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Prioritization of Freight Investment Projects (2019)

Chapter: Chapter 3 - Freight Investment Project Prioritization Process and Methods

« Previous: Chapter 2 - Context Information and Agency Perspectives on Freight Investment Prioritization Methodologies
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
×
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Suggested Citation:"Chapter 3 - Freight Investment Project Prioritization Process and Methods." National Academies of Sciences, Engineering, and Medicine. 2019. Prioritization of Freight Investment Projects. Washington, DC: The National Academies Press. doi: 10.17226/25581.
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17 This chapter provides a detailed description of the general process and the different freight investment project prioritization methods that have been and are currently being used. Specifi- cally, the most-used methods are described, and common steps in these different methods are identified. The chapter is divided by the literature review, survey, and case example findings. As previously defined at the beginning of Chapter 2, there is a difference between a process and a method. A prioritization method is a specific action taken to prioritize projects, such as a stakeholder workshop. A process comprises multiple methods that create the overall pro- gression from beginning to end, which results in a priority list of freight projects. Processes can include both qualitative and quantitative methods. Additional information reviewed in this chapter is listed below: • Development and use of regional and statewide freight data sources by state DOTs and metropolitan planning organizations (MPOs) to accommodate freight prioritization processes; • How available freight planning and investment funding mechanisms are merged with freight prioritization processes; • Innovative policies, strategies, and practices to develop freight planning expertise within agencies while encouraging private-sector contributions to the freight prioritization process; • Identified gaps in practice and knowledge; • Identified research needed for the development and implementation of performance measures to evaluate effectiveness, efficiencies, and performance; • How decision makers consider scoring criteria in the prioritization process; • How project prioritization is partitioned given that there could be several prioritization processes that may be conflicting [for instance, an urban area usually holds freight and pri- vately owned vehicle (POV) traffic, and conflicting points may be in different locations of that area, and two prioritization processes may be competing, one for freight and another for POVs]; and • Practices on the allocation of project funding by mode. Common Methods Found in the Literature Review The following literature review discussion covers all the gathered methodologies found within the systematic review search, with most of the methods originating within state DOT freight plans but also including regional processes. The methodologies are categorized and discussed, reviewing all aspects of the methods identified in the project scope. The review also includes a discussion on some of the various factors that are typically included in freight project prioritization methodologies, such as economic impact analyses, performance mea- sures, qualitative and quantitative methods used, and factors used for weighing decisions. C H A P T E R 3 Freight Investment Project Prioritization Process and Methods

18 Prioritization of Freight Investment Projects State DOT Methods The systematic review included all available state freight to analyze and compare different freight prioritization methodologies. The first search was conducted in December 2017, and 15 freight plans (containing freight project prioritization methodologies) were found. Because of the recent FAST Act update that went into effect on December 4, 2017 (2 years after the act had been signed), many state DOTs created a new plan or an addendum to their existing plan to comply with the FAST Act regulations. A second sweep of state DOT freight plans was conducted in May 2018. Sixteen new freight plans or addendums had been created within the 5-month span. Therefore, a total of 31 state DOT freight plans that included a freight project prioritiza- tion methodology were included in this analysis. More state DOT freight plans exist, but only 31 discuss the methodology used to prioritize freight projects. The FAST Act does not require a dialogue about the prioritization methodology, only a list of priority projects. The state freight plans that do not discuss the prioritization methodology were not included in this analysis. For visualization purposes, some of the DOTs created graphics explaining their prioritiza- tion processes. Out of the 31 different freight plans, 19 included a prioritization visualization. All of the visualizations collected from the freight plans can be found online on the respective departments of transportation websites. Freight Project Prioritization Methods After examining all 31 state DOT freight plans, three common methodology types were found. They are tier-based methods, step-based methods, criteria- or goal-based methods, and priori- tization assistance tools. Table 2 summarizes this information. Some states have multiple steps within their methodology, so it was not uncommon to see more than one of these methods used. For example, a state could use a step-based process, and one of the stages within the process could rank goals or criteria either qualitatively or quantitatively. Therefore, some of the states used more than one methodology to rank their freight plans. Tier-Based Methods Tier-based methods categorize freight based on two or three tiers. The tiers can be based on various standards, depending on the state. The California DOT (Caltrans) uses a three-tier process, basing the tiers on freight (e.g., in terms of trucks or rail) volume. Tier 1 projects are more likely to receive more funding and higher prioritization since they are located on the federally identified Primary Freight Highway System established in MAP-21 (10). The Maine DOT bases its tiering method on the critical freight corridors identified by National Highway Freight Network (NHFN) (4). Projects on more vital freight roads are given higher prioritiza- tion (11). The Michigan DOT uses a two-tier process. Tier 1 projects are federally identified key freight corridors located on the Primary Freight Highway System, and the second tier is all other projects (12). The Nebraska DOT asked its freight advisory committee (FAC) to rank freight projects based on its previously identified freight strategies and freight goals. Three tiers of freight projects were identified (13). The New Jersey DOT determined a set of weighted perfor- mance measures for each freight plan. Once the projects had been scored, they were divided into three tiers, divided by thirds. The top third was the first tier, and so on (14). The Oregon DOT used quantitative performance measures to weigh and prioritize freight highway bottlenecks, ultimately resulting in three tiers of projects. The performance measure results were broken into two or three thresholds, which provided the high, medium, and low tiers (15). The Texas DOT prioritized its freight projects based on a set of scored qualitative and quantitative measures. Once the projects were scored, a score threshold was established to divide the projects into three tiers (16).

