BUILDING THE CASE FOR RAIL THE WELLINGTON REGIONAL RAIL

PLAN
Alan Burford
IEng MICE MAPM
AECOM

SUMMARY
In February 2009 the Greater Wellington Regional Transport Committee endorsed the Wellington Regional
Rail Plan (RRP), thus providing a pathway for the long term development of the regions rail network.
The production of the RRP was a requirement associated with the $500m five year Medium Term
Improvement Programme investment package for the Wellington suburban rail network. The package,
designed to deliver greater service reliability and network capacity, was announced by the Crown and
Greater Wellington Regional Council in July 2007.
The RRP was developed by Greater Wellington Regional Council in collaboration with primary rail
stakeholders; with specialist economic and technical inputs being provided by John Bolland (John Bolland
Consulting Ltd) and Alan Burford (AECOM) respectively.
This paper provides a specific overview relating to the framework and process methodology adopted to
produce the long term rail development plan that will deliver a better rail experience for the people of the
Greater Wellington region and New Zealand.

Keep individual assumptions and risks in

view;

INTRODUCTION

In July 2007 the Crown and Greater Wellington

Regional Council announced a $500m five year
Medium Term Rail Improvement Programme
investment package for the Wellington suburban
rail network comprising new and refurbished rolling
stock, infrastructure enhancements, and general
rail system strengthening.
An explicit requirement of the investment package
was the need for GWRC to formulate a long term
development plan for the regions rail network. The
approach adopted by GWRC was to produce the
long term development plan in a way that
recognised established investment planning
process, relevant funding criteria and evaluation
methodology in order to ensure compliance with all
relevant funding agency requirements.
The RRPs critical success factor was the
establishment of a robust Business Case. The
Business Case needed to be credible, providing
accurate predictions that allowed decision makers
and planners to act with confidence.
The development of the Business Case would
focus on 5 keys to success, these being:
Recruitment of the right Reference Group;
The strategic objectives that are the basis of
benefits;
Design and agreement of the cost model;

Use of the case analysis for continuing

management and control.
The Business Case would investigate the
individual projects required to meet a desired
Service Level Specification, by considering both
economic and non-economic factors and also the
overall strategic context of Wellingtons rail
passenger transport and freight network
development.
2

NOTATION

BCR

Benefit Cost Ratio

BCR(G)

BCR to Government

BCR(N)

BCR National

CAPEX

Capital Expenditure

CBD

Central Business District

DTEW

Double Track and Electrification to

Waikanae

EEM

Economic Evaluation Manual

GPS

Government Policy Statement 2008

GWRC

Greater Wellington Regional Council

IVT

In Vehicle Time

LoS

Level of Service

LTMA

Land Transport Management Act 2003

Conference On Railway Engineering

Wellington, Sept 12-15, 2010

Alan Burford
AECOM

LTMAA

Building the Case for Rail

The Wellington Regional Rail Plan

Land
Transport
Amendment Act 2008

Management

In general terms the reference groups would:

Help develop the cost / benefit models with
authority and credibility;

MATANGI New EMUs being designed and

manufactured by the international
rolling stock manufacturer ROTEM
MTRIP

Medium Term
Programme

Rail

Help spread the sense of ownership;

Communicate methods and data;

Improvement

Provide a controlled forum for critics.

NRS

National Rail Strategy to 2015

NZTA

NZ Transport Agency (formally Land

Transport NZ and Transit NZ)

Both groups were represented by the various key

stakeholders that would also ensure the strategic
direction of the RRP was maintained.

NZTS

New Zealand Transport Strategy 2008

3.1

OPEX

Operating Expenditure

PPFM

Planning, Programming and Funding

Manual

PT

Passenger Transport

PTP

Passenger Transport Plan (refer to

RPTP below)

RPTP

Regional Passenger Transport Plan

2007 - 2016

A Steering Group was formed from the main

funding parties and development agencies, and
comprised GWRC, NZTA, Ministry of Transport,
KiwiRail and ONTRACK. The group was made up
of senior nominees who had extensive local
knowledge of the project and who fully understood
its strategic nature at both regional and national
levels.

RRP

Regional Rail Plan

RLTS

Regional Land Transport Strategy (This

is the document that details the way
forward for the Wellington Regions
transport system from 2007 to 2016)

RMA

Resource Management Act

SLS

Service Level Specification

TAC

Transport and Access Committee

TMW

Tranz Metro Wellington (The Operator

of
rail
passenger
services
in
Wellington)

To assist in the development of the rail

business in Wellington for the benefit of
passenger and freight transport;

TWG

Technical Working Group

Giving early warning to the Study Manager

and consultants of issues which come to the
attention of members of the Steering Group in
order that matters can be addressed at the
earliest possible stage. This being facilitated
through regular reporting on the progress of
the study, which in turn provided early
warning
of
any
additional
resource
requirements to ensure timely delivery;

VoT

Value of Time

WTSM

Wellington Transport Strategy Model

PROJECT GOVERNANCE
AGENCY ADVOCACY

AND

INTER-

The
production
of
the
RRP
(including
organisations associated with and assisting in the
development of the all the component parts) was
managed in house by GWRC with professional
support, where appropriate, being provided by
individuals and companies with a thorough
knowledge of the Wellington passenger transport
network.
During the initial scoping stages of the RRP it was
recognised that the formation of appropriate
reference groups would probably be one of the
most important steps taken to ensure the success
of the RRP. This coupled with the strategic and
complex nature of the project and anticipated size
of the required implementation funding envelope
confirmed the need to establish a two tiered
governance structure comprising a senior
management level Steering Group and an officer
level Technical Working Group.

