Robert Bain, traffic & revenue consultant says he thinks he's found a new low in forecasting - a 77km tollroad in Malaysia linking the Desaru tourist area to Johor Baru. Traffic after opening in the fall of 2009 was just 1.9% of forecast by the end of the year. For the whole of 2010 traffic had risen to 8.3% of forecast, 91.7% below forecast.
The tollroad cost unfortunate investors RM1.37b, $439m.
The state auditor-general described the result as "unsatisfactory" and a "danger to users."
Expectations about traffic forecasts for 20 years ahead as opposed to five years are much lower, with some disregarding entirely 20 year forecasts, especially for new roads. That's a finding of a survey of accuracy expectations by Robert Bain that got responses from some high level transportation officials. At 20 years respondents expect average traffic forecasting error (adding positive and negative error) of 45% compared to about 25% at 5 years.
Traffic and revenue (T&R) forecasts that turn out high are a problem not only for those who invested on the basis of inflated expectations. They're a broader problem for the industry, spreading general skepticism and causing forecasts to be heavily discounted even where that isn't warranted.
Improved traffic and revenue (T&R) forecasts are vital if toll roads (TRs) are to maintain the support of investors, says financial consultant Robert Bain. Writing in the Fall issue of TOLLWAYS, the IBTTA journal Bain says international investor confidence in traffic forecasts "is at an all time low."
Robbie Bain is a freelance transport finance analyst. We've loved the guy from the first time we met him maybe ten or 12 years ago because he's good company, candid and fearless. He obviously lives by the adage that if you want a loyal friend you get a dog. It also helps that he's well-qualified etc.
Tollers in northeast Texas have coined a new term: "underrun". It's the flipside of overrun. A statement says the last meeting of the North East Texas Regional Mobility Authority (NETRMA) board voted among other items "to request that TxDOT reallocate the construction cost underrun on Toll 49 Segment 3B to Toll 49 Segment 5."
That's one for cost-overrun wonks Bent Flyvbjerg and Robbie Bain to note.
Rob Bain formerly with Standard & Poors and Steer Davies Gleeve has written the first guide to traffic and revenue (T&R) studies, reports which are often key in go/no-go decisions on tollroad projects, and which have a huge bearing on how much capital can be mobilized, whether the operation is under government ownership or investors (P3).
Rob Bain, 47, former director in the infrastructure team at Standard & Poor’s London office, has established his own traffic and transportation consultancy providing independent reviews of traffic and revenue forecasts, and credit advisory services to investors. He has just finished a PhD dissertation at the University of Leeds on investor financed roads around the world.