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Norway High Speed Rail

Norway High Speed Rail. Contract 6 Financial and Economic Analysis. Warwick Lowe Commission Director. Overview. Subject 1: Impact on road and aviation Subject 2: Rail cost model Subject 3: Funding and operational analysis Subject 4: Socio-economic assessment

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Norway High Speed Rail

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  1. Norway High Speed Rail Contract 6 Financial and Economic Analysis Warwick Lowe Commission Director

  2. Overview Subject 1: Impact on road and aviation Subject 2: Rail cost model Subject 3: Funding and operational analysis Subject 4: Socio-economic assessment Subject 5: Uncertainty analysis

  3. Subject 1: Impact on road and aviationincluding: - airport terminal handling efficiency - multi-operator scenario

  4. Impact on air and road sectors Required because:Demand evaluated on end to end journeysModal shift will impact on appraisal, e.g. Co2(e), potential air/road capital programme & tax. Air traffic and airport capacity review, London

  5. Interaction with other modes HSR Immediate impact Other modes demand Other modes revenue Commercial response from other modes Impact dependent on response of other modes Other modes costs Other modes socio-economic impacts

  6. Airport terminal handling efficiency Part of the overall travel time by air (competitiveness against HSR) Many elements to the overall transit time Each element is subject to time variability Improvements to target times in one or more elements needs to be supported by overall reduction Time through security and baggage handling can improve with technology but can deteriorate due to regulation Air transit process (courtesy IATA) We will undertake sensitivity tests to establish the extent improvements here can affect HSR demand Airports have an interest in allowing passengers sufficient in their shops Improvements to transit time have costs associated e.g. how many staff at how many desks and how many security gates

  7. Market segments and services People – market segment Transport service Time Speed Ferry Student backpackers Bus Train Rich Slow Retired directors Ordinary office workers Poor Fast HSR ? Business executives Plane Poor Rich Cheap Expensive Money Price

  8. Multi-operator scenario • Premium long-distance services? • Revenue maximising “open access” operator(s)? • New entrants for under-served markets? • International operators? • Airport express? • Tourist / special services? • Station and facility upgrades for target customers?

  9. Subject 2: Rail cost model

  10. Model development (Faithful + Gould) A “top down” capital cost model Driven by quantum and quantified risk assessment Appropriate for use on all scenarios HSR cost data review (Europe) F+G in-house expertise Whole Life Cost A (simple) operating cost model Driven by timetable for each scenario

  11. Subject 3: Funding and operational analysis

  12. Model development (Ernst & Young) Demand Capital cost Operating cost Financial model Impact on different parties under different market and project scenarios Commercial organisation Market and regulation

  13. Subject 4: Socio-economic assessment

  14. Approach Assessment period Norwegian state (JBV) methodology International experience Discount rate and early-stage “optimism bias” Alternative (extended) approaches Values of time Real “value” growth e.g. values of time “Alternative” (extended) assessment “Core” assessment Other aspects

  15. Subject 5: Uncertainty analysis

  16. Population growth The public’s environmental concerns Economic growth The public’s funding concerns Human factors Employment growth Passengers’ priorities Demographic and economic Travel patterns Perception of HSR Technical standards Policy on HSR Policy and legislative HSR cost Dealing with climate / terrain HSR technology Safety and security standards Maintenance solutions Exchange and interest rates Competition from other modes Wider policies Supply market maturity Price inflation Interface with other modes

  17. QRA Optimism bias Route options Cost data Cost model Demand model Demand data Range of demand forecasts Risk-adjusted costs Sensitivity tests Sensitivity tests Structuring options Scenario testing Financial data Financial model Economic model Economic data Financial indicators Socio-economic indicators Range of financial results Range of economic results Informed decision-making on HSR

  18. Thank you!and Questions? Warwick Lowe Director Woodcote Grove, Ashley Road, Epsom, Surrey, KT18 5BW Tel: +44 (0) 01372 756895 Mobile: +44 (0)7917 636587 Email: warwick.lowe@atkinsglobal.com www.atkinsglobal.com

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