Steering Group

The main objective of the Steering Group was to

provide a high level sounding board to the
Technical Working Group. It also allowed each
representative to report to their respective
organisations on the progress of the RRP. This
approach ensured that there were no surprises
regarding the content and direction of the
outcomes.
The exact role of the Steering Group was as
follows [1]:

Provision of guidance and suggestions to the

Study Manager and consultants in order to
address community matters, national and
regional policy considerations and matters
involving environmental mitigation and
development;
Promoting an informed attitude, and
information feedback through the appropriate
channels, regarding the RRP amongst
Mayors, Chairs, Members of Parliament and
other organisations involved, in order to
develop a common understanding;
Providing feedback and suggestions to the
Study Manager and consultants regarding
presentations to organisations involved or
interested parties;

Conference On Railway Engineering

Wellington, Sept 12-15, 2010

Alan Burford
AECOM

Sign off of key directions.

3.2

Technical Working Group

The TWG was managed by the Study Manager

with assistance from the appointed consultants.
The group comprised of nominees from KiwiRail,
ONTRACK, Ministry of Transport, NZTA and the
GWRC (Transport Strategy & Procurement).
The TWG provided detailed inputs in relation to
the development of the service level specification
and overall scenario design.

Building the Case for Rail

The Wellington Regional Rail Plan

the broader objectives of national and regional

transport strategies.
Relevant strategies included the New Zealand
Transport Strategy 2008 (NZTS), the Government
Policy Statement 2008 (GPS), the National Rail
Strategy to 2105 (NRS) and the Regional Land
Transport Strategy 2007 (RLTS). In particular, the
plans primary focus was on achieving RLTS key
outcomes and the transport targets in the Regional
Passenger Transport Plan (RPTP) within the
RLTS.
The key outcomes of the RLTS included:

VISION AND SUBJECT STATEMENTS

Increased peak period passenger transport

mode share;

Given the long term perspective of the RRP it was

deemed necessary to establish a clear vision that
would support GWRCs strategic transport
objectives.

Increased mode share for pedestrians and

cyclists;

A vision statement can be defined as a statement

that gives a broad, aspirational image of the future
that an organisation is aiming to achieve [2].

Reduced severe road congestion;

On this basis the following vision for the RRP was

developed:

Improved land use and transport integration;

To deliver a modern, reliable and accessible rail

system that competitively moves people and
freight in an economic, environmental, integrated
and socially sustainable way. [3]
In the context of development plans and business
cases, a vision statement will influence the scope
and direction of the subject under consideration.
Consequently, and in addition to the vision
statement, a subject statement was developed that
clearly described the primary and related actions
of the RRP more fully and precisely. The subject
statement for the RRP was:
The purpose of the RRP is to identify the needs
and actions required to maintain and develop rail
as the key transport mode for long to medium
distance and high volume PT services over the
next 30 years. The RRP will be developed to
calculate the combined patronage impacts of all
the medium term improvements and to plan for the
best outcome for the regions users, rate payers
and businesses through the optimum selection
and development of rail infrastructure and service
improvements.
Committed
and
future
developments will be tested under alternative
growth scenarios and a range of service level
improvements. The RRP programme will cover
development of the commuter rail network with
planning timeframes of 5, 10 and 30 years (i.e.
2013, 2018 and 2038).
As can be seen in its kernel form the subject
statement contained the scope, objectives and
boundary of the RRP.
5

STRATEGIC CONTEXT

Reduced greenhouse gas emissions;

Improved regional road safety;
Improved regional freight efficiency.
Improvement of the regions rail network was
identified as a significant feature of the RLTS and
a major contributor to achieving many of the above
outcomes.
The rejuvenation of the Wellington regional rail
system also contributes to the realisation of the
NZTS, which aims to deliver an affordable,
integrated, safe, responsive and sustainable
transport system.
6

BUSINESS CASE FRAMEWORK

A primary component of the RRP was the

development of a supporting Business Case.
The overall purpose of the Business Case was to:
Justify the financial commitment associated
with any proposed upgrade programme or
development scenario;
Help choose
projects;

between

proposed

Establish a sustainable
Specification;

'Service

capital
Level

Help decide the timing of the planned

projects;
Support budgetary planning;
Help choose potential Funding / Financing
methods and Implementation Strategy /
Pathway.
6.1

Framework

The general process methodology adopted for the

Business Case is presented in Figure 1 below:

