narrow view that high-speed rail should be funded at the expense of other transport projects. Rather, he implies that high-speed rail is of national importance. Rowlands states that "schemes such as HS1 and London's Crossrail will have lasting benefits for generations to come, and were funded with this in mind". Twenty years ago when Michael Heseltine, then Environment Minister, took the decision to build HS1, his advisors singled out the wider regeneration benefits that it would bring to the Thames Gateway region. Rowlands' last break was a trip to the Loire Valley, by Eurostar and TGV. He'll say he's not a rail enthusiast, but then this is a sign of someone who perhaps has seen the future and, like the Secretary of State who appointed him, believes that Britain should have some of it. Sir David Rowlands will be addressing UK's high-speed rail future at the HSR Summit, taking place in London on 9th September 2009. Visit www.HSRsummit.com

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Around the world by urban transit

Shown here are just a few of the urban transit projects that Steer Davies Gleave is working on around the world.

toronto, ontario $9bn funding for transit projects

We developed the benefits cases for rapid transit projects in the Greater Toronto region which has led to the recent announcement by the Ontario government of $9bn in funding for four transit projects (York VIVA, Eglinton, Sheppard-Finch and Scarborough Rapid Transit). SDG Project Manager Dan Gomez-Duran notes that "As funds become scarce it is crucial that a consistent and comprehensive approach to the evaluation of rapid transit projects is applied in the region."

edmonton, alberta Making the City Vision a reality vancouver, britsh columbia Rapid transit projects on the go

We are working with TransLink and the Ministry of Transportation and Infrastructure on a range of transit projects. A Rapid Transit Strategic Network Review is looking at a 30-year strategy for the Greater Vancouver region. We are also examining options for upgrading the Expo Line on the SkyTrain network and are leading a comprehensive assessment for a transit extension to the University of British Columbia, looking at BRT, Streetcar, LRT and SkyTrain alternatives. Edmonton opened the first modern LRT system in North America in 1978. Thirty years on it now has a new City Vision to develop a more compact and efficient city. A comprehensive 6-line LRT Expansion Plan and a new Land Use and Transit Planning Framework are driving the process. Alan Jones, SDG's Project Director points out, "Our approach promotes a new urban style LRT network, with closer stop spacings linked to new development to make the City's Vision a reality."

florence, italy Modern tram for historic city

Growth in traffic fuelled by urban development and a surge in the visitor/ tourist population encouraged the city of Florence to rethink the mobility needs for this historic city and introduce a modern tram system. Having helped secure 230m of private sector finance, we are now acting as market and technical advisors to the funding institutions. According to SDG Project Manager Marco Concari, "this project is truly innovative as it represents the first urban transit project to be implemented within a PPP structure in Italy."

leon, spain See page 13

amman, jordan A world-class BRT scheme

Looking to vastly improve public transport services, Amman is aspiring to design a bus rapid transit system that will provide a fundamental shift in the perception of public transit in the growing city of 2.5m people. As SDG's project manager Peter Armitage puts it, "Jordan may be best known for Petra, wadis and desert. Our challenge is to ensure that it becomes renowned for something else too ­ a world-class BRT scheme in Amman."

sacramento, california A 30-year TransitAction Plan

Fifty years of suburban sprawl have brought the need for Sacramento to find a new way forward into sharp focus. We developed a new 30-year TransitAction Plan to support the region's land-use `blueprint' for a more compact form of development supported by transit. It entails a tiered implementation program for investment in LRT, a `Hi-Bus' network (high frequency, capacity and quality) and a range of supporting initiatives in transport demand management, information & ticketing and safety & security, including Transit Oriented Development Guidelines. SDG Project Manager Ian Druce notes, "The Sacramento TransitAction Plan has introduced European best practice in transit planning, design and evaluation to the challenges faced by Sacramento."

bogotá, colombia Award-winning TransMilenio

It is nearly a decade since Bogotá's award-winning TransMilenio, designed by Steer Davies Gleave, was officially opened. The Colombian government is now determined to extend the benefits of bus rapid transit to other cities with our support. Of the eight cities that have planned for BRT systems of their own, two have recently opened (Periera and Calí) and two more will start operations by the end of 2009 (Bucaramanga and Barranquilla). German Lleras, Head of our Colombian office, states, "The success of Bogotá's TransMilenio has demonstrated that a well-designed BRT system could be retro-fitted onto an existing network."

