Guidance for Calculating the Return on Investment in Transit State of Good Repair (2019)

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2019 T R A N S I T C O O P E R A T I V E R E S E A R C H P R O G R A M TCRP RESEARCH REPORT 206 Research sponsored by the Federal Transit Administration in cooperation with the Transit Development Corporation Subject Areas Public Transportation • Maintenance and Preservation Guidance for Calculating the Return on Investment in Transit State of Good Repair Spy Pond Partners, LLC Arlington, MA AECOM Arlington, VA Christchurch, New Zealand Brian McCollom MccolloM ManageMent consulting, inc. Annapolis, MD Andre L. Carrel the ohio state university Columbus, OH

TCRP RESEARCH REPORT 206 Project E-12 ISSN 2572-3782 ISBN 978-0-309-48087-1 © 2019 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FRA, FTA, Office of the Assistant Secretary for Research and Technology, PHMSA, or TDC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; or the program sponsors. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the Transit Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. TRANSIT COOPERATIVE RESEARCH PROGRAM The nation’s growth and the need to meet mobility, environmental, and energy objectives place demands on public transit systems. Cur- rent systems, some of which are old and in need of upgrading, must expand service area, increase service frequency, and improve efficiency to serve these demands. Research is necessary to solve operating prob- lems, adapt appropriate new technologies from other industries, and introduce innovations into the transit industry. The Transit Coopera- tive Research Program (TCRP) serves as one of the principal means by which the transit industry can develop innovative near-term solutions to meet demands placed on it. The need for TCRP was originally identified in TRB Special Report 213—Research for Public Transit: New Directions, published in 1987 and based on a study sponsored by the Urban Mass Transportation Administration—now the Federal Transit Administration (FTA). A report by the American Public Transportation Association (APTA), Transportation 2000, also recognized the need for local, problem- solving research. TCRP, modeled after the successful National Coop- erative Highway Research Program (NCHRP), undertakes research and other technical activities in response to the needs of transit ser- vice providers. The scope of TCRP includes various transit research fields including planning, service configuration, equipment, facilities, operations, human resources, maintenance, policy, and administrative practices. TCRP was established under FTA sponsorship in July 1992. Proposed by the U.S. Department of Transportation, TCRP was authorized as part of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). On May 13, 1992, a memorandum agreement outlining TCRP operating procedures was executed by the three cooperating organi- zations: FTA; the National Academies of Sciences, Engineering, and Medicine, acting through the Transportation Research Board (TRB); and the Transit Development Corporation, Inc. (TDC), a nonprofit educational and research organization established by APTA. TDC is responsible for forming the independent governing board, designated as the TCRP Oversight and Project Selection (TOPS) Committee. Research problem statements for TCRP are solicited periodically but may be submitted to TRB by anyone at any time. It is the responsibility of the TOPS Committee to formulate the research program by identi- fying the highest priority projects. As part of the evaluation, the TOPS Committee defines funding levels and expected products. Once selected, each project is assigned to an expert panel appointed by TRB. The panels prepare project statements (requests for propos- als), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooperative research programs since 1962. As in other TRB activities, TCRP project panels serve voluntarily without compensation. Because research cannot have the desired effect if products fail to reach the intended audience, special emphasis is placed on disseminat- ing TCRP results to the intended users of the research: transit agen- cies, service providers, and suppliers. TRB provides a series of research reports, syntheses of transit practice, and other supporting material developed by TCRP research. APTA will arrange for workshops, train- ing aids, field visits, and other activities to ensure that results are imple- mented by urban and rural transit industry practitioners. TCRP provides a forum where transit agencies can cooperatively address common operational problems. TCRP results support and complement other ongoing transit research and training programs. Published research reports of the TRANSIT COOPERATIVE RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to http://www.national-academies.org and then searching for TRB Printed in the United States of America