An important factor during the development of the

RRP was the need to acknowledge and support

Conference On Railway Engineering

Wellington, Sept 12-15, 2010

Alan Burford
AECOM

Building the Case for Rail

The Wellington Regional Rail Plan

The development and evaluation of these

scenarios and options are discussed later in this
paper.
7

SCENARIO DEVELOPMENT

Business Cases are built to answer questions

such as: Which proposal represents the best
business decision? Will the returns justify the
investment? What will the action do for our
business performance?
Such questions can be answered only if the
structure of the case is designed to address them.
This structure resides in the scenario design, the
cost model, and the benefits rationale.
Figure 1 : RRP Framework
A number of options for possible SLSs were
identified, which reflect the regions Vision and the
Strategic Options presented in the RLTS.
The scenarios were designed and developed to
deliver the principal components of an Ideal
passenger transport system, fully optimising
existing corridor infrastructure; whilst being
consistent with needs of the customer; analysed
and evaluated in accordance with NZTA
evaluation methodology and appropriate existing
frameworks
presented
in
the
following
documentation:
EEM (Volume 1 and 2);
PPFM.
The PPFM was developed to consider the
requirements of the NZTS and also the
requirements placed upon the NZTA under the
LTMAA.
Consequently the evaluation of the
various options considered and tested the impacts,
and assumptions in relation to other transport
modes affected (private and public). In particular
the extent, to which the options support the
objectives of the RLTS and the associated RPTP,
for an integrated passenger transport network,
were considered within patronage demand
forecast modelling for different mode share
assumptions.
The various options and scenarios that were
considered for the Business Case are listed below:
Base Case The Medium Term Rail
Improvement Programme;
Rail Scenario 1 (RS1) - 15 minute nominal
peak frequency on all routes;
Rail Scenario 2 (RS2) - 15 & 10 minute
nominal peak frequency;
Rail Scenario 3 (RS3) - 10 minute nominal
peak frequency on all routes;
Long Term Scenario A (RSA) - Rapid Rail
(Journey Time Improvements);
Long Term Scenario B (RSB) - Inter Urban
Rail Services (Extension of network reach).

7.1

Service Attributes

Compared with similar-sized international cities,

Greater Wellington residents use of PT is
average, with relatively more trips by PT than in
US and Australian cities, but significantly fewer
than in European cities. The experience from
Canadian cities, which are the most similar in
character to those in New Zealand and Australia,
suggest that greater use of PT is possible if the
following attributes are in place:
Simple, legible networks;
High service frequencies;
High service reliability;
Interconnection of routes;
Co-ordination of timetables;
Seamless inter-operator
integrated ticketing;

and

inter-modal

Traffic priority for passenger

vehicles (i.e. versus freight trains);

transport

Marketing of passenger transport, and;

Supportive land use and parking policies.
The above are very similar to common definitions
of Rapid Transit with the following features
characterising high quality commuter rail services:
Dedicated right of way;
High frequency;
Reliability;
Fast trains;
Well
designed
interchanges;

and

located

transit

Good modal connection to bus and car

feeders;
Safety and comfort;
Integration with land use.
The GWRC RPTP adopted the following principal
features to establish an idealised PT system:
Accessibility;
Reliability;
Conference On Railway Engineering
Wellington, Sept 12-15, 2010

Alan Burford
AECOM

Quality;

8.1

Simplicity;

In order to understand the total costs associated

with each scenario a mechanism was utilised
which identified the potential financial impacts of a
particular scenario over the duration of the 25 year
economic evaluation period (this being a
requirement of NZTA).

Affordability.
These are also consistent with the GWRC, TMW
and NZ Bus 2008 customer satisfaction survey
results that identified Reliability, Frequency,
Capacity and Journey Time as being of significant
importance.
The RRP sought to develop scenarios based on
identified SLS that clearly supported the elements
of a high quality PT system.
7.2

Building the Case for Rail

The Wellington Regional Rail Plan

The total cost for each project and subsequent

scenario was determined through a Lifecycle
approach [4].
The developed cost models
considered 4 primary lifecycle phases, these
being:
Investigation / Development Cost elements
associated with the design and development
of the particular project;

Service Level Specification

A number of scenarios directly related to possible

SLSs where identified that reflected the objectives
of the RPTP, as stated in 6.1 above. It was
necessary for the evaluation of the SLS to
demonstrate compliance with the requirements of
the LTMAA.
7.3

Implementation Cost elements required to

bring the asset into operation;
Operation (modelled separately) Cost
elements associated with the day-to-day
operation and maintenance of the asset;

The Project List and Scenario Mapping

Ongoing Change / Growth These cost

elements incorporate additions, moves and
changes to the asset, e.g. platform
lengthening to accommodate capacity
enhancement through the operation of longer
trains.

Inputs from a number of sources including RLTS

submissions, Annual Plan submissions, and
Primary Stakeholders, were also considered
during the development of the SLS.
The RRP TWG undertook a scenario mapping
exercise, in order to ascertain the necessary
requirements for each scenario to deliver each
SLS. The primary scenarios, namely RS1 to RS3
were designed to be incremental and by their
nature inter-dependant i.e. to achieve RS2 the
component projects of RS1 need to be completed.
This provided for scalable investment scenarios.
The long term scenarios (RSA and RSB) were
independent by design and were considered as
event driven choices for future enhancement.
8

COST MODEL AND ANALYSIS

To ensure that each scenario was accurately

represented, a detailed cost model was developed
using a full value approach (cost data represents
the full values of cash outflows for each line item).
The full value approach was utilised on the basis
that:
The business case would be used to support
long term business planning;
There was a need for the stakeholders to
utilise the data to plan budgets on cost
projections i.e. they needed to understand full
value figures;
The base case scenario, as a long term
option, was unthinkable as it did not meet the
strategic requirements of the region.
The cost models developed during the RRP were
developed in a way that would allow for ongoing
future financial planning.

