Bus Rapid Transit System cost-benefit · PDF fileBus Rapid Transit System cost-benefit analysis !!!!! ... Size of the Project? Basis for Economic Analysis of BRTS ! BRTS is:! A Bus

Bus Rapid Transit System cost-benefit analysis

Prof. Shivanand Swamy Centre Of Excellence for Urban Transport

An ini?a?ve of the Ministry of Urban Development) CEPT University ([email protected])

Contents }  What is Cost –Benefit Analysis? }  Why do we undertake Cost –Benefit Analysis of BRTS? }  The Framework for Economic Analysis }  Step -1: Defining project boundaries }  Step -2: Economic analysis }  Step -3: Financial Viability Assessment }  Step – 4 & 5: Examining Financing Options

}  Case Study- Hubli Dharwad BRT

Cost-Benefit Analysis (CBA) An Investment Appraisal Tool

}  The CBA is the implicit or explicit assessment of the benefits and costs (i.e., advantages and disadvantages) associated with a investment project. Benefits and costs may be monetary (pecuniary) or non-monetary (non-pecuniary, “psychic”).

}  The economic analysis appraises the project contribution to the social and economic welfare of the city, region or country. It is made on behalf of the whole society (region or country).

}  The financial analysis appraises the project in terms of return on investment. It is made on behalf of the entity investing in the project (Owner of the project).

}  Multicriteria analysis enables evaluation of projects with regard to its various objectives

Financial V/s Economic Analysis Point of Comparison Economic Analysis Financial Analysis

Point of View Public, Society Private, Project sponsoring

En:ty

Objec:ve Maximising Public Benefits Maximising Benefits to

Private / Project Sponsoring En:ty

Types of Effect All benefits and costs to society (including external

costs)

All receipts and outlays that affects the financial return

from the project. Taxes, Subsidies and Interest payment

Excluded Included

Prices used in valua:on Real Prices Actual domes:c market prices/current prices

Evalua:on Parameters Economic IRR, Economic NPV, Benefit Cost Ra:o.

Financial IRR, Financial NPV, Debt Service Coverage Ra:o

Project Economic and Financial Analysis Framework

Step 1 Defining Project Boundaries

Step 2

Economic Analysis of Project

Step 3 Assessment of Financial

Viability of the Project

Step 5 Examine Public Finance Option

( Balance sheet Financing Option along with multilateral/Central

State Government Grant

Is Project Economically Viable?

(Is EIRR >12%)

Estimation of Capital Cost and O&M Cost for the Project

Project Should not be Undertaken

Is Project Financially Viable? (Is FIRR >Cost of Fund?

Net Cash flow is sufficient for Debt Service?

No

Step 4 Examine Private Finance

Option (PPP)

No

If project Commercially Viable considering VGF or Project structure

Modification

Yes

Yes

No

Yes

Contents }  What is Cost –Benefit Analysis? }  Why do we undertake Cost –Benefit Analysis of

BRTS? }  The Framework for Economic Analysis }  Step -1: Defining project boundaries }  Step -2: Economic analysis }  Step -3: Financial Viability Assessment }  Step – 4 & 5: Examining Financing Options


Public Works

Do we carryout Cost – Benefit Analysis for all urban transport investments? If no, then why BRTS?

S l No

U r b a n T r a n s p o r t Project

B / C A n a l y s i s done?

1 Roads No 2 Foot paths No 3 Bus system No 4 Flyover/Bridges No (Some Times) 5 PARKING No 6 BRTS Yes 7 MRT/Mono Yes

External Funding? Size of the Project?

Basis for Economic Analysis of BRTS }  BRTS is:

}  A Bus Transit System }  It is Rapid – Hence the comparison with Rail/ assessment /Competetion }  It is low cost (when compared to Rail Based Solutions) 1/20th }  It is a Concept and Not a Technology – Brings about flexibility (a Mix

and Match, quick building and addition) }  It is OPEN – Multiple Stakeholders, Multiple Users }  It is QUICK (NOT EASY) to build (Integration requirements are easy to

provide) }  People scale (Not huge structures) – accessible }  Barring one or two systems, in most cases it is an URBAN INSERT –

Involves multiple stakeholders and people }  It reallocates the use rights of road space - (dislocate some

users – feeling?) }  Such large socio-technological projects can’t be built

unilaterally by public authorities.

