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113 CHAPTER 7 Lessons Learned and Suggested Topics for Future Research 7.1 Critical Lessons Learned Incorporation of risk analysis, which is a critical element of from Phase I Research private-sector decision-making, but is not often explicitly accounted for in public-sector analyses. Incorporating a risk This section highlights some of the more critical lessons analysis module also can help compensate for uncertainty learned throughout the development and testing of the Freight introduced as a result of data or methodology weaknesses. Evaluation Framework as a prelude to a proposed approach for The incorporation of case studies as part of the Framework further research to refine, test, and implement the Framework testing process, which provided how-to examples as well as to support freight investment decisions. examples of the different data and tools that are available There are numerous available tools that can be used to for conducting analysis. assess benefits, costs, and risk of freight investments. What is needed are clear procedures that help analysts and deci- Users would benefit from more detailed procedures and sionmakers integrate these tools and that guide the analysis guidance to facilitate using the Framework. to ensure consistency from project to project. Many participants in the Freight Investment Workshop As described earlier, there is a wide variety of investment described in Chapter 5 were concerned that the Framework decision-making techniques and tools that are used to assess as currently configured was complex and difficult to follow. user benefits, conduct return on investment assessments, and perform benefit/cost analysis, economic impact analysis, and Some were looking for "cookbook" procedures that provided risk analysis. Yet, there was general agreement at the Freight detailed examples of how the Framework could be applied in Investment Workshop that the Framework was very useful to practice. One participant suggested a guided approach that help frame an investment decision analysis, even when there would walk the user through an analysis based on a series of are multiple stakeholders and decision processes involved. questions about the nature of the project and the types of Many analysts find it difficult to wade through the variety of information available. Other participants felt that it would be tools and data and determine which are the most appropriate difficult to develop a procedure that was this deterministic for their particular situations. They also felt that having a and wanted to maintain the flexibility inherent in the idea of structure that guides the analyst through steps of an analysis a framework. would be very useful. Despite this range of opinions on how to do it, there was Some specific features of the Framework that were felt to near universal agreement that more detailed procedures and be particularly useful included the following: examples would be beneficial to potential users of the Freight Evaluation Framework. This might include worksheets, sam- The identification of stakeholders and relationships between ple problems, and references on analytical tools and data benefit categories and stakeholders, which helps in alloca- sources organized in a guidebook format with users in mind. tion of costs among potential beneficiaries. Analysis of small-scale local projects would benefit from The categorization of benefits and relationships among ben- more detailed information about current and prospective efits, project types, and modes. This essentially provides a users of the project. checklist for the analysts to make sure they have considered The analyses suggested by the Framework are most effective all appropriate benefit types for a particular project type. when the analyst has some information about the types of The ability to conduct multimodal comparisons as well as industries/commodities that will use the project. This is par- to consider cross-modal impacts of projects. ticularly important in the analysis of supply chain, reliability,

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114 and inventory cost impacts. Some participants in the workshop The research team's testing process uncovered a number of lamented the state of the practice in subnational commodity issues related to how freight stakeholders are engaged through- flow data and freight forecasting that could produce this kind out the application of the Framework, including the following: of information. Given this problem, more focus on local data collection may be justified for significant investments. Some of Disaggregating benefits by stakeholder type. The Frame- the case studies did involve this type of local interviewing or work identifies and classifies stakeholders into different data collection to enhance the type of information that was groups (asset providers, service providers, end users, and available from models. This kind of supplemental data and other impacted parties), and then adds a table to assign or information collection is a critical component of the success- allocate the various elements of benefit and cost to specific ful implementation of the Framework. stakeholder groups. However, in carrying out the analysis, There are a variety of multimodal issues that need to be it can become a challenge to effectively assign various incorporated in any freight investment decision. classes of benefits to specific stakeholders when there are The Freight Evaluation Framework was initially structured dynamic interactions among them. This is illustrated by around modal modules, primarily because the analytical the DIA WorldPort case, where freight transport firms techniques tend to be slightly different for different modes. were projected to gain net revenue from expanded facility However, in actual practice (as was made clear from the case capacity but their actual gain would be reduced to the studies in Chapter 5), most projects will require the use of extent that they have to pay ground lease payments to the multiple modal modules. This is a feature of freight invest- air freight facility operator, which, in turn, has to pay a ments that tends to distinguish them from passenger trans- share of its revenue to the property owner (airport author- portation investments. Reasons multimodal analysis is so ity). Tracking the string of payments can be challenging critical include the following: and estimating their final allocations may require the type of risk analysis that is included in the Framework. Projects often have explicit intermodal dependencies or Consistency among stakeholders and benefits. Maintain- multiple modes are present in the project. This is espe- ing consistency with how stakeholders are identified and cially true in cases involving cargo handling facility and port how they might benefit from particular projects will add (air and marine) projects. Even though the investment may value to the Framework. For example, the results and find- focus on one mode, the interaction of all the modes present ings from a study can look very different depending on the at a facility requires a comprehensive intermodal analysis. level of detail in which stakeholders are defined and the Projects often have cross-modal impacts. The most obvi- degree of depth to which their interactions are traced. Both ous case is one in which modal diversion is an explicit objec- detail and consistency are required to generate useful results. tive or expected outcome of the project (e.g., the Heartland Accounting for sensitivity differences. There are poten- Corridor Clearance Initiative). But there are cross-modal tially large differences in the sensitivity to cost, benefits, and interactions in most projects. Developing a new air cargo risk among different stakeholder types that are not all cap- facility will affect trucking access routes and transportation tured within the Framework. This becomes important if the costs associated with connecting to the facility. Grade cross- Framework is used to help rank projects from the perspec- ing projects clearly affect highway modes at the crossing as tives of various stakeholder groups. In some cases, there well as rail operations through the crossing. may be issues of such importance to a particular stake- Supply chains typically are integrated across multiple holder group that they outweigh any and all other possible modes and reliability and inventory-cost impacts must costs and benefits to that particular agent. In such cases, be considered from one end of the supply chain to the group preferences may include factors not all captured in other. This is one of the most challenging aspects of freight the Framework as currently configured. It may be possible investment analysis because if done properly, it almost for the Framework to be expanded to account for, and always requires consideration of secondary impacts of a incorporate, these types of preferences. Alternatively, it may project well beyond the jurisdictional boundaries of the be necessary to just note cases where the Framework does investing entities. However, if the users of the project can be not (or cannot) encompass other major considerations. identified by industry type, it may be possible to focus on how the project affects nearby intermodal links and relate Freight investment analyses need to be structured to this to overall supply chain performance. ensure that they capture the wider economic effects of a project that may extend well beyond traditional study area Allocation of benefits and costs among stakeholders is a boundary definitions. critical feature of the Framework but could be enhanced in All of the case studies involved projects leading to savings in future research. the cost of doing business (for at least some industries at some