A review of techniques used to assess the credibility of a business case in public sector rail projects

Abstract

Building a business case for a rail project is a complex and demanding task drawing on the professional skills of transport planners, economists, quantity surveyors and engineers. The decision and policy makers need to be convinced that the project sponsor is promoting a credible and robust business case that reflects the scheme’s intended investment before giving the go-ahead for the scheme. However despite these fundamental requirements with the business case the rail industry is plagued with projects that have been granted approval, by the decision and the policy makers, and have not delivered according to the forecast business case proposed by project sponsors. In most projects the conclusion that can be drawn is that costs were underestimated and benefits and revenue were overestimated in the original business case. This position naturally calls into question the credibility of the sponsor’s business case, an issue for many public sector rail schemes worldwide. When granting approval for a project the policy and decision makers are faced with the complex and difficult decision of assessing whether the scheme is credible and robust and can go forward for implementation. Whether or not the project delivers according to the prescribed business case will not be known until the project has been completed, however the vital credibility assessment needs to be made well in advance of the final outcome. The credibility decision is based on the business case information presented to policy and decision makers by the project sponsor; therefore the sponsor has a responsibility to promote a credible business case and use robust techniques to achieve this goal. Similarly the policy and decision makers need to use robust credibility assessment techniques to assess whether the sponsor’s case is credible or not and ultimately fit for investment, otherwise disaster strikes.