Basic Approach

It was necessary that each lifecycle phase

provided a clearly defined high-level overview of
each cost causing activity.
In addition, the
lifecycle approach also allowed for the
identification of potential cost saving opportunities
that existed between scenarios i.e. new rolling
stock costs versus refurbishment and long term
inefficient operational costs.
It should be noted that many of the capital cost
items were spread over more than one financial
year (rolling stock acquisition being one example)
and that refurbishment, renewal or replacement
which would typically be necessary for some items
within the 25-year evaluation timeframe were also
considered.
For those items with a life longer than 25 years,
the residual value at the end of the evaluation
period was taken into account, although these
were heavily discounted.
The costs were presented as a set of
spreadsheets (CAPEX and OPEX) for each
Business Case scenario.
8.2

Capital Expenditure

For the projects associated with the Base Case,

the costings that were used to build up the cost
model were taken from existing technical studies,
with the exception of projects where the scope at
that point in time was either unknown or not clearly
defined.
Where this situation existed it was
proposed that a best credible scope be
established with costs being derived through a
Conference On Railway Engineering
Wellington, Sept 12-15, 2010

Alan Burford
AECOM

combination of
historic cost data, and
contemporaneous cost information for works of a
similar nature. For each project the following
information was ascertained:
Development costs;
Implementation costs (including allowances
for rail disruption);
The year by year profile of expenditure;
Source of the estimate information;
Primary assumptions (inclusions / exclusions
/ estimate accuracy / estimate base year /
level of contingency / asset life timeframe).
For projects that were
categorised
as
Infrastructure Enhancement Projects within 10
Years and Network Enhancement beyond 2018 it
was proposed that the costs be derived through
the utilisation of historic cost data / unit rates
applied to a high level credible scope e.g.
Electrification to Otaki would be costed on a unit
rate / km for overhead electrification based on
costs used for the DTEW project, with an
appropriate level of contingency for unknowns etc.
These projects were initially scoped and costed by
the RRP team using unit rate data from ONTRACK
and GWRC. Once completed these costings were
reviewed externally in order to achieve a desired
level of credibility.

Building the Case for Rail

The Wellington Regional Rail Plan

During the OPEX analysis each cost item was

assigned to a unit category, which in turn enabled
longer term high level budget appreciation and
identification of expenditure trends (this being one
of the fundamental reasons for differentiating
between Train Running and Semi Variable Costs).
This was considered useful given the fact that rail
OPEX budgetary planning is only accurate in the
short term or for the duration of any agreed
Passenger Rail Operating Contract, due to
possible fluctuations in costs and assumptions
applied.
Figure 2 below presents the cost items that were
considered to ensure that the OPEX cost model
developed specifically for the RRP was robust.

The CAPEX costs made no provision for any cost

escalation. The exclusion of escalation is a
requirement of the EEM.
8.3

Operational Expenditure

It is acknowledged that the primary driver of the

amount of expenditure associated with the
operation of a rail based PT system is the level of
service provided during peak operating periods.
Experience gained during the OPEX analysis for
the Auckland Rail Development Plan, identified the
need to keep the number of cost items to a level
that ensured amendments and updates could be
carried out easily whilst maintaining a degree of
detail that allowed meaningful manipulation of data
for the various scenarios; especially when
undertaking future forecasts.
The OPEX cost model was developed using 3
distinct cost categories and input parameters [5],
namely:
Train Running Costs (these being totally
variable and most sensitive to change);

Figure 2 : OPEX High Level Cost Model

Specific information that was required to develop
the OPEX cost model included:
Annual costs for items;
Key Assumptions including as a minimum;

Semi Variable Costs (a variable cost of lesser

sensitivity in relation to service level);

On Train Staffing (Drivers / Train

Managers / Passenger Operators)

Corridor Fixed Costs (costs fixed annually

through budgets that are not affected by level
of service).

Train Fleet (Base Case Peak

Requirements, Spares maintenance
& hot)

Each cost category had a number of cost items

associated with it, and for the purpose of the RRP
the total number of operational cost items was
limited to 30.

Operational
Weekend)

Hours

(Weekday

and

Conference On Railway Engineering

Wellington, Sept 12-15, 2010

Alan Burford
AECOM

Building the Case for Rail

The Wellington Regional Rail Plan

Annual Train Kms (Peak / Non Peak /

Dead Running)

Annual Train Hours

Annual GTKs

Exclusions (if any).

Information provided for the above analysis was
treated as confidential and only used for the
purpose of the Business Case.
9

The main sources of benefits attributable to each

RRP scenario were those as modelled by the
GWRC strategic regional transport model - WTSM.
In addition, the following additional sources of
benefit were also included:
Reductions in passenger crowding;
Improved reliability;
Vehicle quality improvements.
A correction to allow for the impact of considerable
fuel price increases, since WTSM was calibrated,
was also included in the benefit calculation.
WTSM runs for 2016 and 2026 were used in the
analysis. Two alternative approaches to benefit
streams were considered [6]:
Interpolation between model
extrapolation before and after;

9.1

years with

ii. 2016 model only with 3% pa growth before

and after.
The results of ii) were considered to better reflect
historic annual rail patronage growth, so that
particular approach was used. Figure 3 below
provides a notional breakdown of the benefits.

