The cost of building a railway needs to be weighed against the benefits

Since the invention of steam engines, railways have been a major means of transportation around the globe. In the United Kingdom, there is a lot of debate regarding the HS2 project and whether it will be a worth while investment. However, without infrastructure a country can be left behind in terms of economics and development. The costs must be weighed up against the benefits not just for today but for the years to come.

Since the mid 1990s, railways across the workd have "gone commercial", with various models of privatisation  and public-private partnerships (PPPs) or private finance initiatives (PFIs). This is a simple guide to how a new railway might be financed and a review of the limitations of privatisation and private sector participation in the ownership and operation of railway systems.  Numbers are taken from known examples but are only for illustration and should not be considered binding.

How Much Does a Railway Cost?

A difficult question!  This is a bit like asking how much does a car cost.  It depends on whether you want a Mercedes or a Honda, a sports car or a pick-up, a car to do the shopping in or to move furniture with.  It also depends on where you buy it.  Cars are cheap in the US because there is a huge market and a good economy.  Cars are expensive in Singapore because many of them are imported and there is a high taxation penalty to control traffic numbers.  Cars are expensive to build in Europe but cheap to build in India because of the differences in labour costs and lower engineering requirements.

It is the same with railways.  A single track freight line with a few locomotives and simple signalling, running across a flat, geologically sound, sparsely populated landscape in a developing country might be built for as little as US$ 2 million per kilometre including electrical and mechanical equipment.  A double track underground metro line in a densely populated city with difficult geological conditions, requiring anti-earthquake construction techniques, electric traction, immunity from typhoons and high humidity, high technology specifications and high passenger capacity trains could cost US$ 200 million a kilometre.  One of the most expensive railways ever built was the Jubilee Line extension in London.  This cost US$ 330 million a kilometre because of difficult civil engineering, its large and finely built stations and its additional safety equipment and its financing costs.  You pays your money and you takes your choice.

Published Railway Costs

Here are some sample new railway project costs as published in the railway trade press.  The prices published by operators usually include all civil and equipment costs, project and financing costs. Click here to continue

No one regrets a railway once its built

HS2 will cost over £70bn

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