Benefit-Cost Analysis in MPO Transportation Planning

Transcription

1 Benefit-Cost Analysis in MPO Transportation Planning Mary Luebbers, Ohio-Kentucky-Indiana Regional Council of Governments; Eric C. Gabler, Federal Highway Administration November 8, 2007

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3 John A. Roebling Suspension Bridge

4 OKI Regional Council of Governments (OKI) OKI is the Metropolitan Planning Organization (MPO) for the greater Cincinnati area OKI develops the region s 20-year Long Range Plan and the four-year Transportation Improvement Program (TIP) OKI has final authority over selecting the transportation projects on which $30 million in Federal dollars will be spent in the region

5 Greater Cincinnati Region As of 2005, the total 3-State, 8- county OKI region included 1,940,545 people and 968,680 workers and 2,636 square miles of total area

6 Transportation Assets More than 3,000 centerline miles of major roadway, 6,000 centerline miles of other roadway, and 398 centerline miles of the 160,000-mile National Highway System Three transit providers provide fixed-route service and three other providers serve communities with demand responsive service Other rail, bus, bike, and parking assets

7 OKI s s Planning Method OKI considers a wide range of options for addressing transportation needs for its region through its Congestion Management Process (CMP) Under the CMP, these options include capital investments as well as Transportation System Management (TSM) approaches

8 Planning Products CMP guides the development of OKI s long-range and short-range range transportation planning, including its Transportation Improvement Plan (TIP) The TIP implements portions of OKI s 2030 Regional Transportation Plan by programming funding for improvements over the next four-year period

9 Prioritization of Projects OKI s s Prioritization Subcommittee reviews potential TIP projects eligible for Federal CMAQ and STP funds A key component of the Subcommittee s Prioritization Process is the Project Scoring Process

10 Project Scoring Process Highway and transit projects are first scored separately using Transportation Factors Highways ranked on existing safety; impact on safety; existing level of service (LOS); impact on LOS; average daily traffic; status as a freight corridor; etc. Maximum 45 points

11 Project Scoring Process (Cont.) Projects are then scored on planning factors Replacement/expansion factor (preference to replacement and preservation), environmental justice, land use conformance, air quality/energy improvements, local funding share, number of travel modes improved, intermodal connectivity, and the existing condition of the project area Maximum 50 points

12 Project Scoring Process (Cont.) Finally, projects are scored using a hybrid benefit/cost ratio analysis Transportation and Planning factor scores are summed (maximum of 95) and divided by project cost (in millions of dollars) The subsequent value is then scored from 2 to 10 points and added to point total Can add from 2 to 10 points to maximum 95, summing to as high as 105 points (best score)

13 Points for Hybrid B/C Score Benefit/Cost (Project Transportation and Planning Points Divided by Project Cost, in $Million) Points Available Greater than 1, Greater than Greater than 10 6 Greater than 5 4 Greater than 1 2

14 Limitation of Hybrid B/C Score Benefits score is purely qualitative If a project would make a high improvement in LOS, it could potentially rank only 2 points higher on the 95 point technical and planning scale than a project that would make a medium improvement in LOS Slightly higher cost of high improvement project could eliminate its 2 point LOS advantage when hybrid B/C score is calculated

15 Improving the Scoring Process OKI Prioritization Subcommittee is always seeking to improve the scoring process Has targeted reducing reliance on qualitative scoring methods One solution would be to put some transportation and planning factors into dollar terms and apply economic analysis tools to compare the dollar values of benefits to costs directly

16 Benefit-Cost Analysis (BCA) Systematic evaluation of the lifecycle advantages (benefits) and disadvantages (costs) of a set of transportation investment alternatives, measured in terms of present value dollars

17 History of Benefit-Cost Analysis Interest in BCA has been hot and cold on a national basis, but mostly cold OKI developed qualitative scoring because of variability of projects and perception that BCA requires too much expense and work, particularly with tools available in the 1990s Decided to investigate new BCA tools in hopes of adding more quantitative analysis

18 OKI Conditions for BCA OKI wants BCA tools that are: Usable by OKI staff Affordable to acquire and operate Make use of existing data resources and staff skills OKI does not have an economist on staff Tools should come with economic data and guidance Tools should be acceptable and familiar to Federal and State partners

19 STEAM To meet its conditions, OKI explored the use of the FHWA s s Surface Transportation Efficiency Analysis Model (STEAM) beginning in 2003 STEAM accepts input directly from the four-step travel demand modeling process Post-processes the traffic assignment outputs from the travel demand model

