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10 S t e p 1 1.1 Goal The goal of this step is to develop a working definition and an impact area of a project or corridor to be used for analytical purposes. Projects are typically defined by features such as: â¢ Type of facility/location: corridor, modal or intermodal facility, or both. â¢ BCA impact area. â¢ Modes involved: air, water (marine or barge), rail, truck, pipeline, or combinations (multimodal, modal diversion, or intermodal). A unimodal project can be considered a subset of a multimodal project based on options or alternatives developed during the analysis process. â¢ Nodes involved: connections to freight articulation points such as gateway ports, terminals, distribution centers, and other intermodal facilities. 1.2 Tasks The main task in this step is to map the project features, scale, and type to allow better linkages to appropriate tools and data. It is important to have a good understanding of the planned project and typology in the context of the transportation network so that suitable demand forecasts can be developed and benefit estimation will not be biased. Define the Type of Facility/Location to Include The first task is to define the type of facility or location (one or more) to be included in the project evaluation. Projects can consist of: â¢ Corridors. â¢ Modal or intermodal facilities. â¢ Both. Projects under evaluation often include or are, in fact, freight corridors. A freight corridor is essentially a route (right of way) along which trade moves (4). The freight corridor is made up of links, nodes, and transfer points serving both inbound and outbound freight flows. It includes main arteries that connect truck, rail, sea, and inland waterway routes via roads and highways, rail lines, air facilities, ports, and waterways. These corridors can allow trucks, air, rail, and water modes to also compete for freight shipments. A marine or airport corridor may include complementary or competing ports and airport facilities. The Alameda Corridor is an urban freight movement corridor. Define the Project
Define the project 11 On the other hand, multijurisdictional nodal projects, such as those at ports and airports, cannot be represented using this corridor convention. Develop Options or Alternatives This task specifies the base case no-build and/or do-minimum scenarios, as well as build scenarios, for computing benefits. Stakeholder inputs are most useful in guiding this effort since they are most aware of the objectives and motivations of the project. When developing alternatives, ensure all modal alternatives and/or all modal connections associated with the project are in the same location (impact area). Baseline and Alternatives and Development of the Suitable No-Build Use a do-something for the baseline instead of simple no-build. Do-something is also referred to as do-minimum or business as usual. The most likely conditions expected to exist in the absence of the project define the no-build alternative. It is important to consider what the sponsoring agency or facility users might do in the event a project is not built. Rea- sonable improvement alternatives to the base case can include a range of solutions, such as major rehabilitation of the existing facility, full-depth reconstruction, or replacement by a higher-volume facility. Alternatives that improve operations or manage travel demand are also suitable for consideration in the do-minimum. Build alternatives can be developed to be mutually inclusive, as in bundled projects (all projects will occur) or dependent projects. Alternatives can also include timing and staging considerations. Bundling makes sense for discrete freight projects when they each have their own utility, are complementary, and are in the same impact area (corridor). The actual no-build scenario to use as the base case is best determined by developing consen- sus among all the expert participants in the possible build scenarios. Consider these five possible approaches to a without-project decision in BCA: â¢ Assume the current scenario will continue through the analysis period (continued opera- tions): This is the most common no-build (do-nothing) and assumes that the facility will deteriorate over time. Very few sources actually recommend the use of this simple do-nothing or no-build for the baseline. However, many BCA case studies do sometimes consider this the counterfactual alternative to be compared. The use of a simple no-build has the effect of exaggerating the impact of the build alternative. â¢ Assume some level of investment (with assumed capacity and/or levels of service) will con- tinue over the analysis period: This is typically used in the context of strategic upgrades to facilities. This is a typical do-minimum scenario for the BCA of an existing facility that is expected to undergo improvements. â¢ Assume the base mode or route will continue with some level of investment and upgrade (whether a public or privately owned facility): This is one of the do-minimum scenarios when a new mode or route is considered. For example, in the case of a proposed rail corridor with a parallel roadway infrastructure, the analyst can assume the base highway route will receive some level of continuing investment as the do-minimum. â¢ Develop discrete interventions: The interventions may represent a partial solution to the full build. â¢ Use future year conditions: Use future year conditions to drive alternatives for the build and do-something scenarios. â¢ Consider other ways parties in the private sector or public sector can respond to inaction: It is important to be able to consider the strategies or options that would be undertaken without the intervention by either the public or private sector in the no-build scenario compared to the build scenario.
