Bringing greater realism to the value of new infrastructure

On average, Sydneysiders are spending two hours a day wasting time, energy and money travelling around Sydney. With the opening of WestConnex, Sydney will have more toll roads than any other city in the world.

“Predicting the number of people who will use new travel infrastructure is the biggest challenge when justifying investment in public transport or toll roads,” says Professor David Hensher. Overestimating the number of people who will utilise the infrastructure places a huge financial risk on investors and taxpayers.

A leading international expert on transport economics, Professor Hensher is frequently engaged by business and government to advise on infrastructure feasibility. He has developed several methods that more accurately predict the financial and user benefit and risk of major transport projects.

Professor Hensher was the first to challenge the simplistic cost savings approach to the value of travel time framework. His pioneering formula, significantly impacted the accuracy of forecasting consumer demand and is used by industry, transport consultants and governments worldwide.

Professor Hensher’s research has been used to develop national guidelines for government-supported project appraisals. As a result, he was engaged by all major toll road consortia to develop estimates of private projects including the Sydney M7 and the Brisbane Airport link.

In 2013, the Roads and Maritime Services engaged Professor Hensher to rethink the values for fatality and injury risk. His methodology increased the value of avoiding loss of life from $1.5 million to over $6 million, which has impacted on the reprioritisation public investment in road safety. Transport for NSW and Austroads now recommend these values be used in all transport appraisals.

Using Professor Hensher’s willingness to pay value (how much users are willing to pay to avoid the risk of various degrees of injury as well as being killed in the road environment), the Bureau of Infrastructure, Transport and Regional Economics increased the annual cost of crashes by 52 percent to $27 billion, which ultimately reduced accident risk.

He has also developed an innovative way of jointly maximising commercial and social objectives in the context of establishing performance-based contracts in bus reform, which continues to influence contract reform in Australia. This pioneering work was a factor in him receiving a BusNSW Outstanding Contribution to Industry Award.

Recently, Professor Hensher proposed a peak period distance-based charge (cents per km) in combination with reductions in fixed charges such as vehicle registration to improve Sydney’s chronic traffic congestion. The radical new system of charges calls for a complete overhaul of the current road pricing system that could cut peak hour traffic by 10 percent or to school holiday levels.

“Our research has suggested that we ought to move to a distance based charge of five cents a kilometre during peak hours but no charge at all in the off-peak,” Professor Hensher said. “In order to ensure that people don’t pay more for their travel, we would also reduce registration charges.”

Current research into mobility as a service being undertaken by Professor Hensher and the Institute of Transport and Logistics Studies (ITLS) together with industry partners (IAG and Skedgo) is looking at the impact on future societies and the barriers to disruption.

ITLS and Professor Hensher are currently working on a series of major projects that will contribute to the design, improvement and optimisation of infrastructure and transport initiatives around the world. These include:

• Developing new bus frameworks in urban areas to enhance mobility and meet accessibility needs. Currently being implemented in Santiago, Chile.
• Developing new methods to improve the realism of regional access.
• Exploring simpler and more accurate ways of measuring the impacts of new cycling infrastructure. The City of Sydney will use this research to build new bicycle paths.
• Research into autonomous vehicles and human behaviour to prepare our society for more automated vehicles on roadways.
• Research into transport-related barriers inhibiting people with a disability from participating in the workforce.
• Development of planning and evaluation software that assesses the merits of new infrastructure such as roads, airports and public transport.