ACT CANADA 2014:Using Business Cases To Get Great Projects Financed and Delivered

December 1, 2014 | Michael Sutherland

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“Alignments and technologies will be developed during the project-level Benefits Case Analysis that Metrolinx will carry out in partnership with municipalities and transit agencies for individual projects. When it comes to make decisions on new transit projects, the costs and benefits of all reasonable alternatives need to be evaluated so that the best possible transit projects are built.” – The Big Move (RTP), 2008

Where we started from

The public’s low trust in transit decision-making can be addressed in part by ensuring that the process for project evaluation and selection is evidence-based and transparent. The Metrolinx Investment Strategy notes that using a comprehensive business case analysis and prioritization framework ‘builds confidence that the right projects are being selected for delivery at the right time and in the right sequence.

–Transit Investment Strategy Advisory Panel, 2013

Metrolinx has not published a detailed financial plan, showing what it plans to build, how it will be paid for, and what this will deliver. “Benefit Case Analyses” have not been issued for some schemes. The BCAs that have been issued omit key information. [Important] BCAs...were not made public until we obtained them for this report through a Freedom of Information request. In any case, Metrolinx seems to be ignoring their conclusions…in contravention of its own principle of accountability. – Neptis Foundation Review of Metrolinx’s Big Move, 2013

The challenge

Recommendation 5: Enhance reporting systems for project rationale, schedule, budget, & changeRecommendation 14: Enhanced evidence-based project evaluation and selection processesRec 2: Apply open, evidence-based decision-making to Next Wave projects through the review of the RTP (Big Move)

- Metrolinx Investment Strategy Recommendations, 2013

Recommendations

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Business Cases and

Prioritization Introduction

• Business Cases inform decisions about the value of individual projects (including considering project options).

• Prioritization builds on Business Cases to inform considerations of how projects compare to each other and how projects may be implemented in phases over time.

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Major Studies:Significant

Planning and Policy or Individual

Project Studies

Alternative Finance and Procurement/

Pre-Contract Approval:

10-30% Significant Design

Regional Transportation

Plan and Corporate

Strategic Plan:Vision,

Policies, & Projects

Capital Planning and Phasing: Annual Review Cycle

Business Cases = individual projects

Prioritization = multiple projects

Board Approval

Board Approval

AnnualBoard

Approval

Community and Stakeholder Consultation

Board Approval

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3 part Business

Case

How does the proposed project deliver larger policy objectives?How does the project contribute strategically to the overall network?(look at Regional Transportation Plan policies like shifting mode, reducing congestion)

What is the value for money of the project? How efficient is it?How much will it cost? What benefits will it contribute? (benefit:cost ratio, Net Present Value)

How is the project best delivered for on-time, on budget results? What is a feasible timeline? How will it be built, operated and maintained?Optimize partnerships, identify risks and opportunities for effective delivery.

Business Case

Methodology Strategic & Planning

Economic & Financial

Deliverability & Operations

A problem statement initiates a study; options are developed to respond to the problem statement. Value is measured qualitatively and quantitatively, with evidence gathered in three areas:

A collaborative platform for project evaluation across the organization

Thameslink in London, UK – an audit of the business and investment cases for this rail improvement projecthttp://www.nao.org.uk/wp-content/uploads/2013/06/10164-001-Thameslink-Full-Report.pdf

CASE STUDY -

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Integrating the Evidence

Conceptual• Is the investment supported by a robust case for change that fits with wider public

policy objectives? – ‘policy and planning analysis’;

• Does the investment show value for money and is financially affordable? – ‘economic and financial analysis’;

• Is the investment viable and achievable from an operations and deliverability perspective? – ‘deliverability and operations analysis’

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Economic Benefits

Transportation Investment

Agglomeration Benefits

Other uncaptured benefits

$

~5 - ~100% additional benefitsMethods are improving for estimating these benefits

Relevant to decisionsDifficult to measure in dollars

Increasing accessibility in a region to enable more travel interactions and greater productivity

Quality of lifeGreener citiesAccess to opportunityReduced inequalityPrecise land use shaping

Traditional mobility benefits

Includes ridership, trips, travel time savings, reliability, accident avoidance, health benefits, and other benefits

Benefit Cost Ratio should be > 1

Direct economic impacts

Jobs and associated economic activity from construction and operation

Worth measuring, but shouldn’t be used to evaluate projects because these benefits accrue to any construction project.

relevance

reliability

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HighlightBusiness

Case Work

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Supporting Good

Investment – Both

Large and Small

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Thank you and Questions?

www.metrolinx.com