Ex-post Economic Evaluation of National Road Investment Projects
Research Report 145
BITRE undertook two rounds of ex-post evaluations of national road investment projects: one in 2005–2007 and the other in 2014–2016. Available evidence suggests that there is much room for improvement in the quality of Australian road CBAs if they are to be used as an effective tool for ranking options and prioritising projects. The net present value (NPV) was over-estimated by significant margins in some of the selected case study projects. Over-estimation in NPV was largely caused by over-estimation of road user benefits (up to 500 per cent), with the errors mostly coming from travel time cost saving estimates. Inaccurate traffic forecasts and methodology errors were mostly responsible for the over-estimated road user benefits. There was no evidence of systematic cost overruns for the projects selected for ex-post review. Lessons learned include recommendations for improvements in CBA documentation and review, traffic forecasts, and estimation of road user benefits and residual values.