The National Academies Press

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From page 27... ... and the key decision points along the way; and • Current practices used to evaluate freight investments, particularly how potential public and private benefits are calculated, how cost allocations are made, and how investments are evaluated and prioritized. As discussed in Chapter 2, freight projects can affect four types of stakeholders: asset providers, service providers, end users, and other impacted parties. Read the entire page →
From page 28... ... Evaluation Process. Washington State DOT developed a statewide rail benefit/impact evaluation methodology (1) Read the entire page →
From page 29... ... ; and 29 Review Application Conduct Cost/Benefit Analysis Use Legislative Priority Matrix Tool Use Project Management Assessment Tool Use User Benefit Levels Matrix Compile Information Document Scores Develop Summary, Including Qualitative Analysis and Recommendation Gather Information Using Standard Application No Application Fail Terminate Evaluation Pass Figure 3.2. Washington State DOT freight rail decision-making process. Read the entire page →
From page 30... ... Are there alternatives to using the 30 Benefit/Cost Measurement of Benefit/Cost Reduced Maintenance Costs Based on expected number of rail carloads versus semis and the weight of the shipments Reduction in Shipper Costs (for Shipments Originating in State) – Freight Only Comparison of the cost of shipping the goods via rail compared to truck Reduction in Automobile Delays at Grade Crossings Value of motorist time (usually a function of average wages) Read the entire page →
From page 31... ... Determine Net Present Value of Project Decision-Maker: Investment Activities Group Tools: Cost-Benefit Analysis Issues Evaluated: Whether the Net Present Value of the project warrants RR investment under various public funding scenarios 4. Final Investment Decision Decision-Maker: Capital Committee Tools: Findings generated in prior steps Issues Evaluated: All – Capital Committee makes the final investment decision Figure 3.3. Read the entire page →
From page 32... ... BNSF, like other railroads, typically uses benefit/cost analysis to evaluate potential capacity improvement projects because BNSF considers NPV to be the single most important indicator of a potential project's viability. The NPV is calculated over a 30-year timeframe, and the railroad uses a standard discount rate across all proposed projects so NPVs can be compared consistently across the network. Read the entire page →
From page 33... ... Projects appearing in the Capital Project Plan go through a rigorous evaluation process. The first step is for the project sponsor to fill out a Project Setup Form, which consists of the following four elements: – Scope and justification, which includes a description of the project, its justification, and why it currently is important, as well as business impacts and risk identification, project objectives, fixed assets created, and any alternatives that exist for the project; – Cash flow and financial analysis, which describes the projected cash flow associated with the project and financial indicators, such as NPV, modified internal rate of return (MIRR) Read the entire page →
From page 34... ... to evaluate infrastructure investments. Case Study -- Watco Companies Overview. Read the entire page →
From page 35... ... Additional Maintenance Costs Construction Costs * Economic Value Added (EVA) Read the entire page →
From page 36... ... Community Cost Analysis Decision-Maker: Grubb & Ellis analysts Tools: Analysis of total operating costs in selected communities, associated with the following: • Wage rates and payroll expenses • Transportation • Corporate income, property, and inventory taxes • Utilities and telecom • Lease rates • State and local development incentives Issues Evaluated: Overall operating costs in potential locations 4. Delivered Costs Analysis Decision-Maker: Grubb & Ellis analysts Tools: Pro-forma financial analysis based on operating costs in potential communities Issues Evaluated: Total delivered costs per unit for potential distribution centers located in each community 5. Read the entire page →
From page 37... ... timeframe. However, other decisions -- such as the contracts to provide air cargo or marine services -- are evaluated every year and are changed to reflect the best combination of costs and service. Read the entire page →
From page 38... ... These tools provide different functions at different points in time, as shown in Figure 3.6. There are several classes of tools used by different stakeholders to assess these types of benefits, including the following: • Strategic planning tools -- These include tools used to assess long-term needs and deficiencies impacting the transportation system and the lifecycle costs of operating and maintaining transportation infrastructure (for asset providers) Read the entire page →
From page 39... ... Benefit assessment spectrum. Stakeholder Types Asset Provider Service Provider End User Impacted Party Strategic Planning Performance Carrier Cost and Performance Tool Types Shipper Cost and Transportation Efficiency Less Important More Important. Read the entire page →
From page 40... ... Strategic planning extends beyond 5 years for public-sector agencies and entities, as well as for large freight service providers or end user companies with stable markets. Long-term strategic planning horizons also are typical for those asset providers making right-of-way or new capacity investments. Read the entire page →
From page 41... ... . Newly developing models are attempting to integrate traditional performance measures -- such as time savings, safety, and operating costs -- with wider measures that include the cost of vehicle emissions and monetized health benefits. Read the entire page →
From page 42... ... They share common features -- the valuation of travel-time savings for different classes of travel, as well as vehicle operating costs, safety, and air quality impacts. Commonly used benefit/cost tools include the following: • Cal-B/C, developed by the California DOT (Caltrans) Read the entire page →
From page 43... ... The benefits considered by BCA.Net include highway user costs (travel time and vehicle operating costs, safety) and environmental impacts. Read the entire page →
From page 44... ... They may further assist economic development agencies to identify how proposed projects may affect their efforts to diversify the area economic base and attract target industries -- shifting the quality and pay level of available jobs, reducing dependence on declining industries, or improving business stability by enhancing supporting and complementary activities. Economic impact models are discussed in terms of two aspects -- the core economic model and the analysis framework that translates freight-related transportation impacts into economic model inputs. Read the entire page →
From page 45... ... In practice, REMI Policy Insight also needs a front-end tool to translate freight-related transportation impacts into economic model inputs. One option is REMI TranSight. Read the entire page →
From page 46... ... Leveraging the short- and long-term forecasting macroeconomic models of Global Insight, this system provides highly detailed responses to changes in transport costs by mode and commodity. It utilizes econometric (statistical) Read the entire page →
From page 47... ... Utilization of the physical assets and resources is reported via the financial data. Another category of financial analysis tools deals not with freight generation or freight flows, but rather with the economic viability of transportation infrastructure projects and the freight services that use that infrastructure. Read the entire page →
From page 48... ... , which is the discount rate that sets the NPV of all cash flows equal to zero. It is a common measure for investments that may produce multiple cash flows over a period. Read the entire page →
From page 49... ... 49 Risk Private Public Legislative (Existing and Future) Sharing within defined parameters Major responsibility Acquisition and Environmental Sharing within defined parameters, with public-sector assistance Major responsibility Permitting and Planning Sharing within defined parameters Major responsibility Design and Construction Major responsibility – Operation and Maintenance Major responsibility Sharing within defined parameters Financing Major responsibility – Termination Major responsibility, unless demonstrably caused by public – Insurance Major responsibility Sharing based on availability of commercial rates Force Majeure Sharing based on event and availability of insurance Sharing based on event and availability of insurance Source: Halcrow, Inc. Read the entire page →
From page 50... ... Finally, the tools available for use by public-sector agencies often rely on data that are proprietary to private-sector service providers. When evaluating rail projects, for instance, these tools need detailed information on volumes, commodity types, track speeds, and operational strategies. Read the entire page →
From page 51... ... In addition, there are a number of regional economic models (described previously) that are useful in identifying the regional economic impacts and benefits associated with freight system improvements. Read the entire page →

From page 27...

... and the key decision points along the way; and • Current practices used to evaluate freight investments, particularly how potential public and private benefits are calculated, how cost allocations are made, and how investments are evaluated and prioritized. As discussed in Chapter 2, freight projects can affect four types of stakeholders: asset providers, service providers, end users, and other impacted parties.