Scottish Tram Financing

Transforming Travel... or not. Edinburgh Tram's optimistic route plan.
Transforming Travel… or not. Edinburgh Tram’s optimistic route plan.

Some Edinburgh City councillors already privately refer to the city’s tram project as the problem that “cannot be named”. Much as actors refer to Shakespeare’s tragedy as “the Scottish play”, superstitions of bad luck now bedevil the production. A dramatic shift from the optimism that initially characterised the development of the Edinburgh tram, towards pessimism.

That which cannot be named is no longer just the failure of a flagship local transport policy. The issue has engulfed the City of Edinburgh Council, and now risks destroying local politics completely: Not only the existing administration, but public trust in local government decision-making.

Political heavy-weights, who normally shy away from the minutiae of local governance, are now offering parental guidance in public: Alistair Darling (local Member of Parliament, and former United Kingdom Chancellor and Secretary of State for Transport) described the option to borrow £231 million ($370 million) to complete the city centre section of the tram line as “absolute madness” – the local population would be saddled with vast debts. Days later, Graham Birse (chief executive of the influential Edinburgh Chamber of Commerce) called the decision to not complete the city centre section, “bonkers” – far fewer passengers would use a tram that did not serve the city centre adequately. Even Alex Salmond (Scotland’s First Minister) has become directly embroiled, struggling to contain calls for an immediate public inquiry to identify who is responsible.

Burn the witches! This Scottish tragedy is rapidly descending into farce. That would be unfortunate, because this particular local difficulty goes to the heart of the Scottish nationalist agenda: A desire for greater devolution of public funds to local level. More localised independent entities have fewer financial resources, so are less able to manage expensive, risky projects. Consequently policy ambitions also need to be scaled back. Such scale isn’t necessarily a problem – small can be beautiful. The problem lies in pretending to be big, when not.

This article introduces the concept of risk in tram (and similarly large public transportation and infrastructure) projects, chronicles the decisions that lead a relatively small local authority to need to find hundreds of millions of pounds to support a single project, and explores the implications for future policy-making, especially in the context of a more devolved Scotland. Continue reading “Scottish Tram Financing”

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Systems of Curse and ZAM

The World of Warcraft ecosystem saw the final “big fansite” acquisition this week, with MMO-Champion bought by Curse Inc. Big meaning something that attracts millions of users each month. Curse have been using some of their $11 million of venture capital to buy up a variety of gaming fansites, including many popular WoW sites. But MMO-Champion is significant for 3 other reasons:

  • Corporate deal, not the “founder buy-out” traditionally commonplace among gaming fansites. MMO-Champion was previously owned by Major League Gaming, already a multi-million dollar enterprise (by comparison, $46 million funding).
  • Completes a duopoly (2 dominant businesses) in the core World of Warcraft “fansite” market – Curse and ZAM. While there are other large businesses and specialist niches on the fringe, none of those appear to be growing into the core WoW market.
  • Exposes an intriguing driver of this market structure: Systems costs – the underlying technology and support costs. Intriguing because these were crucial in determining the market structure of far more traditional sectors of the economy, like groceries.

This article analyses the latest acquisitions and discusses the unseen importance of systems costs. Continue reading “Systems of Curse and ZAM”

Optimism

As I write, the United Kingdom is in the midst of a national election campaign. A month during which politicians vie to confuse the electorate with big numbers. Politics is suddenly ravaged by intangibility, because the national economy is unable to sustain the usual tangible proxies for a better life – “more schools and hospitals” – and because the tangible results of fixing that economy tend to be unattractive – “less schools and hospitals”. So the best political strategy is not explaining the consequence of choices in a language ordinary people can understand.

Do you like the sound of £100 million ($150 million)? Can I tempt you with £160 billion? Expressing these figures per person in the population can be useful. The first figure is one bar of luxury chocolate for everyone. Doesn’t sound so big now, does it? The second figure is like everyone having a £2,500 bank overdraft (loan). Strange that, because indirectly, we do.

Unfortunately, applying the economics of household groceries to major items of government expenditure introduces certainty. The idea that one can visit a store where luxury chocolate bars are sold for precisely £1.70. Yet many large elements of government expenditure are akin to ordering a chocolate bar years before it can be eaten, for a price that transpires to be somewhere between £1 and £5.

Larger businesses will be familiar with this concept. It’s called risk. Such businesses are often far more interested in what “it might cost” (£5) than what “it will cost” (£1.70), because what it might cost might lead the business to bankruptcy.

The national economy is chaotic in its complexity, but overall, things should average out. So long as all the assumptions are broadly reasonable: Ultimately some will earn/cost more, some less. Short-term in-balance can be solved by (basically) printing more money, and then down-grading future assumptions until everything is back in balance.

