Engineering Economic Analysis Practices for Highway Investment (2012)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

114 Appendix d Selected Federal Requirements for Highway economic Analyses The following federal requirements are in addition to those cited in the case studies, and are included to show the breadth of potential applications of engineering economic analyses to highway investments. The compilation is for illustrative pur- poses only and is not represented to be a complete or exhaus- tive coverage of all such federal requirements. Please also note that the guidance discussed in this appendix relates only to requirements for economic analyses. Agencies must also com- ply with other, non-economic requirements on proposed high- way investments; e.g., provisions governing environmental protection, mitigation of environmental impacts, and Environ- mental Justice, to name a few other areas of policy guidance. Code oF FedeRAl RegulAtionS, title 23—HigHwAyS (23 CFR) CHApteR i—FedeRAl HigHwAy AdminiStRAtion, depARtment oF tRAnSpoRtAtion SubCHApteR e—plAnning And ReSeARCH Part 450—Planning assistance and standards appendix a to Part 450—linking the transportation Planning and nePa Processes Background and Overview . . . I. Procedural Issues . . . II. Substantive Issues . . . (b) Evaluating and Eliminating Alternatives During the Transportation Planning Process: The evaluation and elimination of alternatives during the transportation planning process can be incorporated by reference into a NEPA document under certain circumstances. In these cases, the planning study becomes part of the NEPA process and provides a basis for screening out alternatives. . . . . . . • During the planning Alternatives Analysis, all of the reasonable alternatives under consideration must be fully evaluated in terms of their transportation impacts; capital and operating costs; social, eco- nomic, and environmental impacts; and technical considerations; . . . SubCHApteR F—tRAnSpoRtAtion inFRAStRuCtuRe mAnAgement Part 505—Projects of national and regional significance evaluation and rating § 505.9 criteria for grants. (a) The Secretary will approve a grant for a Project of National and Regional Significance project only if the Secretary determines, based upon information submitted by the applicant, that the project: . . . (4) Is justified based on the ability of the project: (i) To generate national and/or regional economic ben- efits, as evidenced by, but not limited to: . . . (C) The demographic and economic characteristics of the area served. (ii) To allocate public and private costs commensurate with the share of public and private benefits and risks; (iii) To generate long-term congestion relief that impacts the State, the region, and the Nation, as evidenced by, but not limited to: (A) Congestion levels, delay, and consequences of delay; (B) Efficiency and effectiveness of congestion mit- igation; and (C) Travel time reliability. (iv) To improve transportation safety, including reduc- ing transportation accidents, injuries, and fatalities, as evidenced by, but not limited to, number, rate and consequences of crashes, injuries and fatalities in the affected region and corridor; . . . § 505.13 federal government’s share of project cost. (a) Based on engineering studies, studies of economic feasi- bility, and information on the expected use of equipment or facilities, the Secretary shall estimate the project’s eli- gible costs.

115 SubCHApteR g—engineeRing And tRAFFiC opeRAtionS Part 626—Pavement Policy § 626.2 definitions. Unless otherwise specified in this part, the definitions in 23 U.S.C. 101(a) are applicable to this part. As used in this part: Pavement design means a project level activity where detailed engineering and economic considerations are given to alternative combinations of subbase, base, and surface materials which will provide adequate load carrying capac- ity. Factors which are considered include: Materials, traffic, climate, maintenance, drainage, and life-cycle costs. § 627.3 definitions. Value engineering. The systematic application of recog- nized techniques by a multi-disciplined team to identify the function of a product or service, establish a worth for that function, generate alternatives through the use of creative thinking, and provide the needed functions to accomplish the original purpose of the project, reliably, and at the lowest life-cycle cost without sacrificing safety, necessary quality, and environmental attributes of the project. Part 650—Bridges, structures, and Hydraulics § 650.105 definitions. . . . [related to FHWA actions supporting a Unified National Program for Floodplain Management] . . . (p) Risk analysis shall mean an economic comparison of design alternatives using expected total costs (construc- tion costs plus risk costs) to determine the alternative with the least total expected cost to the public. It shall include probable flood-related costs during the service life of the facility for highway operation, maintenance, and repair, for highway-aggravated flood damage to other property, and for additional or interrupted highway travel. . . . subpart a—location and Hydraulic design of encroachments on flood Plains § 650.115 design standards. (a) The design selected for an encroachment shall be supported by analyses of design alternatives with consideration given to capital costs and risks, and to other economic, engineer- ing, social, and environmental concerns. (1) Consideration of capital costs and risks shall include, as appropriate, a risk analysis or assessment which includes: (i) The overtopping flood or the base flood, whichever is greater, or (ii) The greatest flood which must flow through the highway drainage structure(s), where over- topping is not practicable. The greatest flood used in the analysis is subject to state-of-the-art capability to esti- mate the exceedance probability. subpart H—navigational clearances