abu dhabi, united arab emirates Rapidly developing nation

The city population of Abu Dhabi is expected to grow five-fold over the next 20 years. Steer Davies Gleave worked with the Department of Transport to develop the emirate's Surface Transport Plan 2030 which includes 590km of regional railways, 130km of metro lines, 30 tram projects and 560km of highway improvements. At the plan's launch in May, the Crown Prince said, "the plan will meet the people's and the economy's mobility needs throughout the Emirate until 2030". Tendering for the design and construction of the first metro lines is currently under way.

guadalajara, mexico Segregated Macrobus BRT scheme

The `Macrobus' BRT scheme started operations in Guadalajara earlier this year. Carrying over 110,000 passengers a day, Macrobus runs on a completely segregated 17km trunk corridor with 27 stations, and will eventually comprise three trunk routes. SDG Project Manager Liliana Pereira comments that "building on our experience from TransMilenio, we were able to provide Guadalajara's Macrobus project with invaluable support on start-up plans, fares and ticketing and operations."

lagos, nigeria Growing mega city with 15m people

Lagos is a growing mega-city with 15 million people and until recently it was very poorly served by public transport. Steer Davies Gleave is helping to transform this situation, working with public and private sector partners on three key projects, including the Lagbus high priority bus scheme which was successfully implemented in February 2007 and is now served by over 200 new buses carrying over 3m passengers a year. We are also designing and developing a US$2bn BRT and toll road scheme and preparing demand and revenue forecasts for a potential LRT concessionaire.

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The wider role of transport in the economy and society

By John Swanson and Simon Nielsen

On the other hand we know that the effects of reducing transport costs are not always desirable. The increased employment and business activity that the investment was designed to stimulate generate rising travel volumes leading to congestion on the roads and over-crowding on public transport; meanwhile, the capacity to increase activity is constrained by land availability, and the extent to which people will accept sprawl or high-rise building. And there may be more subtle effects. For example, increasing the ability of employers in one location to recruit a workforce may make it harder for employers located elsewhere, leading to an unexpected loss of employment in some places, even if the total increases. This all hints at another issue: the DaSTS agenda means that transport strategies have to recognise not only the effects of transport on the wider world, but also the reverse relationship. Regional spatial and economic strategies, housing policies, land-use planning: they can all have a profound effect on transport that can be hard to foresee yet must be taken into account when drafting policies. So we see there are many sequences of cause and effect that can follow transport or other strategic interventions, some of them acting quickly, some taking years. These policies require broad estimates of the shape and scale of the changes likely to occur, and to use the understanding gained thereby to design a well-balanced package of initiatives most likely to deliver desirable outcomes; this is what Steer Davies Gleave's Urban Dynamic Model, or UDM, has been designed to do.

While complex in detail, this model uses the ideas outlined above ­ such as the attractiveness of locations as places to live or to do business ­ mixed with some widely recognised techniques drawn from more conventional transport modelling to provide a dynamic simulation of how complex cities or regions are likely to develop over periods of years, and of how transport strategies are likely to affect that trajectory. At this point, it is worth referring back to the goals above, to see how the UDM can contribute. Support national economic competitiveness and growth. The UDM simulates changes in job numbers and levels of employment in each model zone, giving a direct estimate of the impact on employment. However, it can also calculate conventional transport user benefits and the Wider Economic Impacts of proposals, providing quantification of the contribution to the national economy. Reduce transport's emissions of carbon dioxide. Because the UDM calculates changes in mode choice and in the total vehicle kilometres driven, it can provide an estimate of the reduction in CO2 emissions, in tonnes per year.

Promote greater equality of opportunity. Employment is possibly the most significant contributor to this. The UDM can demonstrate where reductions in unemployment are most likely to happen, and who benefits. Regeneration Areas, referred to in DfT appraisal guidance (available at www.WebTAG.org.uk) can be highlighted to see how proposed strategies are likely to affect them. Contribute to better safety, security and health. Estimates of changes in accidents can be made from vehicle kilometres driven and road speeds. The model includes walk and cycle, so increased use in these modes can be used to indicate contributions towards health; reductions in vehicle kilometres mean fewer emissions and thus better air quality. Improve quality of life. A full assessment of the quality of life is beyond such a model, but employment, emissions, travel distances, access to services, all contribute to quality of life, and are all available from the UDM. John, Head of Operational Research, has developed new urban simulation methods to help predict the wider economic and social impacts of transport. Simon is Head of Policy and Planning and has a detailed knowledge of transport modelling and appraisal. To find out more or discuss further contact John Swanson or Simon Nielsen t +44 (0)20 7910 5000 e [email protected] e [email protected]