Origin - Destination Length With BRT Without BRT Saving

Average Delay (s) Savings (s)

Average Delay (s)

Average Delays w/o BRT over with

BRT From To (Km) BRT Mix Traffic

Helmet Keshavbaug 2.1 103.5 338.605 235 394.49 3.8 times Helmet Shivaranajani 2.6 138 368 230 430.88 3.1 times

SIMULATION RESULTS FROM VISSIM -- FROM HELMET TO SHIVARAJANI INTERSECTION

•  The evaluation results indicate the average speed of 27.2 and 22-24 kmph for BRT and mixed traffic respectively. •  The evaluation results indicate the average speed under mixed traffic situation is 16-19

KMPH

‘It is difficult to carryout an analysis to prove the most obvious’

People moved – 280 Area occupied – 135 sq. m

Queue length – 37 m.

People moved -155 Queue length – 210 m. Phase time – 70 Seconds Cycle Length – 180 Seconds

Janmarg Mixed traffic

MORE CARS – Same No of people – Longer Queue MORE CARS MEANS LONGER

QUES

Janmarg – Focus on Moving People..

18 M ARTICULATED BUS CAPACITY- 140

People moved -240 Queue length - 165 m. (Increase from 54 meters) Phase time – 100 Seconds Cycle Length > 180 Seconds (Not Desirable)

Mixed traffic

Present scenario- without BRTS MORE CARS MEANS LONGER

QUES

Janmarg – Focus on Moving People..

Contents }  What is Cost –Benefit Analysis? }  Why do we undertake Cost –Benefit Analysis of BRTS? }  The Framework for Economic Analysis }  Step -1: Defining project boundaries }  Step -2: Economic analysis }  Step -3: Financial Viability Assessment }  Step – 4 & 5: Examining Financing Options


Step -1: Defining project boundaries

Step 1 Deciding the Mode of Urban Transport

Step 2 Deciding Project Components

Categorized into three parts namely (1) Infrastructure (2) Rolling stocks (2 ) IT

Step 3 Estimating Project Cost

Step 4 Estimating Operation and Maintenance Cost for the

Project

•  Estimation of Cost of Project Components. •  Phasing of Investment Requirement based on

Implementation Plan

•  Defining Project Operation Period. •  Estimation of O&M Cost during project

operation period considering the current prices and industry standards.

i.e. City Bus Service, BRTS, Rail based Urban Transport, NMT based on Urban Transport

Demand

PROJECT BOUNDARIES }  A project, is an economically indivisible series of tasks related

to a specific technical function and with identifiable objectives; }  Transport is Interconnected and hence boundaries are

difficult to draw. }  A group of projects, that is projects that satisfy the following

three conditions: }  they are located in the same area }  they belong to a general plan for that area or transport corridor; }  they are supervised by the same agency

}  DO NOTHING/MINIMUM, DO SOME THING

Two BRTS Projects

Hubli-Dharwad Twin Cities 1 milllion people; 22 kms BRTS;

Ahmedabad - 6 million city – 88 km network

Chandkheda

Narodavillage

Odhav

Bopal

Narol

KalupurRly. Stn.

ManinagarRly. stn,.

RTOSola RoB

Shivranjani Nehrunagar

AECNaroda

Soni nichaali

Phase 1 corridors (58 kms.)

Phase 2 corridors (30.5 kms.)

