Scottish Transport Appraisal Guidance

4. PART 2 APPRAISAL

4.1 INTRODUCTION

4.1.1 The Part 2 Appraisal phase requires a more detailed appraisal of options taken forward from Part 1. The Part 2 Appraisal includes detailed analysis of an option’s performance against:

• Transport Planning Objectives;
• STAG Criteria;
• Cost to Government; and
• Risk and Uncertainty.

4.1.2 The Technical Database provides and references techniques and methodology to support the Part 2 Appraisal. Practitioners must adhere to the detailed guidance in the Technical Database, which may be subject to change as new techniques and methodologies emerge.

4.1.3 If practitioners are considering deviating from the methodology found in the Technical Database, they should consult with the Scottish Government and/or its agency Transport Scotland or other such agency for guidance and prior approval.

TRANSPORT PLANNING OBJECTIVES

4.1.4 Before commencing Part 2 Appraisal, practitioners must revisit the Transport Planning Objectives developed during the Pre-Appraisal phase to ensure that the Transport Planning Objectives are SMART.

STAG CRITERIA

4.1.5 The Part 2 Appraisal against the STAG Criteria is outlined in the following sections of this chapter and include an overview of the guidance on Part 2 Appraisal against:

• Environment;
• Safety;
• Economy;
• Integration; and
• Accessibility and Social Inclusion.

4.2 ENVIRONMENT

4.2.1 Within the Part 2 Appraisal, all options taken forward from Part 1 Appraisal are measured against a number of Environmental sub-criteria.

SUB-CRITERIA

4.2.2 The Environmental sub-criteria considered in detail during Part 2 Appraisal, include:

• Noise and vibration;
• Global air quality – carbon dioxide (CO₂);
• Local air quality – particulate matter (PM₁₀) and nitrogen dioxide (NO₂);
• Water quality, drainage and flood defence;
• Geology;
• Biodiversity and habitats;
• Landscape;
• Visual amenity;
• Agriculture and Soils; and
• Cultural heritage.

4.2.3 The scoping exercise undertaken during Part 1 Appraisal should identify the relevance of each sub-criterion to a particular option and whether any additional topics need to be covered. The Part 1 Appraisal will also determine the scope and level of detail required for the appraisal against each sub-criterion at Part 2. Further detailed guidance can be found in the Technical Database.

4.2.4 The underlying fundamental principles are that practitioners should concentrate on significant impacts and that both qualitative and quantitative measures should be used to determine significance, provided that these measures are understandable and robust.

4.2.5 Significant impacts may be defined as those which should be given due consideration in decision-making. Where an impact on a particular sub-criterion is unlikely to be significant, the detailed assessment as reported in Part 2 Appraisal may not be necessary. On the other hand if the scope of the assessment is too narrowly defined, significant issues may not be identified at the outset of the study and subsequent data collection and analysis may be inadequate. Issues which are significant at the specific option level (such as land take from a particular habitat of ecological value) may not be significant at the more strategic level.

ADDITIONAL ENVIRONMENTAL ASSESSMENT REQUIREMENTS

4.2.6 Before substantive work is undertaken the need for a Strategic Environmental Assessment (SEA) or an Environmental Impact Assessment (EIA) should be considered carefully.

4.2.7 There is a certain level of overlap between STAG and both SEA and EIA. However, duplication of effort can be avoided if the available guidance on SEA and EIA is reviewed prior to undertaking the STAG study to ensure there is continuity in the methodology and approach adopted.

4.2.8 In summary, if a SEA or EIA is undertaken as part of the STAG study, the focus should be on:

• Collection of baseline information and identification of environmental problems;
• Prediction of significant environmental effects;
• Identification of mitigation measures;
• Identification of alternatives and the effects of such alternatives;
• Consultation with the public and authorities with environmental responsibilities;
• Reporting on the results of the SEA/EIA assessment and how consultation responses have been taken into account;
• Non-technical summary; and
• Monitoring of the actual environmental effects during implementation.

4.2.9 The following sections provide an introduction to SEA and EIA. Practitioners should refer to the Technical Database and the statutory guidance documents on SEA and EIA if appropriate.

STRATEGIC ENVIRONMENTAL ASSESSMENT

4.2.10 SEA is a systematic method which extends the assessment of environmental impact beyond individual projects. The Environmental Assessment (Scotland) Act 2005 extends the scope of SEA in Scotland beyond the provisions of the European Union Directive 2001/42/EC to include strategies as well as plans and programmes.

4.2.11 In September 2006 the Scottish Government launched the SEA toolkit. The aim of the toolkit is to provide advice on the requirements of the Environmental Assessment (Scotland) Act 2005. The toolkit gives guidance on when a SEA will be required, practical advice on how to do a SEA and templates for each stage of the report writing process.

4.2.12 Further information and guidance on the SEA process can be obtained from http://www.scotland.gov.uk/Topics/Environment/14587.