for Bridges § 650.807 Bridges requiring a uscg permit. (a) The USCG has the responsibility (1) to determine whether a USCG permit is required for the improvement or con- struction of a bridge over navigable waters except for the exemption exercised by FHWA in §650.805 and (2) to approve the bridge location, alignment, and appropriate navigational clearances in all bridge permit applications. (b) A USCG permit shall be required when a bridge crosses waters which are: (1) tidal and used by recreational boat- ing, fishing, and other small vessels 21 feet or greater in length or (2) used or susceptible to use in their natural condition or by reasonable improvement as a means to transport interstate or foreign commerce. If it is deter- mined that a USCG permit is required, the project shall be processed in accordance with the following procedures. . . . (d) The HA [Highway Authority] shall accomplish sufficient preliminary design and consultation during the environ- mental phase of project development to investigate bridge concepts, including the feasibility of any proposed mov- able bridges, the horizontal and vertical clearances that may be required, and other location considerations which may affect navigation. At least one fixed bridge alterna- tive shall be included with any proposal for a movable bridge to provide a comparative analysis of engineering, social, economic and environmental benefit and impacts. § 650.809 movable span bridges. A fixed bridge shall be selected wherever practicable. If there are social, economic, environmental, or engineering reasons which favor the selection of a movable bridge, a cost benefit analysis to support the need for the movable bridge shall he prepared as a part of the preliminary plans. SubCHApteR H—RigHt-oF-wAy And enviRonment Part 771—environmental imPact and related Procedures § 771.105 Policy. . . . [relates to all environmental investigations, reviews, and consultations on a project] . . .

116 (b) Alternative courses of action should be evaluated and decisions be made in the best overall public interest based upon a balanced consideration of the need for safe and efficient transportation; of the social, economic, and environmental impacts of the proposed transportation improvement; and of national, State, and local environ- mental protection goals. Part 772—Procedures for aBatement of HigHway traffic noise and construction noise § 772.9 analysis of traffic noise impacts and abatement measures. (a) The highway agency shall determine and analyze expected traffic noise impacts and alternative noise abatement measures to mitigate these impacts, giving weight to the benefits and cost of abatement, and to the overall social, economic and environmental effects. § 772.13 federal participation. (a) Federal funds may be used for noise abatement mea- sures where: (1) . . . (2) . . . and (3). The overall noise abatement benefits are determined to outweigh the over- all adverse social, economic, and environmental effects and the costs of the noise abatement measures. . . . (d) There may be situations where severe traffic noise impacts exist or are expected, and the abatement measures listed above are physically infeasible or economically unrea- sonable. In these instances, noise abatement measures other than those listed in paragraph (c) of this section may be proposed for Types I and II projects by the highway agency and approved by the FHWA on a case-by-case basis when the conditions of paragraph (a) of this section have been met. § 772.19 construction noise. The following general steps are to be performed for all Types I and II projects: (a) . . . (b) Determine the measures which are needed in the plans and specifications to minimize or eliminate adverse construction noise impacts to the community. This determination shall include a weighing of the benefits achieved and the overall adverse social, economic and environmental effects and the costs of the abatement measures. united StAteS Code, title 23—HigHwAyS (23 uSC) CHApteR 1—FedeRAl-Aid HigHwAyS Sec. 138. preservation of parklands study of alternative transportation modes in national Park system Pub. L. 102-240, title I, Sec. 1050, Dec. 18, 1991, 105 Stat. 2000, provided that: (a) In General.—Not later than 12 months after the date of the enactment of this Act [Dec. 18, 1991], the Secretary, in consultation with the Secretary of the Interior, shall conduct and transmit to Congress a study of alternative transportation modes for use in the National Park System. In conducting such study, the Secretary shall consider (1) the economic and technical feasibility, environmental effects, projected costs and benefits as compared to the costs and benefits of existing transportation systems, and general suitability of transportation modes that would provide efficient and environmentally sound ingress to and egress from National Park lands; and (2) methods to obtain private capital for the construction of such trans- portation modes and related infrastructure. Sec. 602. determination of eligibility and project selection . . . (b) Selection Among Eligible Projects.— (1) Establishment.—The Secretary shall establish criteria for selecting among projects that meet the eligibility requirements specified in subsection (a). (2) Selection criteria.— (A) In general.—The selection criteria shall include the following: (i) The extent to which the project is nationally or regionally significant, in terms of generating economic benefits, supporting international commerce, or otherwise financing the national transportation system. pRojeCtS oF nAtionAl And RegionAl SigniFiCAnCe Pub. L. 109-59, title I, Sec. 1301, Aug. 10, 2005, 119 Stat. 1198, as amended by Pub. L. 110-244, title I, Sec. 103(a), June 6, 2008, 122 Stat. 1578, provided that: (a) Findings.—Congress finds the following: (1) Under current law, surface transportation programs rely primarily on formula capital apportionments to States.