Rolling Stock

ITS

Land Acquisition and R&R

Contingencies

Component Amount (INR Crore)

Trunk corridor (CBT connec:on) 18.45

Foot overbridges and VuP 37.5 Ligh:ng KRDCL corridor 8 Bus sta:ons 23.45 Terminals & Depots (BRT) 31.43 Terminals and Depots (Feeder services) 62.29 Interchanges 8.8 NMT facili:es 9 Adap:ve Traffic Signal System 7 BRTS Infrastructure on KRDCL corridor 72

85.1

30.06

240

59.8

Total Project Cost :

Rs 692 crores

Infrastructure

Defining project boundaries for Hubli- Dharwad BRTS Project

Project Components

Hubli-Dharwad Ahmedabad

}  22km long 2 lane road was proposed to be upgraded to 4 lane divided highway. Project is to insert 4 lane BRTS (8 lane with 4 lane BRTS) and regional transport infrastructure

}  BAU: 4 lane Road }  Project: Addition of 4 lane

BRTS

}  Built 88 kms of BRTS }  Complete Street Approach;

18 Rail-over bridges on and outside BRT network; 2 river bridges; 8 flyovers (3 along and 5 across)

}  BAU: Minimal Road Network

}  DO Some Thing: Comprehensive Network Improvements

}  Do BRTS: Above + BRTS

Step -2: Project Economic Analysis

Urban Transport Project

Inputs from Traffic demand Model (Passenger forecast, diverted trips etc.)

Life Cycle Economic Cost

Life Cycle Economic Benefits

Conversion of Financial Cost to Economic Cost by excluding taxes, subsidies, interest payment and considering only real prices. 1.  Project Cost 2.  O&M Cost 3.  Capital Replacement Cost

Benefits derived by Comparing user cost in With Project and Do- Noting or Alternative scenario. 1.  Quantifiable Benefits .

a)  Time Savings b)  Savings in VOC c)  Accident Benefits. d)  Pollution Reduction e)  Reduced Road Stress

2.  Non Quantifiable Benefits

Economic Viability Parameters •  Economic Internal Rate of Return •  Economic Net Present Value •  Benefit/Cost Ratio

Sensitivity Analysis and Switching Value Analysis with respect to key parameters.

PROJECT LIFE - 20-25 yrs

Benefits of BRTS (Objectives) }  Reduction in congestion - Increased capacity (widen road, missing link

development – new links, bridges, Rail over-bridges)

}  Improved performance - Increase travel speeds, by minimising jay walking, turning movements, segregation, signal management, level boarding, pre-board ticketing etc.,

}  Reduce operating costs (Trunk-feeder, more kms/bus) }  Reduction in accidents - through the adoption of safety measures

}  Improve Environment & Health (Mode Shift from polluting to non-polluting, Reduced VKT and Cleaner Vehicles)

}  Reduced GHG emissions, Local Air Quality, Increased physical activity (Health)

}  Mode Shift - In favour of walking, bicycles, bus (Mode Balance) }  Economic Development - More competitive city, Productivity

}  Accessibility }  Economic : work-home relationship, safety & security }  Social: Physically challenged, women and children (Safety and security) }  Physical: Affordable transport within a certain distance (Core city; Periphery) More……………………………………… NOT ALL ARE MEASURABLE

•  Vehicle Kilometers Travelled •  Vehicle Hours Travelled •  Vehicle Passenger Hours Travelled •  Access is another important contributor

THINGS THAT MATTER IN BCA

Scenarios Development

(2006-2014-2031)

Business As Usual (2006)

Scenario 1

Scenario Development

AMTS Road Network Administrative limit Railway

Legends


+ Road widening

5.5 % (69.36km )

addition of Lane

capacity

Scenario 2



Legends

Scenario 3


Total 25 Bridges

11 Flyovers 9 Rail over bridge (ROB)

3 Rail under bridge (RUB) 2 River bridges


Legends


+ Bridges

Scenario 4



Legends


+ Bridges

+ Road widening


+ Bridges

+ Road widening

+ Exclusive BRT

Corridor

Scenario 5



Legends

AMTS & BRT routes runs parallel

Business As Usual (2006) +

Bridges +

Road widening +

Exclusive BRT Corridor

(no parallel AMTS routes) (2014)