ENVIRONMENTAL IMPACT ASSESSMENT

4.2.13 The European Commission Directive on Environmental Assessment (85/337/EEC) (1985) has subsequently been amended by Directive 97/11/EC and also Article 3 of Directive 2003/35/EC. The Directives set out a framework for environmental impact assessment which has been enacted in Scotland principally by means of the Environmental Impact Assessment (Scotland) Regulations 1999 as amended. These regulations are applicable to specific development projects rather than strategies, plans or programmes.

4.2.14 EIA draws together, in a systematic way, an assessment of a project's likely significant environmental effects. This helps to ensure that the importance of the predicted effects, and the scope for reducing such effects, are understood by relevant stakeholders, the public and decision makers prior to any decision being made.

PARTICIPATION AND CONSULTATION

4.2.15 Throughout the process it will be important to consult with statutory bodies and special interest groups who may have a responsibility and/or interest in the environmental effects of options. The main areas of expertise of statutory bodies are set out in the Technical Database. In addition to statutory bodies, non-statutory national and local interest groups, community organisations and individuals may also have an interest in the assessment of environmental effects.

4.2.16 The approach to each organisation may be different as some will be principally information providers, while others have statutory functions to perform or simply hold opinions on particular topics. It is good practice to develop a consultation strategy and protocol at an early stage in the process. This will identify the relevant parties for consultation and the appropriate method of approach.

4.2.17 It is important to note that for options requiring a SEA or EIA to be completed, there are specific reporting and consultation requirements. Further guidance is provided in the Technical Database.

REPORTING

4.2.18 The environmental appraisal information in the STAG Report should include a discussion of what the likely environmental effects may be and the extent to which these effects have been investigated. The methodologies used should be described and data sources listed. Particular attention should be given to explaining the indicators and significance criteria used in evaluating the impacts. Any mitigation measures that have been developed to remove or reduce the adverse effects of an option should be outlined.

4.2.19 The distribution of environmental impacts should be identified. Depending on the context, the distribution of impacts by social group and/or geographic area might be considered important.

4.2.20 The results of the appraisal of environmental impacts should be presented in a manner which will assist decision-makers and be summarised in Part 2 ASTs.

4.2.21 In order to provide confidence about the objectivity of the assessment underlying this summary, worksheets or working papers should be prepared for each topic and summarised within the report. These should not be included within the STAG Report although it would be expected that they could be called upon for audit or inquiry purposes at a later stage.

Part 2 Appraisal against the Environment Criterion: Key Points

The Part 2 Appraisal against the Environment Criterion involves a detailed appraisal against the following sub-criteria:

• Noise and vibration;
• Global air quality – carbon dioxide (CO₂);
• Local air quality – particulate matter (PM₁₀) and nitrogen dioxide (NO₂);
• Water quality, drainage and flood defence;
• Geological features;
• Biodiversity and habitats;
• Visual amenity;
• Agriculture and soils;
• Cultural heritage; and
• Landscape.

Consideration should focus on significant impacts with qualitative and quantitative measures used to determine significance, provided that these measures are understandable and robust.

The need for wider environmental assessment in relation to Strategic Environmental Assessment (SEA) and Environmental Impact Assessment (EIA) should be taken into consideration by practitioners.

4.3 SAFETY

4.3.1 The Safety Criterion includes two sub-criteria which the Part 2 Appraisal should consider in detail:

• Accidents; and
• Security.

ACCIDENTS

4.3.2 The impact of an option on the number of transport related accidents and/or severity should be considered. If measurable changes to accident numbers and/or severity are identified as important impacts of an option then use should be made of established methodologies to aid the quantification of road traffic accidents. Only in exceptional circumstances should practitioners depart from such methodologies.

4.3.3 For options which change road traffic accident numbers and/or the severity of the road traffic accident, the recommended approach to appraising the accident impacts should be followed by practitioners during the Part 2 Appraisal.

4.3.4 Standard methodologies exist for calculating the projected number of accidents, the types of accidents and associated casualties in the before and after scenarios. The methods relate traffic on the road (measured by vehicle kilometres) to the number of accidents via the application of an accident rate. Accident rates (and casualty rates) for different road types are referenced in the Technical Database and should be used by practitioners.

4.3.5 Standard cost values are attributed to fatal, serious and slight casualties allowing the monetisation of accidents in the before and after scenarios, and hence the calculation of the benefits or otherwise of an option. The standard costs per accident are referenced in the Technical Database. Also referenced in the Technical Database are costs per accident for insurance administration, damage to property and police costs for different types of accidents on different types of roads.

4.3.6 STAG also allows a qualitative assessment of accident benefits to be included. A qualitative assessment can be used to highlight matters including, but not limited to:

• The user groups affected by safety improvements, for example, car occupants, pedestrians and cyclists;
• A change in the balance of accidents, for example, fewer fatalities or serious injury accidents, but an increase in slight injury accidents; and
• Any uncertainties in the assessment, such as a view that the rate based calculation either under or over estimates accident savings.

