Guidance for Calculating the Return on Investment in Transit State of Good Repair (2019) / Chapter Skim
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Pages 7-18
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7 C H A P T E R 2 This chapter describes the methodology for calculating the return on investment (ROI) of transit agency projects and programs to maintain or achieve a state of good repair (SGR)
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8 Guidance for Calculating the Return on Investment in Transit State of Good Repair It should be noted that while the figure and the discussion above show a ridership decline because of asset deterioration and a lack of investment in SGR, this may not always be the case. This assumption is valid for choice transit riders, who can switch to other modes of transportation if the deteriorating conditions severely affect their experience.
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Analysis Methodology 9 in a state of good repair and then deteriorates over time. As depicted in the figure, declining asset conditions may affect system performance, resulting in impacts to transit users, the transit agency, and society as a whole.
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10 Guidance for Calculating the Return on Investment in Transit State of Good Repair Although not shown on the figure, there may be additional health and recreational benefits resulting from increased transit use, to the extent that using transit leads to increased walking and cycling. For the transit agency, deteriorating asset conditions can result in increases in Capital Costs, as it may be more expensive to address deferred conditions.
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Analysis Methodology 11 A critical issue in analyzing ROI of SGR investments is defining a meaningful base case. Traditionally, BCA compares a case in which an investment is made to a base case of "no invest ment." In such an analysis, it is generally taken for granted that needed maintenance, repairs, and rehabilitation work will be performed following an initial investment.
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12 Guidance for Calculating the Return on Investment in Transit State of Good Repair Methodology for Cost and Demand Calculation Quantifying Agency Costs Transportation agency costs that may be impacted by SGR investments include capital costs of replacing transit assets, subsequent maintenance and rehabilitation costs (including costs of addressing asset road calls or failures) , and fuel or energy costs.
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Analysis Methodology 13 Approach 1: Travel Demand Model. If the transit agency has access to a detailed travel demand model, the recommended approach is to replace the transit travel times in the travel demand model with the travel time results from the EJT calculation.
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14 Guidance for Calculating the Return on Investment in Transit State of Good Repair Currently, the most relevant and recent values for transit demand elasticity with respect to transit invehicle travel time are from Frank et al.
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Analysis Methodology 15 use, communities, and the environment, and so forth. However, such impacts are generally not projected in the case of analyzing SGR investments that change asset conditions without affecting the extent of transit service.
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16 Guidance for Calculating the Return on Investment in Transit State of Good Repair Economic Analysis Primer (19) , the FHWA cautions that the value of the indirect economic effects calculated in an EIA "is not additive to the BCAmeasured direct effects -- rather, the former value is a restatement or capitalization of the latter value." In other words, one cannot simply add the benefits predicted from BCA to those calculated from an EIA and present these as a total benefit; the two types of analysis are measuring some of the same things but presenting them in different ways.
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Analysis Methodology 17 Table 24 summarizes the specific effects considered in the TCRP Project J11 analysis, distinguishing between cost reduction and spending impacts. Metrics for Communicating the Return on Investment Communicating the ROI of SGR investment is an important final step in the analysis process.
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18 Guidance for Calculating the Return on Investment in Transit State of Good Repair • Wages. A subset of the total economic impact that indicates the value of additional wage dollars generated as a result of an investment.
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