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
Made Public Date
10/11/2011

1042

Czech Republic

352

Germany

1050

Sweden
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Identifier
2011-00590

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

Background

Road pricing projects have been implemented in many parts of the world, notably in the Czech Republic, Germany, Singapore, Sweden, the United Kingdom, and the Netherlands. A scan team from the United States traveled to Europe and Singapore to meet with transportation officials involved in implementation of road pricing programs and to learn firsthand about their approaches and practices.

The scan tour was sponsored by the American Association of State Highway and Transportation Officials (AASHTO), the Federal Highway Administration (FHWA), and the National Cooperative Highway Research Program (NHCRP). The 10 members of the multidisciplinary scan team included transportation professionals from four State departments of transportation (DOT), one regional transportation agency, FHWA, the Federal Transit Administration (FTA), and private industry.

The team met with officials from Berlin, Germany; the Czech Republic; London, United Kingdom; Singapore; Stockholm, Sweden; and The Hague, Netherlands, from December 7 to 18, 2009. The face-to-face visits enabled participants to gain a deeper understanding of each host country’s history and context, the goals and objectives that were established, how road pricing was designed to address transportation and policy objectives, and the hurdles that were faced and how they were overcome. The exchanges provided an opportunity to gain in-depth understanding of program goals and methods, implementation costs, benefits, transportation impacts, revenue generation and use, operating and technical practices and their costs, financing approaches, effects on safety and the environment, and public acceptance.

Much like the U.S. experience, overseas road pricing projects have been met with considerable resistance and political and public debate. International examples indicate that public acceptance and approval of pricing programs improves significantly after project implementation, when the benefits and impacts can be weighed in tangible terms based on the context of its application. Based on discussions and observations made during and after the scan, the scan team developed a series of lessons learned.

Lessons 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.

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

Reducing Congestion and Funding Transportation Using Road Pricing In Europe and Singapore
Publication Sort Date
12/01/2010
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
Publisher
Federal Highway Administration, U.S. DOT

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