|Accelerating Infrastructure Innovations|
|Federal Highway Administration > Publications > Focus > March 1997 > Economic Assessment Project Finds SHRP a Wise Investment|
|March 1997||Publication Number: FHWA-SA-97-021|
Economic Assessment Project Finds SHRP a Wise Investment
Was the Strategic Highway Research Program (SHRP) a wise investment? Are SHRP-originated products providing real benefits to highway agencies? These questions were posed 2 years ago by the Transportation Research Board (TRB) SHRP Committee, which provides the Federal Highway Administration (FHWA) with advice and recommendations on SHRP implementation activities. The committee members knew that State and local highway agencies were already using many SHRP products, but they wanted to know whether the benefits to be gained from the products would compensate for the hefty research and implementation costs. This information would also be beneficial in determining whether SHRP should serve as a model for future research programs.
The committee's questions led FHWA to initiate a full-scale economic analysis of the benefits versus costs of SHRP. Preliminary results from the project indicate that the answer to the questions is a resounding "yes." This issue of Focus provides a brief overview of the project findings.
How the Project Was Conducted
FHWA contracted with the University of Nevada-Reno (UNR) to coordinate and manage the project. Maria Ardila-Coulson and Jon Epps at the transportation technology transfer center at UNR were the principal investigators.
The first step involved collecting data on how highway agencies across the United States are using SHRP products. UNR enlisted the help of the transportation technology transfer centers in Florida, Indiana, Minnesota, Pennsylvania, and Texas; the centers conducted phone and mail surveys to compile information on how highway agencies were using SHRP products. The result: more than 100 case studies describing how SHRP products are being used to build, maintain, and operate safer, smoother roads.
The Texas Transportation Institute (TTI) carried out the second step-analyzing the data collected by the centers and preparing a report detailing the benefits versus costs of SHRP. TTI's analysis was conducted by a team of engineers and economists headed by Charlie Wootan, Dallas Little, and Jeffery Memmott. The analysis concentrated on five technology areas:
The products of the long-term pavement performance (LTPP) program were not included in the analysis, as the research is still ongoing.
TTI used existing information to extrapolate the nationwide costs for research, development, and implementation of SHRP technologies. Information collected in the case studies and from other sources was then used to estimate the expected benefits to be gained. The upfront costs of putting new technologies into practice-such as purchasing equipment and training staff-were then subtracted from the predicted savings.
Realizing that highway agencies will not adopt SHRP products overnight, TTI used three different implementation scenarios to estimate the costs and benefits over a 20-year period. This provides a more realistic picture of the range of savings.
Two types of savings were calculated: savings to highway agencies, which result from more efficient operations and longer lasting roads and bridges, and savings to motorists (highway users), which result from lower vehicle operating costs, fewer delays, less discomfort (from rough roads, etc.), and fewer accidents.
The findings are impressive. Take, for example, the Superpave binder specification. TTI estimates that $230 million will be spent on research, development, and implementation of the specification over a 20-year period, yet highway agencies and users stand to reap benefits ranging from $22.5 billion to $36.5 billion each year over that period.
With more than one-third of the Nation's roads in poor or mediocre condition, those savings can be used to solve other critical transportation needs. And the sooner an agency implements the technologies, the greater the long-term payoffs.
Although the predicted savings are huge, when viewed in light of highway agencies' annual expenditures, the numbers seem quite reasonable. For example, highway agencies spend more than $7 billion each year on pavement maintenance. TTI predicts that highway agencies can save at least $126 million a year by adopting SHRP's maintenance strategies. The predicted savings are substantial, yet equate to only 1.8 percent of maintenance expenditures.
The findings of the assessment project have resulted in the SHRP technologies being dubbed "RoadSavers"-they save money, time, and lives.
An Inexact Science
Economic analysis is, by its nature, an inexact science. It uses assumptions, which are derived from existing knowledge, statistical information, and credible forecasts, along with sophisticated computer models to predict how actions taken today will affect tomorrow's economy. The predictions reported here are TTI's best estimates, using the case studies and sound economic theory, of the economic benefits to be gained from using SHRP's products; the actual savings will vary, depending on how widely and quickly the technologies are adopted.
The RoadSavers case studies and economic analysis have been summarized in a videotape, titled From Research to Reality: Innovative Technologies for Saving Money, Time, and Lives on Our Nation's Highways. The videotape is being distributed to FHWA field offices, State highway agencies, Local Technical Assistance Program centers, and others.
More information on the findings of the SHRP assessment project will be available through FHWA's web site (http://www.fhwa.dot.gov). To order copies of the RoadSavers case studies or brochures, use the order form included in this issue.
For more than 20 years, highway agencies and economists have relied on the benefit-cost analysis system described in the Manual on User Benefit Analysis of Highway and Bus-Transit Improvements, published by the American Association of State Highway and Transportation Officials. That system, while effective, was difficult to use. Under the National Cooperative Highway Research Program, TTI developed a software program, called MicroBENCOST, to streamline the process of calculating benefits and costs of highway improvement projects. The program, which is available from TTI and McTrans (Center for Microcomputers in Transportation), was used to calculate the benefits of SHRP technologies to highway users.
For more information, contact Jeffery Memmott at TTI (telephone: 409-845-3405; fax: 409-845-9761; email: email@example.com).
Following SHRP strategies for such maintenance techniques as crack sealing can produce huge savings.
More detailed information on the benefits-versus-costs analysis of the SHRP products, as well as more than 100 case studies of how highway agencies are using those products, are available at the RoadSavers home page.
United States Department of Transportation - Federal Highway Administration