This methodology is broadly consistent with that presented above, but there are some differences in the treatment of QRA. This arises due to a lack of evidence regarding the treatment of risk within rail projects. This guidance should therefore be regarded as temporary whilst further research is undertaken. The Project Development Level and recommended Optimism Bias uplifts are presented in Table 13.5, based on rail specific uplifts from previous Strategic Rail Authority (SRA) guidance and evidence from Network Rail.
Table 13.5: Recommended Risk and Optimism Bias Adjustments for Rail Projects
|
Project Development Level* |
Level 1 | Level 2 | Level 3 | Level 4 | Level 5 |
| Activity | Pre-feasibility | Project Definition | Option Selection | Single Option Refinement | Design Development |
| Capital Expenditure | |||||
| QRA | No | No | No | QRA at mean estimate | QRA at mean estimate |
| Optimism Bias (% of present value capex) | 66% | 50% | 40% | 18% | 6% |
| Operational Expenditure | |||||
| QRA | No | No | No | QRA at mean estimate | QRA at mean estimate |
| Optimism Bias | 41% of present value opex | 1.6% per annum# | 1% per annum# | Evidence based | Evidence based |
Sources: Mott MacDonald 2002, Review of Large Public Procurement in UK (HM Treasury website), SRA and Network Rail research
* Definition of project development levels is consistent with Network Rail's project development definition in GRIP (Guide to Rail Investment Projects)
# Added to each set of operational costs in the year that they occur. Not to be taken as a cumulative.