Freight Investment Project Prioritization Process and Methods 19 Overall, the tiering process helps state DOTs categorize their freight projects based on identi- fied thresholds, whether it be through performance measures, a qualitative or quantitative scor- ing process, or type of freight corridor. Tiering has helped DOTs accurately allocate funds to the projects with the greatest needs within the freight system. Step-Based Methods The step-based methods that were analyzed categorize the methodology by two, three, or four steps. Step-based methods usually start with a needs assessment, identifying where there are issues or bottlenecks within the freight system. Similar to the criteria- or goal-based methods, step-based methods also generally weigh states’ identified freight goals against qualitative, State Type of Method Criteria-Based or Goal-Based Tier-Based Step-Based Arizona √ California √ Colorado √ Connecticut √ Delaware Georgia √ Idaho √ Iowa Kansas √ √ Louisiana √ √ Maine √ Maryland √ Massachusetts √ Michigan √ √ Missouri √ √ Nebraska √ Nevada New Jersey √ New Mexico √ √ North Carolina √ Ohio √ Oklahoma √ Oregon √ Pennsylvania √ Rhode Island √ South Carolina √ Tennessee √ Texas √ √ Virginia √ Washington √ Wyoming √ √ Total: 21 7 7 Table 2. State DOT methodology by type.

20 Prioritization of Freight Investment Projects quantitative, or both measures. The Colorado DOT created a five-step method, starting with identifying needs and issues within the freight system. Next, the needs and issues were weighed against state freight strategies and federal requirements. In the end, a matrix was created that scored the projects based on all the above factors (17). The Louisiana Department of Trans- portation and Development (Louisiana DOTD) created a four-step process, which consisted of (1) evaluating a list of potential projects, (2) performing a gap analysis to identify projects that were absent from the first list of investments, (3) creating prioritization factors for each mode, and (4) analyzing each project on the list and producing a prioritized list (18). The Wyoming DOT created a three-step prioritization methodology, with similar steps to Louisiana. The steps defined the projects, established the weighting factors, and scored the list of projects (19). The purpose of a step-based process is to organize the prioritization procedure into com- prehendible stages. Often, step-based processes include other methods, such as goal-based, criteria-based, or tier-based methods. Step-based processes are also able to include both qualita- tive input and quantitative assessments into a prioritization process. The flexibility of step-based methods makes them easy to customize and an ideal candidate for freight prioritization. Criteria- or Goal-Based Methods The criteria- or goal-based method was the most common method seen in the literature. State DOTs created weighted criteria or goals from either quantitative measures or qualitative measures. Once the measures were determined, projects were prioritized and ranked. The Connecticut DOT created its freight investment plan based on six key criteria. Each project was scored qualitatively by stakeholders. The criteria questions were “located on a major interstate; on a freight bottleneck area; add capacity; increase bridge load rating; operational improvement; and provides freight data” (20). The Georgia DOT used a set of state goals as a framework when prioritizing its long-term investment plan (21). The Maryland DOT (22), the Massachusetts DOT (23), the New Mexico DOT (24), the Rhode Island DOT (25), the South Carolina DOT (26), the Kansas DOT (27), and the Tennessee DOT (28) all used criteria with specific weights and then allowed their FAC or similar body to qualitatively score projects to prioritize freight investments. The Missouri DOT (29), the North Carolina DOT (30), the Oklahoma DOT (31), the Pennsylvania DOT (32), the Virginia DOT (33), and the Washington State DOT (34) selected several performance measures to weigh against identified state goals. Qualitative and quantitative measures were both used to score and weigh the different projects to create the finalized list. The Ohio DOT created a set of performance measures, called critical success factors, that support the state’s identified goals as a quantitative way to weigh and rank freight projects (35). Criteria- or goal-based methods enable state DOTs to have a forward-thinking vision moti- vated by identified state goals at all points during the prioritization methodology. This allows all freight professionals and stakeholders within the area to focus on a singular vision for the state’s freight network. Prioritization Assistance Tools Prioritization assistance tools can come in various forms, such as an algorithm-based com- puter software or a simple spreadsheet. The Arizona DOT used a prioritization assistance tool to help sort and rank various qualitative and quantitative inputs over the identified state freight projects. The Delaware DOT created a prioritization tool through a geographic information system (GIS). A Delaware Capital Transportation Program GIS layer was used to identify potential projects, which was overlaid with a GIS layer that identified the NHFN. Once the list of potential projects was produced, a weighted assessment was performed (36). The Iowa DOT used both a qualitative assessment and a web-based decision support tool called the FRA

