Evaluation of Rail Infrastructure Investments Related to the New Rail Regulatory Environment in Some Countries
As for any transportation infrastructure project, rail investment projects are subject to appraisals, which traditionally include an economic evaluation to determine public benefits and a financial analysis to determine the purely financial returns. When the company that owns and manages the rail infrastructure, termed the “infrastructure manager,” is legally different from the company that provides the rail service, appraisals are typically carried out separately for the infrastructure manager and the train operator. The appraisal process is different from the process when the same legal entity owns and manages both infrastructure and train operations. The distinction is especially pertinent for European Union member states. This study proposed a comprehensive methodology for rail investment project appraisal for the case of rail infrastructure and train operations that were owned and managed by separate legal entities. The study defined the socioeconomic viability of a project from the infrastructure manager's perspective, which reflected social welfare, as well as the financial viability of the project from the perspectives of the infrastructure manager and the operator. It was recognized that a project would proceed only if the socioeconomic evaluation were positive. In the case of a negative financial appraisal, which was often the case for low-volume rail links, the study demonstrated how the use of subsidies could render the rail investment financially viable. The methodology was applied for a proposed investment in the western extensions of the railway network of Greece project.
Evaluation of Methodologies in Benefit–Cost and Economic Impact Analyses for Freight Rail Projects
Public investment in privately owned freight rail infrastructure is mutually beneficial if that investment benefits the public. Public–private partnerships are emerging as a viable procurement method to leverage public and private funding or financing in transportation projects to meet the mobility needs of an expanding economy. This paper summarizes the research conducted as part of a larger project to evaluate the state of the practice in methodologies that estimate the benefits generated by freight rail projects. The research examined existing research, case studies, and benefit–cost analyses and economic impact analyses of implemented, approved, and proposed rail projects. Much variation was found in the approaches, definitions, techniques, and level of detail employed. The research defined and characterized projects, developed a generalized benefit classification scheme, and analyzed and evaluated data sources, methodologies, and assumptions on which quantification and monetization of projected benefits were based. The paper draws conclusions about—and recommends improvements in—approaches and methodologies to allow more objective comparisons among projects, with a focus on the parameters underlying the calculation of benefits and performance measurement after the project is completed.
Passenger Rail Franchising in Britain: Has It Been a Success?
Franchising has been recognized, for many years, as a way to introduce competition to areas of the economy via competitive tendering where direct market competition is either undesirable or impossible. A number of European nations have used franchising as a means to secure all or some subsidized service provision. Great Britain, however, has made franchising a means to secure (virtually) all rail passenger service provision. Drawing conclusions about British passenger rail franchising in recent years is not easy. Several points, however, do stand out. First, competition for British franchises has been invariably high, with a shortlist of four or five bidders out of a wider field. Second, there has been extremely healthy traffic and revenue growth, in spite of the temporary setback that happened after service quality collapsed at Hatfield. Third, train operating company (TOC) costs do not seem to have been driven down by franchising. Fourth, when franchisees have not been able to achieve their projected financial performance, there have been substantial problems in dealing with them. Also, that TOCs with renegotiated contracts saw higher cost growth than those without is suggested by the evidence. Overall, the authors conclude that British passenger rail franchising has failed to achieve its cost-side objectives, but may be regarded as a moderate demand-side