Return on Investment for State Highway Projects. 25 th Annual Transportation Research Conference May 22, 2014

Transcription

1 Return on for State Highway Projects 25 th Annual Transportation Research Conference May 22, 2014

2 Agenda Introduction SGA s State Transportation Program Themes Innovative DOT Demonstration Projects MnDOT ROI Project Questions 2

3 Smart Growth Smart growth means building urban, suburban and rural communities with housing and transportation choices near jobs, shops and schools. These strategies support thriving local economies and protect the environment. 3

4 SGA s state transportation program WPA Mural Wilkinsburg, PA 4

5 Themes Save Money by Taking Better Care of What You Have Maintain and repair existing roads and bridges Grow the Economy by Making Your Transportation s More Strategic Fund the biggest job creator: public transportation Spark innovation and cost savings through a competitive transportation solutions program Revisit near term spending decisions and long term project selection process 5

6 The Innovative DOT WPA Mural Wilkinsburg, PA 6

7 The Innovative DOT: A handbook of policy and practice A new resource for state transportation officials Developed by Smart Growth America and the State Smart Transportation Initiative September 2012 (Updated January 2014) 7

8 The Innovative DOT: A handbook of policy and practice Describes strategies states can use to achieve the greatest outcomes at the least cost with transportation investments. Documents innovative approaches state leaders are already using to make systems more efficient, government more effective and constituents better satisfied. Provides information on 34 policies and practices The benefits of each policy Steps for implementation Cases studies Resources for further information 8

9 Demonstration Projects WPA Mural Wilkinsburg, PA 9

10 Results Oregon Over 60 funding sources studied 12 Consensus funding sources 4 consensus financing measures 2013 Legislative Session 10

11 Results Oregon 11

12 Results Tennessee 1. Develop new metrics to measure and prioritize all proposed projects 2. Audit the current project list 3. Identify public and private transportation/land use planning partners 4. Articulate a full range of benefits 5. Identify new funding partners based on benefits 6. Communicate flexible design standards 12

13 Results Tennessee 13

14 Results Tennessee 14

15 Issue a State of Hawaii Executive Policy identifying TOD as a priority Identify a lead agency to advance TOD, along with a cluster of state agencies whose mission would most directly relate to TOD implementation Analyze and prioritize stateowned properties and assets Target resources to support TOD Results Hawaii 15

16 Results - Vermont Strengthen VTrans corridor management planning program. Revise VTrans guidance and procedures for consistency with state goals. Update VTrans design standards to support multimodal objectives. Encourage development in state designated community centers. Document the smart growth benefits and costs of VTrans policies, programs, and investments. 16

17 Results Michigan An urban district growing with development, but limited in roadway capacity seeking strategies to say yes to growth, but no to additional traffic A suburban corridor trying to reinvent itself from a strictly auto arterial to a vibrant place inviting to all modes A region struggling to meet the daily transportation needs of its special populations Small and mid-sized municipalities seeking to expand and improve transportation services for commuters and tourists 17

18 MnDOT ROI Demonstration Project WPA Mural Wilkinsburg, PA 18

19 Key Questions 1. Maintaining the current performance of Minnesota s state highway system would require an investment of an additional $5 billion over the next twenty years. What would be the return on that investment? 19

20 Key Questions 2. Improving the state highway system to help Minnesota become more economically competitive through technology and operational innovations and projects to reduce congestion and delays would require the investment of an additional $7 billion over the next 20 years. What would be the return on that investment? 20

21 Key Questions 3. Within the proposed investments over the next 20 years, some projects and programs will necessarily have a higher return on investment and some will have a lower return on investment. Which kinds of projects and programs offer the highest ROI? 21

22 ROI Methodology TFAC Categories (4) ROI Categories (10) Sample of MnDOT Projects National Best Practices 22

23 ROI Methodology TFAC Categories Highway Reconstruction Deficient Bridges Congestion Mitigation Highway Safety ROI Categories Safety Spot Improvement at High Risk Locations Pavement Preservation Corridor Pavement Reconstruction Corridor Pavement Reconstruction Urban/Main Street Bridge Repair Bridge Replacement Congestion Mitigation General Capacity Development Active Traffic Management (ATM) MnPASS 23

