Managing the Level Crossing Removal Program

Tabled: 14 December 2017

Appendix E. Core quantifiable benefits

Figure E1 describes the quantifiable benefits and net present value (NPV), collectively referred to as the core cost–benefit analysis approach.

Figure E1
Benefits summary

Core quantifiable benefits


2016 NPV $ million
(7 per cent discount rate)

Travel time savings

Includes changes in the journey times for private, business and freight vehicles across Melbourne's road network.

1 898

Vehicle operating cost (VOC) savings

Total VOCs include all running costs of the vehicle—depreciation, fuel, repairs and maintenance.


Road travel reliability savings

The removal of level crossings may have an impact on travel time reliability for road users by eliminated unpredictability of boom gates.


Public transport user benefits

A reduction in road congestion will improve travel times and reliability for bus passengers, as well as potentially causing some rail users to drive instead, and therefore alleviate crowding on trains. A number of new train stations will be built, or existing ones upgraded.


Accident cost savings

The removal of level crossings will eliminate a number of dangerous locations from the road network and may reduce the likelihood of risk‐taking behaviour along these roads.


Resource cost corrections (RCC) savings

RCCs are the difference between the overall social and user‐perceived costs of travel. For example, motorists perceive some of the costs of operating a vehicle, such as fuel, but do not necessarily perceive other expenses like depreciation.


Cost of pollution

Different transport modes result in different production of environmental emissions, such as air pollution and greenhouse gas emissions, changes in travel patterns may cause changes in network-wide emissions.


Residual value—replacement cost

Benefits are based on a 50-year evaluation period. Beyond this LXRP assets will still provide services to transport users. The residual value of the benefits to be derived from level crossing removals at the end of the 50‐year evaluation period has been estimated as the discounted value of the assets at the end of the period.


Construction disruption cost

During construction, there will be times requiring road and rail line closures. Road diversions and/or provision of replacement bus services but this may mean that journey times are longer. At other times, roads or rail lines may operate with reduced levels of service.


Wider economic benefits

Wider economic benefits are productivity impacts that a standard CBA does not adequately cover. Analysis of wider economic impacts attempts to capture the broader impacts of a project including the effects of connectivity, land development and business logistics improvement on productivity and output.


(a) Public transport user benefits is made up of public transport user benefits ($141 million), station improvement benefits ($466 million) and interchange improvement benefits ($292 million).

(b) Accident cost savings is made up of direct level crossing relating collision reduction ($145 million) offset by an estimated increase in other road incidents due to higher vehicle kilometres travelled (-$11 million).

(c) Construction disruption disbenefit comprises disruption to rail passengers ($39 million) and disruption to road users ($18 million).

(d) The figure in the table includes agglomeration benefits ($420 million), increased labour supply ($82 million), and imperfectly competitive markets ($52 million).

Source: VAGO from information provided by LXRA.

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