12 Guide for Conducting Benefit-Cost Analyses of Multimodal, Multijurisdictional Freight Corridor Investments Inland and Deep-Draft Navigation Projects Navigation projects are a unique subset. The U.S. Army Corps of Engineersâ (USACEâs) P&G (5) provides guidelines for the build and without-project alternatives. Among the six conditions that need to be met, the P&G specifies that the without-project alternatives be specified by considering alternative freight modes that can transport cargo by using the most likely route for the specified freight mode, assuming that sufficient capacity exists on each mode at current rates. The most likely condition expected to exist in the future defines the with-project alternative, and the most likely condition expected to exist over the planning period in absence of the project defines the without-project alternative. The P&G recom- mends that optimal timing of investments be considered as part of the alternatives or project formulation. Deciding on the No-Build The most efficient way to decide the no-build is to utilize direct stakeholder input via focus groups, expert panels, and/or stakeholder surveys to help decide the no-build to be used in any stage of the process. However, this is most likely to be important in conceptual and feasibility stages of the project where consensus building is important on the most likely condition(s) to be examined as part of the BCA. Determine the BCA Impact Area The corridor or impact area is not necessarily the same as the impact area evaluated in a specific BCA. In general, the impact area is the area that will be affected by the construction of the proposed project or the true area of influence. The BCA impact area is often a subset of the true impact area of a project and is typically defined by jurisdictional boundaries used for planning purposesâthe MPO, state, or other region defined by the project scale, or a broader area made up of key routes and modes (the impacted facility and the diverted facil- ity). In yet other cases, where the project impacts corridor productivity and throughput, the BCA impact area may be defined more tightly by the origin-destination (O-D) pairs served by the facility (travel shed). The choice of the BCA impact area establishes, in many contexts, the benefits themselves (e.g., safety, reliability, speed, or cost). The corridor impact area, on the other hand, allows a diagnos- tic assessment of factors that can be linked to distributional effects such as key adjacent uses and activity articulation nodes along the route, regardless of jurisdiction. The difference between the true area of influence and the area used for BCA is a source of con- fusion. It is a source of bias in travel forecasts since induced demand (the additional demand for a facility due to a change in transportation cost) is essential for estimating consumer and producer surpluses and may not be well represented. In technical language, induced demand is a movement along a long run demand curve or shifts in the short run demand due to other factors (6). In any event, it is important to document the basis upon which the BCA impact area or area of influence is established. Define the Modes Involved The next task is to understand and define the unimodal or multimodal nature of the project(s) or for the alternatives under consideration, such as: â¢ Unimodal projects (M): projects that involve only one mode (highway, rail, marine, or air). â¢ Modal projects with diversion implications (MD): unimodal projects expected to create diversion from one part of a network to another within the same mode. An example is a new
Define the project 13 highway segment that diverts from other highway segments. This is a broad category and can include port access improvements and investments in corridors that influence both freight and passengers (rail, truck tolls, truck access improvements, etc.). â¢ Multimodal projects (MM): projects that involve two or more modes. Examples are: â Port improvements on the marine side and highway improvements to the same port. â Projects on two line-haul networks not intended to divert freight but to improve multi- modal and intermodal flows. â Line-haul improvements between land bridges. â Coordinated modal improvements inside corridors. â¢ Multimodal projects with diversion implications (MMD): projects that involve more than one mode and diversion between the modes. An example is a new rail line that generates diversion, and there are other investments in other modes in the corridor. This is also a broad category. â¢ Intermodal projects (IM): projects that focus on the connections between two or more modes to intermodal freight facilities. Examples are ports (gateway seaports, land ports), airports, intermodal railyards, and inland ports. These are all transfer facilities with long asset lives that drive development and multimodal without exception. They can be part of corridor projects and can require non-marginal changes in capacity, but are characterized by decreasing costs with use. 1.3 Inputs: Recommended Tools and Data Sources A number of tools and resources can assist the analyst with project definition for BCAs. These tools help define the components and geographic scope of proposed projects. â¢ Travel demand networks for line-haul modes from state department of transportation (DOT) and MPO networks as needed for state and regional scales of analysis and the Freight Analysis Framework (FAF4) and Rail Waybill. â¢ Private domain data sources such as Global Insightâs Transearch. â¢ The National Transportation Atlas Database from the Bureau of Transportation Statistics (BTS). It includes rail networks, airport runway hubs, highway networks, fixed-guideway transit facilities, waterway networks, hazardous material routes, gateway ports, grade cross- ings, airports, transit stations, Amtrak, and intermodal terminals facilities. The database doc- uments multimodal interactions and, in some cases, associated entities for a terminal served by both rail and truck. â¢ Oakridge National Laboratories Center for Transportation Analysisâs Intermodal Terminals Database and networks (http://cta.ornl.gov/cta/). â¢ Transportation Investment Generating Economic Recovery (TIGER) line files. â¢ Esriâs ArcGIS Business Analyst and Street Networks. â¢ Intermodal Association of North America (IANA) (http://www.intermodal.org/). â¢ Aerial photographs (for smaller areas). â¢ Esriâs ArcVIEW, TransCAD, or similar tools. â¢ Unimodal project BCA guidance documents: â FAA (https://www.faa.gov/regulations_policies/policy_guidance/benefit_cost/) (7). â USACE (economic guidance documents) (http://planning.usace.army.mil/toolbox/index. cfm) and National Economic Development Procedures Manual (2009) (8). â USDOT and FHWA Economic Analysis Primer (2003) (9). (http://www.webpages.uidaho.edu/ ~mlowry/Teaching/EngineeringEconomy/Supplemental/USDOT_Economic_Analysis_ Primer.pdf) and other sources such as USDOT American Recovery and Reinvestment Act of 2009 BCA guidance.