4.3.7 The methodology found in the Technical Database requires projections of vehicle-kilometres in the before and after scenarios. Such projections could be sourced from transport models, or may be derived from other data as appropriate for the scale and type of intervention being considered.

4.3.8 For public transport options, changes in accidents involving traffic due to a transfer away from cars to public transport are captured by the rate-based approach found in the Technical Database.

4.3.9 Current Government advice is that accidents on segregated rail-based systems are negligible and so need not be considered. For systems that involve shared running by rail and other road vehicles, promoters should seek the advice of the Scottish Government and/or its agency Transport Scotland on how to consider accidents in the appraisal of such options.

4.3.10 For options in the marine or aviation sectors that are expected to have a measurable impact on accident rates or the risk of accidents, specific advice should be sought from the Maritime and Coastguard Agency and the Civil Aviation Authority, as appropriate.

SECURITY

4.3.11 Where appropriate, consideration should be given to any security impacts of an option. Options may impact on a range of users including pedestrians, cyclists (and stored/secured cycles) and equestrians as well as public transport and car users. The Security sub-criterion should also consider the impacts of options on particularly vulnerable sections of the community such as children, the elderly or women travelling alone.

4.3.12 At Part 2 Appraisal it will be necessary to introduce quantitative measures to the appraisal to complement or even replace qualitative measures. Examples include:

• Outputs from surveys designed to capture users’ perception of security in different scenarios or assess their preference for different security measures;
• Quality of service monitors which explicitly capture perception of security at different facilities; and
• ‘Before and After’ surveys of levels of use of comparative facilities where security enhancing measures have been introduced.

4.3.13 Further detailed guidance can be found in the Technical Database.

PARTICIPATION AND CONSULTATION

4.3.14 Participation and consultation are of particular value to informing both the appraisal of security improvements and the identification of problems associated with the security of a particular mode.

REPORTING

4.3.15 This section of the STAG Report should describe which, if any, user groups are affected by the options. The calculation of monetised accident costs and benefits follows a well established methodology and no further detailed descriptions are required. However, where the methodology does not allow the full benefits of an option to be identified then this, and any additional analysis, should be included in the report and summarised in the Part 2 AST.

Part 2 Appraisal against the Safety Criterion: Key Points

The Part 2 Appraisal against the Safety Criterion involves a detailed appraisal against two sub-criteria:

• Accidents; and
• Security.

Accidents

• Consideration is required of whether the option will have any measurable impact on the number of transport related accidents and/or the severity of transport-related accidents; and
• If measurable changes to accident numbers and/or severity are identified to be of significance, well established methodologies should be adopted to aid the quantification of road traffic accidents and only in exceptional circumstances should there be deviation from the standard methodologies.

Security

• The impacts of options on pedestrians, cyclists (and stored/secured cycles) and equestrians as well as public transport and car users should be considered;
• Account should be taken of the impacts of options on particularly vulnerable sections of the community such as children, the elderly or women travelling alone; and
• The adopted approach is largely qualitative. Quantitative methods may be adopted if they are robust and have been discussed with the Scottish Government and/or its agency Transport Scotland or other agency, as appropriate.

4.4 ECONOMY

4.4.1 The Part 2 Appraisal under the Economy Criterion has three sub-criteria which together should summarise the full extent of economic impacts. These are:

• Transport Economic Efficiency (TEE) – the benefits ordinarily captured by standard cost-benefit analysis – the transport impacts of a proposal;
• Wider Economic Benefits (WEBs) – relate to the notion of wider economic benefits derived from the impact of transport upon agglomeration, and the underlying relationship of impacts of agglomeration upon productivity; and
• Economic Activity and Location Impacts (EALIs) – allow the impacts of a proposal to be expressed in terms of their net effects on the local and/or national economy.

TRANSPORT ECONOMIC EFFICIENCY (TEE)

4.4.2 This section provides guidance on how to assess the contribution that an option may have on economic welfare. Cost benefit analysis techniques are used to show the net welfare effect, as measured by costs and benefits, of options. It provides guidance on the principles which underpin the general approach to be followed and outlines issues and methodologies relating to different components.

4.4.3 Additional Transport Economic Efficiency guidance is available for practitioners in the Technical Database.

CALCULATION OF TEE INPUTS

BENEFITS TO TRANSPORT USERS

4.4.4 The economic benefits of transport projects are often captured through an analysis of the impacts on transport users. Benefits to users often fall into the following sub-groups:

• Transport users whose travel patterns do not change but who enjoy time saving and/or other benefits;
• Diverting users, who switch from other routes because of changes in relative (generalised) costs;
• Diverting users who switch mode in response to changes in relative (generalised) costs;
• Generated users, whose use was previously frustrated by, for example, traffic conditions on the proposal, route or service; and
• Redistributed users who may change their origin or destination in response to transport changes (for example, finding employment elsewhere).

