U.S. Department of Transportation
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| Conditions and Performance Report Appendix G—Changes in Highway Investment Requirement Methodology |
| Conditions and Performance Chapter Listing Conditions and Performance Home Page Expanding the Scope of the Investment Requirements Data Corrections, Changes in Analytical Procedures and Model Enhancements
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The bid price index, which is used to calculate the costs of highway improvements, rose between 1995 and 1997. The rural index increased by 9.0 percent and the urban index rose by 6.8 percent. Converting the investment requirements from 1995 dollars to 1997 dollars causes them to increase by approximately 7.5 percent for both the Maximum Economic Investment scenario, and the Maintain User Costs benchmark.Expanding the Scope of the Investment Requirements In previous reports, separate external adjustments were made to account for some types of capital improvements not captured in the modeling process, but other improvement types were omitted completely. To allow for comparisons between investment requirements and current capital spending, a "C&P-related capital outlay" figure was used that excluded current spending on items not included in the investment requirements. A significant problem with this approach is that it makes it difficult to relate the investment requirements to other commonly available figures for current and future spending (i.e. the increase in funding under TEA-21 compared to ISTEA). To make this comparison accurately, it would be necessary to deduct all amounts estimated to be used for safety, traffic operations, environmental enhancements, or for new construction related to economic development. Unfortunately, the raw data required to make this type of adjustment is not commonly accessible, which has led to erroneous use of the C&P report investment requirements. This problem was noted by some participants at the C&P report outreach sessions.Another concern expressed at the outreach meetings was that excluding safety, traffic operations facilities, and environmental enhancements from the analysis implies that this type of spending is not considered to be important by the agency. On the contrary, this type of investment is critical to allow FHWA to achieve its strategic goals. Based on these comments, the "report-related capital outlay" concept has been dropped from this report, and the investment requirements in this report have been expanded to include all types of highway capital outlay. To accomplish this, the external adjustment process has been streamlined, and is now based on an underlying assumption that the overall percentage of capital investment that is used for types of capital improvements that are not modeled are likely to remain roughly the same in the future. Expanding the scope of the investment requirements to include all types of capital outlay increases both the Maximum Economic Investment scenario, and the Maintain User Costs benchmark by approximately 13.1 percent. This modification does not increase or reduce the gap between current spending and investment requirements, since investment requirements and the spending figures they are compared to both have been increased by the same percentage. The relationship between current spending and investment requirements is discussed more fully in Chapter 8. |
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