Weekend Reading Part 2

I finished reading the rest of the Case Study this evening. Here are two other good quotes:

——-

Citing research on rail estimates carried out by the US Department of Transportation, the
authors observe that “for virtually every [rail transport] project the divergence between
forecast and actual ridership was wider than the entire range of the critical decision
variables. Actual ridership was 28 to 85 percent [average 65 percent] lower than forecast
ridership, meaning that forecasts overshot actual development by 38 to 578 percent
[average 257 percent].75 The authors conclude that the accuracy (or rather the degree of
inaccuracy) of demand forecasting is a major source of uncertainty and risk in the
appraisal of major projects.

And:

As the new mayor prepares to hand over Ottawa’s transit planning task to community
volunteers in the new transit task force, it is difficult not to agree with Denley’s verdict
that:
…our highly paid experts and elected councillors have made a terrible mess
of it. They poured millions of dollars and untold thousands of hours of staff
time into a north-south rail plan that the public ultimately did not endorse.
They’ve also spiked all the studies of the east-west rail plans. In truth, they
have no plan, except a plan to spend.

——-

Has anyone else read it?

10 thoughts on “Weekend Reading Part 2

  1. Michael Druker

    Primarily, that study looks at the failure of a poorly-managed project by Ottawa’s city government. There’s certainly lessons there in how not to plan and manage important projects, which transit infrastructure was and is for Ottawa. The lesson about LRT is not “don’t do it”, but “don’t screw it up”.

    Waterloo Region is running this project very carefully, in solid alignment with endless other projects, with all due diligence, and without ridiculous politics.

    Reply
  2. Ted Post author

    The focus of the white paper was the Ottawa LRT, but the quotes above are about LRT projects in general. Do you know if any analysis has been done on what the economic impact to the community will be if construction projects go over (which the region will have to pay 100% of) or if ridership doesn’t meet expectations?

    Reply
    1. Mike Boos

      Actually, the Region has designed the procurement process to avoid cost overruns. It’s a public-private partnership (P3), facilitated by Infrastructure Ontario. So far, none of Infrastructure Ontario’s projects have gone over budget. A contract will be made with a private consortium to a design, build, finance, operate, and maintain (DBFOM) the LRT system. Consortiums are preparing bids on the contract this year, and once one bid is selected and agreed upon, cost overruns beyond it will be shouldered by the project companies, not the Region. While some have raised concerns over the OM part of DBFOM, the purpose of the process in general is to minimize the financial risk to the Region in undertaking this project.

      I get that a lot of this stuff looks uncertain to you because you haven’t yet had much time to look into the project. But just because something is uncertain to you right now doesn’t mean that it actually is, or that others were afraid to face the answers.

      Reply
      1. Ted Post author

        Hey Mike,

        Could you please provide a link to the other projects? I would love to take a look, as the white paper I l posted showed that almost every LRT project in history has come in over budget, and has failed to meet ridership projections.

        Therefore, I think it would be wise that we assess the risk of this happening. Do you know if this has been done? If so, could you please provide a link?

        Reply
        1. Michael Druker

          “… as the white paper I l posted showed that almost every LRT project in history has come in over budget, and has failed to meet ridership projections.”

          The paper you posted showed no such thing.

          Reply
          1. Ted Post author

            Hey Michael,

            I am copying here the identical quote that I posted above:

            Citing research on rail estimates carried out by the US Department of Transportation, the
            authors observe that “for virtually every [rail transport] project the divergence between
            forecast and actual ridership was wider than the entire range of the critical decision
            variables. Actual ridership was 28 to 85 percent [average 65 percent] lower than forecast
            ridership, meaning that forecasts overshot actual development by 38 to 578 percent
            [average 257 percent].75 The authors conclude that the accuracy (or rather the degree of
            inaccuracy) of demand forecasting is a major source of uncertainty and risk in the
            appraisal of major projects.

            Do you interpret this differently?

            Reply
            1. Michael Druker

              Rather than showing anything, what it has is a second-hand citation of over 20-year-old work that looked at a handful of examples rather than a primary comprehensive study. There has been much more modern LRT built in the last 20 years in North America than in the previous 20.

              The reality is that modern LRT projects in North America in recent years have generally been exceeding ridership estimates, especially as urban decline (in U.S. cities) has been replaced with urban intensification. As for budgets, lots of projects go over budget or over time – it’s not specific to LRT. The best predictors are other projects by the same government (the Region of Waterloo has a good track record here), and the project procurement approach (P3 – addressed elsewhere).

              Reply
        2. Mike Boos

          Infrastructure Ontario

          We went through the process of risk assessment a few years ago. There are reams of reports you can read about it on the rapid transit project page. There’s even an expert panel peer review of the Region’s assessment.

          Instead of searching for literature that casts doubt on projects undertaken in other places, should we not be looking at what actually has been proposed here and the reasons given for it?

          Reply
          1. Ted Post author

            Hi Mike,

            I did not go looking for the white paper, someone sent it to me. I merely found it an interesting perspectives.

            Agreed though that Waterloo and the LRT project here are indeed different, and we should treat them as such.

            I have read many of the docs at the link you posted. I haven’t been able to find any documents that show what the economical impact will be if the project comes in 0%, 25%, 50%, or 100% over budget, and if ridership numbers are 0%, 10%, 25%, or 50% lower than projections. Have you been able to find this?

            Reply
            1. Mike Boos

              Other than this one citation of US figures (where the demographics of transit use are decidedly different), what evidence do you have that we should expect cost overruns or ridership shortfalls in these ranges?

              GRT ridership growth has been outpacing population growth by a factor of five over the past decade. Unless this dramatically halts (and trends suggest that it shouldn’t any time soon) we aren’t going to have an issue.

              One of the stated advantages of light rail mentioned in planning reports is that because many other cities have built it in the past, the costs now are reasonably well understood. I can’t remember the exact report or number, but there’s also a buffer in the $818M price tag to account for overruns and contingencies. Again however, overruns beyond the agreed upon DBFOM contract would be shouldered by the consortium, not the Region.

              Reply

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