4.4.5 Benefits typically arise from a combination of the following:

• Changes in the monetary costs of travel;
• Journey time savings achieved directly, for example by using a new road or bridge rather than the next best alternative;
• Improvements in journey time reliability, which may be especially important for certain types of users such as delivery services; and
• Improvements in journey quality, such as comfort or reduction in number of interchanges.

4.4.6 As transport projects form part of a system or network, network-wide effects should be considered. This can help show whether transport users of other modes or routes gain if an option is implemented. Network effects which may contribute to benefits for non users include:

• Reduction in journey times on other routes which arise because of some users of the other route(s) switching to the new route or switching mode; and
• Improvements in journey time reliability and other aspects of journey quality, arising for similar reasons.

PRIVATE SECTOR OPERATOR IMPACTS

4.4.7 The other category of transport economic efficiency benefits is the impact on private sector operators – investment costs, operating and maintenance costs, revenues and grant/subsidy payments. Guidance on how to assess these impacts can be found in the Technical Database.

APPRAISAL PARAMETERS

4.4.8 Standard appraisal parameters are applicable for appraisal against the Economy Criterion and in particular, within TEE calculations. The Technical Database includes guidance on adopting the appropriate appraisal parameters. Practitioners must follow this guidance and, if required, request advice from Transport Scotland on technical matters relating to the appraisal parameters set out in the Technical Database.

WIDER ECONOMIC BENEFITS (WEBS)

4.4.9 The second sub-criterion found under the Economy Criterion, concerns Wider Economic Benefits (WEBs) derived from the impact of transport upon agglomeration, and the underlying relationship of impacts of agglomeration upon productivity. Practitioners must follow the Technical Database guidance and if required, request advice from Transport Scotland.

ECONOMIC ACTIVITY AND LOCATION IMPACTS (EALIs)

4.4.10 Economic Activity and Location Impact analysis will only be necessary if it has been identified as important or significant within the Part 1 Appraisal. If so, practitioners should seek to identify and quantify impacts at the national and local level. As a practical approach to identifying and quantifying EALIs (at least in orders of magnitude), it is necessary to consider the nature and scale of these on a case-by-case basis.

4.4.11 A case-by-case approach must be tailored specifically to the transport option under consideration and to the appropriate area or spatial level. This forms a partial analysis, which involves a detailed segmentation of the economic actors in the spatial areas relevant to the appraisal of the option.

4.4.12 The Technical Database sets out the approach which should be followed for the detailed appraisal of EALIs. Practitioners should follow this guidance and, if required, request the advice of Transport Scotland on technical matters relating to the detailed appraisal guidance on EALI analysis.

4.4.13 The approach outlined can be tailored to particular studies and local circumstances, with the degree of quantification appropriate to the size of the study, the scale of the option under consideration and the expected relative significance of EALIs (both positive and negative) in the overall appraisal.

PARTICIPATION AND CONSULTATION

4.4.14 It will be useful for practitioners to agree appraisal parameters, methodologies and appropriate appraisal tools with the Scottish Government and/or Transport Scotland in advance of the detailed Part 2 Appraisal of impacts against the Economy Criterion. Detailed information on participation and consultation guidance for EALI analysis should be particularly useful to practitioners and this is outlined in the Technical Database.

REPORTING

4.4.15 It is important that practitioners provide clear and concise details of the impacts which are calculated during Part 2 Appraisal under the Economy Criterion in the STAG Report. For the TEE analysis, it should be clear what is driving the present value of benefits calculated and what appraisal parameters have been used. A tabular presentation of results is expected in the Part 2 AST with supporting information provided to outline the main quantitative impacts calculated.

4.4.16 Similarly, the WEB and EALI analysis should be summarised in the Part 2 AST with supporting information provided where relevant. If no impacts are found against either the WEB or EALI sub-criteria then this should be stated clearly.

Part 2 Appraisal against the Economy Criterion: Key Points

The Part 2 Appraisal against the Economy Criterion involves a detailed appraisal against three sub-criteria:

• Transport Economic Efficiency (TEE);
• Wider Economic Benefits (WEBs); and
• Economic Activity and Location Impacts (EALIs).

Transport Economic Efficiency (TEE)

Net benefits to transport users, comprising:

• Travel time savings;
• User charges including fares, parking charges and tolls;
• Vehicle operating cost changes for road vehicles;
• Quality benefits to transport users; and
• Reliability benefits to transport users.

Net benefits to private sector operators, comprising:

• Investment costs;
• Operating and maintenance costs;
• Revenues; and
• Grant and subsidy payments.

Wider Economic Benefits (WEBs)

WEB analysis relates to the notion of Wider Economic Benefits derived from the impact of transport upon agglomeration, and the underlying relationship of impacts of agglomeration upon productivity.

Economic Activity and Location Impacts (EALIs)

EALI analysis allows the impacts of an option to be expressed in terms of their net effects on the local and/or national economy.

