The taming of traffic 

How long do you spend in traffic each week? Almost regardless of where you live or work, there is a fairly good chance your personal urban mobility is constricted by congestion. Road congestion is not only frustratingly inconvenient, but also hugely expensive. By 2025, the UK is expected to lose US$36 billion in productivity each year due to traffic jams; the US already loses almost twice that amount.

Of course, urban congestion is about much more than just economic ‘opportunity costs’. It also has a massive impact on both the quality of life for urban dwellers and the environment in which they live, work and play. As a result, urban administrators and planners around the world are keenly focused on enhancing urban mobility through a range of mass transit solutions.

But urban transportation projects are notoriously difficult to plan and execute. They have long lead times, face huge planning issues, are complex to procure, challenging to operate and usually exceedingly expensive. They promise to make a difference to the lives of millions of people, but they come with the scope to go seriously wrong and potentially even bankrupt a city.

Understanding the cost

Likely the most significant consideration relates to cost. Facing constrained government budgets and competing priorities, many city administrators and infrastructure developers are now exploring a variety of innovative funding approaches. In London, England, for example, the local authority has raised more than £4 billion to fund the new Crossrail initiative through a supplemental business tax. In other cases, governments are developing Private Public Partnerships (PPPs) where the authority procures the infrastructure and underwrites part of the demand risk and private sector partners contribute funding, expertise and operational experience.

However, governments and urban planners must carefully consider the implications of their financing choices. The simple truth is that few people are willing to spend a larger proportion of their personal budgets on daily transport, so any mass transit solution must stay focused on providing a financially competitive alternative to car and road use.

Planning authorities may also find that their choice of potential urban transport projects is limited by two other important factors: land and time. Land acquisition is a frequent challenge for established cities as the development of new mass transit systems often involves protracted negotiations to secure appropriate land usage rights.

Another challenge relates to the long lead times required to develop many mass transit solutions such as metros or light rail projects, which can often take up to a decade to fully execute. As a result, there is significant interest in solutions that can be quickly brought to fruition such as Bus Rapid Transit systems which, by making better use of existing road infrastructure, can often be deployed in a matter of months rather than years.

Building a value network

Another key success factor for urban mobility projects is their ability to interconnect with alternate forms of transport that, together, can provide ‘door-to-door’ service to local residents. For example, the São Paulo Metro PPP plans to integrate into the regional and intercity bus terminals to effectively extend the footprint of transit options across a wide region. The Gold Coast Rapid Transit project in Australia also envisions a complex set of interconnections with roads, pedestrian walkways and other forms of public transport.

Similarly, urban planners will want to ensure their mass transit systems interface with available global connections within the city such as airports, high-speed rail or regional railways. This will not only enhance the value of the system to the city’s inhabitants, but will increase the individual value of each infrastructure asset connected into the network by enhancing usage and – as a result – revenues.

Focusing on connectivity

Recently, a small but growing number of cities have begun to look at their urban transport plans through a different prism that starts with the recognition that the way that mass transit delivers value to a city is through creating more efficient connections between business, labor markets and consumers. And as a result, these cities are now taking a much wider view of the value of mass transit which, in turn, is radically changing the way they prioritize and select their transit options.

Take, for example, a roads project that connects an industrial development to a new port project: viewed as an isolated project and measured solely by time saved in traffic, the road would be hard to justify. But when one combines the economic benefits of delivering products to export markets with the increased throughput of the port and the potential for job creation, it becomes blatantly clear that the road actually provides exceptional value.

Looking ahead, it seems that the sector can anticipate significant growth in the market as more and more cities start to look at urban transit as an economic, environmental and cultural priority rather than simply a set of roads projects.

By Mauricio Endo, KPMG in Brazil

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