The intended benefits of the LXRP are diverse and include those generally recognised for transport projects—specifically, improvements to safety and travel, stimulating economic growth, revitalising local communities, and facilitating more trains running more often.
As completion of the LXRP is not due until 2022—with only 10 of 52 crossings removed—there is insufficient data at present to make an informed judgement on the extent to which it is achieving intended outcomes. Additionally, while LXRA has developed KPIs and targets, some of these are not meaningful. Without these, LXRA cannot assess the extent to which the program is achieving intended outcomes.
4.2 Benefits management framework
DEDJTR has developed a benefits management framework in accordance with DTF requirements.
The framework includes an investment logic map, benefit map and benefit management plan. These were developed from a series of workshops, which included consideration of the problem and benefits, and knowledge from previous level crossing removal projects and other related programs.
DEDJTR circulated the investment logic map, benefit map and benefit management plan to stakeholders from various government departments for comment.
The following high-level benefits have been identified for the LXRP:
- Improved productivity from more reliable and efficient transport networks—addressing the congestion and delays caused by level crossings will improve the efficiency of Melbourne's transport networks.
- Better connected, liveable and thriving communities—removal of level crossings will reduce delays and increase the attractiveness of living and investing in areas surrounding the crossings.
- Safer communities—removing rail and road intersections will eliminate the conflict points between trains and road users, and trains and pedestrians, reducing the number of crashes.
DEDJTR developed KPIs and targets to measure the delivery of these benefits. LXRA is responsible for monitoring the achievement of performance targets and for actions required to improve any area where the target is not achieved.
LXRP's benefits framework has limited outcomes reporting—due to the lack of comprehensive indicators and targets—and needs improvement. The benefits framework is outlined in Appendix G.
KPIs, targets and reporting
KPIs and targets specified in the benefit management plan are not comprehensive, in that they only require an 'improvement'—for example:
- 100 per cent of sites with road based public transport will have improved punctuality
- 100 per cent of sites will have improved access to local activity centres and major services.
These targets would be realised with any level crossing removal.
LXRA advised us that it deliberately set targets in this way because factors other than the crossing removal can affect outcomes. Given this, the KPIs themselves are unlikely to be suitable measures.
LXRA should still monitor its performance against intended benefits so that it can meaningfully report on the contribution the LXRP is making in achieving outcomes.
The business case indicates that the principal transport benefits from the LXRP are changes in journey times for private, business and freight vehicles across Melbourne's road network.
The business case indicates that LXRA will measure and report for the whole program, although it will collect some measures and KPIs for individual packages. For the CTD rail corridor project, LXRA will prepare a benefits management plan for the entire corridor rather than for individual crossings.
LXRA advised that when the removal program is completed, it intends to 'roll up' individual benefits reports into a holistic program report. In doing so, LXRA will have limited timely insight into how LXRP as a whole is progressing towards benefits realisation.
LXRA has quantified journey times as travel time savings, included in its CBA as a core benefit. LXRA should use these and other CBA core quantified benefits as KPIs, and measure and report on these core transport benefits consistent with the business case. See Appendix E for the value of core quantifiable benefits.
Progress towards benefit realisation
LXRA prepared draft benefit reports for four sites that show the impact of crossing removals as at March 2017—Burke Road, Centre Road, McKinnon Road and North Road. Three sites, excluding McKinnon Road, have seven KPIs with available data. Data is available for only one KPI for McKinnon Road. None of the sites have met all seven KPIs.
LXRA acknowledges that the draft benefit reports do not provide meaningful information about the extent of improvement and whether the progress results are in line with expectations.
LXRA makes a judgement on KPI data it compiles such as travel times, vehicle speeds, physical pedestrian counts, cyclists and community surveys. Where the data indicates benefits are not tracking as expected, LXRA considers whether it should take corrective action. However, LXRA does not document its assessment of the data.
