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LRT costs: Be careful what you read…

LRT projects often result in fantastic new urban structures – but remember that these come at a cost. Lyon's bow-string Pont Raymond Barre was constructed in 2013 to allow T1 crossings of the River Rhône on the route extension to Gerland. It is a multi-modal bridge, used by trams, cyclists and pedestrians. Image courtesy of N. Pulling

With just ten minutes of online research I came up with five benchmark figures to help me calculate the likely costs of constructing a new light rail system in the UK. What did we do before the internet? Where did we get all of this amazingly accurate data from?

However, to avoid any accusation of using biased or incorrect data, I looked carefully at when this data was published and inflated the costings given to current prices using the Government Retail Price Indices so they are all consistent. That exercise completed, I’m now in a good position to press on with my draft costing exercise, aren’t I? No.

My internet research gave me figures ranging from GBP8m to GBP55m (EUR9m-62m) per kilometre. Such a range is far too large to be deemed sensible, so I averaged the five benchmarks found to give a rate of GBP30.8m/km (EUR34.6m/km). Surely I must now be in a logical place to continue with my costings? No.

On I go, researching how many stops are included on each of the previous projects making up my benchmark data. I count the vehicles in the fleet and attempt to calculate how much of the route is segregated and on-street using both system and online maps. Now I can fine tune my data, am I now in a position to create a realistic model for how much my proposed LRT scheme will cost? No.

The simple fact is that this type of two-dimensional approach runs the very real risk of actually damaging the potential future of light rail projects in the UK. My basic research has shown that numerous quotes from industry representatives includes information available on Wikipedia – so can we trust all that we read or hear from our colleagues in the sector, let alone interested parties who have no formal training or experience within the industry?

Promoters of LRT alternatives often highlight the highest costs per kilometre to support their case. Objectors to LRT schemes may employ similar tactics to support their objection. Likewise, misguided sponsors and advocates of light rail development – no matter how well-intentioned – will often use the lowest benchmarks available to support their business case. Without due diligence on the data – where it is from, when it was created, where was it published? – there are a number of traps that are all too easy to fall into.

So how do we, as professionals, provide these initial ‘order of magnitude’ (or back of a napkin) costs that are essential to establish whether the project we are considering is likely to cost GBP20m (EUR22.5m) or GBP200m (EUR225m)?

To answer this, it is essential that we have an understanding of the key cost drivers for all rail-based projects. These drivers, if not considered at the earliest opportunity, will have considerable impact upon the accuracy and efficacy of subsequent estimates.

Key cost driver 1: Utilities

The most commonly-discussed – and possibly under-estimated – cost associated with new tramway or light rail schemes is the diversion of known (and unknown) utilities. Having to divert major under-street apparatus away from proposed LRT routes can add between GBP3m and GBP9m/km (EUR3.4-10m/km) to your city centre project, so be sure to make sensible allowances within your budget.

Assuming these utilities are buried at the correct depth to enable a shallow trackform – this is far from guaranteed, especially in older town and city centres where accurate plans may not exist – does not negate the regulatory requirements placed upon LRT sponsors, but it may help in reducing the project risk allowances. Further discussions and agreements are required between the sector and utility regulators to enable reductions in the costs and risks that significantly impact upon a project’s bottom line.

Key cost driver 2: Public realm costs

It is unwise to assume that local planners will limit the responsibilities of the light rail project team to the footprint of the proposed track, without additional works to existing surface water drainage systems and cabling associated with traffic signals.

Additionally, the primarily aesthetic-based enhancements to the streetscape will require upgrading to ensure the LRT corridor offers a significant return to businesses and members of the public who are expected to be supporters, and users, of the areas serviced by the new and improved transport. This is rarely a ‘kerb-to-kerb’ approach, but more likely the ‘façade-to-façade’ enhancement seen in major continental projects. Many of the pavement-borne services are likely very shallow also, thus increasing the costs of Key cost driver 1.

Take the surface finishes for example: the difference between standard asphalt type surfacing and granite paving can be circa GBP100 m2 (EUR112/m2). With an average road and pavement width of 10-12m, this additional cost would increase a project’s budget by GBP1.2m/km (EUR1.35m/km). Such ‘extras’ do not only apply to the direct route of the LRT either: often a much wider zonal refurbishment is required by planners, thus further increasing the out-turn costs of the project.

Key cost driver 3: Structures

Most road bridges on the UK’s arterial routes can accommodate heavy goods vehicles and should theoretically be of sufficient capacity to safely carry trams or LRVs.