24 ROI Methodology & Analysis Return on Benefit-Cost Analysis Internal Rate of Return Life-Cycle Cost Analysis 24

25 ROI Methodology & Analysis Option Framework Option(s) Life-Cycle Cost Analysis of MnDOT system programs Benefit-Cost Analysis of a representative sample of MnDOT projects Category Category Category Developed a range ROIs for each category to reflect diversity of investments 25

26 ROI Methodology & Analysis Typical Benefits & Costs Benefits Travel time savings Vehicle operating cost savings Safety benefits Costs Capital costs Major rehabilitation costs Routine annual maintenance costs Remaining capital value Benefit & Cost Factors (PRISM) 26

27 ROI Methodology & Analysis Life-Cycle Cost Analysis: Applying the right treatment to the right facility at the right time Performance Measure Time Service Life Initial Activity Activity One Activity Two Analysis Period Source: FHWA 27

28 ROI Methodology & Analysis Wider economic benefits Short-term: construction employment Direct, indirect and induced impacts More labor intensive investments (e.g., repair and reconstruction), more jobs Long-term: economic productivity Lower the costs of moving people and goods Increasing connectivity and reducing congestion 28

29 ROI Methodology & Analysis ROI does illuminate long-term economic benefits Includes the measures that influence long-term economic productivity Travel time savings Vehicle operating costs Safety benefits ROI does not include short-term impacts construction employment 29

30 ROI Methodology & Analysis ROI Category Safety-Spot Improvement at High-Risk Locations Pavement Preservation-Corridor Source Representative MnDOT projects rural intersection conflict warning systems, diverging diamond interchanges, and passing lanes Results from MnDOT s Transportation Asset Management Plan ROI Point Estimate Low/High ROI Range to to 2.8 Pavement Reconstruction-Corridor Generalized LCCA framework to 1.5 Pavement Reconstruction-Urban/Main Street Representative projects in MnDOT CIMS program to 2.5 Bridge-Repair Results from MnDOT s Transportation Asset Management Plan to 1.9 Bridge-Replacement Generalized LCCA framework to 1.8 Congestion Mitigation-General Capacity Development Active Traffic Management (ATM) MnPASS Projects included in the Metro District Congestion Management and Safety Plan Current scoring of projects in Corridors of Commerce process MnDOT s recent four-year work plan of ATM investments and average BCRs from USDOT Opened, programmed, and potential MnPASS corridors to to to to

31 ROI Methodology & Analysis MnSHIP Category TOTAL Unmet MnSHIP Need ($M) Safety-Spot Improvement at High-Risk Locations Pavement Preservation- Corridor Pavement Reconstruction- Corridor Pavement Reconstruction- Urban/Main Street ROI Category Bridge Repair Bridge Replacement Congestion Mitigation- General Capacity Development Active Traffic Management (ATM) Pavement Condition $2,800 X X X Bridge Condition $1,860 X X Roadside Infrastructure $250 X X X Safety $820 X IRC Mobility $920 X Twin Cities Mobility $3,860 X X X X Bicycle Infrastructure $390 X X X X Accessible Pedestrian $210 X X X X RCIP $1,400 X X X TOTAL $12,510 Gap Level ($B) Amount ($B) TFAC Amounts ($M) Performance Preservation $5.4 $662 $1,377 $106 $275 $171 $399 $553 $1,146 $79 $632 Economically Competitive $7.1 $578 $1,264 $288 $408 $451 $1,052 $798 $1,246 $114 $912 $1,35 TOTAL $12.5 $1,240 $2,641 $394 $683 $622 $1,451 $2,392 $193 $1,544 1 MnPASS 31

32 ROI Methodology & Analysis What do the unmet MnSHIP needs and TFAC investments mean? Maintain Current Performance Pavement and bridge conditions would not change Fatalities would continue to drop Congestion would increase, but a few spot improvement projects could be undertaken in isolated locations. Very few expansion projects would occur. 32

33 ROI Methodology & Analysis What do the unmet MnSHIP needs and TFAC investments mean? Economically Competitive & World Class System Pavement and bridge conditions targets are met The rate of decline in traffic fatalities and injuries is increased MnPASS vision for the Twin Cities Metro area is completed. Also, a modest number of high priority expansion projects are completed. 33

