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market development, and market access. All of the functions in this category can have a
direct cost (insurance, employee safety and retention, financial penalties and downtime,
etc.). On the public-sector side, risk management techniques are typically included in asset
management strategies for pavements, bridges, and other investments. Rarely are risk man-
agement techniques employed as part of the investment decision-making activities of these
agencies, including freight investments.
However, risk assessment has taken on increasing importance among public-sector
agencies given recent interest in utilizing public-private partnerships or shared asset activ-
ities. The emphasis placed on financial evaluation is typical for private-sector projects, but
the degree of analysis devoted to risk assessment stands out, and (according to players in
this market) exceeds that to which the public sector is accustomed. Public-private part-
nerships provide a route to funding and operating a project by accessing private-sector
funds and support. It is a partnership that is marked with differences, however, because
the public sector is responsible for promoting projects for the good of its constituents and
the private sector functions and operates based on its bottom line. Financially, they have
evolved separately and rely on different sources of funds. For the private sector to partici-
pate, the public-sector agency should have established policies, processes, and frameworks
that facilitate a partnership.
A Framework for Addressing These Challenges
The Freight Evaluation Framework, shown in Figure S.1, addresses the challenges
described above by providing a common approach to evaluating freight investments. The
Framework allows stakeholders to evaluate the potential benefits of highway, rail, seaport,
and intermodal connector projects on an "apples-to-apples" basis using existing data and
analytical tools and in a manner that is consistent with the existing decision-making
processes of different stakeholders.
The Framework consists of four key elements, described as follows:
1. Identify Benefit Categories and Metrics. As described earlier, different stakeholders
value different potential benefits. Although there are a few measures, such as transporta-
tion cost savings, crash reductions, emission reductions, and pavement/track conditions,
that are important across a wide array of stakeholders, others (such as maintenance sav-
ings and asset velocity) will be relevant to a smaller set. It is these unique benefits, how-
ever, that are likely to drive that stakeholder's decision on whether to participate in the
investment. The Framework recognizes this and reflects the impact or benefit categories
that are likely to be most important to different freight stakeholders in determining
whether the project is beneficial from that group's perspective.
2. Calculate Project Costs. The costs of a constructed facility or implemented technology to
the owner include both the initial capital cost and the subsequent operation and mainte-
nance costs. Each of these major cost categories consists of a number of cost components.
The magnitude of each of these cost components depends on the nature, size, and location
of the project, as well as the owning organization (i.e., public or private).
3. Calculate Benefits and Impacts. The Framework addresses benefits and impacts proceeds
in two parallel tracks: benefit/cost analysis (BCA) and economic impact analysis (EIA).
Benefit/cost analysis identifies the benefits of investing (as compared with not investing),
and compares these to the project costs. Economic impact analysis, in contrast, compares
the overall economic growth (for example, employment, income, and output) in the speci-
fied study region with or without investing. For the purpose of both BCA and EIA, all costs
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Freight Transportation Investment
ID Stakeholders and Modes
Benefit Categories and Metrics
Change Change Change
in Travel in Travel in Travel
Distance Time Quality
Change in delay,
Change in VMT
average speeds, and
for existing traffic
reliability (trucks,
(truck, auto, rail)
autos, and rail)
Change in User Change Change in Change in Time Change in Time Change
Operating Costs in Crash/ Environment Costs of Delay/ Costs of in Loss/
(by truck, auto, Incident Costs Costs (by truck, Unreliability Transportation Damage
rail, aircraft, (by truck, auto, auto, rail, aircraft, (by truck, (by truck, of Cargo
and vessel) and rail) and vessel) auto, rail) auto, rail)
Costs
Capital Costs O&M Costs Other Costs
Benefits and Impacts
Total Efficiency
Benefits (public Total Costs
Assess Risks and private)
Risks Benefit Cost
Direct Economic Metrics
Impacts (value of (NPV,
out-of-pocket benefits) BC ratio, ROI)
Total Economic
Impact Metrics
Economic (jobs, income,
output, tax base)
Figure S.1. Freight Evaluation Framework.