When dealing with structures however, many other factors need to be considered. These include the depth of the construction of the structure itself, the impact that frequent tram crossings may have on its lifespan, and its ability to cope with HGVs and trams simultaneously. Structures must not fail, so if a new LRT line places them at any additional risk then the asset owner will understandably want remedial works to protect and preserve their bridge.

Replacing a 25m crossing, ten metres wide, will add around GBP1m (EUR1.1m) to your project. So it is obvious that having to add the building of new structures, and potentially strengthening others, will add significant costs. Any need for underpasses or tunnels may well kill the project off completely, with the typical costs for these being between GBP20m-30m/km (EUR22.5-34m/km).

Key cost driver 4: Power

Technological improvements in onboard energy storage systems, such as batteries, supercapacitors or fuel cells, will continue to drive infrastructure costs down. The reduction, however, will not be as dramatic as some would have you believe.

A recent press release from one promoter indicated that traction power costs would be zero, simply because the vehicles would be entirely powered by batteries and therefore no overhead line equipment would be required. What happened to the costs of the charging points – either on-route or at the depot? Also, what about the additional capital costs for the vehicles themselves?

For a fairer comparison, surely the expenditure for charging points should be identified and compared against the applicable wire-based alternatives?

When pricing OLE for extensions to existing routes, an addition of say 500m could result in an extra GBP1m-1.5m (EUR1.1m-1.7m) for a new substation because the existing substations are at capacity.

Key cost driver 5: Access

Having suitable access to LRT sites is essential. To demonstrate this, consider a disused rail corridor that may appear prime for an economic conversion to light rail. Then consider the route as a long thin corridor often enclosed by housing and/or industrial premises, thus making access to the mid-point extremely difficult to get heavy plant and machinery in and out. Furthermore, throw into the mix a well-established patch of Japanese Knotweed or an old stabling location contaminated from years of stored engines dropping oil, diesel or other contaminants. Suddenly our simple and economic conversion of this line becomes a logistical nightmare through having to remove such deleterious material.

Understandably, the local authority may also impose stringent working hour restrictions because of the proximity to domestic dwellings. The overall efficiency of these associated works subsequently reduces, which equals an increase in costs.

Difficulties relating to access are not only applicable to segregated track sections. As was commonplace pre-lockdown, local events such as fairs, performing arts and Christmas markets are seen as an important boost to our struggling high street economies and cultural calendar. Such events can have a significant impact upon urban LRT projects in terms of planning and managing the work areas, traffic management and materials deliveries, all of which drives project costs up.

More reasons to be a non-believer

So back to my internet research and what it has told me… or what it hasn’t told me. Is my average of GBP30.8m/km for a single line or double-track line? Obviously, this could double or half my benchmark.

Does this include land acquisition, vehicle costs, the associated depot and spare parts? Does the depot have a wheel lathe, a paintshop and washing plant? Does the rate include a façade-to-façade public realm allowance? Have the drainage proposals allowed for the expansion of our storm water capabilities that all local authorities are factoring in to their highways programmes? What risk allowances have been included, and how was the project procured? The list of uncertainties contained within such cost data is seemingly endless.

What should you do?

Most importantly, you should take all these factors into account. Do not ignore them. Hopefully, this short article will show how problematic coming up with ‘quick costs’ for new LRT schemes can be. It is not all doom and gloom, however, and by planning your project around the above cost drivers, economically-viable LRT projects can be planned and constructed.

Also, engage with the UKTram Centre of Excellence. It is available for all project promoters and can offer advice on all matters related to LRT based upon years of real-world experience. CNNCT and UKTram have been collecting data in order to provide reliable cost data benchmarks based upon detailed and fully-understood project costs – and will soon be publishing a guide for the industry.

If you are responsible for project costs, please send any cost data you have to UKTram. Full confidentiality exists throughout the collection, analysis and blending of the data, however more data ‘in’ means more reliable data ‘out’.

ABOUT THE AUTHOR: Mathew Taylor is the owner of specialist transport consultancy CNNCT Ltd, as well as a member of the UKTram Centre of Excellence and a Director of Pre Metro Operations. A qualified Quantity Surveyor, Mathew spends much of his time advising promoters and sponsors on the likely costs, risks and opportunities associated with Light and Very Light Rail projects. He has provided commercial advice to the transport sector for over 20 years and while working at Mott MacDonald led the team responsible for the Little Black Book – Construction Benchmarks Light Rail. CNNCT is currently leading an initiative of advising investors interested in providing private funding for infrastructure projects.

Article appeared originally in TAUT 994 (October 2020)