Benefit reports would be more meaningful if they included commentary to interpret the results. For example, if travel time in the morning peak reduced by 1.9 minutes, commentary on whether these results are positive or otherwise should be included.
Figure 4A provides examples of KPI targets that level crossing removals have met or not met.
Examples of KPI targets
Average travel time reduced
Vehicle throughput increased
Travel time reliability improved
No new safety incidents
Source: VAGO, based on information provided by LXRA.
Data is not yet available for a number of KPIs. These include:
- community satisfaction with local amenity following crossing removal
- public transport intermodal connectivity
- reduced number of safety incidents and improved ALCAM risk score.
Overall, the reports for the four crossings indicate that benefits realised to date are below expectations. Further, without specific targets, it is not known if the extent of improvement, where achieved, is in line with expected outcomes.
4.3 Maximising value-capture opportunities
LXRA has developed a comprehensive plan aimed at maximising value-capture opportunities through the LXRP.
Value capture is the act of collecting a portion of the benefits from public infrastructure investments that flow to the value of land. Government can then use that value to pay for a portion of the corresponding infrastructure investment.
An integrated development opportunity (IDO) refers to the value created through infrastructure and land development that occurs when removing the level crossing.
For the LXRP, value capture is limited to IDOs. For example, railway land that becomes surplus to requirements through a grade separation may, with some enabling works by LXRA, be suitable for sale to the private sector to develop. IDOs can also include broader social benefits such as social housing, community services and open spaces.
LXRA released an IDO strategy in December 2015. It provides guidance on identifying IDOs, potential benefits and how benefits can be realised.
Implementing the strategy involves the following key activities:
- establishing an experienced multidisciplinary team to optimise value capture
- developing an appropriate planning approval process focused on project planning and design, to increase certainty and improve value-capture opportunities
- identifying entrepreneurial commercial and development opportunities that are scoped against market appetite for investment and risk taking—the identification of development opportunities is done using project proposals and the procurement process, rather than through program-level planning.
LXRA's ongoing monitoring of IDO projects is timely and comprehensive. It produces monthly IDO dashboard reports that provide a high-level comprehensive summary of the status of each level crossing site against project milestones. The report includes:
- gross and net revenue forecasts for the state from the sale of developed land
- costs incurred by the state to facilitate IDOs
- the type and number of residential and commercial properties proposed to be developed.
At March 2017, LXRA had identified 26 possible IDO sites estimated to provide a net return to the state of $153 million. This includes $271 million from property sales less $118 million for development enabling works, such as site preparation works.
The Coordinator-General has signed the development contract for one site, 24 sites are under consideration and one site is not proceeding. LXRA expects completion of the first IDO site in March 2021 and the last in September 2027. While LXRA aims to recover the enabling costs it incurs at each site, it does not have a specific net revenue return target.
LXRA's inability to get stakeholders to reach agreement on property developments is delaying the timely realisation of IDOs, particularly on more contentious developments, such as high-rise apartments or office towers.
This lack of agreement delays government approval of the development scope and subsequent property development agreement. This means that despite the alliance completing the level crossing removal and enabling works for the IDO, construction cannot start even though LXRA has engaged a developer.
LXRA also acknowledges the estimated return to the state may reduce if there is significant community opposition to the proposed development or the cost of enabling works becomes excessive.
Maintenance of open space
Responsibility for maintenance of community open space, such as parklands, created through an IDO project is yet to be resolved.
Although LXRA meets the cost of developing the land into open space, its crossing removal budget does not extend to meeting the ongoing maintenance costs. LXRA has advised that VicTrack—the owner of the railway land—and the local councils—whose municipality the open space belongs to—have not yet reached agreement for the ongoing maintenance of the area. VicTrack advised that it could manage this activity if funding was provided to do so.
In April 2016, LXRA put forward a proposal to government for a $15 million open space maintenance account created through the CTD project. DPC and DTF questioned the establishment, management and maintenance of the account. As at October 2017, the proposal is still under consideration.