34 ROI Methodology & Analysis ROI: Maintain Current Performance ROI Category Average (millions) Percentage of Total Average Benefit (millions) Low Benefit (millions) High Benefit (millions) Safety-Spot Improvement at High-Risk Locations $662 12% $2,701 $1,684 $3,718 Pavement Preservation-Corridor $1,377 26% $2,754 $2,203 $3,305 Pavement Reconstruction-Corridor $106 2% $93 $53 $133 Pavement Reconstruction-Urban/Main Street $275 5% $395 $206 $583 Bridge-Repair $171 3% $248 $222 $273 Bridge-Replacement $399 7% $399 $199 $598 Congestion Mitigation-General $553 10% $5,546 $2,546 $8,545 Capacity Development $1,146 21% $1,526 $847 $2,204 Active Traffic Management (ATM) $79 1% $703 $608 $798 MnPASS $632 12% $2,180 $1,661 $2,700 Total Benefit n/a n/a $16,544 $10,230 $22,858 Total $5,400 n/a $5,400 $5,400 $5,400 Return on n/a n/a

35 ROI Methodology & Analysis ROI: Economically Competitive ROI Category Average (millions) Percentage of Total Average Benefit (millions) Low Benefit (millions) High Benefit (millions) Safety-Spot Improvement at High-Risk Locations $578 9% $2,324 $1,454 $3,195 Pavement Preservation-Corridor $1,264 19% $2,528 $2,022 $3,034 Pavement Reconstruction-Corridor $288 4% $252 $144 $359 Pavement Reconstruction-Urban/Main Street $408 6% $585 $305 $864 Bridge-Repair $451 7% $654 $586 $721 Bridge-Replacement $1,052 16% $1,052 $526 $1,578 Congestion Mitigation-General $798 12% $1,836 $1,296 $2,375 Capacity Development $1,246 19% $1,297 $772 $1,821 Active Traffic Management (ATM) $114 2% $1,015 $878 $1,151 MnPASS $912 14% $3,146 $2,397 $3,896 Total Benefit n/a n/a $14,688 $10,379 $18,996 Total $7,111 n/a $7,111 $7,111 $7,111 Return on n/a n/a

36 ROI Methodology & Analysis ROI: Total TFAC Recommendations ROI Category Average (millions) Percentage of Total Average Benefit (millions) Low Benefit (millions) High Benefit (millions) Safety-Spot Improvement at High-Risk Locations $1,240 11% $5,025 $3,137 $6,913 Pavement Preservation-Corridor $2,641 23% $5,282 $4,226 $6,338 Pavement Reconstruction-Corridor $394 3% $344 $197 $492 Pavement Reconstruction-Urban/Main Street $683 6% $979 $511 $1,447 Bridge-Repair $622 6% $902 $808 $995 Bridge-Replacement $1,451 13% $1,451 $725 $2,176 Congestion Mitigation-General $1,351 12% $7,381 $3,842 $10,921 Capacity Development $2,392 21% $2,823 $1,620 $4,026 Active Traffic Management (ATM) $193 2% $1,718 $1,486 $1,949 MnPASS $1,544 14% $5,327 $4,057 $6,596 Total Benefit n/a n/a $31,232 $20,609 $41,854 Total $12,510 n/a $12,510 $12,510 $12,510 Return on n/a n/a

37 ROI Methodology & Analysis Which kinds of projects and programs offer the highest ROI? ROI Category Average (millions) ROI Point Estimate Low/High ROI Range Safety-Spot Improvement at High-Risk Locations $1, to 6.6 Pavement Preservation-Corridor $2, to 2.8 Pavement Reconstruction-Corridor $ to 1.5 Pavement Reconstruction-Urban/Main Street $ to 2.5 Bridge-Repair $ to 1.9 Bridge-Replacement $1, to 1.8 Congestion Mitigation-General $1, to 9.6 Capacity Development $2, to 2.0 Active Traffic Management (ATM) $ to 12.0 MnPASS $1, to 5.1 Total $12, to

38 Key Findings A $5 billion investment over 20 years to maintain current system performance will deliver between $10 billion and $23 billion in benefits, with an average ROI of 3.1 An additional $7 billion investment over 20 years to have a world class system will deliver between $15 billion and $19 billion in benefits, with an average ROI of

39 Next Steps New ROI metrics for capital construction projects economic development social equity environmental stewardship Develop role for ROI in DOT decision-making 39

40 Project Stakeholder Group MnDOT Charlie Zelle Eric Davis Ken Buckeye John Wilson Philip Schaffner Jason Junge Deanna Belden Brad Utecht SGA/GSP John Houghton Marshall Elizer Thanks to 40

41 Thank you! 41