Freight Investment Project Prioritization Process and Methods 21 GradeDec.Net, a system for highway–rail grade crossing investment analysis. This cost–benefit analysis tool helped decision makers categorize and rank projects based on economic enhance- ments (37). The Nevada DOT used a multi-objective decision analysis tool to help sort and rank projects. Both quantitative measures and input from local professionals and stakeholders were used in this prioritization tool (38). Most DOTs that use a prioritization assistant tool are actually using one of the other three methods discussed earlier. However, technology has allowed state DOTs to create detailed and more complicated methods for state freight prioritization. Prioritization assistance tools help automate the prioritization process in a rigorous and robust way so that the process can be repeated and updated in a timely manner. Table 2 summarizes the state DOT method information. Economic Impact Analysis An economic impact analysis is used in some prioritization strategies to determine weights for prioritization. In some methods, projects are ranked based on economic competitiveness and will increase economic opportunities for freight fluidity. Often paired with cost–benefit analyses, economic impact analyses are a useful tool to determine the projected impacts that certain freight projects will contribute. The state DOTs that include an economic impact analysis in their pri- oritization process are Iowa (37), Kansas (27), Massachusetts (23), Missouri (29), Nebraska (13), Ohio (35), Rhode Island (25), and Texas (16). Figure 6 summarizes the DOT economic impact analysis count. Within the 31 identified state DOT plans, these eight states were the only ones that integrated an economic impact analysis within their prioritization methodology. Many data sources were used for the economic impact analysis conducted in the state freight plans. The most common sources were U.S. Census Bureau, economic data from the U.S. Bureau of Labor Statistics, FHWA, and data from economic impact analysis tools, including TRANSEARCH and IMPLAN. Table 3 summarizes this information, providing all mentioned data sources that DOTs used in their analyses. Performance Measures Monitoring the performance of a state’s freight network is a required action written in the FAST Act. Calculating metrics such as average annual daily truck traffic, conditions of roads Source: Texas A&M Transportation Institute. 8 23 0 5 10 15 20 25 Yes No Economic Impact Analysis Used in Priorizaon Method? Figure 6. Economic impact analyses used in prioritization method based on literature review.