Scenario 6



Legends

No AMTS routes on BRT corridor

Benefits assessment of BRT: Travel Reductions: Base Year 2006-2014

Scenarios VKT % change from BAU PKT % change

from BAU

Business As Usual (BAU) 13,369,865 25,971,245

Road infrastrucutre improvement 12,710,657 -‐5% 24,271,572 -‐7%

Road infra. Improvement + BRT 12,525,928 -‐6% 22,950,421 -‐12%

Scenarios VHT % change from BAU PHT % change

from BAU

Business As Usual (BAU) 418,643 1,110,769

Road infrastrucutre improvement 394,369 -‐6% 972,857 -‐12%

Road infra. Improvement + BRT 389,150 -‐7% 877,256 -‐21%

Vehicle Hours Travelled (VHT) & Passenger Hours Travelled (PHT)

Vehicle KM Travelled (VKT) & Passenger KM Travelled (PKT)

2014 Network

Future Road Network

Future 2031 Sprawl Network

(Business As Usual)

Total road Network length – 6411 km

Future 2031 Compact Network

(Do something – Gradual growth)

Total road Network length- 6090 km

Total road Network length- 5632 km

14.1 % Addition of road network length w.r.t to 2014 network

8.3 % addition of road network length w.r.t to 2014 network

5.3 % Decrease in road network length w.r.t to 2031 Sprawl scenario

Scenario 1 – Sprawl Network

Future Scenario Development

AMTS Road Network Administrative limit

Legends


+ AMTS

+ Exclusive BRT

Corridor 30% PT share




Legends


+ AMTS

+ Exclusive BRT

Corridor 35% PT share




Legends


+ AMTS

+ Exclusive BRT

Corridor +

Metro

40% PT share

Scenario 4 & 5– Compact Network



Legends

Gradual Growth (2031)

+ AMTS

+ Exclusive BRT

Corridor +

Metro

40% PT share & 50% PT

share

Benefits assessment of BRT: Travel Reductions: Future Scenarios 2031

Vehicle Hours Travelled (VHT) & Passenger Hours Travelled (PHT)

Vehicle KM Travelled (VKT) & Passenger KM Travelled (PKT) Urban growth Scenarios VKT % change

from BAU PKT % change from BAU

Urban sprawl

Business As Usual (BAU with City bus) -‐30% PT share 37,058,752 62,781,430

Urban sprawl

BAU + City bus + BRT -‐35% PT share 34,567,596 -‐7% 59,359,411 -‐5%

Urban sprawl

BAU + City bus + BRT + Metro -‐40% PT share 31,378,129 -‐15% 54,696,517 -‐13%

Compact city

City bus + BRT + Metro -‐ 40% PT share 30,977,742 -‐16% 53,630,910 -‐15%

Compact city

City bus + BRT + Metro) -‐ 50% PT share 25,453,405 -‐31% 46,203,740 -‐26%

Urban growth Scenarios VHT % change

from BAU PHT % change from BAU

Urban sprawl

Business As Usual (BAU with City bus) -‐30% PT share 1,247,615 2,331,951

Urban sprawl

BAU + City bus + BRT -‐35% PT share 1,172,363 -‐6% 2,176,741 -‐7%

Urban sprawl

BAU + City bus + BRT + Metro -‐40% PT share 1,026,865 -‐18% 1,968,453 -‐16%

Compact city

City bus + BRT + Metro -‐ 40% PT share 1,022,709 -‐18% 1,932,609 -‐17%

Compact city

City bus + BRT + Metro) -‐ 50% PT share 797,156 -‐36% 1,630,217 -‐30%

No. Parameters Interpreta?on / Decision Criteria

1 Outcome of project analysis and sensi:vity analysis in terms of EIRR, ENPV and Benefit to Cost Ra?o.

•  Outcome of EIRR is compared with social opportunity cost of capital. Generally in developing countries Social Cost of Capital is considered as 12%.

•  If EIRR is above this 12%, ENPV is a posi:ve value

and Benefit to Cost ra:o is more than 1 then the project is considered economically viable.

2 Outcome of Switching value analysis

Quantum of change in parameters determines the economic viability of a project. If such changes are considerably higher, then the project is economically robust.

Interpretation of outcome of Economic Analysis

•  Financial Analysis of the Project should be undertaken if;

(1) Project is evaluated to be economically viable.

