Evaluating target achievements in the public sector: An application or a rare non-parametric DEA and Malmquist indices

This paper provides an assessment of the extent to which targets set by a public authority are achieved by its operational units. A rare DEA framework and its subsequent Malmquist indices are applied on data comprising 19 units over a four year period of 1996 to 1999. The mean efficiency scores by which targets are achieved across the sample years are moderate, in the range 0.81 to 0.93. Average productivity progress across the sample years has been 26 percent. The results illustrate the usefulness of DEA even when there are no inputs and the decomposable Malmquist index for productivity is an asset in exploring causes of productivity growth.target achievement, traffic safety, data envelopment analysis, Malmquist indices

Do Planners Get it Right? The Accuracy of Travel Demand Forecasting in Norway

This paper deals with the accuracy of travel demand forecasts among Norwegian road projects. We use data collected from tolled roads and toll free roads. The results reveal that while traffic forecasts of tolled schemes are fairly accurate, traffic forecasts among toll free roads have a higher degree of inaccuracy and are generally underestimated. An explanation for the observed discrepancy between estimated and actual traffic among toll free roads is that road planners may have ignored the existence of induced traffic and that the standard national traffic growth rates used in the transport models has been too low. For tolled roads, an explanation for the higher degree of forecast accuracy is that planners over the years have been scrutinized to provide careful estimates. Our recommendation is that traffic forecasts provided by planners should constantly be subjected to scrutiny by independent consultants before being presented to the decision makers. Aspects that need to be specifically examined include: (1) the extent to which a road project may lead to induced traffic, (2) the extent to which transport models accommodate appropriate factors and, (3) the extent to which forecasts made address uncertainties by providing confidence intervals of estimates.&nbsp

How Efficient Are Ferries In Providing Public Transport Services? The Case Of Norway

In this paper we provide a yardstick for measuring the performance of ferries involved in the Norwegian trunk road system. We establish a best practice frontier from which individual ferries are measured against. The potentials for efficiency improvements can then be derived giving the decision makers knowledge of the magnitude of efficiency gains that can be achieved if the current subsidy regime is changed. The approach we use for establishing the frontier is the Data Envelopment Analysis (DEA) which is known to tackle problems of this type appropriately and which is now popular in assessing the efficiency of public transport services. Further, we use rich data comprising about 82 ferries operating throughout the country. The data are from the account years 2003 – 2005 and includes as inputs; fuel, labour, capital and maintenance costs, and as output ferry kilometres per year. Our results indicate that there is a large potential for efficiency improvements in the sector as whole. Further, we find that area of operation e.g. whether open sea or not has a significant impact on efficiency thus we warn the decision makers not to be indifferent concerning the area where services are provided when assessing performances of the ferry sector. Our findings if used appropriately could improve the ferry subsidy schemes which today are based on standard cost norms and that do not address special cost drivers such as area of operation and capacity of ferries.Institute of Transport and Logistics Studies. Faculty of Economics and Business. The University of Sydne

The Relative Efficiency of Public and Private Bus Companies?

By applying Data Envelopment Analysis (DEA), this study examines the efficiency of a subset of Norwegian bus companies in order to test the hypothesis that public companies are less efficient than private ones. DEA consists of constructing a piecewise linear best practice frontier enveloping the input-output combinations of the companies, efficiency being measured for each individual company in terms of its distance relative to the frontier. DEA is widely acclaimed for being flexible, letting the data reveal the unknown and possibly complex relationships between inputs and outputs. As a consequence, each company is most likely evaluated against similar companies being located in the ‘neighbourhood’ in the input-output space. If private and public companies are clustered in separate subspaces in the input-output space however, each company will most likely be evaluated against companies of its own rather than the opposite category of ownership. In order to avoid this pitfall, we identify and include in the study only those companies that are found to be either efficient or inefficient as compared to at least one company in the opposite category of ownership. The results from the study are compared to those obtained by the more conventional approach where all companies are included in the study

The accuracy of benefit-cost analyses (BCAs) in transportation : an ex-post evaluation of road projects

Ex-post evaluations of benefit-cost analyses (BCAs) of transportation projects are scarce in the literature. If conducted frequently, they could reveal the extent to which objectives are achieved and may give inputs that can improve the quality of ex-ante BCAs. We first explain the usefulness of ex-post BCA evaluations of transportation projects, depending on which planning phase a project is in. We then perform ex-post BCAs on 27 Norwegian road projects that have been in service for at least 5years and compare the results with the ex-ante BCAs that were presented to the decision-makers. We use two different measures of aggregating the magnitudes of accuracy; the Mean Percentage Error (MPE) and Mean Absolute Percentage (MAPE). Using MPE, we find that: (1) ex-ante BCAs underestimate the actual net present value (NPV) by 50% on average and, the NPV per dollar invested by a mere 0.14% points on average; (2) the traffic level and traffic growth rates areoften underestimated ex-ante, leading to an underestimation of the benefits and; (3) construction costs are underestimated by 5% on average, which is too small to offset the observed underestimation of benefits. By default, MAPE shows higher values of inaccuracies implying that one should not be indifferent as to the measure used. Overall, the Norwegian exante BCAs perform fairly well. We urge that the authorities concerned must improve their traffic forecasts and construction cost estimates to assure that the ex-ante objectives are met. The upkeep of ex-ante data is essential to enable ex-post evaluation which, ceteris paribus, will enhance the transparency and credibility of BCA as an appropriate decision-making tool. Keywords: ex-post evaluation, benefit-cost analyses (BCA), road projects, NorwaypublishedVersio