4.5 INTEGRATION

4.5.1 There are three sub-criteria to the Part 2 Appraisal of the Integration Criterion:

• Transport Integration – the degree to which an option fits with other transport infrastructure and services;
• Transport and Land-Use Integration – the fit between an option and established land-use plans and land-use/transport planning guidance; and
• Policy Integration – the appropriateness of an option in light of wider policies including those of both Central and Local Government.

4.5.2 These sub-criteria are different in both concept and scope, and they therefore require separate treatment in the STAG study.

TRANSPORT INTEGRATION

4.5.3 The Part 2 Appraisal requires detailed consideration of the following aspects of Transport Integration:

• Services and ticketing; and
• Infrastructure and information.

4.5.4 In relation to services and ticketing, the Part 2 Appraisal should focus on:

• Seamless public transport network (where the user’s experience is of a single, genuinely integrated system); and
• Seamless ticketing (where no barriers are presented to purchasing whole-journey tickets).

4.5.5 Consideration of infrastructure and information relates to what is provided at an interchange point independent of actual public transport services. Examples include, but are not limited to:

• Quality of infrastructure: waiting areas, amenities on site (such as toilets, refreshment areas and shops), quantity and quality of seating;
• Layout: distances between boarding points, changes of level, widths of corridors, physical accessibility/barrier-free design, weather protection; and
• Information: provision of accessible information, provision of whole-journey information, accuracy of information (e.g. real-time), signing between points.

TRANSPORT AND LAND-USE INTEGRATION

4.5.6 Developments in UK and Scottish Government policy in recent years have provided a clear framework for the integration of land-use and transport planning with a focus on sustainability and reducing the need to travel. It is expected that options emerging from STAG studies are consistent with existing policy.

4.5.7 For the Part 2 Appraisal the relationship between an option and any major existing or proposed developments should be considered to determine the likely impacts of an option on existing and planned land-use developments.

POLICY INTEGRATION

4.5.8 The Part 2 Appraisal requires more detailed checks to identify complementary or conflicting impacts with the wider Scottish policy context including, but not limited to, the Government’s Purpose. Additional benefits in the context of Scottish policy on disability, health and rural matters together with further social inclusion impacts should also be outlined. The purpose is to check for compliance with legislation and policy in addition to specific accessibility issues, including but not limited to:

• Disability;
• Health;
• Rural Affairs; and
• Social Inclusion.

4.5.9 The Part 2 Appraisal also requires a more detailed assessment of the consistency of options with national transport targets, for example for road traffic reduction.

PARTICIPATION AND CONSULTATION

4.5.10 Consultation should be integral when considering the impact of an option on Integration. For example, in terms of Transport and Land-Use Integration it may be appropriate to target individuals involved in planning decisions at the local and regional level. Furthermore, the movement of people is a key aspect of Transport Integration and users should be consulted to ensure account is taken of real and perceived integration issues.

REPORTING

4.5.11 Reporting on Integration in the STAG Report should cover the three sub-criteria of Transport integration, Transport and Land-Use Integration and Policy Integration.

4.5.12 It should be noted that there is possible overlap and the potential for double counting between Transport Integration and Transport Economic Efficiency (TEE) appraisal. It is therefore important for practitioners to provide an explanation in support of the Part 2 AST in the form of answers to the following two questions:

• Is there an identifiable impact upon transport interchange resulting from the option; and
• Is it definitely the case that some aspect(s) of this impact will not be captured by the TEE or another aspect of the appraisal?

4.5.13 Under the Transport and Land-Use sub-criterion any conflicts and potential synergies with existing statutory documents concerning planning should be reported. In addition it is necessary to demonstrate that a proper analysis has been undertaken of the relationship between the option and any major existing or proposed developments, taking into account the principles of sustainability and reduction in the need to travel.

Part 2 Appraisal against the Integration Criterion: Key Points

The Part 2 Appraisal against the Integration Criterion involves a detailed appraisal against three sub-criteria:

• Transport Integration;
• Transport and Land-Use Integration; and
• Policy Integration.

Transport Integration

• The Transport Integration sub-criterion should focus on services and ticketing and infrastructure and information.

Transport and Land Use Integration

• The relationship between an option and any major existing or proposed development should be considered in accordance with established land-use policy to determine the likely impacts of an option in the context of existing and planned land-use developments.

Policy Integration

• For Policy Integration, a series of checks are required to establish whether the options integrate with wider policies, including those of both Central and Local Government including, but not limited to, the Government’s Purpose; and
• Additional benefits in the context of policy on disability, health and rural matters should be identified, together with further social inclusion impacts.

4.6 ACCESSIBILITY AND SOCIAL INCLUSION

4.6.1 Accessibility is a broad concept that defines the ability of people and businesses to access goods, services, people and opportunities. The Part 2 Appraisal focuses on detailed qualitative and quantitative assessment of Community and Comparative Accessibility.

