Quote:
Originally Posted by swimmer_spe
Still doesn't tell me how to actually calculate that. the more convoluted it is, the less I trust it.
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Governments don't investment in multi-billion dollar projects with napkin maths. Imagine that.
Also, what is difficult to understand about this:
Quote:
Originally Posted by Truenorth00
They basically asses all the socioeconomic benefits and any direct net revenue over a given time period (say 20-30 years) and compare that to capital and operating costs over the same period.
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If you need smaller words, I'll try here.
1) Pick a relevant timeframe. For most infrastructure, it's the time before capital renewal, usually 20-30 yrs.
2) Add up all socioeconomic benefits. Income from jobs created. Economic benefits through higher productivity. Costs saved to the environment, or other infrastructure (like reduced road wear), etc.
3) Add net revenue (fares, ancillary sales, ads minus operating expenses.
4) Calculate all costs over the relevant time period. Add up the capital costs to build with operating costs over the time period. Pro-rate renewal costs if necessary.
5) BCR = (Step 2 + Step 3) / Step 4. If BCR > 1, then benefits exceed the costs and the project has net socioeconomic value. If BCR < 1, benefits are lower than the costs, and the government can decide if they want to proceed for some other reason, knowing full well the economic case is poor.
For example, the Eglinton Crosstown and Scarborough Subway both has BCRs below 1 (substantially too). But the Ontario Line has a BCR of 1.05. Similarly, you can see with Ontario HSR, they looked at two speed options and whether to go from Toronto to London, or continue to Windsor. The only option with an HSR above 1 was 250 kph from Toronto to London (Table 3.5):
http://www.mto.gov.on.ca/english/pub...hapter-3.shtml
BCR is the only fair way to really evaluate the relative merits of different projects in different parts of the country. How do we know if a subway in Toronto provides a better return than an LRT in Calgary or BRT in Winnipeg? By comparing BCRs. Moreover, if BCR is well above 1, it also tells us that the infrastructure will be popular and have a much more immediate material benefit. As such, the higher the BCR, the higher the priority should be.