The business case for light rail

By The Canberra Times
Updated April 23 2018 - 12:24pm, first published October 31 2014 - 2:11am

A benefit-cost ratio of 1.2 and a net present value of $161 million. The not unimpressive metrics contained in Capital Metro's "full business case" supporting the design, construction and operation of the City-Gungahlin light rail system will doubtless be challenged in the days and weeks to come. That is the nature of cost-benefit analyses based on a wide range of estimates and assumptions stretching well into the foreseeable future. The economic analysis conducted by Ernst and Young on behalf of Capital Metro contains no obvious reference to return on investment, either – another metric usually to be found in cost-benefit studies. Two out of three positives isn't bad, however. On the other hand, the analysis is larded with caveats, including this: "A BCR is not a guarantee of project success. It represents the sum of the best evidence at this point in time on the costs and benefits of the project", and this: "Ultimately the outturn financial cost [a commitment undertaken, most commonly in relation to repaying money] will be determined in large part by (i) the private sector during a competitive procurement process, and (ii) the occurrence (or otherwise) and severity of risk events during the life of the project".

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