Some information within the 2018–21 NLTP Investment Assessment Framework (IAF) pages may currently be out of date. We are in the process of updating the Planning and Investment Knowledge Base to reflect the new draft IAF that has been developed for the 2018–21 National Land Transport Programme (NLTP). This work will be completed by mid-May 2018. The draft IAF is currently available for feedback until 18 May, and will be finalised by 30 June 2018.
The Transport Agency assesses investment proposals in the 2018-21 National Land Transport Programme (NLTP) using the information contained in the business cases and supporting information submitted in Transport Investment Online (TIO). After the business case has been assessed and passed, the information is then distilled down to two ranking factors, Results Alignment - the alignment of the proposal's key transport issues with the Government Policy Statement (external link) on Land Transport (GPS), and Cost-benefit Appraisal - how efficient resources are used to deliver benefits from the proposed solution.
The information relating to developing assessment profiles is organised by activity class groupings, with guidance provided on each of the two factors within the groupings.
The Transport Agency assesses investment proposals under two factors, being:
The specific guidance on how each of these apply to activity class groupings is provided in relevant sections listed at the bottom of this page.
Assessment of results alignment considers how the problem, issue or opportunity identified in the strategic case aligns with the results sought under the GPS.
Results alignment focuses on the problem, issue or opportunity being considered without regard to the possible solution.
The assessment considers how the problem/issue/opportunity:
Any potential need for investment comes from addressing a level of service gap and/or system performance gap in delivering the appropriate level of service. Historically, the gap has not been explicitly or consistently defined.
The One Network Road Classification (ONRC) defines nationally consistent customer levels of service. Over time, all roads in a particular category should offer an increasingly consistent fit for purpose customer level of service for users. Identifying the gap to the ONRC customer levels of service is a key input into the assessment of Results Alignment for road maintenance and improvements.
No nationally consistent level of service or classification yet exists for public transport or walking and cycling. In these activity classes we use proxies to determine the significance of the problem, issue or opportunity including the geographical classification such as main urban areas or primary routes.
The appropriate service level for each part of the transport system should be defined by its relevant framework or benchmarks.
A gap in the levels of service is defined as the difference between the appropriate level of service and the current level of service. Evidence is needed to support the significance of the gap. The problem and benefits should have been described in the strategic case with reference to appropriate levels of service. Evidence collected about the current performance compared to the expected performance will help define a gap, if any.
Evidence is needed to show that:
The level of service gaps are defined as follows:
During preparation of a Business Case, there may be situations where critical thinking through the business case approach uncovers no strong evidence that a gap in levels of service or system performance exist. This is a perfectly acceptable outcome to the Transport Agency and could, in fact, suggest the system is running optimally.
Also during the preparation of the Business Case, service levels may be shown to be above expectations. This amounts to a system performance gap and further effort may be needed to assess the significance of this gap and consider system performance and optimisation.
Cost-benefit appraisal considers how well the proposed solution maximises the value of what is produced from the resources used, and the timeliness of intervention.
Assessment of improvement activities uses the benefit–cost ratio calculations as the default approach.
Cost effectiveness and cost performance comparisons are used for road maintenance and public transport programmes.
Benefit Cost Ratio
The Benefit Cost Ratio (BCR) is the primary tool used to measure the efficiency of improvement activities.
All improvement activities other than low cost low risk improvements and specified exceptions (see below) should be supported by the provision of a robust BCR.
The Transport Agency requires that Approved Organisations and the Transport Agency use the Transport Agency Economic Evaluation Manual procedures and templates to determine the BCR for improvement activities.
Alternatives to benefit cost ratio
For assessment of road maintenance, existing public transport programmes and road safety promotion programmes, alternative methods may be used in place of the BCR.
A brief description of these methods is provided below:
Present value method (PV)
The present value of future costs of options are determined and compared to identify the long term least cost option.
The method is recommended to determine if replacement/renewal is more cost effective than on-going maintenance. Where the future costs of the do-minimum exceeds the costs of replacement/renewal then the net present value of the option can be assessed in the cost benefit appraisal as the best present value end of life approach.
In certain cases the use of benefit streams rather than future costs may be more appropriate.
|Cost effectiveness method||
Cost effectiveness analysis is used where the objective is to compare the cost of different ways of achieving a given effect (e.g. level of service), or comparing the relative cost of different strategies with different effects.
This approach is used to evaluate the benefit and cost appraisal of public transport, maintenance, or road safety promotion programmes by comparing a programme with similar programmes for other organisations.
