Conditions and Performance Chapter Listing

Conditions and Performance Home Page

Introduction

Summary

Economics-Based Approach to Transportation Investments

Highway Investment Requirements

Bridge Investment Requirements

Combined Highway and Bridge Investment Requirements

Transit Investment Requirements

Economic Focus Versus Engineering Focus

Traditional engineering-based analytical tools focus mainly on transportation agency costs and the resources required to maintain or improve the condition and performance of infrastructure. This type of analytical approach can provide valuable information about the cost effectiveness of transportation system investment from the agency perspective, predicting the optimal pattern of investment to minimize life-cycle costs. However, this approach does not fully consider the needs of the consumers of transportation services.

The HERS, TERM and BIAS models have a broader focus than traditional engineering-based models, looking at the service that the transportation system provides to its users. The goal of this economic analysis is generally to maximize benefits, and to minimize the combined costs incurred by transpor-tation agencies, transportation system users, and third parties that are affected by the operation of the transportation system.

One way to conceptualize the goal of the HERS, TERM, and BIAS models is presented in Exhibit 7-2. The lines marked "user cost" and "capital investment" indicate that as transportation investment increases, user costs decline. However, at some point the additional increment of investment will fail to result in user cost reductions sufficient to warrant the additional investment. This point is indicated on the "total cost" line as the Minimum Total Cost.

Exhibit 7-2

Economic-Based Approach to Transportation Investments Schematic

Using an economics-based approach to transportation investment may result in different decisions about potential improvements than would occur using a purely engineering-based approach. For example, if a highway segment, bridge, or transit system is greatly underutilized, benefit-cost analysis might suggest that it would not be worthwhile to fully preserve its condition, or address its deficiencies. Conversely, an economics-based model might recommend additional investments to improve system conditions above and beyond the levels dictated by an engineering life-cycle cost analysis, if doing so would provide substantial benefits to the users of the system.

The economic-based approach also provides a more sophisticated method for prioritizing potential improvement options when funding is constrained. This helps ensure that limited transportation capital investment resources are directed to the areas that will provide the most benefits to transportation system users.