COMMUNITY ACCESSIBILITY

4.6.2 Community Accessibility comprises:

• Public Transport Network Coverage – a consideration of the impacts of an option on each group in society for a range of trip purposes; and
• Local Accessibility – the measurement of opportunities to walk or cycle to services and facilities is required, including severance arising from proposed changes.

COMPARATIVE ACCESSIBILITY

4.6.3 Comparative Accessibility considers the distribution of impacts by:

• People group – particular attention should be given to the needs of socially excluded groups with age, gender, mobility impairment, income group and car ownership factors of relevance; and
• Geographic location – locations relevant to the local Transport Planning Objectives considered, for example community regeneration areas, areas of disadvantage and deprivation and rural areas. The appraisal should describe where impacts are occurring and compare the impacts within these locations with other areas.

4.6.4 It should be noted there is also a further aspect to Accessibility – expressed or revealed accessibility i.e. the demand for travel. This is captured through the Transport Economic Efficiency (TEE) analysis completed as part of the economic appraisal where a monetary value can be provided for observed and forecast travel demand.

EQUALITY IMPACT ASSESSMENT

4.6.5 The Public Sector Equality Duties require public bodies to promote race, disability and gender equality. As part of this requirement public bodies should take due consideration of the impact of their policies and practices on race, disability and gender issues through the undertaking of an Equality Impact Assessment. It is also good practice for account to be taken of age, sexual orientation and faith. Further information on the requirements of the Public Sector Equality Duties and Equality Impact Assessment process is available from http://www.scottishexecutive.gov.uk/Topics/People/Equality.

PARTICIPATION AND CONSULTATION

4.6.6 With a focus on people and places rather than modes of transport, consultation should be integral to the appraisal of the impacts of an option on Accessibility and Social Inclusion. This is of particular value to the accessibility analysis completed in that the opportunity is presented to capture both real and perceived accessibility issues. Coverage should therefore be wide ranging and focus on people and places rather than modes of transport. A range of methods can be used and the selected approach should be fully reported. Further detailed guidance can be found in the Technical Database.

REPORTING

4.6.7 A presentation of results should be given in the Part 2 AST with supporting information provided to outline the main impacts identified.

4.6.8 Accessibility and Social Inclusion findings can be much easier to understand when presented on maps. The Technical Database outlines the different options available for presenting Accessibility and Social Inclusion results for each of the sub-criteria considered. This should be included in the STAG Report and presented clearly and concisely.

Part 2 Appraisal against the Accessibility and Social Inclusion Criterion: Key Points

The Part 2 Appraisal against the Accessibility and Social Inclusion Criterion involves a detailed appraisal against two sub-criteria:

• Community Accessibility; and
• Comparative Accessibility.

Community Accessibility

• This includes consideration of public transport network coverage and access to local services.

Comparative Accessibility

• This concerns the distribution of accessibility impacts by people group (for example age, gender etc) and by location.

Consideration should also be given to the need to complete an Equality Impact Assessment in accordance with the Public Sector Equality Duties for race, disability and gender. It is also good practice for account to be taken of age, sexual orientation and faith.

4.7 COST TO GOVERNMENT

4.7.1 At Part 2 Appraisal, it is essential to assess the net cost of an option from a public spending perspective. This cost can then be compared with the total benefits of the option in terms of the STAG Criteria. This allows an overall value for money assessment to be made. It is important that practitioners adhere to the detailed Cost to Government and Risk and Uncertainty guidance provided in the Technical Database. This will ensure that costs are presented robustly and consistently across Scotland.

4.7.2 Cost to Government refers to all costs incurred by the public sector as a whole, net of any revenues. The total net cost consists of investment costs, operating and maintenance costs, grant/subsidy payments, revenues, and taxation impacts. All investment costs presented should be adjusted for Optimism Bias. Detailed guidance on Optimism Bias is outlined in the Technical Database.

4.7.3 Costs and revenues to private sector operators should be separately identified. If there is any ambiguity about whether a cost should be allocated to the public or the private sector (e.g. in the case of public-private partnerships), advice should be sought from the Scottish Government and/or its agency Transport Scotland.

INVESTMENT COSTS

4.7.4 These should include all infrastructure and other capital costs incurred by public sector operators which are additional to those incurred in the do-minimum scenario. In addition to construction costs, fees, design, land acquisition and other preliminary works should be included.

OPERATING AND MAINTENANCE COSTS

4.7.5 Operating and maintenance costs should include the annually recurring costs incurred by the public sector in running and maintaining the option considered.

GRANT AND SUBSIDY PAYMENTS

4.7.6 Should private sector operator revenues not cover the investment and operating costs, some form of grant or subsidy may be required for the delivery of an option by private sector operators. Any such grant or subsidy represents a Cost to Government.

4.7.7 At the appraisal phase funding agencies are unlikely to be able to give commitments or to be precise about the amounts of support likely to be available. However, the deficit arising from private sector provision without the benefit of grant or subsidy will be indicative of the level of support likely to be required to deliver the proposal (although the private sector is likely to require an additional profit margin/return on capital).