This approach involves making comparisons of programme benchmark and key performance measures against peer groups, similar regions and the national average. A lack of evidence to support differences from peer group, regional and national averages may result in a lower benefit and cost appraisal rating for the programme. Alternatively it may result in a requirement for a review of the supporting business case as a condition of investment approval.
Trends in benchmarking measures over time are used rather than just annual values.
|Marginal contribution method||
The marginal contribution of programme expansions and incremental new services will be considered through benchmark and key performance measures. The cost-effectiveness of the changes will be considered as well.
Specific guidance relevant to activity class groupings is provided in activity class assessment page, see below for links.
Non-monetised benefits and additional benefits
If a proposed solution has demonstrable non-monetised benefits, then these should be taken into account and may, if the Transport Agency considers these benefits to be significant, result in a higher rating.
Additional benefits are benefits that are not specifically covered by the Transport Agency’s Economic Evaluation Manual. The Transport Agency may consider additional benefits as reasonable and may determine a higher rating as a result. Alternatively, it may consider that the additional benefits should be presented as part of sensitivity analysis that will not impact the rating.
Cost-Benefit Appraisal is not required for some activities.
Activities which are not required to calculate a benefit and cost appraisal include:
Use of placeholder, generic or default BCR
In specific cases generic or default BCRs may be used in lieu of a calculated BCR for the activity. These are:
No other placeholder, generic or default BCRs should be used.
The Transport Agency reserves the right to require a peer review of benefit and cost appraisal determinations and measures, including any non-monetised/additional benefits and adverse impacts, regardless of the scope, prior to an investment decision.
Insufficient information (1* or Low*)
An activity can be included in the National Land Transport Programme (NLTP) when no benefit and cost appraisal has been made or when robust evidence is lacking to support the assessment. In such cases the rating for a benefit and cost appraisal will default to 1* for improvement activities and Low* for programmed activities. The Transport Agency represents these activities as 1* or Low* to indicate that more information is required to achieve a robust assessment profile.
An activity will not be considered for funding approval with a 1* or Low* status.
BCR range 0- 0.9
All activities with BCR greater than or equal to 0 and below 1 are in this band. The Transport Agency may, at its discretion make an assessment of any non-monetised benefits to determine whether the total of monetary and non-monetary benefits outweigh costs and the incidence of benefits and costs in the context of individual proposals.
BCR range 1- 2.9
All activities with BCR greater than or equal to 1 and below 3 are in this band.
BCR range 3 - 4.9
All activities with BCR greater than or equal to 3 and below 5 are in this band.
BCR range 5 - 9.9
All activities with BCR greater than or equal to 5 and below 10 are in this band.
BCR range 10 or more
All activities with BCR greater than or equal to 10 are in this band.
A PVEOL (Present Value End of Life) rating is given to all activities assessed on a net present value basis where the net present value of ongoing maintenance and operating costs exceeds the net present value of the cost of replacement together with the new maintenance and operating costs. The PVEOL rating replaces the previous BCR 99 rating for these activities.
Continuous programmes, e.g. road maintenance, existing public transport services, road safety promotion and minor improvements, are assessed with a benefit and cost appraisal rating based on their relative cost effectiveness or performance comparisons.
The ratings are:
Incremental benefit and cost appraisal
Incremental cost - benefit appraisal is required for option selection, optimisation (other than between projects within packages) and scope change proposals.
A number of criteria need to be satisfied before assessing an activity for inclusion in the NLTP for funding approval.
Requirements for NLTP inclusion
Inclusion of an activity in the NLTP requires that:
Requirements for NLTF funding
Seeking approval for funding from the National Land Transport Fund requires all of the above, plus:
The assessment profile assigned to individual activities must be reviewed at each stage of the activity's development and updated as necessary to reflect the latest information and any changed circumstances.
An activity’s profile assessed at the time of NLTP inclusion must be confirmed prior to any investment and funding decision. This may result in a reduced profile if the Transport Agency considers the evidence to be insufficient or that the risks around delivery of the activity’s outcomes are too high.
The Transport Agency may consider any exceptional additional factors not otherwise captured by the two assessment factors, including additional economic and community benefits.
These will be specific to the activity or combination of activities being assessed and relevant to determining its overall priority and funding source in the programme.
Evidence will be required if additional factors are to be considered.
Links to guidance on developing assessment profiles for each of the activity class groupings are provided below.