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Planning

Jun 2, 2015

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Kitchen of the future (source: Smashing Magazine)

The Huffington Post recently invited 10 science fiction writers to predict how our world will change in the next ten years and published the results last month. That’s a pretty short period for science fiction so it’s perhaps no surprise the writers tended to take a longer term view.

Their prognostications include a shift of service industries from developed to developing countries; higher water levels due to climate change; rising socio-economic inequality; and expansion of home automation, the sharing economy, use of drones, and embedded chips in bodies.

Yet change does occur over relatively short periods. News Corp must’ve felt its commuter newspaper, MX, was a fair bet when it was launched in Melbourne in 2001. It probably didn’t anticipate it then but it nevertheless got the benefit of a sharp increase in train patronage from around 2004 to 2008.

It’s doubtful it foresaw the rate at which smartphones would be adopted either. Last week it was announced MX will close shortly after a run of just 14 years. A lot of the growth in train patronage was among the younger demographic who prefers a smartphone over a tabloid.

It’s sobering to think that even as recently as 2005 there were many now-familiar technologies that weren’t known outside their host companies or a coterie of leading edge users e.g. iPads, iPhones, home wi-fi, e-books, netbooks, drones, Google Maps.

Some of the ways new tech is being used are even more recent e.g. iPads in schools and Cabinet meetings, borrowing library books electronically. In terms of social issues, neither the growth of the 1% or gay marriage were on the popular radar ten years ago.

There’ve been some big changes in cities over the last decade too. For example, the big increase and subsequent stabilisation in public transport use in some cities (Melbourne and Perth); growth in car ownership; decline in the number of kilometres of car travel per capita; and the explosion in high-rise apartment living in the city centre (again, in some cities).

It’s a good excuse to think about what might happen over roughly the next decade in Australian cities.

One set of clues comes from US transportation researcher David M Levinson. In 2013 he compiled a list of possible future changes in transport. He doesn’t give a time-frame but since his predictions are based on existing trends, the implication is he thinks some could show real change within 10 years.

Professor Levinson’s list includes lower workforce participation, greater uptake of electric cars with the concomitant need to find substitute revenue sources for fuel taxes; improved traffic management because of wider use of embedded sensors and crowd sourced information; and fewer trips by car leading to a continuing and sharp decline in per capita car travel.

He also foresees fewer local trips but more longer trips; increasing replacement of “fetching” from the shops with home delivery; increased (but not explosive) growth in car-sharing; more “big box shopping”; and growth in driverless cars (I commented at the time on Professor Levinson’s predictions; see What are the big trends shaping transport?).

There’s some overlap here with forecasts by the US Public Interest Research Group also published in 2013 although PIRG doesn’t give a time frame either. PIRG’s predictions include declining labour force participation; stable or slowing average traffic speeds; greater use of transit; and low growth in car ownership, driver licensing and the share of population who drives.

Short-term prediction seems easier than the long view, at least for cities, because we know a lot of what’s already in the infrastructure pipeline. We also have a sense of how long it takes to build new stuff or to change attitudes and laws on big issues like congestion pricing. On the other hand, cyclical macroeconomic changes have a big impact in the shorter term and are hard to foresee.

Some things I expect will increase by 2025 but not by a lot are the uptake of driverless cars; the mode share of public transport and cycling; car-sharing; and the proportion of metropolitan jobs in the city centre. I think there’ll be no shortage of visible projects in these areas, but I don’t see outcomes changing much over this time frame.

The per capita rate of driving should continue to decline modestly (although not in absolute terms). I don’t anticipate any Australian city will introduce congestion pricing over the next ten years but I think there’s at least some chance the fuel excise will be increased in real terms. The biggest change I expect to see is in a range of small improvements that exploit embedded sensors and crowd sourcing to improve the capacity and level of service of all forms of transport.

I think it’s more likely than not that the construction of high-rise housing in the city centre and in suburban brownfields will keep pace with demand (although the latter is bound to fluctuate) over the coming decade. However I’ll be surprised if the share of new medium density housing being constructed in the streets of established suburbs doesn’t decline in most capital cities. I expect regional areas near the capitals will win a bigger share of new housing construction at the expense of the fringe.

Prediction is more satisfying from the perspective of the traditional strategic planning time scale (say to 2050) because there’s more room to imagine the impact of a major potential change e.g.driverless cars. Looking forward 10 years is easier at the level of projects but harder when it comes to discerning significant outcomes. Prediction is also hard; mine will likely be way off the mark, probably blind-sided by something hardly anyone foresaw e.g. in 2013 PIRG predicted the oil price would stay high.