The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. John L. Anderson is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.national-academies.org. The Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to increase the benefits that transportation contributes to society by providing leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied committees, task forces, and panels annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR TCRP RESEARCH REPORT 206 Christopher J. Hedges, Director, Cooperative Research Programs Lori L. Sundstrom, Deputy Director, Cooperative Research Programs Gwen Chisholm Smith, Manager, Transit Cooperative Research Program Dianne S. Schwager, Senior Program Officer Jarrel McAfee, Senior Program Assistant Eileen P. Delaney, Director of Publications Natalie Barnes, Associate Director of Publications Heidi Willis, Editor TCRP PROJECT E-12 PANEL Field of Maintenance Victor Rivas, Jacobs, Boston, MA (Chair) Patrick Astredo, Los Angeles County MTA, Los Angeles, CA Mark W. Burris, Texas A&M University, College Station, TX Louis D. Cripps, Regional Transportation District, Denver, CO John King, JMK Consulting, Lethbridge, AB Samuel Rumala, New York City Transit, Jackson Heights, NY John H. St. Clair, New York City Transit, Bronx, NY Dave Vautin, Metropolitan Transportation Commission, San Francisco, CA John D. Wilkins, Gillette, NJ Eric Hu, FTA Liaison Maggie Schilling, FTA Liaison Stephen J. Andrle, TRB Liaison

TCRP Research Report 206 provides guidance and a spreadsheet tool for calculating the return on investment (ROI) for a specific investment or program of investments to achieve and maintain transit assets in a state of good repair (SGR). The results of this research are intended to be immediately applicable for individuals at transit agencies, in particular transit staff involved with long-range planning and capital programming. TCRP Research Report 206: Guidance for Calculating the Return on Investment in Transit State of Good Repair addresses transit agency, user, and social costs and benefits of SGR investments. The report presents an analysis methodology that utilizes and builds upon previous research performed through the Transit Cooperative Research Program (TCRP) presented in TCRP Reports 157 and 198. The guidance (presented in Chapter 3) walks through the steps for calculating the ROI for a potential investment or set of investments. A key product of the research is a spreadsheet tool intended for transit agency use. The tool, which is discussed in Chapter 4, is available for download on the TRB website (www.trb.org) by searching for “TCRP Research Report 206.” Transit agencies can use the guidance and tool to test a specific investment or program of investments and determine the return of the invest- ment over a period of time. It should be noted that this tool is not a detailed life-cycle cost calculator for use in developing project alternatives, but rather is a high-level tool useful for communicating the benefits of SGR investment and comparing investments in improving or maintaining SGR to other types of transit investments. Three pilot studies were performed to test the guidance and tool at different transit agencies across the United States (see Chapter 5). The pilot studies address a wide range of SGR investments and assets. The pilot results demonstrate that there is a positive return on investment in transit SGR. The pay-off comes from savings in transit agency, user, and social costs. Savings in transit agency costs can free up resources that can then be invested in other areas of the transit agency. Transit users see savings through increased quality of service and lower travel times. Finally, savings in social costs come through reduced emissions and reduced congestion. F O R E W O R D By Dianne S. Schwager Staff Officer Transportation Research Board

1 Summary 2 Chapter 1 Introduction 2 Background 2 SGR Impacts 3 Prior TCRP Research 5 Research Scope 6 Report Organization 6 References 7 Chapter 2 Analysis Methodology 7 Overview of Benefits and Costs of Transit SGR Investment 10 Key Concepts 12 Methodology for Cost and Demand Calculation 17 Metrics for Communicating the Return on Investment 18 References 19 Chapter 3 ROI Calculation Guidance 19 Step 1. Establish the Analysis Scope 22 Step 2. Calculate Agency Capital Costs 27 Step 3. Calculate Other Agency and Social Costs 31 Step 4. Calculate Effective Journey Time 36 Step 5. Calculate Change in Travel Demand and Its Effects 39 Step 6. Evaluate Results 42 Step 7. Summarize and Supplement Results 44 References 45 Chapter 4 Tool Documentation 45 Introduction 45 Tool Overview 46 Inputs 52 Cost Profile 53 Calculations 53 Results 56 Worked Example 65 Chapter 5 Pilot Summaries 65 Introduction and Approach 66 Pilot 1: Pacific Transit Agency 68 Pilot 2: Western Transit Agency 73 Pilot 3: New England Transit Agency 79 Chapter 6 Conclusions 80 Reference C O N T E N T S

A-1 Appendix A Literature Review Summary A-1 Effects of Transit Quality of Service on Travel Demand A-8 Economic and Social Impacts of Transportation Investments A-10 References B-1 Appendix B Annotated Bibliography B-1 Models of State of Good Repair Investment B-2 Travel Demand Literature B-14 Economic and Social Impacts Literature C-1 Appendix C Model Details for Calculating Agency Costs C-1 Revenue Vehicle Model C-3 Age-Based Asset Model C-5 Condition-Based Asset Model C-7 Implementation of the Asset Models C-7 References