The UK Department for Transport (DfT) recently issued guidance to help regional authorities develop strategic transport plans and policies. Called Delivering a Sustainable Transport Strategy, but known as DaSTS, it sets out five goals: t To support national economic competitiveness and growth; t To reduce transport's emissions of carbon dioxide and other greenhouse gases; t To contribute to better safety, security and health and longer life-expectancy; t To promote greater equality of opportunity for all citizens; t To improve quality of life for transport users and non-transport users, and to promote a healthy natural environment. 8

A striking feature of these goals is that they are not about transport, but its wider role in society and the economy. In other words transport plays a subsidiary enabling role, and transport policy should be designed to help achieve the wider aims of the economy, help fight climate change, promote equality of opportunity, and so on. This is surely right, but the DfT's laudable requirement for an evidencebased analysis of current problems and of why any proposed measures will help address these problems requires a fresh way of thinking about transport, showing how it affects society in a wider sense. It is hard to do this without some form of model, because transport's role in society is so complex and the consequences of changes can be difficult to foresee. However there are a few things that research has consistently shown to be true that we can begin with.

From the point of view of businesses and employers, transport affects their ability to recruit a workforce, and to do business with customers and suppliers. If transport costs are reduced, this increases the workforce accessible to employers so that vacancies can be filled more rapidly, while the range of customers and suppliers accessible to them also increases. Such conditions will tend to encourage more business activity, at least within other constraints such as the availability of land and premises. For households, transport provides access to employment opportunities and to retail and essential services, so improving transport links can help get people into employment and improve their broader quality of life.

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Business modelling in an uncertain world

By Martin Baynham-Knight Whether you are trying to manage an uncertain revenue stream with a largely fixed cost base and thin margin, ration ever scarcer public funds, or decide which assets to divest or to acquire ­ in the current economic climate, the need for strategic decision-making to be supported by robust evidence-based analysis and transport market knowledge has become ever more important. At the same time, new sources of funding and finance are emerging, bringing with them new restrictions and different analytical requirements. And as the macro and micro economic environment evolves, the ability to revisit and revise key decisions based on transparent and robust modelling and analysis is necessary to inform strategic decisions. Because our clients are diverse, and every project is unique, Steer Davies Gleave adopts a bespoke approach, drawing on our extensive expertise in transport, business and finance according to the specific needs of each project. Below are just two examples. When developing the financial and key operational models underpinning a successful UK rail franchise bid, we worked onsite with the client using a collaborative approach to model development. This was tailored to the client and issue and based on our experience and workshops at the inception. Working closely with specialists at the bidding company also ensured that we developed a model which could interface with their forecasts, and also allow senior management to test strategic sensitivities. We also recently developed an integrated economic appraisal and feasibility financial model to assess the case for and net costs of a new BRT system. The model was designed so that the structuring of the transaction could be flexed and that, for example, the responsibility for operations and maintenance or the vehicle procurement route could be flexed. This allowed our client to understand the different funding requirements of a range of structural options and simultaneously the value for money of the system as a whole. The success of our modelling methods lies in our belief that there is no sense in relying on a mechanistic use of models. Robust business modelling requires interpretation based on thorough understanding of the context and issues, using scenarios and sensitivity tests to understand the range of uncertainty ­ especially important in the current market. Martin leads our business modelling offer, helping businesses and governments develop strategies and complete transactions. To find our more or discuss further contact Martin Baynham-Knight t +44 (0)20 7910 5000 e [email protected]

