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Long-term view, local value
The revisions to the Green Book principles are likely to support the localised approach that is embodied by TEAM, explains Stephen Cox.
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Value analysis points the way to recovery for town centres

For the urban environments that have suffered during the COVID-19 crisis, calculating the value of potential projects using our economic analysis tools can assist regeneration and recovery.

Town and city centres have been hit especially hard by the economic impacts of COVID-19, as office workers, shoppers and other visitors have opted to stay at home and businesses that rely on this footfall have suffered. Whatever the lasting effects of the pandemic and whatever societal changes result, it seems certain that there will be a greater need than ever for projects that can regenerate urban environments, creating appealing spaces for commercial and leisure activity and adding value for the communities that use them.

But local authorities, town planners and transport bodies that are responsible for land use and development - many of whom were already severely resource constrained before this year’s events – now find themselves in an unenviable position. How do you choose the right intervention, and put together a business case strong enough to win public funding and attract private investment, in such an uncertain landscape? Schemes that are being conceived now may take at least three or four years to come to fruition, so decision-makers today need to look beyond the current COVID disruption and use the best possible evidence to ensure they maximise value for local people and businesses.

Some specific challenges clients are facing include:

  • Traditional assumptions about jobs created as a result of a new building or infrastructure may no longer hold. For example, the benefits of a new office building might be calculated on the basis that it will hold one person per 7 square metres once occupied. If social distancing and homeworking become the ‘new normal’ these densities may no longer be appropriate.
  • Moreover, agile working patterns may call into question the value of jobs created to a local area. A job might be nominally based in one location, but if an individual is predominantly working from home and only making periodic trips in the office, in practice this may add little to the local economy.
  • Projects which combine public transport improvements with private sector development (eg leisure and retail outlets at train stations) will be undermined if there are fewer commuters and business travellers in future.
  • The value created by arts, entertainment, leisure and sports venues will depend on these being allowed to open to full capacity, and people being willing and able to travel to them.

Flexible, multi-faceted projects

Projects that are most likely to provide good value in these uncertain times include residential developments in and around town centres – for example, flats above shops – which bring people into the centre of the local economy, according to Stephen Cox, Mott MacDonald’s head of economic and social development. Where possible, a mix of different types of residential development close to the centre – sheltered accommodation, family housing, apartments – is preferable, to tap into demand from a variety of demographic groups.

A second category that has grown in importance is agile and flexible business space. Commuting a long distance may have become less appealing during the pandemic, but this does not mean that working from home is a desirable long-term solution for all. Offices that people can drop in and out of, booking a desk for a defined period, may offer a resilient commercial proposition especially if they are located close enough to centres of population.

Thirdly, the lockdown and its aftermath has highlighted the value of parks and other green spaces. Projects that bring nature into urban environments not only enhance the lives of people living nearby, but encourage visitors who can add to a local economy and offer an alternative to residents who would otherwise leave town to enjoy rural locations. Green spaces also encourage active travel such as cycling and walking - which reduces carbon footprint and adds to the fitness of the population – while improving air quality, and mitigating flood risk and the urban heat island effect

“A lot of the towns that we are working with are talking to us about bringing projects forward that bring the countryside into the town,” says Stephen Cox. “Having green space means that people can spend more time in their own town rather than always going for days out - that local dimension to recreation is becoming much more important. We can help clients work out the value of that green space to society - how many people have access to it, what the value is to each of those people, and how you monetise that.

“For example, we are working with one town which is looking to bring forward the largest area of urban parkland in the country with a mix of recreation uses, edible and non-edible growing space, and enterprise units on a mix of brownfield and green belt land.”

Help with accessing funding

Even before the pandemic, the UK government had recognised the need to breathe new life into struggling town centres and made significant public money available for projects that are focused on local regeneration, including the Towns Fund, which is worth £3.6bn, and the £675M Future High Streets Fund. These sources of finance are likely to become even more important in the wake of COVID-19. To have the best chance of winning funding, project sponsors need to demonstrate robust analysis of the economic, social and environmental value created by their proposals.

Mott MacDonald can help clients with this using our Transparent Economic Assessment Model (TEAM), which is a versatile tool designed to calculate direct, indirect and induced local economic impacts of proposed interventions and policies.

TEAM offers a different perspective from traditional economic benefit analysis, which focuses on macro-level impacts and fails to highlight local benefits. By contrast, TEAM starts with a micro assessment, highlighting job creation, increased wages, access to housing, education and healthcare, and gross value added to the local economy. It also analyses dynamic effects – examining the impacts of changes that will occur over time, interact with the project and affect its performance - in contrast to a static analysis which only considers the interaction between the project and the world as it exists now.

Both of these features make it ideal for analysing value in the current scenario, where local decision-makers are focused on choosing projects that maximise the benefits that accrue to their specific geographical area and are concerned with how these benefits might alter over time in a changing world. Since it was launched in 2014, TEAM has been complemented by additional tools, Green TEAM and RESI, which provide even more detailed analysis for green infrastructure and residential development respectively.

The insights revealed by TEAM can be presented visually through GIS mapping. The easy-to-understand digital interface provides the ideal means of engaging local stakeholders with the benefits that will accrue to their local area, on a granular, street-by-street level.

For many stakeholders, social outcomes are just as important as economic ones, and our analytical methods can capture benefits such as accessibility, inclusion, empowerment, resilience and wellbeing throughout the project lifecycle.

Long-term view, local value

In line with internationally recognised appraisal best practice and HM Treasury’s Green Book principles, TEAM uses 10, 30 or 60-year appraisal periods depending on the type of project being assessed. It is important to recognise that the longer the time period considered, the harder it is to anticipate any effect of social trends resulting from the pandemic, and assuming a return to normality in calculations may be the only possible response.

But even for big infrastructure projects – which necessarily use this longer time horizon – TEAM can add a different dimension by sharpening the focus on local benefits and value.

As part of its plan to ‘level up’ the country, the government is considering revisions to the Green Book to answer the criticism that it favours densely populated urban areas over small towns and rural regions. The revision is likely to support the localised approach that is embodied by TEAM, explains Stephen Cox.

“In general, the Green Book works well and we think the wholesale changes that some people are expecting are highly unlikely,” he says. “However, one flaw is that its approach favours more densely populated cities and larger towns over smaller ones. If you create 10 jobs in a town that only has 100 jobs, that is quite significant, but when it is compared to 100 jobs created in a bigger settlement, the latter will always win. The enlightened view – which has already been adopted in Scotland and Wales - is that it is not about the total benefit, it is about the difference that benefit makes locally.”

Learn more about Mott MacDonald’s business case consultancy here

TEAM is one of the tools featured in the Mott MacDonald white paper New Dimensions to Delivery

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