(2)  Even if Project is not evaluated to be economically viable but in case of strategic important cases in which the qualita:ve (Unquan:fiable) social benefits are very high, it can be considered for recommenda:on.

•  Alterna?ve Projects should be considered or modifica?on in proposed project should be considered if Project is evaluated for economic viability

Actions Points after Interpretation

Economic and Financial Appraisal Hubli-‐Dharwad BRT Project, India

Economic Analysis

Economic Analysis Framework

Ø  Economic appraisal for Hubli-‐Dharwad BRT has been done through broad framework of social cost – Benefit Analysis Technique.

Ø  Involves comparison of project cost and benefits of undertaking the BRT Project as

follows:

Economic Analysis involves the following : •  The incremental cost of undertaking the BRT Project over the Base Situa?on is

compared with the economic benefits through quan?fica?on •  Stream of benefits and costs over a 30 year period are discounted at 12%

discount rate as per standard prac:ce for social projects to calculate their Net Present Value.

Op?ons Descrip?on

Base Situa:on Four lane facility without BRT (under construc:on)

BRT Project Four lane facility upgraded to four lane mixed traffic facility plus 4 lane BRTS

Economic Costs of BRT Project

Project Capital Costs

Incremental Maintenance and Fare Collection Costs

Corridor / Bus Station Main. Costs

ITMS/ ATCS Main Costs

Junction Mgt./ Security at Bus Station

Housekeeping

Economic Benefits for BRTS Projects – Conceptual framework

Economic Benefits - 1

Modal Shift from private mode to BRT

Passengers remaining in public transport

Private Mode passengers not shifting

Time Savings due to better speeds

Cost Savings due to higher Ops cost of

pvt vehicles

Time Savings due to better speed

of BRT

Cost Savings due to lower number of

buses required and lower cost / km in

later years

Time Savings due to lower

congestion

Cost Savings due to lower Ops cost

of pvt vehicles due to lower congestion

Economic Benefits -2

Savings from Accident Reduction

Savings from Lower Emissions

Savings from lower number of fatal and non fatal accidents

due to lower congestion levels

and better organization

Savings from lower carbon emissions arising from lower usage of fuel by all

modes

Economic Benefits for BRTS Projects – Conceptual framework Continued….

Key Inputs/Assumptions

BRT Non BRT

Km/bus operated pd 350 275

Passengers per Bus per day 1600 1000

Bus Variable Cost (Rs. Per Km) 24 10

Financial Project Capital Cost (Rs. Crore)*

692 79

Bus Cost (Rs lakh per Bus ) 35 26

Analysis limited to corridor alone. Costs or revenues are not system-wide.

Analysis Period •  Construction Period : Two Years upto 2014 •  Operation Period – 30 years

*Number of buses required up to 2016 are included in the project cost. In the BRT option, it is 190 buses, while in the Without BRT alternative, it is 264 buses

Pax under BRT and Non BRT System

0

100

200

300

400

500

600

700Pax (Thousand) (Regular System)

Pax (Thousand) (BRT)

Inputs/Assumptions for Cost Estimation

No. Cost Key Input/Assump?ons 1 Capital Cost of the

project •  Financial costs of BRTS are converted to economic (or shadow) costs by applying a factor

of 0.9 as per standard prac:ce in order to remove all the distor:ons in prices rela:ng to labour wages, capital market, transfer payments, taxes .

•  Economic Capital Cost of Project : Rs 692 crore x 0.9 = Rs 623 crore .*

2 I n c r e m e n t a l Maintenance and Fare Col lec:on Cost

•  Incremental Maintenance and fare collec:on cost as compared to base case op:on is considered. (Detailed Inputs are specified in Financial Analysis)

Ø  Corridor/Bus Sta:on/ Depot Maintenance Costs.

Ø  ITMS and Fare Collec:on Cost.

Ø  Junc:on Management / Security at Bus Sta:ons.

Ø  Housekeeping cost.

Inputs/Assumptions for Benefit Estimation

No. Benefits Key Input/Assump?ons

1 T i m e Savings

•  Travel :me under each of the op:ons has been compared with exis:ng travel :me.

