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

Chapter 7: Capital Investment Requirements

Chapter 7 Table of Contents

  • Summary
    • Highways and Bridges
    • Transit
  • Highway and Bridge Investment Requirements
    • Cost to Improve Highways and Bridges
    • Cost to Maintain Highways and Bridges
    • Investment Requirements by Improvement Type
      • System Preservation
      • System Expansion
      • System Enhancements
    • Sources of the Highway and Bridge Investment
      • Requirements Estimates
      • External Adjustments
      • Adjustments for Missing State Data
    • Highway Economic Requirements System (HERS)
      • Highway Investment Backlog
      • HERS Investment Scenarios
    • National Bridge Investment Analysis System (NBIAS)
      • Bridge Investment Backlog
      • Bridge Investment Requirements Scenarios
  • Transit Investment Requirements
    • Investment Requirements
    • Average Annual Costs to Maintain and Improve Conditions and Performance
    • Average Annual Investment Requirements by Detailed Asset Type
    • Existing Deficiencies in the Transit Infrastructure


Exhibit 7-1 compares the 20-year average annual investment requirements in this report with those presented in the 1999 C&P report. The first column shows the projection for 1998-2017 based on 1997 data shown in the 1999 C&P report, stated in 1997 dollars. The second column restates these highway and transit values in 2000 dollars, to offset the effect of inflation. The third column shows new average annual investment requirement projections for 2001-2020 based on 2000 data.

Results for highways, bridges, and transit are presented for two key scenarios, one in which the status of the current system is maintained, and one in which it is improved. However, the exact specifications of the scenarios differ for each mode. Investment requirements for highways and bridges are drawn from the Highway Economic Requirements System (HERS), which estimates highway preservation and highway and bridge capacity expansion investment; the National Bridge Investment Analysis System (NBIAS), which estimates future bridge preservation requirements; and external adjustments to reflect functional classes and improvement types not directly modeled. Transit investment requirements, with the exception of those for rural and special service transit, are estimated by the Transit Economic Requirements Model (TERM). Requirements for rural and special services are estimated separately based on the number of vehicles, percentage of overage vehicles and vehicle replacement costs.

Exhibit 7-1

Highway, Bridge and Transit Investment Requirement Projections Compared With Data from the 1999 C&P Report

Average Annual Investment Requirements
1997 $ 2000 $ 2000 $
Cost to Improve
Highways and Bridges
$94.0 bil $104.8 bil $106.9 bil
$16.0 bil $16.8 bil $20.6 bil
Cost to Maintain
Highways and Bridges
$56.6 bil $63.1 bil $75.9 bil
$10.8 bil $11.3 bil $14.8 bil

Background information on the development of the future investment requirements estimates, and the motivation for using economic analysis as the basis for the estimates, is presented in the introduction to Part II. That section also discusses uncertainty in the investment requirement modeling process. More information on the methodology used to develop the investment projections, including recent changes to the methodology, is contained in Appendices A, B, and C.

Both the highway and transit analyses depend heavily on forecasts of future demand. Chapter 10 explores the effects that varying demand forecasts and some of the other key underlying assumptions in the highway and transit investment requirement analytical processes would have on the projections identified in Exhibit 7-1. Highway travel growth forecasts are also discussed in Chapter 9.

Highways and Bridges

The average annual Cost to Improve highways and bridges is projected to be $106.9 billion for 2001-2020. This figure represents an "investment ceiling" above which it would not be cost-beneficial to invest. Accounting for inflation (using the FHWA Construction Bid Price Index), this estimate is 2.0 percent greater than the Cost to Improve for 1998-2017 reported in the 1999 C&P report. The average annual Cost to Maintain highways and bridges is projected to be $75.9 billion for 2001-2020, which is 20.3 percent larger than the estimate in the 1999 C&P report for 1998-2017, again accounting for inflation. At this level of investment, future conditions and performance of the Nation’s highway system would be maintained at a level sufficient to keep average highway user costs from rising above their 2000 levels.

What is the Federal share of the highway and transit investment requirements identified in this report?

A. The investment requirements identified in this report represent the projected levels of total capital investment that would be necessary to obtain certain outcomes. The question of what portion should be funded by the Federal government, State governments, local governments, or the private sector is outside the scope of this report.

Chapter 6 includes information on historic trends in public funding for highways and transit by different levels of government.