117 (2) Despite the significant increase for surface transporta- tion program funding in the Transportation Equity Act of the 21st Century [Pub. L. 105-178, see Tables for classification], current levels of investment are insuffi- cient to fund critical high-cost transportation infrastruc- ture facilities that address critical national economic and transportation needs. (3) Critical high-cost transportation infrastructure facilities often include multiple levels of government, agencies, modes of transportation, and transportation goals and planning processes that are not easily addressed or funded within existing surface transportation program categories. (4) Projects of national and regional significance have national and regional benefits, including improving economic pro- ductivity by facilitating international trade, relieving con- gestion, and improving transportation safety by facilitating passenger and freight movement. (5) The benefits of projects described in paragraph (4) accrue to local areas, States, and the Nation as a result of the effect such projects have on the national transportation system. . . . (2) Criteria for grants.—The Secretary may approve a grant under this section for a project only if the Secretary determines that the project— (A) is based on the results of preliminary engineering; (B) is justified based on the ability of the project— (i) to generate national economic benefits, includ- ing creating jobs, expanding business opportuni- ties, and impacting the gross domestic product; (ii) to reduce congestion, including impacts in the State, region, and Nation; (iii) to improve transportation safety, including reducing transportation accidents, injuries, and fatalities; (iv) to otherwise enhance the national transporta- tion system; and . . . nAtionAl CoRRidoR plAnning And development pRogRAm Pub. L. 105-178, title I, Sec. 1118, June 9, 1998, 112 Stat. 161, provided that: . . . (d) Corridor Development and Management Plan. — A State or metropolitan planning organization receiving an allo- cation under this section shall develop, and submit to the Secretary for review, a development and management plan for the corridor or a usable component thereof with respect to which the allocation is being made. Such plan shall include, at a minimum, the following elements: (1) A complete and comprehensive analysis of corridor costs and benefits. . . . tRAFFiC ContRol SignAlizAtion demonStRAtion pRojeCtS: RepoRtS to SeCRetARy oF tRAnSpoRtAtion; RepoRt to CongReSS Section 146 of Pub. L. 94-280 provided that: (a) The Secretary of Transportation is authorized to carry out traffic control signalization demonstration projects designed to demonstrate through the use of technology not now in general use the increased capacity of existing highways, the conservation of fuel, the decrease in traf- fic congestion, the improvement in air and noise quality, and the furtherance of highway safety, giving priority to those projects providing coordinated signalization of two or more intersections. Such projects can be carried out on any highway whether on or off a Federal-aid system. (b) There is authorized to be appropriated to carry out this section of the Highway Trust Fund, not to exceed $40,000,000 for the fiscal year ending September 30, 1977, and $40,000,000 for the fiscal year ending September 30, 1978. (c) Each participating State shall report to the Secretary of Transportation not later than September 30, 1977, and not later than September 30 of each year thereafter, on the progress being made in implementing this section and the effectiveness of the improvements made under it. Each report shall include an analysis and evaluation of the benefits resulting from such projects comparing an adequate time period before and after treatment in order to properly assess the benefits occurring from such traffic control signalization. The Secretary of Transportation shall submit a report to the Congress not later than January 1, 1978, on the progress being made in implementing this section and an evaluation of the ben- efits resulting therefrom. Study oF CmAQ pRogRAm Pub. L. 105-178, title I, Sec. 1110(e), June 9, 1998, 112 Stat. 144, provided that: . . .