Benefits Modelled by WTSM

The benefits in WTSM accrue to two classes of

traveller, namely PT users and road users.
9.1.1

BENEFIT ANALYSIS

i.

represented as a journey time improvement)

relative to 2006; for the scenarios beyond the
Base Case the corresponding figures were 5%
and 10%. These values reflected the proportion of
new vehicles in the fleet.

PT user benefits

Compared to the Base Case, each scenario

provides more frequent rail services and faster
trips; these translate directly into time savings (as
a consequence of trip time and wait time
reduction) which are PT user benefits. As a result
of this an increase in rail ridership is forecast by
WTSM, although there is also a small drop in bus
usage.
EEM provides a dollar value for the benefit due to
each additional PT user and this was used in the
evaluation in terms of both more rail users and
fewer bus users. The value varies according to
time of day, being lower outside the peaks. By
combining the EEM value and the changes in
patronage from WTSM, the overall PT user
benefits were calculated for each time period (AM,
IP and PM) and then annualised.
9.1.2

Non-user benefits

Where passengers have been diverted to rail from

road, there is the expectation that the remaining
road users enjoy reduced travel times. The extent
of this depends on the number of diverted
passengers, their average distances and times
travelled, average vehicle occupancy and the
distribution between peak and off-peak periods.
The evaluation used a decongestion benefit for
each passenger-km saved, assuming car trip
lengths to be the same as the rail equivalent, using
a combination of WTSM outputs and EEM values.
This source of benefits is the saving in
externalities which arise as a result of the
reductions in car use when travellers transfer to
PT.
In general the externalities of car use
comprise:

Figure 3 : Notional Breakdown of Benefits

Three time periods, morning peak (AM), inter-peak
(IP) and afternoon peak (PM) were modelled in
WTSM and converted to annual values for each
modelled year using the appropriate WTSM
factors (e.g. 245 AM peaks per year).
The main PT improvements that are modelled in
WTSM are in service headway, journey times and
vehicle quality. However, some of these typically
improve as a result of upgrades that were already
under way. To address this, in the Base Case,
WTSM assumed a 2% improvement in journey
times and 5% improvement in vehicle quality (also

Noise;
Local Air Quality;
Greenhouse gases;
Congestion;
Accidents;
Increased road damage.
For small changes in car use on roads which are
already well-used, the first and last of these are so
small as to be insignificant. Of the remaining four,
congestion is dominant (about 90% of the total).
The outputs from WTSM included the number of
car-hours by LoS, which ranges from A (free flow)
Conference On Railway Engineering
Wellington, Sept 12-15, 2010

Alan Burford
AECOM

to F (highly congested, forced flow). Decongestion

is therefore shown as a change in the distribution
of LoS, with fewer hours at the congested end of
the range as a result of a shift to PT in the options
compared with the base case.
The value of car time was taken from EEM and
varied according to the time of day and the degree
of congestion through the maximum value of
congestions (denoted as CRV). The values of
time which were used include CRV at 0% (for LoS
A to C), 50% (D) and 100% (E and F). Again,
then, the benefits are calculated from a
combination of WTSM results and EEM $ values.
Changes in Vehicle Operating Costs between the
scenarios and the base case were also included,
again using EEM values.
9.2
9.2.1

Other Sources of User Benefits

Relief of crowding

While the passenger capacity of the rail network

will be increased as a result of the new Matangi
rolling stock, forecasts indicate that further
capacity increases will be necessary as patronage
grows in the future. This would be typically
addressed through the development of each RRP
SLS scenario.
It is an established fact that PT users prefer not to
stand, other than over short distances. This is
reflected, for example, by the fact that passenger
VoT (as given in EEM) are higher when standing.
It was acknowledged that in recent years the
overcrowding on the Wellington rail network has
attracted much adverse publicity.
The evaluation used WTSM passenger numbers,
compared with train seating capacity figures, to
determine the change in the number of
passengers who have to stand between the base
case and the various SLS scenarios in the
modelled years. It was assumed that standing
occurred only on shorter trips (as the train fills up)
so the length of time standing was taken as 20
minutes, a typical trip time from say Porirua or
Waterloo to Wellington railway station.

Building the Case for Rail

The Wellington Regional Rail Plan

The Road User Benefit per car trip removed was

taken from EEM.
9.2.2

Reliability

Research has shown that passengers are

particularly averse to the unexpected delays which
arise from unreliability. The value of expected wait
time is usually taken as being twice IVT, so a 5
minute wait is equivalent to 10 minutes of IVT.
However, for an unexpected wait this increases to
a factor of around 3, this value being confirmed by
recent research in New Zealand [7]. It follows that
for an unreliable service passengers perception of
the expected wait is increased.
Rail reliability would typically be improved for each
developed SLS scenario due to a number of
factors such as an increased number of new trains
and the removal of a large proportion of the
remaining single track sections, for example near
North-South Junction.
The evaluation assumed that each passenger gets
a benefit of a one minute saving in unexpected
delays, which is factored by a weight of 3 as
discussed above. The resulting $ benefit was
calculated for the peak periods and a correction
made to include the inter-peak.
As with crowding relief, the reduced generalised
cost from better reliability leads to some users
being attracted from car and the resulting
decongestion benefits were calculated in the same
way as with crowding.
9.2.3

Vehicle quality

One of the main drivers of the RRP is to continue

to replace older rolling stock, a process which is
under way with the introduction of the new Matangi
electric multiple units (see Figure 4 below).
Overall passenger comfort is improved as the
proportion of new rolling stock in the fleet
increases and research has shown that
passengers value attributes of the new vehicles
such as a smooth ride and air conditioning.

