This section presents the projected investment requirements for highways and bridges for two primary performance targets. The Cost to Maintain Highways and Bridges represents the annual investment necessary to maintain the current level of highway system performance. The Cost to Improve Highways and Bridges identifies the level of investment that would be required to significantly improve system performance in an economically justifiable manner. The impacts of a wider range of alternative investment levels on various measures of system performance are shown in Chapter 9. Chapter 9 also explores recent trends in highway expenditures compared to recent changes in system performance.

The combined highway and bridge investment requirements are drawn from the separately estimated scenarios for highways and for bridges, and from external adjustments to the two models. These scenarios are defined differently, due to the different natures of the models used to develop them. However, it is useful to combine them in order to show combined investment. This is particularly helpful when trying to compare these scenarios to current or projected investment levels, since amounts commonly referred to as “total highway spending” or “total highway capital outlay,” include expenditures for both highways and bridges. Chapter 8 compares current highway and bridge spending with the investment requirements outlined in this section.

The average annual investment required to Improve Highways and Bridges over the 20-year period 2001-2020 is projected to be $106.9 billion in 2000 dollars. The average annual Cost to Maintain Highways and Bridges is projected to be $75.9 billion (also in 2000 dollars).

Cost to Improve Highways and Bridges

The Cost to Improve Highways and Bridges scenario combines the Maximum Economic Investment scenario from the Highway Economic Requirements System (HERS) and the Eliminate Deficiencies scenario from National Bridge Investment Analysis System (NBIAS) with external adjustments to the two models.

Cost to Maintain Highways and Bridges

The Cost to Maintain Highways and Bridges scenario combines the Maintain User Costs scenario from HERS and the Maintain Backlog scenario from NBIAS with external adjustments to the two models.

Investment Requirements by Improvement Type

Exhibit 7-4 displays investment requirements by improvement type for rural and urban areas, for each scenario.

System Preservation

System Expansion

The $49.9 billion in average annual investment requirements for system expansion represent 46.7 percent of the total Cost to Improve Highways and Bridges. Comparable figures for the Cost to Maintain scenario are $32.9 billion and 43.3 percent. Exhibits 7-2 through 7-4 indicate that system expansion requirements are much larger in urban areas than in rural areas, both in the total amount and as a share of overall investment requirements, under both investment scenarios.

System Enhancements

Investment requirements for system enhancements represent 7.9 percent of both the Cost to Improve Highways and Bridges ($8.4 billion) and the Cost to Maintain Highways and Bridges ($6.0 billion). Investment requirements for safety enhancements, traffic operation facilities, and environmental enhancements are not directly modeled, so this amount was derived solely from the external adjustment procedures described on the next page.

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Sources of the Highway and Bridge Investment Requirements Estimates

• Highway and bridge capacity expansion and highway preservation investments were modeled using HERS.
• Bridge preservation investments were modeled using the NBIAS.
• The HERS and NBIAS results were supplemented by external adjustments made to account for functional classes not included in the data sources used by the models, types of capital investment that are not currently modeled, and missing State data.

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The percentage of total investment requirements that are modeled in HERS is somewhat larger than was the case in the 1999 C&P report. The reason for this change is that investment requirements for new highway and bridge construction are now being directly modeled along with expansion of existing roadways, through the use of the high cost capacity improvements feature in HERS. This change is discussed in greater detail in Appendix A.

External Adjustments

External adjustments were made to the directly modeled improvements generated by HERS and NBIAS in two areas:

• Highway functional classes. Bridges on all functional classes are represented in the National Bridge Inventory (NBI) database used by NBIAS, so all of the investment requirements for bridge preservation shown in this report are derived directly from NBIAS. However, the Highway Performance Monitoring System (HPMS) sample segment database used by HERS does not include rural minor collectors, rural local roads or urban local roads. Consequently, HERS does not provide estimates for these systems and separate estimates for highway preservation and system expansion were applied.
• Improvement types. The improvement options that HERS and NBIAS consider primarily address pavement and capacity deficiencies on existing highway and bridge sections. Currently, HERS and NBIAS do not directly consider system enhancements. Estimates for this improvement type were applied across all functional classes.

Adjustments for Missing State Data

A third adjustment was made to compensate for missing State data. The reliability of the investment requirement projections derived from the HERS model depends heavily on the accuracy of the HPMS sample data collected by States and reported annually to the FHWA. In some previous editions of this report, the HPMS data for certain States was not complete enough to be analyzed by HERS or its predecessor models, so some States were excluded from the analysis, and the national results were factored upward to compensate. Such procedures were not utilized in the production of the 1999 C&P report, as the data for all States was deemed sufficiently complete to be included in the analysis. This was possible in part because of major improvements to the HPMS software provided by the FHWA to the States. The software now includes a variety of new features to assist the States in improving the quality of their data submissions.