14 Guide for Conducting Benefit-Cost Analyses of Multimodal, Multijurisdictional Freight Corridor Investments 1.4 Best Practices and Examples Best practices for Step 1: â¢ Define and describe the project by considering all modes relevant to the context. â¢ Describe the facility with sufficient detail and adequate supporting data (traffic volumes, freight volumes, cargo movements, urban/rural characterization, and adjacent land uses). These statistics are linked to the context. â¢ Discuss the project in the planning context. â¢ Use an analysis that considers multiple feasible alternatives instead of simple comparisons with a do-nothing or no-build scenario. A no-build scenario is only meaningful if the asset is assumed to depreciate over time without upgrades. A useful business-as-usual scenario is a do-minimum that assumes some level of investment to keep the facility in its operational condition. â¢ Let the project definition guide the alternatives examined as part of a search for corridor solutions. â¢ Develop the alternatives as part of a formal process of a strategic solutions or options devel- opment process. For instance, this could include modal solutions or efficient use of existing infrastructure bundled with suitable dependent investments. â¢ Consider staged investments with their proper timelines and costs, and bundled investments as part of the examined alternatives. Bundled investments are dependent projects in the same BCA impact area with independent value. (Independent value implies that the following question is considered when bundling projects in the build scenario: Do the projects generate independent and additive levels of the same type of impact? For example, do both generate diversion independently? Shared use corridors are good examples of independent utility to passengers and freight.) â¢ Consider project timing itself as an alternative. â¢ Consider a variety of build scenarios and do-minimum or no-build scenarios based on project context, market conditions, and mode shifts. â¢ Use expert judgment or stakeholder focus groups to decide on no-build for BCA. This is particularly important for large scale investments that are multijurisdictional. Example 1: The Alameda Corridor is a series of bridges, underpasses, overpasses, and street improvements that separate freight trains from street traffic and passenger trains, facilitating a more efficient transportation network (see Figure 4). The projectâs centerpiece is the Mid-Corridor Trench, which carries freight trains in an open trench that is 10 miles long in Los Angeles (see Figure 5). The entire corridor is a 20-mile rail corridor, multiple-track system designed to link the rail facilities of the Ports of Los Angeles and Long Beach with the Union Pacific and BNSF transcontinental networks. The details of the project are as follows: â¢ Mode: freight rail. â¢ Project definition: MD with safety implicationsâintermodal shipments. â¢ Designated: National High Priority Corridor under the Intermodal Surface Transportation Efficiency Act. â¢ Sources: FHWA (https://www.fhwa.dot.gov/ipd/project_delivery/lessons_learned/success_ stories_alameda.aspx) and Alameda Corridor Transportation Authority (www.acta.org). Example 2: The National Gateway Corridor (http://www.nationalgateway.org/sites/default/ files/pdfs/EA/Environmental_Assessment_and_Section_4_f__Evaluation.pdf) is a series of multistate freight rail corridor investments that parallel highway facilities (see Figure 6). These include portions of the I-95/I-81 corridor, I-70/I-76 corridor, and I-40/Carolina Corridor. The environmental assessment documentation (10) states that Phase 1 shown in the graphic (high- lighted in red) is aimed to achieve minimum 21-feet clearances along CSX Transportation, Inc.âs
Define the project 15 Figure 4. Alameda Corridor. (FHWA) Figure 5. Alameda Mid-Corridor Trench.