Cutting costs without cutting standards

In the face of the recession, keeping costs down becomes a priority for many organisations. And while keeping an eye on costs should always be part of any good business practice, it can be especially difficult to cut costs and maintain the same standards of service. Is there a way to save money without compromising service? Steer Davies Gleave recently helped a large transport services provider do just that, saving them more than $1 million a year. With over 1,000 vehicles operating out of many dispersed locations, the company's annual operating costs were massive. While costs varied with how the vehicles were allocated to locations, the sheer number of possible allocations made it extremely difficult to know whether the current allocation was the best, or could be improved. By applying operational research (OR) optimisation methods ­ a discipline concerned with the efficient use of people and resources in complex organisations ­ and mathematical modelling, Steer Davies Gleave was able to search through millions of possibilities to find how good customer service could be provided while minimising the use of costly resources. In addition to showing how significant savings could be made by reallocating vehicles among locations without any reduction in the service level offered to customers, the reduction in wasted vehicle mileage meant that the company's CO2 emissions could also be reduced. John Swanson is Head of Operational Research. Coralie Triadou is one of our specialists in optimisation methods. To find out more or discuss further contact [email protected]

Modelling lessons from the recession

By Luis Willumsen Very few people saw it coming and it had a significant impact on the economy, employment and the transport sector. The arrival of this "black swan" took most of us by surprise and this is a good time to draw some lessons, not just for private sector projects but for modelling and forecasting in general. The first and most significant lesson is that we can no longer ignore uncertainty in our modelling efforts. Sensitivity tests and Monte Carlo risk analysis can help but are far from the full answer. We need a better approach to uncertainty than this: most financial institutions undertook these exercises and look where we are. A better approach must distinguish what is fundamental and fairly dependable from what is more uncertain and variable in terms of demand. We have learnt how to do this on private toll road and transit projects but the approach needs to be improved and extended to other field. In the same vein, we must recognise that good model calibration and validation are no guarantee of reliable forecasts if we rely on estimates of future inputs that are in themselves unreliable. The `forecastability' of future input data is essential, and this puts some limits to recent enthusiasm for fully dissagregate and Activity Based Modelling. Homo Economicus is dead. This rational and selfish individual that considers all travel alternatives and chooses one in order to maximise his utility underpins practically all our best models. He is necessary to assume nearly perfect markets and support the advantages of equilibration between supply and demand. However, small and big changes like this recession are not explained by him but by animal spirits, market sentiment, trends, envy and emotions. We will not be able to abandon equilibration tomorrow but we should place increased emphasis on dynamic change. We can no longer believe that the timing of interventions in the transport sector is irrelevant: the outcome of transport plans in 2030 does not depend only on what is offered then (as in our classic 4/5 stage models) but also on the sequence of events preceding that date. System Dynamics offers an attractive framework to deal with some of these issues and more research is needed to explore its contribution to decision support. We change our minds. We adapt, develop new objectives, recognise limitations and when pushed beyond our comfort zones may discover other interesting and enjoyable lifestyles. There are inherent limitations to modelling and therefore it must be complemented by judgement and experience. The best modellers of tomorrow must have not only exceptional analytical skills but also develop their emotional and social intelligence to support good advice and guidance. Luis is a Director at Steer Davies Gleave. He is an internationally recognised authority in demand modelling with a distinguished 35-year career as a consultant and researcher. To find out more or discuss further contact Luis Willumsen t +44 (0)20 7910 5000 e [email protected] 11

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Planning a sustainable future for historical León

By Antonio García-Pastor Founded in the first century BC by the fifth Roman legion, León, Spain, has a long and colourful history as a stronghold of the Romans and centre for gold trading. In medieval times, it was the capital of the Kingdom of Leon, from which the Spainish Kingdom originated. Life in León today is much more settled and the local government wants to ensure it preserves its heritage while meeting the challenges of the modern world ­ specifically, by implementing sustainable modes of transport that will help improve quality of life and minimise the negative impacts of transport. While most people in the city do a healthy amount of walking, poor public transport means that the majority of motorised trips are taken by private cars. In 2008, Steer Davies Gleave was asked by the city council to develop a Sustainable Mobility Plan to achieve a modal split that favours public transport and non-motorised modes. We first conducted extensive survey fieldwork and consulted closely with stakeholders to get a true understanding of the city's key transport problems and opportunities. Using elaborate modelling systems, we tested several scenarios of proposed measures, analysing mobility and accessibility to different interest areas and identifying areas that lacked public transport and network density. We also had a `do minimum' scenario which acted as a benchmark to evaluate the proposed measures against. The culmination of our work includes some major transport schemes for León's Sustainable Mobility Plan. Sitting at the heart of it is a new tramway system to connect the major areas of the city ­ the historical centre, commercial areas, hospital and university ­ with the main residential zones. We also reorganised the existing bus network ­ which was modelled to measure its efficiency as feeder of the tram and its accessibility for areas not covered by the tram ­ to provide improved public transport across the city. The main strategic proposals developed for the Plan include the implementation of ambitious pedestrian and cycling initiatives and new parking policies and measures on the road network. For the road network, proposed actions include creating areas with traffic calming (zones "30"), reorganising sections, widening pedestrian platforms and removing parking spaces, and changing the direction of several streets. Antonio is Head of our Spanish operations with expertise ranging from transport planning and policy to operational management and business development. To find out more or discuss further contact Antonio García-Pastor t +34 91 541 8696 e [email protected]