No crowding benefits were claimed outside the

weekday peak periods.
The analysis used
aggregate passenger and capacity values over the
2-hour peak periods. Consequently this approach
takes no account of the peak of the peak, when
crowding is more likely to occur. In this respect
the evaluation was considered conservative.
The benefits from relief of overcrowding were
monetised using the extra passenger VoT when
standing, taken from the EEM Table 4.1.
The removal of crowding also attracts more
passengers to rail from car, something which is not
covered in WTSM. The effects of this were
quantified by using the change in generalised cost
of the PT trip and appropriate elasticity values.

Figure 4 : Matangi Electric Multiple Unit

The quality of the journey is also be improved by
planned station upgrades.

Conference On Railway Engineering

Wellington, Sept 12-15, 2010

Alan Burford
AECOM

Building the Case for Rail

The Wellington Regional Rail Plan

typically be understated.
Moreover, it was
assumed (not unreasonably) that if the price of fuel
were to continue to rise in the longer term future at
similar rates since 2001, then the mode split in
future years would be increasingly understated by
the model.

Figure 5 : Re-developed Paraparaumu

Station (Architectural Visualisation)
While WTSM includes a proxy for the mode split
impacts of improved vehicle quality, it does not
give the actual benefits to passengers of improved
quality, as such these were calculated off model.
Peak passengers were assumed to get a benefit
from improved vehicle quality amounting to 4.6
minutes of IVT. This figure was taken from
research completed in Sydney [8] and is the total
of values for comfortable seats, smooth ride, air
conditioning and a modern exterior.
In the Base Case half the trains are new, meaning
the 4.6 minutes benefit will only apply in the
various scenarios to the remaining half of peak
passengers. During the inter-peak period, the
reduced fleet requirement means that new
vehicles will operate in the base case so there will
be no improvement in quality, and hence no
benefits, in the scenarios.
The mode split impacts of vehicle quality were
calculated as for crowding and reliability.
9.3

Impacts of Fuel Prices

In 2008 there was a considerable increase in the

pump price of fuel, although in the last quarter of
that year it appeared to be trending back down.
Over the longer term, however, there has been a
steady upward trend and in the period from mid
2001 to mid 2008 the pump price of 91 octane fuel
(which is how most travellers perceive their costs)
rose by 74% in absolute terms and 44% in real
terms.
The impacts of the 2008 price rises manifested
themselves as both an increase in PT usage and a
drop in private traffic. While there was insufficient
data to measure these impacts at the time, there
was a considerable body of research into the
cross-elasticity of PT usage with respect to fuel
prices. This typically provides values of minus 0.2
to minus 0.4, meaning that a 10% rise in the price
of fuel would lead to an increase of between 2 and
4% in PT use. Taking the mid-point value of
minus 0.3, the 44% increase in fuel price since
2001 would be expected to give an increase in PT
use of about 13%.
The mode split model in WTSM was calibrated in
2001, since then the real price of fuel increased as
discussed above. This suggests that the mode
shift from road to PT, as modelled in WTSM, would

The consequence of the above argument is that

the decongestion benefits given by WTSM would
need to be revised upwards and that the extent of
revision should increase through time. Taking into
account that decongestion benefits were only part
of the picture, it was calculated that the effect of
fuel price rises would provide an increase in
benefits of 5% in the early years of the evaluation,
rising by about 1% each year. The effect on the
Present Value of benefits was an overall uplift of
15% and this was taken into account in the
evaluation.
9.4
9.4.1

Wider Economic Benefits

Land use intensification

Rail travel reduces total travel in two different

ways:
Directly through mode shift;
Indirectly when it creates more accessible
land use and reduces car ownership.
Only the first of these is taken into account by
WTSM. Research quoted by Victoria Transport
Policy Institute [9] indicated that, for every trip in
the first category, there may be 3 to 6 in the
second. Each of the saved car trips will have the
usual externalities, so that if only 2% of rail trips
have this effect the decongestion benefits
potentially increase by 6 to 12%.
Given the multiple opportunities within the region
in terms of land use locations (for both residential
and business development), the concentrating
power of rail-based investments is likely to be
particularly important to regional land use
outcomes associated with nodal development.
While assisting with land use intensification gives
strategic benefits, there was no attempt was made
to evaluate the associated economic benefits.
9.4.2

Agglomeration benefits

It is now accepted that intensification in a CBD

brings agglomeration benefits from the presence
of a range of businesses in the same area. These
benefits are:
Deeper, more efficient labour markets;
Greater specialisation;
Greater competition;
Networking and knowledge transfer.
These benefits would occur to some extent with
the RRP scenarios solely because rail
improvements allow more workers to enter the
CBD during the morning peak. Such an increase
Conference On Railway Engineering
Wellington, Sept 12-15, 2010

Alan Burford
AECOM

Building the Case for Rail

The Wellington Regional Rail Plan

would be very costly with any road-based mode

due to the difficulty of constructing major
infrastructure in crowded urban areas.