Comparing the productivity of Norwegian and some Nordic and UK container ports - An application of Malmquist productivity index

This article measures productivity changes during 2009 2014 of the six largest Norwegian container ports against 14 similar small- and medium-sized ports in the Nordic countries and the UK. The approach used is the Data Envelopment Analysis (DEA) based Malmquist Productivity change Index (MPI), which carries out a decomposition isolating the technical progress of the efficiency improvement. The major findings are: (i) The sampled Norwegian ports seem to perform better than their international counterparts in terms of efficiency scores; (ii) when productivity growth over time is considered, the Norwegian ports appear to be overperformers but a statistical test proves that they are not, and (iii) overall, total productivity increased by approximately 0.6% per year for all ports considered and this progress is explained more by technological improvements and less by efficiency change, which declined during the period studied. This study provides Norwegian decision makers with new information regarding the performance of Norways container port industry.publishedVersio

The Relative Efficiency of Public and Private Bus Companies?

By applying Data Envelopment Analysis (DEA), this study examines the efficiency of a subset of Norwegian bus companies in order to test the hypothesis that public companies are less efficient than private ones. DEA consists of constructing a piecewise linear best practice frontier enveloping the input-output combinations of the companies, efficiency being measured for each individual company in terms of its distance relative to the frontier. DEA is widely acclaimed for being flexible, letting the data reveal the unknown and possibly complex relationships between inputs and outputs. As a consequence, each company is most likely evaluated against similar companies being located in the ‘neighbourhood’ in the input-output space. If private and public companies are clustered in separate subspaces in the input-output space however, each company will most likely be evaluated against companies of its own rather than the opposite category of ownership. In order to avoid this pitfall, we identify and include in the study only those companies that are found to be either efficient or inefficient as compared to at least one company in the opposite category of ownership. The results from the study are compared to those obtained by the more conventional approach where all companies are included in the study

How Efficient Are Ferries In Providing Public Transport Services? The Case Of Norway

In this paper we provide a yardstick for measuring the performance of ferries involved in the Norwegian trunk road system. We establish a best practice frontier from which individual ferries are measured against. The potentials for efficiency improvements can then be derived giving the decision makers knowledge of the magnitude of efficiency gains that can be achieved if the current subsidy regime is changed. The approach we use for establishing the frontier is the Data Envelopment Analysis (DEA) which is known to tackle problems of this type appropriately and which is now popular in assessing the efficiency of public transport services. Further, we use rich data comprising about 82 ferries operating throughout the country. The data are from the account years 2003 – 2005 and includes as inputs; fuel, labour, capital and maintenance costs, and as output ferry kilometres per year. Our results indicate that there is a large potential for efficiency improvements in the sector as whole. Further, we find that area of operation e.g. whether open sea or not has a significant impact on efficiency thus we warn the decision makers not to be indifferent concerning the area where services are provided when assessing performances of the ferry sector. Our findings if used appropriately could improve the ferry subsidy schemes which today are based on standard cost norms and that do not address special cost drivers such as area of operation and capacity of ferries.Institute of Transport and Logistics Studies. Faculty of Economics and Business. The University of Sydne

The Impact of External Quality Assurance of Costs Estimates on Cost Overruns: Empirical Evidence from the Norwegian Road Sector

Cost overruns in transport infrastructure projects are prevalent and have been well documented in the literature; see, for instance, Flyvbjerg et al. (2003), Odeck (2004 and 2014) and Cantarelli et al. (2010). Governments may therefore exert efforts to reduce overruns by implementing strategies such as quality assurance of cost estimates, whereby external consultants are engaged to assure the accuracy of estimates. However, the literature has to a lesser extent provided evidence on what governments do to combat overruns and whether those efforts work in practice. This paper provides such evidence for the case of Norway, where the government implemented a quality assurance regime for cost estimates above 500 million NOK in the early 2000. Apart from explaining the Norwegian quality assurance regime, the paper uses statistical inferences to compare the magnitudes of cost overruns in the pre-and post- quality assurance periods. The statistically significant derived results are as follows: (i) quality assurance has led to a reduction in cost overruns; (ii) quality assurance has not, however, led to improved accuracy of the estimates provided by the authorities – rather, it has led to systematic overestimation by the authorities; and (iii) external consultants are more accurate than the authorities. We conclude that the quality assurance regime is achieving the objectives of reducing cost overruns and that similar regimes should be considered for smaller projects where overruns have been shown to be very large

Transport appraisal revisited

Cost-benefit analysis has become a widely used and well developed tool for evaluation of suggested transport projects. This paper presents our view of the role and position of CBA in a transport planning process, partly based on a survey of a number of countries where CBA plays a formalised role in decision making. The survey shows that methodologies, valuations and areas of application are broadly similar across countries. All countries place the CBA results in a comprehensive assessment framework that also includes various types of non-monetised benefits. An important advantage with using CBA is that it is a way to overcome cognitive, structural and process-related limitations and biases in decision making. Some of the main challenges to CBA and to quantitative assessment in general lie in the institutional and political context. There is often a risk that CBA enters the planning process too late to play any meaningful role. This risk seems to increase when planning processes are centred around a perceived "problem". If the problem is perceived as important enough, even inefficient solutions may be viewed as better than nothing, despite that the definition of what constitutes a "problem" is often arbitrary