4.7.8 Grant and subsidy payments are transfer payments, and hence the assumed level of subsidy provision should not affect the overall net present value of an option – it simply affects the distribution of costs and benefits between different parties. The figure recorded under Cost to Government should be equal, but of opposite sign to, the figure recorded in the Grant/Subsidy section of Private Sector Operator Impacts in the Transport Economic Efficiency section of the appraisal.

4.7.9 In some cases, it may be possible to identify potential developer contributions. In effect, these are ‘negative grants’. These contributions also represent transfer payments and should be recorded both as a benefit to the public sector and a cost to the private sector.

REVENUES

4.7.10 Public sector revenues are most likely to be relevant in the case of road user charging and where an option would impact on parking revenues. Revenues are related to user charges, as user charges represent monetary transfers from users to the Government, although in many cases the revenues are subsequently re-invested in the transport system.

INDIRECT TAX REVENUE

4.7.11 Options which substantially promote public transport can lead to reductions in HM Revenue & Customs tax receipts by shifting expenditure from cars and car fuel, which are heavily taxed, to public transport services on which the indirect tax rate is relatively low. Similarly, a saving in fuel costs for drivers (e.g. due to a road improvement) will lead to loss of tax revenue to Government.

4.7.12 These impacts represent costs to the Government, and it may therefore be necessary to assess the expected change in indirect tax revenue to the Government due to changes in the transport sector.

APPRAISAL PARAMETERS

4.7.13 The Technical Database includes detailed guidance on adopting standard appraisal parameters which are applicable for the detailed appraisal of Cost to Government and in particular, for the assessment of investment costs, lifecycle costs and indirect tax revenue impacts. Practitioners must follow this guidance and, if required, request the advice of Transport Scotland on technical matters relating to the appraisal parameters found in the Technical Database.

PARTICIPATION AND CONSULTATION

4.7.14 It will be useful to engage with stakeholders and specialists during the early stages of the transport planning process through to the Part 2 Appraisal to accurately identify public sector costs. If practitioners are uncertain about whether specific costs are public or private, then advice should be sought from the Scottish Government and/or Transport Scotland.

REPORTING

4.7.15 At this stage in the STAG Report, there must be a clear statement of the likely net cost of the option/s under consideration. This should include all costs incurred by the public sector as a whole, net of any revenues.

4.7.16 If possible, costs should be broken down further with potential funding partners and procurement routes identified. Although desirable, it is acknowledged that this may only be possible for options that are at an advanced stage of development.

Cost to Government: Key Points

• It is essential that the likely net cost of an option from the public sector’s point of view is identified within the appraisal. This enables a comparison with the total benefits and an assessment of overall value for money.
• Cost to Government refers to all costs incurred by the public sector as a whole, net of any revenues. The total net cost consists of investment costs, operating and maintenance costs, grant/subsidy payments, revenues, and taxation impacts.
• In many cases the revenues of private sector operators are unlikely to cover the investment and operating costs of an option considered. As a result, some form of grant or subsidy may be required, and any such payments represent a cost to the Government.
• Revenues are most likely to be relevant in the context of road user charging and parking strategies. Some options, particularly those aimed at promoting modal shift, could have a significant impact on indirect tax receipts. These impacts represent costs to the Government and, where appropriate, the appraisal should assess the expected change in indirect tax revenue attributable to changes in the transport sector.
• All capital costs and estimate of works duration should be adjusted for Optimism Bias and risk.

4.8 RISK AND UNCERTAINTY

4.8.1 In appraisals there is always some difference between what is expected, and what eventually happens, because of biases unwittingly inherent in the appraisal, and risks and uncertainties that materialise. As a result, it is important to identify and mitigate risks, and make allowances for Optimism Bias.

4.8.2 The aim of taking account of risks, uncertainties, and Optimism Bias is to obtain the best possible estimates of the costs and benefits of each option.

4.8.3 Practitioners should calculate an expected value of all risks for each option and consider how exposed each option is to future uncertainty. In addition, before and during implementation, steps should be taken to prevent and mitigate both risks and uncertainties. Risk management strategies should be adopted for the appraisal and implementation of large transport options being considered, although these principles can also be applied to smaller options.

RISK MANAGEMENT

4.8.4 Risk management is a structured approach to identifying, assessing and controlling risks that emerge during the course of the option lifecycle. This supports better decision-making by developing a more thorough understanding of the risks inherent within an option and their likely impact. Risk management involves:

• Identifying possible risks in advance and putting mechanisms in place to minimise the likelihood of their materialising with adverse effects;
• Having processes in place to monitor risks, and access to reliable, up-to-date information about risks;
• The right balance of control in place to mitigate the adverse consequences of the risks, if they should materialise; and
• Decision-making processes supported by a framework of risk analysis and evaluation.

4.8.5 At the level of individual transport projects, risk management strategies should be adopted in a way that is appropriate to their scale. The aim of risk management is not necessarily to completely eliminate risks, but to reduce risks wherever the cost of mitigation is less than the cost of the risk.