118 (E) assess the effectiveness, including the quantitative and non-quantitative benefits, of projects funded under the program and include, in the assessment, an estimate of the cost per ton of pollution reduction; (F) assess the cost-effectiveness of projects funded under the program with respect to congestion mitigation; (G) compare— (i) the costs of achieving the air pollutant emissions reductions achieved under the program; to (ii) the costs that would be incurred if similar reductions were achieved by other measures, including pollu- tion controls on stationary sources; . . . Sec. 152. Hazard elimination program . . . (f) Each State shall establish an evaluation process approved by the Secretary, to analyze and assess results achieved by safety improvement projects carried out in accordance with procedures and criteria established by this section. Such evaluation process shall develop cost-benefit data for various types of corrections and treatments which shall be used in setting priorities for safety improvement projects. . . . (3) Major projects.—The Secretary may require more than 1 analysis described in paragraph (2) for a major project described in subsection (h). (4) Requirements.—Analyses described in paragraph (1) for a bridge project shall (A) include bridge substructure requirements based on construction material; and (B) be evaluated— (i) on engineering and economic bases, taking into consideration acceptable designs for bridges; and (ii) using an analysis of life-cycle costs and dura- tion of project construction. . . . (f) Life-Cycle Cost Analysis.— (1) Use of life-cycle cost analysis.—The Secretary shall develop recommendations for the States to conduct life- cycle cost analyses. The recommendations shall be based on the principles contained in section 2 of Executive Order No. 12893 and shall be developed in consultation with the American Association of State Highway and Transporta- tion Officials. The Secretary shall not require a State to conduct a life-cycle cost analysis for any project as a result of the recommendations required under this subsection. (2) Life-cycle cost analysis defined.—In this subsection, the term “life-cycle cost analysis” means a process for evaluating the total economic worth of a usable project segment by analyzing initial costs and discounted future costs, such as maintenance, user costs, reconstruction, rehabilitation, restoring, and resurfacing costs, over the life of the project segment. . . . uSe oF ReCyCled pAving mAteRiAl Section 1038 of Pub. L. 102-240, as amended by Pub. L. 104-59, title II, Sec. 205(b), title III, Sec. 327, Nov. 28, 1995, 109 Stat. 577, 592, provided that: . . . (5) Report.—Not later than 18 months after the date of the enactment of this Act [Dec. 18, 1991], the Secretary and the Administrator shall transmit to Congress a report on the results of the studies conducted under this subsec- tion, including a detailed analysis of the economic sav- ings and technical performance qualities of using such recycled materials in federally assisted highway projects and the environmental benefits of using such recycled materials in such highway projects in terms of reducing air emissions, conserving natural resources, and reduc- ing disposal of the materials in landfills. . . . tRAFFiC ContRol SignAlizAtion demonStRAtion pRojeCtS; RepoRtS to SeCRetARy oF tRAnSpoRtAtion; RepoRt to CongReSS Section 146 of Pub. L. 94-280 provided that: . . . (c) Each participating State shall report to the Secretary of Transportation not later than September 30, 1977, and not later than September 30 of each year thereafter, on the progress being made in implementing this section and the effectiveness of the improvements made under it. Each report shall include an analysis and evaluation of the benefits resulting from such projects comparing an adequate time period before and after treatment in order to properly assess the benefits occurring from such traffic control signalization . . .

Abbreviations used without definitions in TRB publications: AAAE American Association of Airport Executives AASHO American Association of State Highway Officials AASHTO American Association of State Highway and Transportation Officials ACI–NA Airports Council International–North America ACRP Airport Cooperative Research Program ADA Americans with Disabilities Act APTA American Public Transportation Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and Materials ATA American Trucking Associations CTAA Community Transportation Association of America CTBSSP Commercial Truck and Bus Safety Synthesis Program DHS Department of Homeland Security DOE Department of Energy EPA Environmental Protection Agency FAA Federal Aviation Administration FHWA Federal Highway Administration FMCSA Federal Motor Carrier Safety Administration FRA Federal Railroad Administration FTA Federal Transit Administration HMCRP Hazardous Materials Cooperative Research Program IEEE Institute of Electrical and Electronics Engineers ISTEA Intermodal Surface Transportation Efficiency Act of 1991 ITE Institute of Transportation Engineers NASA National Aeronautics and Space Administration NASAO National Association of State Aviation Officials NCFRP National Cooperative Freight Research Program NCHRP National Cooperative Highway Research Program NHTSA National Highway Traffic Safety Administration NTSB National Transportation Safety Board PHMSA Pipeline and Hazardous Materials Safety Administration RITA Research and Innovative Technology Administration SAE Society of Automotive Engineers SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (2005) TCRP Transit Cooperative Research Program TEA-21 Transportation Equity Act for the 21st Century (1998) TRB Transportation Research Board TSA Transportation Security Administration U.S.DOT United States Department of Transportation