However, this breeds a form of arrogance. A sense that government doesn’t need to consider the possibilities. That we can deliver a radical new policy – that has never been done before – and, in spite of it never having been done before, we know precisely how much it is going to cost. Just like a bar of chocolate.

Unfortunately, assumptions tend towards optimism. On average, projected costs are less than actual costs. This isn’t just a problem for accountants. It means that decisions are taken which do not reflect reality. Potentially leading to a Disneyland scenario, where everything is affordable until after the decision is taken, when suddenly everything has become too expensive. It ultimately challenges the validity of decisions, and in doing so, the moral authority of those that take them.

This article uses the Edinburgh Tram project to demonstrate the inherent uncertainty of large government infrastructure projects. It discusses the role of optimism in planning, and the methods used to reconcile planned optimism with subsequent reality. The article describes how the involvement of the private sector in public projects has evolved over the last 20 years, and the highlights the different time-scales applied to private investment and public choices. It concludes that optimism is not only unavoidable, but necessary. Rather, the true problem lies in tendency of people to demand certainty from the public sector, while accepting uncertainty in the private sector. Continue reading “Optimism”

Railways for Prosperity

Recreating the Island of Sodor in Kidderminster. In the dying years of Margaret Thatcher’s premiership, the United Kingdom government launched a policy document called “Roads for Prosperity”. £23 billion ($35 billion) would fund a network of highway improvements. Schemes that eased capacity constraints on the strategic (primary routes) road network. It was a response to rising car use, and the belief that not providing sufficient highway capacity would damage the UK economy – national prosperity.

It didn’t happen. Neither the threat to prosperity, nor the policy:

  • Environmentalists rallied against the few early projects (famously turning the Newbury Bypass and Twyford Down into civil battlegrounds) – road-building became politically negative, rather than positive.
  • There was never really enough money in national budget to fund the policy – increasingly obvious as the UK economy dipped into the recession of the early 1990s.
  • Even with the policy, roads would still be built slower that road traffic was growing – it was not possible to “build your way out” of the problem. It’s worse than it first seems, because new roads generate additional traffic growth, requiring more road capacity, generating more traffic…

The legacy was apparent in Tony Blair’s first Labour administration (or more accurately, John Prescott’s, the minister who led the transport and environmental agendas in the late 1990s): Much greater emphasis on sustainability, local projects, and use of forgotten modes, like buses and shoes.

Now, step forward 20 years to 2010.

The Secretary of State for railways and other transport, Lord Adonis, announces plans for a new high-speed rail line between London and Birmingham. At least £15 billion ($23 billion) for the first phase, rising to £30 billion with extensions further north. (Read those figures with caution – the costs of the previous West Coast Mainline upgrade project increased so much that nobody could remember how low the initial estimate was.) Inflation means that the cost of this latest rail project is only about half the (real terms) cost of Roads for Prosperity. But Roads for Prosperity proposed thousands of miles of highway, across many different locations, compared to a few hundred miles of railway track between a few large cities. And “Railways for Prosperity”, as I’ve corrupted the latest proposal, doesn’t have the pretence of strategy.

Politically it’s work of genius – the benefits flow to the political class (who tend to use trains), especially those living in increasingly marginal electoral territories in the West Midlands and North-West of England. Meanwhile, the Peoples’ Republic of Great Missenden (and soon likely every other other community near the route) is up in arms because the totalitarian regime they likely never voted for, has decided to build a railway – without the local station necessary for them to commute to London. I exaggerate, but only slightly.

Forget the “high-speed” aspect of the title. Operationally, the need is to increase capacity (see the box below). Make space for more trains on one of the busiest railway lines in Britain. More capacity creates more redundancy in the system, which makes it easier to recover from operational problems, and so makes trains more reliable. From bitter personal experience as a passenger, I suspect reliability is worth more than speed here. Of course, “better reliability” sounds a lot vaguer than “30 minutes faster”.

Read beyond the concrete, and the talk is all about “economic growth”, and “jobs”, and.

It’s at times like this that I want to pick up a shotgun and blow my brains out. 20 years later we’re back where we started. And nobody seems to have noticed.

