We estimate that the daily average usage of the CCT in the first six months of operation, when the toll was at full price, at less than 25,000 vehicles a day. See Exhibit 2.5 in Chapter 2. This means the RTA overestimated initial patronage by more than 300 per cent. However, traffic has increased to an average of 34,000 vehicles a day since the half-price toll period began in March 2006.
The patronage forecaster that the RTA commissioned was quoted in the press as saying 'we're out on this one'. He called the higher projections in the CCM bid 'pretty strong stuff'. The DoP relied on the RTA-commissioned study. A rival bidder said that the tendering model used in this project provided 'a perverse incentive to bid on high patronage'.
The RTA and the DoP did not robustly challenge the assumptions behind the patronage projections they used in deciding the road changes. The agencies considered patronage to be a commercial risk to be shouldered by the consortium.
Our audits of a series of projects over the years confirm that patronage projection is inexact at best, and can be critical to the success or failure of a project. See Exhibit 4.4.
Exhibit 4.4: Examples of early patronage projections and actual usage for road projects | ||
Project | Patronage projection | Comments |
Harbour Tunnel | Under-estimated initially | Continuing high demand now |
M2 Motorway | Too high initially | Now at high capacity |
Airport Rail Link | Far too optimistic | Company collapsed |
M5 Motorway | Under-estimated initially | Continuing high demand now |
Too high initially | Now at high capacity | |
Liverpool to Parramatta Bus Transitway | Too high initially | Actual use still lower than forecast |
Source: analysis by the Audit Office | ||
This experience strongly suggests that taking a risk management approach to patronage projection would be prudent. This could involve requiring transport consultants to express their opinions as a clearly defined range of projected patronage outcomes. This could mean defining a minimum and maximum number of vehicles per day. Project approval would then assess the viability of the project, taking into account the range of patronage scenarios.
For the CCT, the RTA needed to more carefully consider the impact if traffic volumes were lower than predicted.