3. Proposed productivity metrics
After considering a number of measures, the most useful productivity metrics were considered to be (see further discussion in Appendix A):
- The present value of productivity benefits
- The productivity benefit intensity, which is present value of productivity benefits as a percentage of the present value of total benefits including WEBs
- The productivity benefit cost ratio (BCR), which is the present value productivity benefits divided by the present value of investment costs.
Table 2 shows a simple worked example of how to obtain the three productivity metrics from the main benefits and costs of a typical road transport initiative.
|Benefits and costs|
|a||Private car travel time vehicle operating cost savings||12*|
|b||Business car and truck travel time vehicle operating cost savings||5|
|e||Wider economic benefits||4|
|CBA measures without WEBs|
|g||Total benefits (a + b + c + d)||20|
|NPV (g - f)||8|
|BCR (g / f)||1.7|
|CBA measures with WEBs|
|h||Total benefits (g + e)||24|
|NPV (h - f)||12|
|BCR (h / f)||2.0|
|i||Present value of productivity benefits (b + e)||9|
|Productivity benefit intensity % (i / h *100)||38%|
|Productivity BCR (i / f)||0.8|
* All values are $’000 million present values
The fact that the inputs for productivity metrics calculation can readily be extracted from CBAs makes the task of compiling these metrics straightforward once a CBA is done.