Lesson

Beware that schedule and costs of road pricing projects are affected by various factors including legislative outcomes, clarity and specificity of scope, and contracting methods.

Experience from road pricing programs in Europe and Asia

12/01/2010
Czech Republic; Germany; Sweden

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Background (Show)

Lesson Learned

Congestion pricing programs face political, institutional, and public acceptance challenges and concerns everywhere in the world. Over a 12-day period, from December 7 to 18, 2009, a multidisciplinary scan team from the United States interacted with the experts in Europe and Asia to develop an understanding of factors that contributed to the successful implementation of road pricing. Based on their international experience, the scan team offered the following lessons learned on issues related to procurement vehicles such as public-private partnership (PPP) method of financing and design-build-operate method of contracting.
  • Beware that schedule and costs of pricing projects are affected by various factors including legislative outcomes, clarity and specificity of scope, and contracting methods.

    Stockholm: Stockholm worked with an open-ended scope, which was deemed necessary to deal with the compressed delivery schedule for the trial program and evolving legislation that was not resolved at the time of the procurement. The consequence was schedule delays in the trial startup because of scope changes to access legislative outcomes and high implementation and operating costs.

    Czech Republic: The Czech Republic selected an off-the-shelf DSRC (dedicated short-range communications)-based system that had relatively high OBU (onboard unit) costs and a design-build-finance-operate PPP contract over 10 years. The contractor started receiving payments after 6 months’ worth of revenues were generated. For Berlin project, a German private consortium fronted the capital cost for a 15-year design-build-finance-operate PPP contract. Stockholm and London used more traditional design-build-operate procurement methods and found that initial capital and operating costs were high, requiring subsequent actions to reduce ongoing costs.
  • Beware that PPPs have been used in some road pricing deployments by leveraging no-upfront costs to agency for implementation but incurring high operating costs.

    Germany: The German Toll Collect consortium put up all the money required to develop and implement the German system through 2005, with no public funding. The private consortium is bound by contractual standards for availability and accuracy and is audited by the federal government on a regular basis. Toll Collect’s compensation is about 11 percent of total toll revenue and includes operation of the automated and manual systems; a service fee for payment providers; operation of the toll terminals, enforcement gantries, and mobile equipment; mobile communications; system depreciation; and net income before taxes and interest. The nature of the contract provides little incentive for cost efficiency, which drives disproportionate spending to ensure performance standards. Similarly, the Czech system is a PPP with a long term contract that locks in relatively high costs of operations.
Road pricing programs implemented in Europe and Asia offer important lessons on exploring the use of market-based approaches to address traffic congestion and improve mobility. Procurement planning for successful road pricing program must include adequate analysis of costs as a result of the choice of financing and contracting methods.

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Source

Reducing Congestion and Funding Transportation Using Road Pricing In Europe and Singapore

Author: Robert Arnold, Vance C. Smith, John Q. Doan, Rodney N. Barry, Jayme L. Blakesley, Patrick T. DeCorla-Souza, Mark F. Muriello, Gummada N. Murthy, Patty K. Rubstello, Nick A. Thompson

Published By: Federal Highway Administration, U.S. DOT

Source Date: 12/01/2010

URL: http://international.fhwa.dot.gov/pubs/pl10030/pl10030.pdf

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Benefits From This Source

After implementation of the congestion charge in London, the number of vehicles entering the charging zone decreased by 25 percent, travel speeds increased by 30 percent, trip times decreased by 14 percent, and traffic delays plummeted by 25 percent.

In Germany, vehicle-miles traveled using cleaner trucks (Euro 4 and 5) rose 60 percent from 2 percent in 2005 to over 62 percent in 2009 because of the nationwide heavy-goods-vehicle tolling program.

In Singapore, the Electronic Road Pricing program has enabled maintaining target speeds of 45 to 65 kilometers per hour on expressways and 20 to 30 kilometers per hour on arterials.

The Stockholm congestion tax project reduced traffic congestion by 20 percent and vehicle emissions by 10 to 14 percent in the Central Business District.

Lessons From This Source

Be prepared to face the opportunities and challenges posed by political timetables, project deadlines, as well as pricing-equity issues for road pricing procurement and implementation.

Beware that schedule and costs of road pricing projects are affected by various factors including legislative outcomes, clarity and specificity of scope, and contracting methods.

Consider advantages of open-source designs and beware of legal challenges in road pricing systems procurement.

Consider stakeholder outreach and education, transport modes that offer an alternative to driving, performance measurement, and area geography with high importance in the planning phase for road pricing programs.

Create performance standards for operational effectiveness of a pricing program, define business rules for back-office operations, and refine operations practices based on needs.

Define clear goals and pay attention to key institutional and technical factors for successful implementation of road pricing programs.

Develop a statutory and legal framework for as a foundational step for levying road pricing fees and utilizing revenues.

Develop public outreach programs based on the cultural and political context of the project location and provide clear, salient, and timely messages about the purpose and benefits of congestion pricing.

Enforce congestion toll collection and create integration linkages between pricing system and motor vehicle registries to process violations.

For successful implementation of a road pricing program, strive for simplicity in policy goals and strong championing of the program by the executive and legislative leaders.

Understand that while the viability of pricing programs is impacted by political actions, pricing signal is a potential tool for developing a sustainable transportation system.

Use business and functional requirements to guide technology selection for a road pricing program and understand that the technology selected initially evolves over time.

Lesson ID: 2011-00590