Benefits Estimates of Highway Capital Improvements with Uncertain Parameters

About the report:

This report warrants consideration in the development of goals, performance measures, and standard cost-benefit methodology required of transportation agencies by the Virginia 2006 Appropriations Act. The Virginia Department of Transportation has begun to implement a quantitative methodology as an aid to prioritizing highway construction projects in four categories: interstate, primary, urban, and rural. The methodology adopts fifteen quantitative metrics including level of service (LOS), volume-to-capacity ratio, traffic flow, intermodal access, crash rate, emergency route access, heavy truck usage, unemployment rate, environmental issues, right-of-way use, use of alternative transportation modes, bridge sufficiency rating, and cost-effectiveness. The results of the methodology are used by executive review teams to negotiate, interpret, and support decisions regarding the selection of construction projects for funding in a $1.8 billion construction program. This report describes an effort to extend the current prioritization methodology via modeling and uncertainty analysis of the risk reductions, benefits, and costs that are expected of candidate construction projects. The report (1) develops monetized estimates of benefits in several categories including crashes avoided, travel time saved, fuel uses avoided, and emissions avoided; (2) compares the estimates of benefits to the estimates of project costs, representing the uncertainty of the results as numerical intervals; and (3) compares the results to the results of the prioritization methodology that is currently in use. The major contribution of the report is the assembly of existing and new methods of benefits assessment via an interval analysis of uncertainty that enables a prioritization to proceed with sparse data on a large number of potential projects. With the interval analysis of uncertainty, a decision maker is provided with a sound basis to recommend that more data are needed, or that existing available data are sufficient to distinguish among the potential projects. The developed methodology is demonstrated with project data from VDOT's Northern Virginia District using a database of performance criteria of 53 candidate projects ranging in cost from $2 million to $130 million. A prototype of a prioritization software was developed along with the report for the support of future analyses.

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