THE TAY BRIDGE STUDY METHODOLOGY RE‐EXAMINED
| Published date | 01 June 1972 |
| Author | David Barrell |
| DOI | http://doi.org/10.1111/j.1467-9485.1972.tb00519.x |
| Date | 01 June 1972 |
THE TAY BRIDGE STUDY METHODOLOGY
RE-EXAMINED
Category
DAVID
BARRELL
The object of this note is to draw attention to a fundamental error
in
the
calculations of the Tay Bridge Cost Benefit study (Gillhespy,
1968)
and to
an inconsistency in the methodology adopted.
Dr.
Gillhespy’s original table of costs and benefits is reproduced in Table
I
together with an explanation of the formulation
of
his economic criteria.
Table
I
Gillhespy’s uncorrected figures
ANNUAL
COSTS
AND
BENEFITS.
TAY
BRIDGE
STUDY
Value
Annual benefits
f
Cost Savings)
Capital Cost charge
Congestion costs
i
Y
Bridge operating costs
-
]
x
Category
118,200
60,000
430,600
~~ ~~
Vehicle operating costs
Time spent travelling
(a) Diverted
(b) Existing
Accidents
Ferry
Generated Traffic
Total Ib
Present value
of
constant
stream over
25
years.
(6.1
76
discount
P.W.)
-
Value
732,000
771,900
5
1,700
16,000
143,000
391,000
2,105,900
26,670,000
Annual costs
f
1x1
608,800
Present value
of
constant
stream over
25
years.
7,707,000
Ratio
of
present value
of
benefits and costs
3.4
WC)
Differences
of
present value
of
benefits and costs
f18,963,000
(B-C)
25.4
(b-(x+y))
,00
_____
‘
Simple rate
of
return
’
(per cent.)
6,350,000)
Source:
The Tay Road Bridge: A Case Study,
N.
R.
Gillhespy.
Scottish Journal
of
Political
Economy,
June
1968.
Tables
V
and
VI.
An error was made in the calculation of the capital cost charge which
significantly alters the magnitude
of
the benefit cost ratio and the net present
value of the project. The capital cost charge in Table
I
is the annual
equivalent
of
the initial capital cost over the assumed life of the project.
However, the correct annual equivalent of the project’s cost,
Eh,350,000,
at
183
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