This article uses historic examples to question the strength of the relationship between transport and the economy. It highlights the political biases towards railways, and their funding. The article explains why grand transport projects remain popular, when their overall impact on problems is often minimal. Rough analysis is presented that demonstrates the futility of building new railways – the 21st century reality, that we simply cannot afford to continue enlarging our transport networks in response to increased passenger demand. Finally, a stark comparison is made between communications and “transport” policy, which questions the validity of spending 15 times more on a new railway, than on a core element of “digital” inclusion. Along the way, the article clarifies a few popular misconceptions, from the influence of Unionism, to the impact of “integration”. Continue reading “Railways for Prosperity”

Nation of Adoration

World of Warcraft’s seasonal holiday events temporarily reduce player interest in fishing. It’s always been the case, but the decline in fishing seems to be becoming more extreme over time:

Decline in Fishing Activity due to Holiday Events

The graph’s y-axis is the percentage decline in page views at El’s Extreme Anglin’ from the 7 days before each event, to the first 7 days of the event. Pageviews are a good proxy for overall angler interest. El generates hundreds of thousands of page views each week, so even small changes are significant. The x-axis orders events by date, from January 2008. The axis isn’t scaled correctly to show time, but holidays are fairly evenly distributed throughout the year. Events are shown by green dots, with a shortened date (month and year) and the name of the event.

The data is expressed as a percentage of the previous week, because while interest in fishing “waxes and wains” from year-to-year, changes week-to-week are normally minor.

All the events included last at least 7 days. Where one holiday runs concurrently with another event (for example, the “Lunar Festival” and “Love is in the Air” often clash), only the first event in the sequence is included. Interest in fishing also changes dramatically in the month new content is added, so events that clash with major fishing patches have been excluded (Noblegarden 2008 with patch 2.4, Hallow’s End 2008 with patch 3.0.2, and Noblegarden/Children’s Week 2009 with patch 3.1). Winter Veil is also excluded: The period leading to Christmas is particularly unusual – first students stop studying and have a lot of time to play, and then many players stop playing to spend time with family. This causes large changes in activity from week-to-week, which makes it hard to isolate Winter Veil in the data.

Only 12 separate sets of data can be compared. There is one out-lier – Midsummer 2008 – perhaps the early stages of Wrath of the Lich King testing may have caused a small traffic spike in the week before? The pattern shown on the graph is not certain. But I’m growing confident that events are increasingly impacting on fishing activity.

But why? Continue reading “Nation of Adoration”

Iterative Video Development

The internet allows products and services to be rapidly improved based on user feedback. So rapid, that iterative design should become the primary method of designing internet-based services. Not just as an Agile-like method of working, but as a method of specifying the product itself.

Partly it isn’t because creators haven’t adjusted their methods to match the new technology – we’re still wedded to a single start-to-finish process, with one outcome at the end. Partly it isn’t because feedback can be hard to gather and digest, and even hard to act upon.

An iterative method has become one of the defining characteristics of how I like to write, organise, and present text on the internet. At least, beyond this domain. But until now, I’ve struggled to apply it to internet-based video.

This article introduces internet-based iterative design, and uses YouTube’s “Hot Spot” analysis to show how we can start to apply an iterative approach to video and movie-making. Continue reading “Iterative Video Development”

Do You Fish in Real Life?

This article analyses the transfer of fishing activity between the physical and virtual worlds.

Do You Fish IRL? In Real Life. I dislike the phrase, because it implies that everything else is unreal. Yet many virtual environments trigger the same human emotions as the physical world. Very real indeed.

Google US search for 'fishing guide'. If you search US Google for the term “fishing guide“, the first result may surprise you. It doesn’t help to catch any of the 30,000 species of fish found on planet earth. And its author has bright pink hair.

This isn’t just a neat party trick. Nor an indication that I should write a real fishing guide. Nor a failing of Google’s search index: Google is directing such a generic search to a game-specific website because the search engine thinks that the majority of people searching for a “fishing guide” are looking for a World of Warcraft fishing guide. (The box below provides evidence.)

Perhaps, within the online sphere, virtual fishing is as important as conventional fishing? The caveat, “within the online sphere”, is crucial: Physical world anglers generally aren’t sat in front of a computer screen, while World of Warcraft anglers are. However, the internet is still widely used to find information about offline pursuits: The US Angler Survey found that 42% of those surveyed primarily learn about fishing from websites – more popular than print media. (The survey is presumably biased, because anglers that use the internet are more likely to complete an online survey – but still indicates the internet is a fairly important source of information for physical world anglers.) Of course far more people search for generic terms like “fishing” than anything WoW or guide-related. So game-related search does not dominate as much as it may first seem.

Searches for “fishing guide” are not the only way online anglin’ is merging with offline.

As the remainder of this article demonstrates, World of Warcraft anglers are up to 3 times more likely to fish in the physical world than the wider population: If you enjoy fishing “for real”, you are more likely to fish virtually than other players. This implies that the fishing activity transfers directly between the physical and virtual worlds. Continue reading “Do You Fish in Real Life?”