For this edition of the report, however, the data reported by one State in the 2000 HPMS did not include pavement condition data for those roads not under State jurisdiction. As a result, the HPMS data for that State did not represent a statistically valid sample of all roads within the State. Consequently, all 2000 HPMS sample data for that State were removed from the data used to run HERS for this report, and a separate analysis was conducted processing older HPMS data through HERS to derive an adjustment factor to supplement the results of the national analysis

Highway Economic Requirements System (HERS)

HERS initiates the investment requirement analysis by evaluating the current state of the highway system using information on pavements, geometry, traffic volumes, vehicle mix, and other characteristics from the HPMS sample dataset. It then considers potential improvements on sections with one or more deficiencies, including resurfacing, reconstruction, alignment improvements, and widening or adding travel lanes. HERS then selects the improvement with the greatest net benefits, where benefits are defined as reductions in direct highway user costs, agency costs, and societal costs. In cases where none of the potential improvements produces benefits exceeding construction costs, the segment is not improved. Appendix A contains a fuller description of the project selection and implementation process used by HERS.

One of the key features of HERS as an economics-based model (introduced in the 1997 C&P report) involves its treatment of travel demand. Recognizing that drivers will respond to changes in the relative price of driving and adjust their behavior accordingly, HERS explicitly models the relationship between the amount of highway travel and the price of that travel. This concept, sometimes referred to as travel demand elasticity, is applied to the forecasts of future travel found in the HPMS sample data. HERS assumes that the forecasts for each sample highway segment represent a future in which average conditions and performance are maintained, thus holding highway-user costs at current levels. Any change in user costs relative to the initial conditions calculated by HERS will thus have the effect of either inducing or suppressing future travel growth on each segment. Consequently, for any highway investment requirement scenario that results in a decline in average user costs, the effective VMT growth rate for the overall system will tend to be higher than the baseline rate derived from HPMS. For scenarios in which highway user costs increase, the effective VMT growth rate will tend to be lower than the baseline rate. A discussion of the impact that future investment levels could be expected to have on future travel growth is included in Chapter 9. Appendix A includes a further discussion of how travel demand elasticity is implemented in HERS, as well as recent changes in the elasticity procedures to account for traffic diversion and segment length.

While HERS was primarily designed to analyze highway segments, and the HERS outputs are described as “highway” investment requirements in this report, the model also factors in the costs of expanding bridges and other structures, when deciding whether to add lanes to a highway segment. All highway and bridge investment requirements related to capacity are modeled in HERS; the NBIAS model considers only investment requirements related to bridge preservation.

Highway Investment Backlog

The highway investment backlog represents all highway improvements that could be economically justified for immediate implementation, based on the current conditions and operational performance of the highway system. HERS estimates that a total of $271.7 billion of investment could be justified based solely on the current conditions and operational performance of the highway system. Approximately 82 percent of the backlog is in urban areas, with the remainder in rural areas. About 58 percent of the backlog relates to capacity deficiencies on existing highways; the remainder results from pavement deficiencies.

Note that this figure does not include rural minor collectors, or rural and urban local roads and streets, because HPMS does not contain sample section data for these functional systems. The backlog figure also does not contain any estimate for system enhancements. Appendix A explains how the backlog was calculated.

HERS Investment Scenarios

Two HERS investment scenarios were developed in order to generate the HERS-modeled portion of the two highway and bridge investment requirements scenarios. The HERS portion of the Cost to Improve Highways and Bridges was drawn from the HERS Maximum Economic Investment Scenario, and the HERS Maintain User Costs scenario fed into the Cost to Maintain Highways and Bridges. Exhibit 7-6 shows the estimated investment requirements under the two HERS scenarios. The impact of the various levels of investment on user costs and other indicators of highway condition and performance is presented in Chapter 9.

The Maximum Economic Investment scenario is of interest mainly because it defines the upper limit of highway investment that could be economically justified. It was used to generate the highway preservation and system capacity expansion components of the Cost to Improve Highways and Bridges. In this scenario, all improvements with a benefit-cost ratio greater than or equal to 1.0 are implemented in HERS. While this scenario does not target any particular level of desired system performance, it would eliminate the existing highway investment backlog and address other deficiencies that will develop over the next 20 years due to pavement deterioration and travel growth. As shown in Exhibit 7-6, the average annual investment modeled by the HERS Maximum Economic scenario is $69.1 billion.

