2.13 Alternatives and options
- 2.1 Overview
- 2.2 Social cost benefit analysis and financial analysis
- 2.3 Benefits
- 2.4 External impacts
- 2.5 Costs
- 2.6 Present value and discounting
- 2.7 Time frame
- 2.8 Do minimum and benefit and cost differentials
- 2.9 Benefit cost ratios
- 2.10 Incremental cost benefit analysis
- 2.11 First-year rate of return
- 2.12 Uncertainty and risk
- 2.13 Alternatives and options
- 2.14 Packages
- 2.15 Transport models
- 2.16 Other inputs to funding allocation process
- 2.17 References
2.13 Alternatives and options
Need to consider alternatives and options
Early and full consideration must be given to alternatives and options (sections 20(3)(d) and 68(2)(b)(ii) of the LTMA 2003).
Alternatives are different means of achieving the same objective as the proposal, either totally or partially replacing the proposal. For example, TDM programmes are generally alternatives to the provision of road capacity.
Options are variations on the proposal, including scale and scope of components.
It is common for economic evaluations to concentrate on one preferred project option. Narrowing the scope of the analyses too early can cause serious errors, such as:
- neglecting options that differ in type or scale, eg, a road realignment that may eliminate a bridge renewal
- neglecting significant externalities, eg, the impacts of change in traffic flow upon adjoining properties
- inconsistencies with wider strategic policies and plans, eg, the impacts of improvements to a major urban arterial on downtown congestion
All realistic project options shall be evaluated to identify the optimal economic solution. Rigorous consideration of alternatives and options is also a key component of Land Transport NZ's funding allocation process.
Mutually exclusive alternatives and options
Mutually exclusive alternatives and options (and package options) occur when acceptance of one alternative or option precludes the acceptance of others, eg, when a new road is proposed and there is a choice between two different alignments. The choice of one alignment obviously precludes the choice of the other alignment and therefore the two options are mutually exclusive.
Mutually exclusive options shall be evaluated in accordance with the incremental cost benefit analysis procedure in section 2.10.
Independent stages
Project stages shall be treated as independent projects if the different stages could be executed separately, and if their benefits are independent of other projects or stages.
Features to mitigate external impacts
Where alternatives or options include features to mitigate or otherwise address external impacts or concerns and the features significantly increase the cost of the options, the options with the features must be compared with the project option without these features. This analysis shall be undertaken irrespective of whether the features are independent of the project or mutually exclusive.