22 Prioritization of Freight Investment Projects and bridges, or freight volume on road segments can help state DOTs identify geographic problem areas on which to prioritize freight projects. About half of the states explicitly mention the use of performance measures in their prioritization methodologies. Performance measures are required by the FAST Act as part of a state DOT’s freight plan. Therefore, all the identified freight plans include measures to monitor performance of the state’s freight system. However, only about half of the plans include performance measures in freight prioritization method- ology. Although this is true, there are numerous freight plans that speak vaguely about various quantitative measures used in prioritization methodology. Therefore, there could potentially be more state DOTs that use this type of performance measurement in their methodologies. Tables 4 and 5 summarize the available information on the performance measures used in the freight plan methodologies. State Data Sources Iowa “With data from the 2012 Commodity Flow Survey and additional sources, the FAF estimates tonnage, value, and domestic ton-miles by region of origin and destination, commodity type, and mode for 2012 (the most recent year available) and forecasts through 2040” (37) Kansas TRANSEARCH and IMPLAN (developed by IHS Global Insight) (27) Massachusetts Not mentioned Missouri Missouri DOT sources, FHWA sources, TRANSEARCH, U.S. Census, geospatial data, and the U.S. Department of Commerce (29) Nebraska U.S. Census Bureau annual estimates of resident population, educational attainment for adults age 25 and older, and annual survey of state and local government finances; U.S. Bureau of Labor Statistics quarterly census of employment and wages, labor force statistics; U.S. Bureau of Transportation Statistics data measuring the contribution of transportation services to the national economy; U.S. Bureau of Economic Analysis gross domestic product at the state level; U.S. Energy Information Administration State Energy Data System; University of Nebraska at Omaha Center for Public Affairs Research population projections through 2050; Nebraska Department of Labor employment forecasts through 2050; Council for Community and Economic Research cost of living index at the state level (13) Ohio FHWA 2007 Freight Analysis Framework Version 3 (FAF3) (35) Job-years, volume of sales, the value a company adds to a product or service, GDP, income, business taxes, IMPLAN system (25) Rhode Island Texas Not mentioned Table 3. Economic impact analysis data sources from literature review. Yes 15 No 16 Table 4. State DOTs using performance measures in their freight plans: from the literature review.

Freight Investment Project Prioritization Process and Methods 23 Many other state DOTs also use performance measures to assist with decision making and sys- tem monitoring. However, only the state DOT performance measures currently integrated into freight prioritization methods are displayed. To see a complete list of all DOTs and performance measures used outside the prioritization process, see Appendix D. Quantitative Versus Qualitative Balance Processes conducted by state DOTs include both quantitative and qualitative aspects. Quantitative methods identify criteria and goals and then weigh them based on various formulas. In addition, quantitative methods can include an economic impact analysis, cost– benefit analysis, or scenario planning model. Qualitative methods are also valid, and often gather stakeholders in the form of an FAC who then determines the significance of the various freight projects. Sometimes workshops are held, where experts work together to rank the freight projects. Many times, state DOTs allow their FAC to determine freight goals and other various factors that help rank the freight projects according to how well they fulfill the goals or criteria. Many processes use both qualitative and quantitative methods to create a comprehensive strategy. As seen in Figure 7, use of qualitative or mixed methods was tied at 12, while seven state DOTs use only quantitative methods in their prioritization methodology. Decision Factor Weighting A pattern of criteria formed among the state DOT plans. Seven common factors were present among most state DOT plans: safety and security, economic competitiveness, environmental stewardship, infrastructure preservation and maintenance or asset management, congestion relief, system performance, and increased connectivity. These factors were typically used as the Category Performance Measure Truck/flow related Truck travel time index Average annual daily truck traffic Average yearly truck crash rate per mile Congestion index Travel time reliability index Cost of truck/auto delays Highway crash rates Infrastructure related Pavement condition index Percentage of NHFN roads or bridges that are in good/poor condition Number of bridges Other Level of service Commodity by tonnage Number of multimodal freight facilities near the project Number of oversize, overweight, or overlength permits Table 5. Common performance measures used in state DOT freight plans’ prioritization methodologies, from the literature review.

