United States Department of Transportation - Federal Highway AdministrationFHWA HomeFeedback

Status of the Nation's Highways, Bridges, and Transit:
2002 Conditions and Performance Report

Chapter 10: Sensitivity Analysis
Skip Navigators
Index
Introduction
Highlights
Executive Summary
Part I: Description of Current System
Ch1: The Role of Highways and Transit
Ch2: System and Use Characteristics
Ch3: System Conditions
Ch4: Operational Performance
Ch5: Safety Performance
Ch6: Finance

Part II: Investment Performance Analyses
Ch7: Capital Investment Requirements
Ch8: Comparison of Spending and Investment Requirements
Ch9: Impacts of Investment
Ch10: Sensitivity Analysis

Part III: Bridges
Ch11: Federal Bridge Program Status of the Nation's Bridges

Part IV: Special Topics
Ch12: National Security
Ch13: Highway Transportation in Society
Ch14: The Importance of Public Transportation
Ch15: Macroeconomic Benefits of Highway Investment
Ch16: Pricing
Ch17: Transportation Asset Management
Ch18: Travel Model Improvement Program
Ch19: Air Quality
Ch20: Federal Safety Initiatives
Ch21: Operations Strategies
Ch22: Freight

Part V: Supplemental Analyses of System Components
Ch23: Interstate System
Ch24: National Highway System
Ch25: NHS Freight Connectors
Ch26: Highway-Rail Grade Crossings
Ch27: Transit Systems on Federal Lands

Appendices
Appendix A: Changes in Highway Investment Requirements Methodology
Appendix B: Bridge Investment/Performance Methodology
Appendix C: Transit Investment Condition and Investment Requirements Methodology
List of Contacts

Transit Sensitivity Analysis

This section examines the sensitivity of projected transit investment requirements by the Transit Economic Requirements Model (TERM) to variations in the values of the following exogenously determined model inputs:

  • Passenger miles traveled (PMT).
  • Capital costs.
  • Value of time.
These alternative projections illustrate how transit requirements vary according to different assumptions of these input values.

Sensitivity to Changes in PMT

TERM relies heavily on forecasts of PMTs in large urbanized areas. In fact, these forecasts are the primary driver behind TERMís estimates of the extent to which the Nationís transit system will need to be expanded in order to maintain performance. Transit PMT forecasts are generally made by metropolitan planning organizations (MPOs) in conjunction with projections of vehicle miles traveled (VMT) as a part of the regional transportation planning process. They implicitly incorporate assumptions about the relative growth of travel by transit and automobile. The average annual growth rate in PMT of 1.6 percent used in this report is a weighted average of the most recent, primarily 2001, MPO forecasts available from 33 of the Nationís largest metropolitan areas.

Future transit investment requirements have been estimated by TERM on the basis of three alternative projected PMT scenarios to examine the effect of variations in PMT growth on projected investment needs. [See Exhibit 10-4]. These scenarios are:

  1. PMT growth is 50 percent greater than the forecast levels.
  2. PMT growth is 50 percent less than the forecast levels.
  3. There is no growth in transit PMT.
    
Exhibit 10-4

Impact of Alternative PMT Growth Rates on Transit Investment Requirements
 
ANNUAL PMT GROWTH RATE Annual Cost to Maintain Conditions & Performance Annual Cost to Improve Conditions & Performance
(BILLIONS OF 2000 DOLLARS) PERCENT CHANGE (BILLIONS OF 2000 DOLLARS) PERCENT CHANGE
Baseline (1.60%)
$14.80
-
$20.6
-
Increased 50% (to 2.40%)
$17.40
17.6%
$23.2
12.6%
Decreased 50% (to 0.80%)
$12.10
-18.2%
$17.9
-13.1%
Decreased 100% (to 0%)
$9.20
-37.8%
$15.0
-27.2%
*Investment requirements for rural and special service vehicles are included in the totals, but are not subject to the sensitivity analysis. They account for 5 percent or less of the total.
Source: Transit Economic Requirements Model and FTA staff estimates.