LTP, round 3

There is almost universal consensus that the Local Transport Plan process has improved the planning and delivery of transport at a local level. By April 2011 all the local transport authorities in England will adopt their third Local Transport Plan (LTP3). These will establish their short term spending programmes in the context of a longer term strategy. The Government's draft guidance for LTP3 loosens its requirements and builds in greater flexibility for local authorities. It also says that Government will no longer directly assess the adopted plans and the link between excellent performance and funding will be broken. Does this mean that the importance of the LTP process is diminished? Without doubt the answer to this question is `no'. Last year Government set out that between 2011 and 2016 local authorities in England should plan to have around £7.5bn to spend on the maintenance of the local road network and on small scale transport improvements. On top of this there is over £4bn earmarked for major schemes and a host of other funding sources too. The LTP should be seen as the business plan for an authority's transport spending. And like every business plan it needs to set out the long term strategy and within that context, a short term plan to go to meet that strategy. Of course the expectation is that, as we come out of recession, Government spending will be squeezed. Transport will be affected by this just like other sectors. So there's a good chance less money will be available than we first thought. This only increases the importance of LTP3. Through establishing a strategy, and then weighing up the options, it is the mechanism for authorities to identify their priorities and how they can get the biggest possible impact for the funds available. To find out more or discuss further contact [email protected]

Transport models and qualitative research: oil and water, or strawberries and cream?

By Tony Duckenfield Transport models forecast the behaviour of populations while qualitative research such as focus groups provides insights into the minds of individuals, so can the two be combined? I believe the answer is yes and, furthermore, that every effort should be made to do so. The reason for this is that models work well when it is a matter of extrapolating (or interpolating) existing behaviour in some way, but struggle when there is any kind of underlying shift. I first came across this issue about fifteen years ago when looking at new rail stations. The transport models available at that time couldn't cope with the fact that, as revealed by qualitative research, a new station can fundamentally change local travel habits and generate additional trips by making it easier to get to interesting places and activities. This led to the development of a new type of model (based on a GIS) which could forecast this effect pretty well. A more recent example is congestion charging. The transport models for London underestimated the impact on private cars1. Qualitative research revealed that an important effect that the models did not take account of was what might, for want of a better term, be called the `hassle' factor. In other words, the simple act of introducing a charge led car drivers to think about other options and in some cases realise that they didn't actually need to drive in. This theory is supported by subsequent events such as the increase in the charge from £5 to £8. In this case the outcome was consistent with the forecast, indicating that the elasticities being used were correct. The third example is models of car use which work on a direct link with car ownership. In London at least, car ownership has been rising while car use has been falling. Qualitative research provides the explanation for this counter-intuitive trend, which is that car ownership itself provides some owners with benefits in terms of self-esteem, and a feeling of control (the car in the drive being a back-up if public transport fails). This factor has only manifested itself in more recent times because of rising disposable incomes which mean that increasing numbers of people can afford to have a car and still pay public transport fares. These examples aim to show that qualitative research, even though it doesn't have statistically validity, can provide insights that if taken seriously can improve the forecasting ability of models. Tony leads our Market Research & Insight team. He has worked extensively in developing research techniques to understand travel behaviour at both a large-scale and micro level. To find out more or discuss further contact Tony Duckenfield t +44 (0)20 7910 5000 e [email protected]

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The actual reduction between 2002 and 2003 was 33% rising to 36% by 2006. The estimated range was 17% to 28%. See "Central London Congestion Charging: Annual Monitoring Reports", TfL, 2003-2008

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environment column

The future of the UK's national motorway network - where to next?