24 Prioritization of Freight Investment Projects basis to weigh different projects to rank them. State DOTs used these factors as goals against which to weigh the freight projects in their prioritization methodology. The larger the impact in the specific area, the higher the ranking. Table 6 summarizes this information and identifies which state DOTs include the identified factors in their prioritization strategy. The goals or criteria commonly seen are reflected in national freight goals established in the National Multimodal Freight Policy, which are as follows: (1) to identify infrastructure improvements, policies, and operational innovations that— (A) strengthen the contribution of the National Multimodal Freight Network to the economic competitiveness of the United States; (B) reduce congestion and eliminate bottlenecks on the National Multimodal Freight Network; and (C) increase productivity, particularly for domestic industries and businesses that create high-value jobs; (2) to improve the safety, security, efficiency, and resiliency of multimodal freight transportation; (3) to achieve and maintain a state of good repair on the National Multimodal Freight Network; (4) to use innovation and advanced technology to improve the safety, efficiency, and reliability of the National Multimodal Freight Network; (5) to improve the economic efficiency and productivity of the National Multimodal Freight Network; (6) to improve the reliability of freight transportation; (7) to improve the short- and long-distance movement of goods that— (A) travel across rural areas between population centers; (B) travel between rural areas and population centers; and (C) travel from the Nation’s ports, airports, and gateways to the National Multimodal Freight Network; (8) to improve the flexibility of States to support multi-State corridor planning and the creation of multi-State organizations to increase the ability of States to address multimodal freight connectivity; (9) to reduce the adverse environmental impacts of freight movement on the National Multimodal Freight Network; and (10) to pursue the goals described in this subsection in a manner that is not burdensome to State and local governments. (39) Multimodal Framework The identified state DOT strategies often include a multimodal framework. Some DOTs created a comprehensive prioritized list of all freight projects; other DOTs broke their lists down by mode. Each state DOT is different, but all are required to be in compliance with the FAST Act regulations. Sixteen DOT freight plans produced one single prioritized project list, while 12 states prioritized them by mode, producing two or three lists. Figure 8 summarizes this information in a pie chart. 12 7 12 Qualitative Method Quantitative Method Both Qualitative and Quantitative Methods Used Source: Texas A&M Transportation Institute. Figure 7. Qualitative versus quantitative balance.

Freight Investment Project Prioritization Process and Methods 25 Table 6. Common weighted factors seen in state DOT freight plans from the literature review.

26 Prioritization of Freight Investment Projects Regional Methods Regional entities prioritize their freight projects to create a transportation improvement plan (TIP). Often, the regional list of priority projects will be taken into consideration when the state DOT creates the statewide transportation improvement plan (STIP). However, entities still use a variety of different methods, with a few discussed below. Freight project prioritization methods do not have to be complicated, and sometimes can be as simple as a vote, which is what was done in the Delaware Valley Regional Planning Commission’s Unified Planning Work Program. The Delaware Valley Regional Planning Commission worked with stakeholders that held a position on the Goods Movement Task Force to determine a list of projects that would benefit freight movement. Once the list was determined, the room was asked to prioritize the projects on a weighted ballot (36). The Puget Sound Regional Council in Washington State has determined nine criteria to act as a guide when prioritizing freight investments. The methodology was summarized in an Oregon report (15). Along with the nine criteria (air quality, freight related, jobs, multimodal, Puget Sound land and water, safety and security, social equity and access to opportunity, support for centers, and travel), the MPO also provides a cost–benefit ratio to decision makers to help inform their prioritization decisions. A balanced scorecard approach is used, which allows freight professionals to score and rank freight projects in a systematic way (15). In 2011, the National Association of Development Organizations conducted a study that assessed regional planning organizations (MPOs and rural planning organizations [RPOs]) and how they develop their TIP. In the study, a survey was distributed asking questions on how these regional entities rank their projects. Fifty-six percent of the entities used both qualita- tive and quantitative methods to prioritize their projects. Of the respondents who completed a regional list of priority projects or a TIP, 78% submitted the results to the state DOT, and 62% confirmed that their region’s priority list is considered by the state DOT when they form their STIP. When determining the criteria used for weights in the regional priority list, most of the respondents indicated that the criteria were determined at the regional level (36%). Only a hand- ful of regional entities were given the criteria from the state DOT (12%). Some said they worked together with the state DOT to determine the weights (22%) and others indicated they did not use specific criteria at all (24%) (40). 16 12 3 One Combined Multimodal List Modes Prioritized Separately Highway Projects Were Only Considered in Prioritization Source: Texas A&M Transportation Institute. Figure 8. Multimodal framework for project prioritization.

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Freight investment project prioritization, which is used to assist in planning and programming decisions, differs widely in importance across states. One of the reasons for the difference in importance is the fact that freight projects are costly, and state departments of transportation (DOTs) face limited resources to implement them.

The National Cooperative Highway Research Program's NCHRP Synthesis 542: Prioritization of Freight Investment Projects identifies the state of the practice of freight project prioritization and common steps across all state DOTs in the nation.

State DOTs have a variety of motivations for freight project prioritization, including the FAST Act. For DOTs to receive additional federal funding, a priority list of freight projects must be produced. However, because the FAST Act regulations do not include a specific methodology to help DOTs rank their freight projects, many different processes are used by the state DOTs for ranking.

This report synthesizes the available literature on the subject so that DOTs creating a prioritization process can identify successful practices in the current state of the practice.

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