Coursework Guidance 2024

 This Coursework will contribute 50% of your overall Assessment on the module. Word limits, formatting and deadlines are detailed at the end of this guidance.

The questions cover: matrix-based appraisal techniques; the interpretation of CBA metrics (NPV, BCR and IRR); the rule-of-a-half and its limitations; business values of travel time savings; and causality in the relationship between transport and economic development. .

1. Matrix-based appraisal. You have been provided with the data necessary to complete a matrix-based appraisal for a hypothetical transport improvement in a simple 3-mode, 3-zone model where all travel is assumed to be commuting. Use the data and the spreadsheet given to you, to derive:

i. the value of commuting travel time savings in each year of the appraisal period, at 2010 prices (in Sheet 1);

ii. the user benefits in the opening year of the project, 2027, at 2010 prices (in Sheet 2);

iii. the Present Value of user benefits, after discounting according to HM Treasury (2022) Green Book methods, at 2010 prices and values;

iv. the Benefit:Cost Ratio (BCR), Net Present Value (NPV) and Internal Rate of Return (IRR) for this project.

(10%)

2. Interpretation of CBA metrics. Discuss whether this project represents good value for money, with reference to DfT's value for money (VfM) framework (DfT, 2017, p25). Consider whether there is any risk of it changing VfM category - for example due to uncertainty around the value of travel time savings (see Table 1 in DfT, 2022, TAG Unit A1.3). What are the implications of the other two CBA metrics for this project (NPV and IRR)?

(15%)

3. The Rule-of-a-Half. Taking into account the work of Börjesson et al (2014); Geurs et al (2010); and de Jong et al (2007), what do you see as the most serious limitations of the rule-of-a-half as a benefit measure in transport appraisal? Discuss

   (25%)

4. Business VTTS. Should business travel time changes be valued at the wage rate plus overheads?  Discuss with respect to economic theory and the evidence.

   (25%)

5. Transport and economic development. Melia (2018) argues that the statistical evidence of transport’s role in economic development remains inconclusive. He argues that the broad evidence base contains both positive and negative elasticities, and there are mixed results to Granger causality tests.  Transport should instead be seen as a facilitative factor responding to the needs of the economy and society. Do you agree with him?  Justify your answer from a theoretical and empirical perspective.

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