1. Modal ShiW from Private Mode to BRT : Speeds of Private Mode vehicle shiming to BRT in base case is compared with speeds of Buses in BRT.

2. Passengers remaining in Public Transport : Speeds of Buses in With and Base case situa:on has been compared.

3. Private Mode Passengers not shiWing (Mixed lane Traffic) : Speeds of Private mode vehicles not shiming in BRT case has been compared with base case.

•  Exis:ng speeds of vehicles are those that exist now without any of the two op:ons being implemented. Exis:ng speeds are already quite low and are further expected to slow down as conges:on levels rise.

•  Time value of passengers travelling by different mode : Rs 41 per passenger hour.

Inputs/Assumptions for Benefit Estimation No. Benefits Key Input/Assump?ons

2 Savings in V e h i c l e O p e r a : n g Cost

1.   Modal ShiW from Private Mode to BRT :

•  The Vehicle Opera:ng cost of passengers shiming from private mode is calculated using the updated Road User Cost Study -‐2001 by CRRI in Base Case.

•  These costs are compared with the Bus opera:ng costs under BRT to which above traffic would shim.

2.   Passengers remaining in Public Transport :

•  Sub op:mal use of Buses in base case as compared to BRT op:on. I.e Pax per Bus per day in Base case and BRT op:ons are 1000 and 1600 respec:vely. This is owing to lower speeds of Buses and higher conges:on in base case.

•  Voc of Buses under Base case and BRT case has been compared to arrive at savings.

3. Private Mode Passengers not shiWing (Mixed lane Traffic) :

•  VoC of passengers remaining is calculated using Updated Road User Cost Study (RUCS)-‐2001 by CRRI. Unit VOC value for each vehicle type specified in RUCS study which is used to arrive at the Vehicle Opera:ng cost under both with and without project op:on.

No. Benefit Key Input/Assump?ons

3 Sav ings f rom r e d u c : o n i n accidents

•  A lowering in number of fatal and non fatal accidents has been considered under each op:on.

•  The cost of each fatal accident is considered to be Rs. 6 lakh while that of each injury is taken at Rs 0.73 lakh.

4 P o l l u : o n Reduc:on

•  Implementa:on of project leading to reduc:on in vehicle on mixed lane owing to modal shim leading to improvement in fuel efficiency and reduc:on in conges:on and therefore savings in carbon emission.

•  Lower numbers of Buses owing to BRT .

•  Lower carbon emissions would lead to lower health care and environmental costs.

•  Vehicle wise per km emission norms specified in India Infrastructure Report , 2010 ,” Infrastructure Development in Low Carbon Economy“ is adopted to calculate the carbon emission.

•  The price of per tone of CO2 is considered as 20 Euro, which was carbon trading price in spot market in European Energy Exchange as on 6th July , 2011.

Inputs/Assumptions for Benefit Estimation Continued…..

Outcome : Present Value of Economic Benefits and Cost

Particular Amount in Present Value terms

(Rs Lakh)

Economic Cost of Project Capital Cost 58947

Incremental Maintenance and Fare Collection Cost 10847

Total Cost 69793

Economic Benefits

Savings in Vehicle Operating Cost 165829

Savings in Vehicle Time 143686

Benefits due to Accident Reduction 1473

Savings due to Carbon Emission Reduction 1352

Reduction in dead KM 704

Amenities Benefits due to Hosur Depot 3165

Total Benefits 316209

Outcome : Pictorial Presentation of Present Value of Economic Benefits and Cost

Outcome of Economic Analysis

}  The project corridor as a whole is found to be economically viable with posi:ve net present values and EIRR greater than 12%. The hurdle rate considered acceptable for India as per the prac?ce of World Bank and ADB is 12%. Thus EIRR level is acceptable for the project overall.

}  The BRT project involves an addi?onal expenditure of Rs. 692 crore. However, the Economic

Internal Rate of Return available on spending this amount is around 30%.

Description Economic IRR PV of Benefits

(Rs Lakh)

PV of Cost

(Rs Lakh)

B:C ratio

Outcome Considering all eco.benefits and Costs

29.5% 316209 69793 4.55

Outcome considering only VOC benefit and all eco. costs

20% 165829 69793 2.38

Sr. No.