By Anita Mauchan What should be the Department for Transport's (DfT) long term policy for the UK's motorway network? The promoters of new motorways, their opponents and those who manage the existing system gathered together earlier in the year to debate this issue1. As you would expect, opinions differ substantially. But one thing was clear. While the different protagonists are keenly promoting their long term solutions for our national infrastructure, the DfT and the Highways Agency (HA) are putting their efforts into the short term management of the system, seeking to reap short term, but substantial, rewards. The HA's three key policy objectives are: Safe Roads, Reliable Journeys and Informed Travellers. While our motorway network is already regarded as one of the safest, the HA, through the Strategic Safety Action Plan, aimed to reduce the number of people killed or seriously injured by 33% in the ten years to 2010 and is on target to do so. The Strategic Safety Action Plan combines engineering solutions (major scheme improvements/concrete barriers) with driver information programmes, variable speed limits and MIDAS systems. Improvements in journey reliability, the second objective, are being delivered as part of the Reliability Delivery Plan which consists of interventions to reduce congestion. These interventions include technological options such as Ramp Metering, Active Traffic Management (ATM), the Traffic Officer Service and Variable Message Signs. A well-publicised scheme which is delivering promising results is the M42 ATM around Birmingham. According to the HA, this scheme has reduced journey time variability during weekdays by an average of 27% and cut average journey times in the afternoon peaks by up to 24%. At the same time, accident rates have fallen and emissions and fuel consumption are also down. Subsequent phases of the ATM scheme are proposed to complete the `Birmingham Motorway Box' by 2015; at the same time there are proposals to introduce hard shoulder running on sections of the M1, M3, M4, M60 and M62. The third objective ­ Informed Travellers ­ is being pursued through programmes of Variable Message Signs (including projected travel times), National Traffic Control Centre, Traffic England and digital radio. This new investment is designed to allow drivers to make informed route decisions and to provide early warning of major incidents. In general terms, the HA sees these objectives fitting snugly with the DfT's DaSTS report of November 2008 ­ supporting economic growth through improvements in mobility whilst tackling climate change. But are there more radical longer term options that we should now be considering? And, following the successful DBFO road programme of the last 15 years, what, if anything, can the private sector now contribute? In order to drive up the quality of service offered to users by the national motorway network, the RAC Foundation has proposed that consumers should pay a fee for use. This clearly reflects the position with other utilities: telecoms, gas, electricity, water and other transport modes such as rail. Could such a model really be transferred to the motorway sector? Some think so and the latest and largest privately-financed transaction in the UK could be interpreted as another step in that direction. The M25 transaction reached financial close in May this year at a value of £956m. The Connect Plus consortium is responsible for the operation and maintenance of the entire M25 and connecting roads (400 km in total) and improvement of specific sections of the M25 to reduce congestion. Payments to the concessionaire are primarily on an `availability' basis. Performance indicators including road condition, road safety and average traffic speeds have a relatively minor impact on monthly payments. Construction work started in May 2009 and new capacity will be delivered in phases by the deadline of 2012 in time for the Olympics. The successful funding of the M25 deal appears to have restored some confidence in privately financed road infrastructure in the UK but there are only a small number of other schemes being promoted, such as the Mersey Gateway project and the long running Carlisle Northern Development Route. The future of the Dartford Crossing has recently been studied, with options to construct a new crossing being considered to address longer term capacity constraints. So where to next? The HA will continue to develop short term solutions aided by a boost from the Fiscal Stimulus package. The lobbyists will continue their studies of longer term policy options. Whether road pricing on the national motorway network ­ first put forward by a conservative government over 20 years ago and currently supported by the RAC Foundation ­ will ever take place remains to be seen. Arguably this direction could satisfy the objectives of all ­ dynamic management of the system, encouraging mode shift, improving the reliability of the motorway network while providing funds for selected road capacity and public transport enhancements. The first step in this direction is to start looking at the really successful road pricing systems across the world to see what has worked well. The HA's achievements of its short term objectives are impressive but the long term policy on the future of the national motorway network still has some way to go. Anita has 18 years' experience of providing traffic and revenue advice to governments, bidders and sponsors for a range of privately-financed projects worldwide. To find out more or discuss further contact Anita Mauchan t +44 (0)20 7910 5000 e [email protected]