Cars & traffic

Oct 3, 2013

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East-West Link Hoddle Street overpass

Yesterday The Age ran with an apparently shocking new development in the ongoing saga of the Victorian Government’s proposed East-West Link motorway, Secret case for Link revealed.

A Cabinet-in-Confidence report obtained by the paper shows “the financial case for the east-west link hinges on a prediction that toll road use will jump over the next 30 years because of rising wealth and shrinking petrol and CBD parking price rises”.

The paper says the business case for the Link makes the “controversial assumption” that:

  • drivers’ willingness to use toll roads will increase by 1.4% p.a. due to rising incomes;
  • the rate of increase in the cost of running a car will fall from the current 2% p.a. in real terms to 0.5% p.a. by 2041; and
  • the rate of increase in the cost of inner city parking, which is currently increasing at 4% p.a. in real terms, will fall to 0.5% by 2041.

According to The Age, the report indicates the methodology “has not been used in any of the Transport Department’s other public transport projects or program modelling to date.” Rather than use its own “in house” transport model, the Government outsourced the modelling to “Brisbane-based company Veitch Lister”.

The paper says this makes scrutiny difficult and, moreover, cites a source who claims there’d been internal concerns within the roads bureaucracy that:

the government had been prepared to use “garbage” assumptions to make the project appear to stack up, accusing it of manipulating modelling to produce a favourable result.

The comments on the on-line version of the article are overwhelmingly critical of the Government. One commenter takes aim at Veitch Lister, implying the firm was behind the disastrous traffic projections for high-profile motorway failures in Brisbane.

Like many others, I’m sceptical about the East-West Link given the Government’s refusal to make the business case available publicly. But while I haven’t seen the report The Age has obtained (it isn’t making it public), it’s not obvious to me that the issues raised by the paper are in themselves matters of serious concern.

The idea that the value of travel time goes up as incomes rise isn’t some sneaky, underhanded practice as The Age seems to imply. It’s why we’ve gone from walking, to trains, to cars, to planes. In fact, it’s a standard assumption in traffic modelling.

The Department of Transport in the UK suggests modellers should increase the value of travel time by 80% of the increase in real average weekly incomes (i.e. elasticity of 0.8)). Guidelines issued by the US Department of Transportation suggest modellers use an elasticity of 1.0.

The idea that the rate of increase in motoring costs might moderate over the long term isn’t remarkable either. While I might quibble with the precise numbers, the report apparently still assumes the cost will increase in real terms each year.

The lower figure doesn’t apply until 2041, more than 25 years away and we’re told nothing about the trajectory over the period. The reduction in the rate of increase presumably reflects the ample evidence that motorists respond to higher petrol costs by, for example, shifting to smaller cars or more efficient travel patterns e.g. trip chaining.

This isn’t an “out there” assumption. In fact it’s more pessimistic than that adopted in the Phase 2 High Speed Rail Study which says (Appendix 5A, Economic, social and environmental appraisal):

Under all oil price scenarios, even those with major increases, the real costs in car travel are expected to decrease relative to the costs today over the long term. This is driven by the assumptions on improved fuel efficiency for private vehicles.

There are different views on where the price of oil might go in the future and how it might affect behaviour (e.g. see Has “peak gasoline” been and gone?) but the position taken by the report isn’t unusual or deceptive.

I can’t comment on the exact numbers in relation to the reduction in the rate of increase in inner city parking costs either, but again I note that it’s assumed the cost will nevertheless increase in real terms each year. Once more, the smaller figure applies at 2041 and there’s no information provided on the shape of the curve over the period – does it fall off quickly or slowly?

The idea that the growth in parking costs might moderate is in any event a plausible one and warrants serious consideration. The mode share of public transport in the centre of the city is increasing for a number of reasons and should help to moderate the rate at which the cost of parking increases.

The Age has previously dissed Veitch Lister (see Who got the facts wrong on traffic forecasts?) but I think retaining them to do the traffic forecasting for the East-West Link is a smart move (they aren’t doing the economic evaluation). They’ve got specialist modelling expertise in toll roads. As I understand it, the ability of the Government’s in-house model to forecast demand on toll roads is relatively crude in comparison.

Importantly, Veitch Lister market themselves as the firm who provides realistic traffic forecasts. Contrary to the claim by the commenter in The Age, they didn’t do the modelling for the promoters of Brisbane’s failed Clem 7 tunnel or the failed Airport Link. In fact the firm released a rival forecast for Airport Link (as a marketing exercise) that proved considerably more accurate than the numbers the promoter relied on (1).