OPTIMISM BIAS

4.8.6 There is a demonstrated, systematic, tendency for project appraisers to be overly optimistic. This is a worldwide phenomenon that affects all types of projects, including transport, in both the private and public sectors. The available evidence suggests that many project parameters are affected by optimism – appraisers tend to overstate benefits, and understate timings and costs, both capital and operational.

4.8.7 To redress this tendency, appraisers should make explicit adjustments for this bias when appraising projects. These will take the form of increasing estimates of the costs and decreasing, and delaying the receipt of, estimated benefits. Sensitivity testing should be used to consider uncertainties around the adjustment for Optimism Bias.

QUANTIFIED RISK ASSESSMENT (QRA)

4.8.8 Practitioners are required to present a Quantified Risk Assessment (QRA) for all transport options. As project design and development progresses, it should become possible to explicitly quantify and value risk factors. The assessment of risk allows practitioners to calculate a risk-adjusted expected value of the option. In general terms this is calculated by multiplying the probability of the risk occurring by the size of the outcome (as monetised) and summing the results for all the risks and outcomes. However, practitioners are required to undertake a number of steps before deriving the risk-adjusted expected value. Further details on this process are provided in the Technical Database.

ASSESSING UNCERTAINTY

4.8.9 An expected value is a useful starting point for understanding the impact of risk between different options. However, no matter how well risks are identified and analysed, the future is uncertain. Therefore it is also essential to consider how future uncertainties could affect the choice between options.

SENSITIVITY ANALYSIS

4.8.10 Sensitivity analysis is a fundamental part of a STAG study. It is used to test the vulnerability of options to future uncertainties which are unavoidable. Through analysing the range of values for key variables through sensitivity analysis any resultant effects on options can be examined.

4.8.11 The calculation of switching values shows by how much a variable would have to fall or rise to make it not worth undertaking an option. This should be considered a crucial input into the decision as to whether a proposal should proceed.

4.8.12 Therefore it should be the norm, rather than the exception, to carry out sensitivity analysis on the key variables for a given transport option considered during Part 2 Appraisal. These variables will usually have a significant impact on either the overall cost or benefit of the project.

PARTICIPATION AND CONSULTATION

4.8.13 It is important that the participation and consultation activities adopted as part of a STAG study feed into the risk and uncertainty analysis undertaken by transport planners. It will be useful to engage with stakeholders and specialists during the early stages of a STAG study through to the STAG Part 2 analysis in order to identify, control and mitigate risks identified.

REPORTING

4.8.14 The practitioner should be able to demonstrate in the STAG Report the steps taken to identify, control and mitigate the risks identified. It should also be clear what allowances have been made for Optimism Bias. It is a requirement that all capital costs used in the Part 2 Appraisal and reported in the ASTs have been adjusted for Optimism Bias and an explanation of the methodology adopted to do this and the outcome should be clearly and concisely reported.

4.8.15 Sensitivity testing of key variables for a given option is also required to demonstrate the robustness of the option to the assumptions made. It should be made clear what key variables were selected for sensitivity analysis and also what the outcomes were from this analysis and the implications for the proposal under consideration. It is expected that explicit consideration of risk and uncertainty will feed back into the feasibility, affordability and public acceptability analysis undertaken during Part 1 Appraisal.

4.8.16 Further detailed guidance on all matters relating to Risk and Uncertainty analysis can be found in the Technical Database. Practitioners should seek the advice of the Scottish Government and/or Transport Scotland where further clarity is required.

Risk and Uncertainty: Key Points

• All risks and uncertainties associated with an option need to be fully taken into account within a STAG study.
• Risk management strategies should be adopted throughout the appraisal and implementation stages of options in order to ensure that steps have been taken to prevent and mitigate risks and uncertainties.
• Evidence from past transport projects illustrates that there is a systematic tendency for project appraisers to be overly optimistic when estimating costs and benefits. To redress this tendency, practitioners should make explicit adjustments for bias when appraising projects.
• When more reliable estimates of relevant costs are built up, risks are explicitly assessed and quantified, and work to minimise project-specific risks is undertaken, adjustments can be made to reduce the level of Optimism Bias.
• However, in general, even with a well developed project there will remain some risks which cannot be foreseen. In such cases it will not be possible to include these risks in the expected value, so instead a contingency figure should be added in order to take account of possible unanticipated risks.
• No matter how well risks are identified and analysed, the future is uncertain. Therefore a fundamental part of a STAG study is to carry out sensitivity analysis to test the vulnerability of options to future uncertainties.
• Through analysing the range of values that key variables may take, practitioners can examine how this may alter the preferred option.

4.9 PART 2 APPRAISAL SUMMARY TABLES

4.9.1 The Part 2 ASTs summarise the results of the Part 2 Appraisal and are more detailed than the Part 1 Appraisal ASTs. The Technical Database provides detailed guidance on preparing the Part 2 ASTs.

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