11

The likely agglomeration benefits were estimated

and presented as a sensitivity test within the RRP.

11.1 Justification

In October 2008, towards the end of the

preparation of the RRP, the NZTA updated EEM
and included a methodology for estimating
agglomeration benefits. It was not possible to use
the exact methodology for the RRP, but the
approach that was adopted was broadly similar to
the one detailed in the EEM.
10

JUSTIFICATION
EVALUATION

AND

SCENARIO

Economic benefits for all the RRP scenarios were

calculated in accordance with the NZTA EEM, as
previously explained.
During the course of
developing the RRP, the EEM was updated and
the basis of discounting was changed from 10%
over 25 years to 8% over 30 years. All the RRP
scenarios were evaluated at both the old and new
rates, with the sensitivity tests utilising the old
rates only.

ECONOMIC ANALYSIS

The framework that was used in evaluating the

different scenarios was a full cost-benefit analysis
combined with a multi-criteria evaluation designed
to meet the requirements of the NZTA.
The first key output of the economic analysis was
the BCR(G). This is effectively a benefit cost ratio
which also takes into account any changes in
revenue (not normally present in a roading
scheme) by deducting revenue increases from the
costs. The second is the BCR(N), which excludes
revenue effects.
The economic analysis was set up in a
spreadsheet model, thus allowing maximum
flexibility with respect to inputs and the testing of
different scenarios and sensitivities. The structure
was based closely on the NZTA EEM, beginning in
year 0 and continuing for 25 years from the year in
which significant construction commences (i.e.
2008 / 2009). A discount rate of 10% pa was used
but with sensitivity testing of lower rates. Constant
prices, based on Quarter 2 of 2008, were taken
throughout.
In the September 2008 update of the EEM a
number of factors changed, in particular the
discount rate (now 8%) and evaluation period (now
30 years).
While a full evaluation was not
repeated at the new rates, they were applied in
assessing the main scenarios.
The evaluation of the various scenarios required
not only a comparison of costs but also an
analysis of benefits that would accrue to
passengers and the wider community. For the
purposes of the evaluation, the scenarios set out
in 7.2 were adopted. The bus network assumed
was the same for all rail options to ensure that any
differences between rail options were not due to
any other factors.
In the evaluation the respective future scenarios
were compared to the Base Case, which as
previously mentioned included the MTRIP that was
already planned. With respect to implementation
timing scenario RS1 was assumed to start in 2013;
with scenarios RS2 and RS3 commencing in 2016
but with RS1 as an interim from 2013.

11.2 Comparative Economics

A process of comparative economics was used to
evaluate the three main scenarios (RS1, RS2 and
RS3).
In addition to the individual BCRs
calculated, this analysis provided the incremental
BCRs for RS2 and RS3 relative to RS1. The
analysis demonstrated clearly that, once the
implementation of RS1 was under way, it would
not be cost-effective to move to RS3; but on the
other hand it would be highly cost-effective to
move to RS2.
The longer term scenarios RSA and RSB being
independent by design, where not subject to an
evaluation through comparative economics.
11.3 Strategic Assessment - Profiling
The PPFM sets out three factors used by the
NZTA in profiling schemes these being:
Seriousness and urgency;
Effectiveness; and
Efficiency.
The following provides a commentary of the RRP
profiling presented in Figure 6.
11.3.1 Seriousness and urgency
The RRP addresses specific problems facing the
Wellington
rail
network
and
leverages
opportunities to move more people and freight
from road to rail transport. While some issues
result from external pressures, many are a direct
result of inadequate past investment in the
network.
Key issues identified are:
Poor reliability
Lack of capacity across the network
Frequency of services
Ageing train fleet
Ageing infrastructure.
The issues currently being addressed through the
RRP Base Case (MTRIP) is the congestion on the
key arterials, especially SH1 and SH2, north of
Wellington.
Also the issue relating to both
Conference On Railway Engineering
Wellington, Sept 12-15, 2010

Alan Burford
AECOM

crowding and poor reliability on the parallel rail

corridors; only deters rail users and exacerbates
the main problem. The Base Case (MTRIP), being
a committed live project, does go some way to
addressing the problem. However, a continuing
programme of improvement is a necessary
requirement if increasing demand due to factors
such as population growth and increasing fuel
prices are to be met.
It was considered that the identified problem would
continue to cause undesirable trends, through
increased travel time and unreliability and the
spreading of peaks on the road network. As a
direct consequence this will typically have serious
economic impacts, e.g. on the movement of
freight. The issue identified is serious for similar
reasons.