Sensitivity Parameters Economic IRR Net present value (ENPV) @ 12% discount rate (Rs Lakh)

1 Increase in Project Cost and Incremental O&M cost by 25%.

26.0% 228967

2 Reduction in Ridership in BRT alternatives by 25% in years post 2020.

24.9% 160214

3 Combined scenario of reduction in traffic by 25% and Increase in fuel cost by 25% under both with and without BRT alternatives.

23.8% 152608

4 Reduction in Benefits by 25%. 25.2% 167357 5 Combined effect of Increase in Cost by

25% and reduction in Benefits by 25%. 22.18% 149909

It is seen from the above table that under the different sensitivity tests, EIRR is determined to be more than 20% indicating that the project is robust

Switching Value Analysis

Sr. No. Parameter Switching Value

1 Increase in Construction Cost and Incremental O&M cost

354% from base

2 Total Benefit Reduction 78% reduction from base 3 Reduction in VOC benefits 148% reduction from base 4

Reduction in Time benefits 172% reduction from base 5 Combined effect of Increase in Cost and reduction

in Benefits 64% from base

•  Switching values analysis for different parameters have been carried out . •  Switching Value specifies Value of different parameters that will cause EIRR to be below

discount rate meaning NPV negative.

Above table indicates that project is robust with respect to variation in project cost and project benefits and Project is Economically Viable

Financial Analysis

Approach and Methodology }  Comparison of Two alternatives and computation of Incremental

FIRR.

}  With BRT Alternative: BRTS project being taken up with dedicated four lane facility for buses in addition to the current four lane mixed traffic facility which is under construction plus operation of new BRT services.

}  Without BRT Alternative: Four lane mixed traffic facility without BRT

(currently under construction) being retained. BRT project not taken up plus continued operation of existing bus services as expanded to meet the needs of a growing population

}  The second is a Business as Usual scenario where business

practices are left as they are currently practiced.

Summary of Key Assumptions and Inputs

BRT Non BRT

Km/bus operated pd 350 275

Passengers per Bus per day 1600 1000

Fare escalation pa 4.35% 4.35%

Bus Variable Cost (Rs. Per Km) 24 10

Project Capital Cost (Rs. Crore)* 692 79

Bus Cost (Rs lakh per Bus ) 35 26

Analysis limited to corridor alone. Costs or revenues are not system-wide.

Analysis Period •  Construction Period : Two Years upto 2014 •  Operation Period – 30 years

*Number of buses required up to 2016 are included in the project cost. In the BRT option, it is 190 buses, while in the Without BRT alternative, it is 264 buses

Outcome of Financial Analysis

Prts IRR NPV (Rs. Lakh)

With Land Cost 8.06% -25840 Without Land Cost 10.08% -3125 IRR is somewhat around 8%, which is not unusual for public transit systems However the BRT alternative is operationally viable and an increased surplus is observed over the years. Thus the BRT system is more financially sustainable as compared to Without BRT option in the long run.

Scenario Incremental FIRR (With Land Cost)

I n c r e m e n t a l FIRR (Without Land Cost)

Incremental Financial NPV@ 12% discount rate (Rs Lakh) (With Land Cost)

Incremental Financial NPV@ 12% discount r a t e ( R s L a k h ) (Without Land Cost)

Increase in Project Cost by 25% under BRT Alternative; no change in Without BRT Alt.

6.60% 8.10% -42214 -13820

Reduction in Ridership under BRT alternative by 25% in years post 2020; no change in Without BRT Alt.

7.40% 9.02% -29659 -6945

Combined scenario of reduction in ridership by 25% and Project Cost by 25%; no change in Without BRT Alt.

6.01% 7.15% -46033 -17640

Thank You

Documents

Bus Rapid Transit System cost-benefit · PDF fileBus Rapid Transit System cost-benefit analysis !!!!! ... Size of the Project? Basis for Economic Analysis of BRTS ! BRTS is:! A Bus