Britain's next top model

By Chris Ferrary Many think transport modelling a black art. But this is nothing compared with predicting environmental impacts. The manual accompanying the SATURN model, for example, says that for pollutant emissions "..it needs to be emphasised that this is an extremely crude model. ...If it gets to within a magnitude of the `true' answer it will be doing well". The problem often lies in the need for instant answers. On their own, both traffic and environmental models can be validated and perform well within the parameters that are set for them. But problems can arise when the two are brought together. Like transport models, environmental models can be very data hungry. The factors that affect environmental effects of transport are many and various. Nevertheless, these aspects can all be brought together and distilled to provide a good estimate of likely pollution levels. However, more often than not, it isn't. Steer Davies Gleave found, for example, that in respect of the Government's Trunk Road Programme in 2005, estimates of CO2 emissions had been modelled for less for half of the schemes. Mind you, for more than a third of the schemes, no estimates of predicted traffic levels had been made either. As environmental issues generally, and carbon in particular, become increasingly more important, there clearly is a need to do better. More robust estimates supported by, and rooted in, the science are necessary. The recent NATA refresh recognised this, and future work will focus on supporting analysis at regional and local level. Chris is an expert in environmental and climate change consultancy and has over 30 years' experience as a land-use and transport planner. Contact Chris Ferrary at [email protected]

1

Driving Forward Our National Network, 21st January 2009, Bircham Dyson Bell, London

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Our locations

LONDON t +44 (0)20 7910 5000 e [email protected] LEEDS t +44 (0)113 389 6400 e [email protected] EDINBURGH t +44 (0)131 226 9500 e [email protected] GLASGOW t +44 (0)141 224 0990 e [email protected] BOLOGNA t +39 051 656 9381 e [email protected] ROME t +39 051 656 9381 e [email protected] MADRID t +34 91 541 8696 e [email protected] ABU DHABI t +971 50 1039 044 e [email protected] BOSTON t +1 617 794 0022 e [email protected] VANCOUVER t +1 (604) 608 6198 e [email protected] MEXICO CITY t +52 (55) 5615 0041 e [email protected] SANTIAGO t +56 2 473 6900 e [email protected] BOGOTA t +57 1 322 0850 e [email protected] SAN JUAN t +1 787 721 2002 e [email protected] SAO PAULO t +55 (11) 3151 3630 e [email protected]

News in Brief

The Italian jobs The current economic crisis and fluctuating oil prices have had a real impact on traffic levels on Italian motorways, making forecasts for sponsors and lenders more challenging than ever. Steer Davies Gleave is working on several toll road concessions to provide traffic and revenue forecasts, one of which is for the new Mestre by-pass, which was opened in February 2009 to relieve congestion in the Venice area. We are also helping the concessionaire of the new Autostrada Tirrenica between Civitavecchia and Rosignano, along the Tuscany coast in Italy. Our traffic and revenue forecasts will provide the basis for the financial plan review and project optimisation. SDG welcomes Land Securities' triple success in Victoria Land Securities' Victoria Transport Interchange (VTI2) development was granted planning permission in February 2009. Shortly afterwards, Selborne House and Wellington House were also granted consent in March. The proposals will help transform Victoria, providing new homes, premium office space, shops, restaurants, cafes and a public library set around new accessible public spaces. Steer Davies Gleave has provided transport planning advice to Land Securities on a range of developments since 2002 and we are pleased to be part of the team helping Land Securities realise their vision for a revitalised Victoria. Making more of station accessibility Many train stations face the same scenario during the morning rush hour ­ congestion on the roads and a full car park, removing access options for those travelling off-peak. As the key consultants to the Station Travel Plan national pilot programme, Steer Davies Gleave compiled The Station Travel Plan Research Toolkit, which sets out how local authorities and train operating companies can work together to better understand station access. It includes advice on stakeholder consultation, data collection methods, quality control, promotion and data analysis. The three-year programme, supported by DfT and ATOC, will see station travel plans developed and implemented at 31 rail stations across England and Wales.

About us

Steer Davies Gleave is a leading independent transport consultancy providing services to government, operators, regulators, promoters, financiers and other interest groups. Founded 30 years ago and with more than 400 consultants worldwide, we have an unparalleled breadth of specialist expertise available for our clients. We welcome the opportunity for an informal discussion on prospective consulting assignments. Contact us at [email protected]

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