Building the Case for Rail

The Wellington Regional Rail Plan

a scheme of this nature. Again the confidence in

this rating was considered high and this was
backed up by the sensitivity testing undertaken.
The benefits of the RRP were considered to be
sustainable in the long term and by way of
example are not subject to problems of induced
traffic which often arise with roading schemes, a
phenomenon where extra capacity is used up
faster than was forecast, resulting in an erosion of
benefits.
The resulting overall profile is shown Figure 6.
PPFM Profile

It was considered urgent that the ongoing problem

be addressed now in view of the lead times
necessary to take remedial measures such as
ordering new rolling stock (which typically has a
lead time of 2 to 5 years).
The analysis that was undertaken in developing
the RRP provided for a high level of confidence in
the high seriousness and urgency rating.
11.3.2 Effectiveness
The comparative economic analysis established
that the preferred solution presented in the RRP
was to begin with RS1 and then move on to RS2.
The RRP demonstrated that this pathway would
meet the strategic objectives of the region and
would continue to be effective long term. It was
envisaged that once the infrastructure upgrades
were in place, the rail system would have the
capability to increase capacity relatively simply, for
example by operating longer trains. This is in
contrast to adding roading capacity, which requires
the addition of extra lanes and is usually extremely
costly.
It was clear that in the course of developing the
RRP a number of rail specific alternatives were
assessed and evaluated before reaching the
proposed option. It can therefore be expected that
the proposal was optimised.
The contribution to the purpose of the LTMA and
the contribution to objectives of the NZTS and
GPS targets were also considered to be
significant. The RRP proposals do not deliver any
adverse effects.
Given the breadth and depth of analysis that was
undertaken, it was considered that a high level of
confidence could be applied to the effectiveness
assessments high rating.
11.3.3 Efficiency
The BCR for the proposed pathway was calculated
to be in the range between 1 and 2, giving an
efficiency rating of medium. It was considered
that this represented excellent value for money for

RRP Solution

Seriousness and Urgency

High

Effectiveness

High

Efficiency

Medium

Figure 6 : RRP PPFM Profile

12

CONCLUSION

In February 2009 the Greater Wellington Regional

Transport Committee endorsed the Wellington
Regional Rail Plan A Better Rail Experience,
thus providing a pathway for the long term
development of the regions rail network.
Within the context of New Zealand passenger
transport infrastructure development the RRP is
considered unique. The RRP benefited from the
earlier 2004 Wellington Commuter Rail Network
Business Case and also the 2006 Auckland Rail
Development Plan, in so far as a benchmark had
been set.
The 2004 Wellington Business Case was
essentially an Alternative to Roading economic
evaluation, which established the requirements for
a Base Case and compared this with an option to
Exit Rail. The Base Case comprised a 10 year
capital investment programme, considered as the
minimum requirements for the retention of a
viable commuter rail system in Wellington, whilst
allowing for a nominal annual increase in
patronage of 1.7%.
It is considered that the relative success of the
RRP was attributable to a number of factors,
namely:
The Vision of the RRP was maintained
throughout its development;
The collaborative nature of its development,
through the Steering Group and Technical
Working Group, rendered a high level of
credibility;
The general framework was systematic and
transparent;
The evaluation was performed within the
existing rules of the stakeholder agencies;

Conference On Railway Engineering

Wellington, Sept 12-15, 2010

Alan Burford
AECOM

The implementation pathway was realistic

and scalable.
Currently (June 2010) the New Zealand Treasury
are in the process of establishing a Capital Asset
Management framework that will provide guidance
on the development of Business Cases for capital
intensive infrastructure projects. Subject to formal
Cabinet approval the framework will come into
effect in August 2010.
13

ACKNOWLEDGEMENTS

I would like to thank Mr. Angus Gabara and the

Greater Wellington Regional Council for providing
me with the opportunity to work on the Wellington
Regional Rail Plan, and supporting the production
and submission of this paper.
I would also like to thank Dr. John Bolland for
sharing with me some of his vast knowledge and
expertise, throughout the development of the
Wellington Regional Rail Plan.
14

REFERENCES

[1]
Greater Wellington Regional Council.
Wellington Regional Rail Plan Steering Group
Terms of Reference.
GWRC Reference
Document, 2007.

Building the Case for Rail

The Wellington Regional Rail Plan

[2]
BNET.
Business Dictionary [Online].
Available
from:
http://dictionary.bnet.com,
[Accessed 2010].
[3]
Greater Wellington Regional Council.
Wellington Regional Rail Plan 2010 2035 A
Better Rail Experience. GWRC Document, 2008.
[4]
Burford A. Input requirements for CAPEX
and OPEX Cost Models. GWRC Commissioned
RRP Working Paper, 2007.
[5]
Starrs and Winn. Economic Evaluation of
Public Transport Projects; Annex 2 PT Transport
Operating Costs. Draft Guidelines Version 2,
2001.
[6]
Bolland J. Development of the Regional
Rail Plan, Use of WTSM. GWRC Commissioned
RRP Working Paper, 2008.
[7]
Booz Allen & Hamilton (NZ) Limited.
Measurement valuation of public transport
reliability. Land Transport NZ. Research Report
339, 2008.
[8]
Douglas Economics. Value and demand
effect of rail service attributes.
RailCorp
Commissioned Report, 2006.
[9]
Victoria Transport Policy Institute. TDM
encyclopaedia
[Online].
Available
from:
www.vtpi.org, [Accessed 2008].

Conference On Railway Engineering

Wellington, Sept 12-15, 2010