16 Guide for Conducting Benefit-Cost Analyses of Multimodal, Multijurisdictional Freight Corridor Investments rail corridor to allow for double stacking between Mid-Atlantic states and their ports to Midwest markets. Phase 1 is part of a larger initiative. The details of the project are as follows: â¢ Mode(s): freight rail. â¢ Project definition: MD with diversion implications. Example 3: The Tower 55 Project (see Figure 7) located in Dallas, Texas, is a local-scale multi- jurisdictional project. It cost $93.7 million, and the project has the following investments (11): â¢ Additional trackage north, south, and through Tower 55 adding an additional main line and improving interlocker capabilities. â¢ Improvements to train alignment and switches to promote faster train movement. Figure 6. National Gateway Corridor. (FHWA) Figure 7. The Tower 55 Project. (TexasDOT)
Define the project 17 â¢ An enhanced signal and interlocker system with positive train control compatibility. â¢ New and structurally improved bridges and drainage structures. â¢ City arterial street/intersection improvements. â¢ Improved pedestrian safety via pedestrian grade separations to promote crossing safety for children and other pedestrians. The details of the project are as follows: â¢ Mode(s): freight rail. â¢ Project definition: at-grade improvements, capacity, and reliability. Examples of Alternatives Development Example 1: The United Kingdomâs Department for Transportâs WebTAG (12) and the Euro- pean Unionâs BCA Guide (13) provide good discussions on the alternatives development process and its role in BCA, from strategic options development to alternatives development for the actual project-level BCA. Example 2: Early screening and multimodal solutions development processes were used in the I-95 Corridor in Virginia. The Virginia Statewide Model screened modal transportation investment scenarios in the corridor using a freight congestion index (14). The I-95 corridor is a critical link in the freight transportation system connected by several highway, rail, seaport, and airport facilities and is characterized by significant through movement. Example 3: NCHRP Report 649: Separation of Vehicles: CMV-Only Lanes presents sev- eral alternatives for long-haul corridors and urban corridors for consideration in economic analysis (15). Example 4: The Trans-Tennessee Railroad scenario assessment compares two alternative solutions using BCA for the development of a freight rail corridor serving the Tennessee cities of Knoxville, Nashville, and Memphis. Two alternatives were compared, including a low-cost basic freight rail connection costing $118 million and a more ambitious direct multistate alternative (16). Four alternatives were evaluated based on the length of the construction period: â¢ Base case: 5-year decision process, 5-year construction period, 25-year project life, and no benefits until the project is fully in place. â¢ Alternative 2: 10-year construction period, 25-year project life, and no benefits until the project is fully in place. â¢ Alternative 3: 5-year construction period, 25-year project life, and no benefits until the project is fully in place. â¢ Alternative 4: 5-year construction period, 25-year project life, and partial benefit flows begin- ning in year three of the construction period. Example 5: Bayonne Bridge Air Draft Analysis (17): The Port Authority of New York and New Jersey (PANYNJ) commissioned the New York District of the USACE to examine the com- mercial consequences of and the benefits generated by potential remedies for the air draft restric- tion imposed by the height of the Bayonne Bridge (which crosses over one of the busiest shipping channels in the world). â¢ Without-Project or No-Build Condition: Commerce is carried in smaller, less economically efficient vessels that are not constrained by the Bayonne Bridge. Height stays the same. (Alter- natives to this solution were also examined on the cost side). â¢ With-Project or Build Condition: the New York fleet is unrestricted by air draft and as the composition of the world fleet gets taller and commerce grows, larger vessels are added to
18 Guide for Conducting Benefit-Cost Analyses of Multimodal, Multijurisdictional Freight Corridor Investments New York routes. Costs of options for four types of measures options were provided by the Port Authorityâs Tunnels, Bridges, & Terminals Department. Hence, four build alternatives were evaluated. In analyzing these two conditions, the Bayonne Bridge analysis kept the forecast the same while examining other sources for driving benefits (specifically total operating costs is used to compute national economic development benefit [NED] of deepening according to P&G). This way the estimate of benefits produced is a conservative estimate. 1.5 Common Mistakes Common mistakes occur when the project team: 1. Does not consider the need and the economic and institutional context relevant, and does not discuss them. 2. Does not support, explain, or document the baseline data and statistics. 3. Defines the problem too quickly, and attempts to get to an answer as soon as possible and move on (instead of developing a list of good answers). 4. Confuses how an objective will be accomplished with the objective itself. The objective is not to build a project, but to provide a benefit to users. (For example, if the objective is to improve accessibility, this may be accomplished by improving highways, rail lines, or several other modal infrastructure solutions.) 5. Does not identify genuine solutions, and constructs alternatives simply to show they are worse than the preferred (pre-decided) alternative.