calculating tram line construction costs

I’m planning of posting a few ideas for tram extensions, so I thought it might be an idea to lay the groundwork by looking at how much the fixed infrastructure is likely to cost. An easy way of doing this is to look at how much recent Melbourne tram extensions have cost.

Box Hill
The Box Hill extension, opened in 2003, is 2.2 kilometres long and cost $28 million.

Vermont South
The Vermont South extension, opened in 2005, is 3 kilometres long. The exact capital cost is tricky to work out, given that the works included upgrading the 732 bus and funding the operation of these services for 4 years (god knows why). Of the $42.5 million total cost, $12 million was allocated to future service operation, leaving us with a construction cost of $30.5 million. This probably overestimates the cost somewhat, given that it includes capital works on the 732 bus.

Docklands Drive
The Docklands Drive extension, also opened in 2005, is just under a kilometre long (my Melway says 940 metres) and cost $7.5 million.

Indexation and calculating an average per-kilometre cost

Using the RBA’s inflation calculator to work out these prices in 2006 dollars* (2007 dollars not yet available), we find that Box Hill would cost $30.46 million; Vermont South $31.58 million and Docklands Drive $7.77 million. This yields an average per-kilometre cost of $10.87 million in 2006 dollars.

*These price increases are based on the Consumer Price Index, not an index of infrastructure costs, so it is conceivable that they may be a little bit out. However given how close we are to the base year, the difference is probably negligible.

Note about economies of scale

I’d say that the provision of tram infrastructure faces an l-shaped long run average cost curve (LRAC) on the scale that occurs in Melbourne, indicating there are economies of scale. Now of course if every city in Australia decided to each build 200 kilometres of tram lines, then we’re going to see some diseconomies of scale due to insufficient skilled engineers and workers – pointing to a u-shaped LRAC. As stated, however, for this to occur, the scale of production would have be implausibly high; so on a city wide scale we can assume that infrastructure investment LRACs are probably only downward sloping. This suggests that a 10 kilometre tram extension ought to cost less per-kilometre than a 500 metre tram extension.

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8 Responses

  1. Have you though of a tram extension to Tullamarine Airport?

    It would be fairly cheap from the present tram head in Airport West, and fill one of the most terrifying problems in our present system: the only public transport to the airport is a bus service every two hours on weekdays!

    However, the present tram service would be too slow to compete with cars. What I suggest is turning narrow Keilor Road into a car-free mall with four tram tracks so that trams goign from the City can express from Essendon Station to the airport. The rest of the present line can be done by trams from Footscray (route 82). that way, you would have two service to the airport: one for locals, one for the rest of the city! Moreover, the cost would be a lot less than freeways to the airport.

  2. […] tram line operating costs Posted by Phin under Uncategorized  Following on from my calculations on tram line construction costs, I’m going to have a brief look at operating costs for new […]

  3. Hi Julien,
    I think we need heavy rail to the airport (not just trams) for two reasons – airport workers and freight. Whilst a tram would be good for some airport workers in the north western suburbs, as you say it would be slow and could not carry freight. Heavy rail could do this and would be a lot faster. Faster than skybus? not sure. But if it were integrated with the rest of the system and was a standard zone 2 fare, I think that the workers and many travellers would use it.

  4. I’m fairly certain that the citylink contract included a clause banning any public transport links to the airport for the next 50 years, I’ll check though.

  5. Nope, looks like I just made that up 🙂

  6. Just to continue boosting your number of comments, according to wikipedia the state government does have to compensate Transurban for any developments that reduce the number of cars using their roads, so compensation would have to be paid if a line to the airport was built.

  7. […] caution, given the large number of basic errors throughout their entire public transport document. My formula, which sets construction costs at $10.87 million per kilometre, implies that a 4 kilometre […]

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