The changes in projected investment requirements from the 1999 report are due both to changes in the underlying characteristics, conditions, and performance of the highway system as reported in the available data sources, and to changes in the methodology and models used to generate the estimates. The Cost to Maintain scenario in this report incorporates a more ambitious goal of maintaining overall conditions and performance as measured by their impact on average highway user costs, while the values in the 1999 C&P report focused on maintaining the physical condition of the highway and bridge infrastructure. This change represents a return to the general approach used in earlier C&P reports.

While a Maintain User Costs figure derived from HERS was presented in the 1999 C&P report as a supplementary benchmark, it is not directly comparable to the value shown in this report. As described in Chapter 4, since the transmittal of the 1999 C&P report, new measures of congestion have been adopted in the annual FHWA performance plans that better quantify declines in the overall operational performance of the highway system. The HERS model has been modified in a comparable fashion, and is now equipped to consider delay due to incidents and the premium that travelers place on travel time reliability as part of its analysis of highway user costs. Factoring in these additional components of congestion into the analysis increases the level of investment required to stop user costs from rising. Further information on these methodological changes are presented later in this chapter, as well as in Appendix A.

The increase in the Cost to Improve highways and bridges relative to the last report is not unexpected. Capital investment by all levels of government between 1997 and 2000 remained below the Cost to Maintain level. Consequently, the overall performance of the system declined, which increased the number of potentially cost-beneficial highway and bridge investments that would address these performance problems.

The NBIAS was introduced in the 1999 C&P report, but this edition of the report is the first to use it as the primary model for estimating future investment requirements for bridge preservation. NBIAS includes a benefit cost screen in its evaluation of potential bridge improvements, which has the effect of reducing the bridge component of the Cost to Improve Highways and Bridges. However, NBIAS is also better at evaluating the condition of the subcomponents of the Nation’s bridges, and in assessing the value of routine repair and rehabilitation of bridge elements as part of a comprehensive asset management approach to avoid costly replacements in the future. Consequently, it projects higher investment requirements to maintain the backlog of bridge deficiencies than the model it replaced. Further information on NBIAS is presented later in this chapter, as well as in Appendix B.

This chapter focuses on the estimated investment requirements for the Improve and Maintain scenarios noted in Exhibit 7-1. Chapter 9 includes an analysis of the projected impacts of these and other future investment levels on conditions and performance. Chapter 10 includes a sensitivity analysis, showing how the estimated investment requirements would change under different assumptions about the values of key model parameters. Appendices A and B include more discussion of the methodological changes in this report.


The average annual Cost to Improve both the physical condition of transit assets and transit operational performance to targeted levels by 2020 is estimated to be $20.6 billion in 2000 dollars, a 22.8 percent increase over the inflation adjusted amount reported for 1997 in the 1999 C&P report. The estimated average annual Cost to Maintain transit asset conditions and operating performance is estimated to be $14.8 billion, 30.7 percent higher than the 1997 amount. More than 90 percent of transit investment requirements will be in urban areas with populations of over 1 million, reflecting the fact that 90 percent of the Nation’s passenger miles are currently in these areas.

These increased investment requirements reflect an enlarged transit infrastructure base and an increase in the absolute amount of overage transit infrastructure. They also reflect an updating of capital cost estimates for vehicles based on information that FTA maintains on the actual costs paid by transit operators for new vehicles. These costs are somewhat higher than those used to estimate investment requirements in the 1999 Report.

In the case of rail, a high proportion of fixed guideway elements, which account for slightly more 40 percent of the total value of the existing U.S. transit asset base, are currently not in acceptable condition. Rail systems (substations, overhead wire, and third rail), estimated to comprise about 10 percent of the value of the transit asset base, will also require significant investments. Although a large percentage of these rail systems is in adequate or better condition, they have an average useful life of around half that for other non-vehicle assets and require an accelerated replacement schedule. Rail facilities and stations will require the smallest levels of investment. The largest incremental investments needed to Maintain Performance through the expansion of the asset base will be for guideway elements and vehicles. To Improve Performance, significant investment will be required in system design and rights-of-way acquisition.

The purchase of vehicles accounts for the largest component of non-rail investment requirements. Guideway elements and facilities will also account for considerable proportions (20 percent each) of future non-rail asset expansion.

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