In the UK, every major infrastructure project has to go through a cost-benefit analysis process to demonstrate that the business case is strong enough to justify the cost to the public.
However, traditional methods only focus on national benefits and, while these are obviously important, the potential economic and development benefits to local communities aren’t fully captured. As a result, schemes that are greatly needed by both local public and private sectors, and local communities themselves, often fail to attract the required funding.
Yet by taking an approach similar to what is happening in Norfolk at the moment, this could soon change.
Norfolk County Council leads the A47 Alliance, a group of local councils, MPs and business leaders that has long been campaigning for major improvements to the entire length of the A47 trunk road, which runs through the county and beyond into Cambridgeshire.
The main argument has been that the poor quality and unreliability of many parts of the route mean it does not function as the “gateway to growth” it should be. If all the upgrades were completed, the cost would be £1.5bn, according to Department for Transport estimates.
“Traditional cost-benefit analysis for major schemes focus on the savings achieved by reducing travel times”
Traditional cost-benefit analysis for major schemes focus on the savings achieved by reducing travel times – in this case a reduction of 30 minutes between Norwich and Kings Lynn, valued at £42m a year.
Currently, the case for doing the whole stretch of road isn’t strong enough, and, in any case, there isn’t the money available to dual the whole route.
However, having accepted that the road is of strategic importance, it can then be broken down into manageable schemes and prioritised. Previously, these individual interventions may well not have been able to be supported in isolation.
These interventions are the 13 projects that make up the overall upgrade programme, a mix of selected dualling, junction improvements and a new river crossing in Great Yarmouth, with costs ranging from £2m to £150m.
To help this, Mott MacDonald has used the transparent economic assessment model (TEAM) approach to analyse the net additional economic benefits of each sub-project and has been able to highlight where the greatest and fastest social and economic gains could be achieved.
The TEAM analysis looked at the value to the local economy of each of the 13 schemes. It showed that over 20 years, bringing forward improvements such as junction upgrades would result in the creation of 9,600 jobs, construction of 3,200 homes and investment of nearly £500m in local businesses, increasing the gross value added to the local community by £390m a year.
“The current political climate means the need for accurate and transparent economic appraisal modelling will only increase”
It also provided important information that helped secure private-sector and local enterprise partnership funding for some of the projects.
The first scheme, an improvement to the A47 Postwick Hub Scheme, has already gained funding and construction is under way. In addition, five further schemes totalling £300m were included in the chancellor’s Autumn Statement for delivery in the next parliament.
The current political climate means the need for accurate and transparent economic appraisal modelling will only increase. While TEAM is currently geared mainly towards transport and buildings projects, other sectors such as water, environment and tourism could benefit from it as well.
Paul Hammond is head of economic and social development at Mott MacDonald