20 Why STEAM? Systemwide analysis captures network effects Interfaces with travel demand model Multimodal FHWA sponsorship Free

21 User Groups Auto (drive alone, carpool) Transit (bus, light rail) Truck

22 Potential Benefits/Disbenefits (User Impact Measures) Travel time Travel costs Travel safety Emissions

23 Travel Time

24 Travel Costs Fuel Tires/Maintenance

25 Travel Safety

26 Emissions

27 How STEAM Works Base Case Travel demand model input Maintenance or Capital costs STEAM 2.0 Benefit- Cost Analysis Alternative Travel demand model input Travel time Travel costs Travel safety Emissions

28 Potential Applications Large-scale individual projects Corridor studies TIP projects Long range plan

29 Implementing STEAM OKI downloaded the STEAM software and user documentation from the FHWA STEAM website Established the interface between its travel demand model and STEAM Documented the specifications of this process in a draft document entitled Preparation of Travel Demand Model Data for STEAM (March 10, 2006)

30 Implementing STEAM (Cont.) OKI next undertook a thorough review of the default economic and other values provided in STEAM to make sure they were appropriate for the OKI region Process was documented by OKI in the draft document Preparation of Values for Variables in STEAM (March 10, 2006) Once OKI plugged in all of the input files and variables, it successfully executed the program

31 FHWA Assistance OKI encountered various problems and constraints with STEAM Contacted the FHWA s s Office of Asset Management for technical support FHWA established technical support contract for STEAM users through original programmer Corrected STEAM problems and provided on- site assistance OKI and the FHWA interacted regularly

32 Test Application of STEAM In April 2006, OKI and FHWA focused on six projects being evaluated with STEAM Southwest Warren County Transportation Study projects consisting of three lane additions, a road extension, a new interchange, and an interchange improvement Testing of individual SW Warren projects revealed STEAM is not sensitive to individual small projects

33 Test Application (Cont.) For STEAM to work, a project must be large enough to impact regional traffic flows as measured in the four-step Travel Demand Model Small projects have very little effect on overall regional congestion FHWA recommended projects should be evaluated as a group rather than individually Projects must be related to evaluate as group

34 Test Application (Cont.) Five of six projects were modeled as group for analysis Intersection project was dropped because it has no effect on Travel Demand Model Five projects were implemented at separate points in time over a 20-year analysis period to reflect planned implementation dates Required multiple runs of STEAM and Travel Demand Model to accommodate different dates

35 Consolidation of Results To facilitate consolidated analysis of five projects, the FHWA team developed a new spreadsheet tool named STEAMStream Enabled results of different implementation years to be combined Provided more robust estimate of net benefits over 20 year analysis period by interpolating between analysis years for all projects Better measure of net present value

36 STEAM Results Results for the five Southwest Warren County projects as a group are: Present Value of Costs: $62,350,000 Prevent Value of Benefits: $140,764,000 Benefit/Cost Ratio: 2.26 Overall package is cost-beneficial

37 Interpretation of Results Test analysis was generally supportive of findings of the Southwest Warren County Transportation Study except for one project started at end of analysis period Its inclusion eroded net benefit stream In a real planning situation, OKI would have used results to re-evaluate evaluate that project, testing different implementation years

38 Going Forward OKI invested 1,500 staff hours and much energy into its STEAM exercise Now that it has the skills, OKI will consider further applications of STEAM to large scale projects or project clusters OKI is also actively pursuing the use of other economic analysis tools for smaller projects

39 Was It Worth It? Effort significantly advanced OKI s s agenda of incorporating more economic analysis into its transportation planning process OKI staff now possesses a body of economic analysis skills and information that can be readily used to support the planning process

40 OKI Lessons Learned Leadership from the top is essential to sustain the resources needed to implement new tools Staff commitment and skills are also critical Successful completion requires good technical support Efforts cannot go forward without public support

41 FHWA Lessons Learned OKI s s experience led FHWA to make numerous model improvement and reinstitute technical support for STEAM Development of STEAMStream FHWA has commissioned an improved guidance document for STEAM that will benefit OKI and all other users of STEAM

42 Mr. Mark R. Policinski Executive Director, OKI More Information Mr. Robert Koehler Deputy Executive Director, OKI Ms. Mary Luebbers Senior Planner, OKI Phone: (513) FHWA Office of Asset Management Phone (202)