02 June 2011

Audit General's Management of Major Road Projects: Interesting reading

As reported in today's edition of The Age, Victoria's Auditor-General's report of major road projects is highly critical of the cost-benefit predictions behind road project decisions. You can read a nifty two page summary at the Auditor-General web page here. Highlights include:

"VicRoads and LMA have not been fully effective in developing the major road projects examined. Both agencies fell short of the standards required to reliably forecast traffic and estimate projects’ economic benefits when informing the decision to proceed. LMA also had weaknesses in the way it had informed procurement decisions."

"Addressing these weaknesses is critical because decisions have been made without a complete understanding of the consequences."

"Based on the projects reviewed, neither organisation has effectively measured all of the intended project outcomes, but both are working to do this for current and future projects.

"The two major weaknesses were in the way VicRoads and LMA forecast traffic and estimated benefits for projects affecting congested parts of the road network. They did not adequately assess the traffic induced by these improvements, communicate the risks, or estimate the impact on the economic benefits.

"These shortcomings create a risk of overestimating the benefits and giving decision makers false confidence about the capacity of the project and the surrounding road network, to cope with future traffic. If these risks materialise then additional investment will be required to realise the benefits promised when justifying a project."

Visit the AG's page

What do you think? Are you surprised that freeways 'induce' traffic?

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