Stories like The Age’s tend to be accepted uncritically because they fit with the existing mood of scepticism about the East-West Link. But despite the breathless way its framed, the story doesn’t support the implication of dubious practices and assumptions. Further, we know nothing of the credibility or motivation of the paper’s source, and we don’t get to evaluate the report The Age relies on.

That doesn’t mean the East-West Link is a good project or that there aren’t other problems we don’t know about (after all, we haven’t seen the real business case). Nor does it mean the Government isn’t above being “creative” with how it presents technical information publicly (e.g. see Is there actually a sensible case for the East-West Link? and Do the numbers on the East-West Link add up?).

In this instance though, the criticisms implied by The Age aren’t convincing. I’ll remain sceptical of the East-West Link until the Government provides persuasive evidence that it’s a sensible project. But I’m not playing politics, so I’m not going to accept uncritically any and everything the media dishes up simply because it happens to “fit” my view on an issue.

__________________________

  1. For the record, I have no business or personal relationship with Veitch Lister.

Cars & traffic

Dec 13, 2012

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Forecasts for vehicle use of Brisbane's Airport Link. Source: Veith Lister Consulting (VLC)

In an article titled ‘Optimism bias’ on toll road plan published last week, The Age claimed a Qld company “that overestimated the traffic on Brisbane’s financially failed airport toll road has been hired to predict the traffic on Melbourne’s proposed $10 billion east-west toll road.”

Like most exercises that require gazing into the future, forecasting traffic is a hard business at the best of times. There are many variables at play and ample opportunity for the real world to depart from the assumptions made before the road in question opens for public use.

So it’s unrealistic to expect any forecast to be spot-on. However the projections relied upon by investors in Brisbane’s Airport Link toll road were a long way from spot-on.

The Product Disclosure Statement prepared by the proponents of Airport Link, BrisConnections, forecast 163,269 vehicles would use the new tunnel on an average day in the first three months after opening. That forecast assumed the full toll would apply but in fact no toll applied during this period.

As it turned out, actual usage during the three month toll free period averaged just 76,935 vehicles per day, less than half the forecast. So whoever did the forecasts got the numbers spectacularly wrong.

Neither Melbourne nor any other Australian city needs a problem like that. However it wasn’t the “Qld Company” referred to by The Age – Veitch Lister Consulting (VLC) – that got the forecast for Airport Link wrong.

In fact, The Age got it wrong. VLC had nothing to do with the forecasts that investors in Airport Link relied on. The Age does note in para 4 that “VLC was not employed” by BrisConnections, but that’s to cover its arse – the implication of the headline and lead paras is that VLC is culpable for Airport Link’s debacle (read The Age’s story here).

What actually happened is VLC prepared and published its own forecast for Airport Link as an entirely independent exercise, at its own cost. The company says it was an “in-house research project”.

I expect VLC was engaging in some aggressive marketing. The company probably expected the forecasts used by the proponent would turn out to be nonsense, making its own look good in comparison.

And they do. VLC’s forecasts are much closer to actual use than the proponent’s (see exhibit).

It’s still early days, but over the initial toll-free three month period, VLC says its forecast of average daily traffic, computed on the same basis as the proponents (except VLC assumed no toll), was between 75,460 and 91,600.

That’s between -2% and +19% of actual patronage. Pretty good for any forecasting exercise and very good compared to the proponents +213%, especially considering the proponent’s forecast assumed full tolling (over the entire 15 months!).

So VLC didn’t do the hopelessly optimistic forecasts that appear to be the undoing of Airport Link. More importantly from the point of view of Melburnians, the ones they did do have proven so far to be very good!

The Age got its story from Greens State Leader, Greg Barber, who the paper says:

called into question the Victorian government’s assertion that the east-west link would carry up to 100,000 vehicles a day.

Based on the estimates in the 2008 Eddington study, Investing in Transport, the preliminary Benefit to Cost ratio for the East-West Link is in the order of 0.5 i.e. it’s negative.

Now that it’s effectively committed to the project, the Victorian Government will of course be looking for ways to get that figure into positive territory. So Mr Barber’s concern is understandable.

Pointing the finger at VLC however is wrong. In fact, Mr Barber should be comforted, as I am, that the Government is hiring a firm that makes a public virtue of the accuracy of its forecasts.

I like the idea of a transport modelling consultant whose competitive advantage lies in the superiority of its forecasting technology. Some might also be comforted to learn that VLC did the transport modelling underlying the negative BC ratio estimated in the Eddington Study.

The best-known cases of enormous gaps between forecast and actual traffic involve private proponents seeking to attract capital. However, in the case of the East-West Link, VLC’s role is as an adviser to the Government.

As an aside, I don’t know where Greg Barber got the figure of 100,000 vpd on the East-West Link from, or even what it means.