Varying the assumed rate of growth in PMT significantly affects estimated transit investment requirements. This effect is more pronounced under the Maintain Conditions and Performance scenario as PMT growth rates influence asset expansion costs, which comprise a larger portion of total estimated Maintain Conditions and Performance needs. A 50 percent increase/decrease in growth will increase/decrease the cost to Maintain Conditions by 18 to 19 percent and the cost to Improve Conditions and Performance by 13 to14 percent. Investment requirements decrease by over 25 percent if PMT remains constant, although this is not a likely scenario.

Sensitivity to a 25 Percent Increase in Capital Costs

Capital costs used in TERM are based on actual prices paid by agencies for asset purchases as reported to FTA in several surveys. Asset prices have been converted to 2000 dollars as necessary. Given the uncertain nature of capital costs, a sensitivity analysis has been performed to examine the effect that higher capital costs would have on the dollar value of projected transit investment requirements.

As shown in Exhibit 10-5, a 25 percent increase in capital costs increases both the costs to Maintain Conditions and Performance and to Improve Conditions and Performance by close to the full 25 percent increase. These results indicate that total benefits continue to exceed total costs for most investments, even with a 25 percent increase in costs.

    
Exhibit 10-5

Impact of a 25 Percent Increase in Capital Costs on Transit Investment Requirements*
 
ANNUAL PMT GROWTH RATE Annual Cost to Maintain Conditions & Performance Annual Cost to Improve Conditions & Performance
(BILLIONS OF 2000 DOLLARS) PERCENT CHANGE (BILLIONS OF 2000 DOLLARS) PERCENT CHANGE
Baseline (1.60%)
$14.8
---
$20.6
---
Increase Costs 25%
$18.2
23.0%
$25.3
22.9%
*Investment requirements for rural and special service vehicles are included in the totals, but are not subject to the sensitivity analysis. They account for 5 percent or less of the total.
Source: Transit Economic Requirements Model and FTA staff estimates.

Impact of Change in the Value of Time

The value of time is a key input to TERMís benefit-cost test for all proposed capital investments. Specifically, the value of time is used to determine the total benefits accruing to transit users from transit investments that reduce passenger travel time. Hence, increases in the value of time should further multiply the estimated user benefits of such projects.

Exhibit 10-6 shows the effect of varying the value of time, assumed to be $9.85 per hour in the baseline projections. Overall, variations in the value of time have a very limited effect on investment needs. While increases in the value of time increase the benefits of transit projects that reduce travel times, it decreases the benefits of investment in transit modes that are slower than alternative non-transit modes of travel, such as the automobile. Therefore, an increase in the value of time reduces projected investment in agencies/modes with relatively slower transit service (as travel shifts from transit to automobiles) and increases projected investment requirements in agencies/modes with relatively faster transit services (as travel shifts from automobiles to transit). The opposite occurs in response to a decrease in the value of time.

    
Exhibit 10-6

Impact of Change in the Value of time* on Transit Investment Requirements
 
ANNUAL PMT GROWTH RATE Annual Cost to Maintain Conditions & Performance Annual Cost to Improve Conditions & Performance
(BILLIONS OF 2000 DOLLARS) PERCENT CHANGE (BILLIONS OF 2000 DOLLARS) PERCENT CHANGE
Baseline
$14.4
---
$19.5
---
Increase 100%
$14.6
0.0
$19.7
0.0
Decrease by 50%
$14.4
-0.1%
$19.5
-0.3%
* Investment requirements for rural and special service vehicles are included in the totals, but are not subject to the sensitivity analysis. They account for 5 percent or less of the total.
Source: Transit Economic Requirements Model.
   Back
Up to Navigation Bar
 

FHWA Home | Feedback
FHWA