The second major highway investment requirement scenario in this report is the Maintain User Costs scenario. It was used to generate the highway preservation and system capacity expansion components of the Cost to Maintain Highways and Bridges. This scenario gives the level of investment sufficient to allow total highway user costs per vehicle miles traveled (VMT) at the end of the 20-year analysis period to match the baseline levels. Highway user costs include travel time costs, vehicle operating costs, and crash costs. The average annual investment modeled by HERS under this scenario is estimated to be $48.4 billion.

The Maintain User Costs concept was introduced in the 1997 C&P report to provide a new highway system performance benchmark based on economic criteria. It focuses on highway users, rather than the traditional engineering-based criteria, which are oriented more toward highway agencies. This scenario is also an important technical point in the operation of HERS, since the VMT growth rates in the model are partly dependent on changes in user costs, due to the operation of the travel demand elasticity feature. The impact on individual highway user cost components at this and other levels of investment are discussed in Chapter 9.

National Bridge Investment Analysis System (NBIAS)

The bridge investment requirements shown in this report are derived primarily from the NBIAS, which is summarized in this section. Appendix B provides a more comprehensive look at this approach. Although NBIAS was introduced in the 1999 C&P report, this edition is the first to use it as the primary model for estimating future investment requirements for bridge preservation.

NBIAS is the latest in a series of bridge models used by the FHWA and its partners. It replaces the Bridge Needs and Investment Process (BNIP) model, which estimated bridge investment requirements for the 1999 C&P report. Like BNIP, NBIAS is based on data from the NBI, which provides information on the characteristics and conditions of more than 525,000 bridges in the United States.

The internal logic of NBIAS is derived from the PONTIS Bridge Management System. PONTIS is licensed by the American Association of State Highway and Transportation Officials to 45 State departments of transportation. Because this approach relies on having element-level condition data, which is not currently contained in the NBI, NBIAS begins its analysis by synthesizing element condition data from the general bridge condition ratings that are available. NBIAS considers individual bridges for improvement and replacement needs, but the current version of the model analyzes maintenance, repair, and rehabilitation (MR&R) needs on an aggregate level, rather than looking at individual bridges.

NBIAS improves upon BNIP in several ways. NBIAS includes a benefit/cost screen, which filters out improvements that are not cost-beneficial within the 20-year funding horizon. NBIAS is also more accurate in evaluating bridge subcomponents and determining the value of routine repair and rehabilitation of bridge elements. Finally, NBIAS provides estimates that are more reflective of the way State and local transportation agencies undertake bridge management strategies.

Bridge Investment Backlog

As defined in this report, the bridge investment backlog represents the cost of improving all existing bridge deficiencies, if the benefits of doing so exceed the costs. NBIAS, like BNIP, defines deficiencies broadly, and covers more than the structurally deficient and functionally obsolete categories defined in Chapter 3. NBIAS estimates that $54.7 billion of investment could be invested immediately in a cost-beneficial fashion to replace or otherwise address currently existing bridge deficiencies.

The $54.7 billion bridge investment backlog is substantially lower than the $87.3 billion backlog reported in the 1999 C&P. This is due to the use of benefit/cost analysis in the NBIAS model. NBIAS determines that the optimal time to address some bridge deficiencies may not be in the first year of a 20-year planning horizon; instead, improvements or replacements may be made at other points of the planning period. This is more consistent with the real world experiences of State and local transportation agencies, which deal with bridge deficiencies over a multi-year planning period.

Bridge Investment Requirements Scenarios

While modeling techniques have changed from the BNIP to NBIAS models, the investment requirements scenarios are defined similarly. Two scenarios are examined: the Eliminate Deficiencies and Maintain Backlog scenarios. The results are described in Exhibit 7-7.

The Eliminate Deficiencies scenario is the bridge component of the Cost to Improve Highways and Bridges described earlier in this chapter. Where it is cost-beneficial to do so, the Eliminate Deficiencies scenario would eliminate the existing bridge investment backlog and correct other deficiencies that are expected to develop over the next 20 years. The average annual investment required under this scenario is estimated to be $9.4 billion, which is 8.8 percent of the $106.9 billion average annual investment required to improve highways and bridges over a 20-year period.

The Maintain Backlog scenario is the bridge component of the Cost to Maintain Highways and Bridges. The Maintain Backlog scenario identifies the level of annual investment that would be required so that the bridge investment backlog would not increase above its current level. Existing deficiencies and newly accruing deficiencies would be selectively corrected to minimize the investment required to maintain the same backlog of deficient bridges in 2020 that exists in 2000. The average annual investment required under this scenario is estimated at $7.3 billion, or 9.7 percent of the $75.3 billion average annual investment required to maintain highways and bridges over a 20-year period.