Safety Evaluation of Intersection Conflict Warning Systems

Chapter 8. Economic Analysis

An economic analysis was conducted to estimate the B/C ratio for using the ICWS strategy for two-lane at two-lane intersections and four-lane at two-lane intersections. The statistically significant reduction in total crashes for combined States was used as the benefit for two-lane at two-lane intersections and for four-lane at two-lane intersections.

Based on details provided by NCDOT, the analysis used the average cost estimate for each installation type (e.g., overhead signs on both approaches) by major route number of approach lanes. Approximate costs provided by MoDOT were used for installations in Missouri. For sites in Minnesota, the cost estimates provided by MnDOT were used. The average installation cost for all two-lane at two-lane intersections was $41,590. The average installation cost was $106,150 for four-lane at two-lane intersections. In addition, an annual maintenance and operations cost of $1,075 was assumed for two-lane at two‑lane intersections based on information provided by MoDOT. A value of $1,200 for maintenance and utility costs was assumed for four-lane at two-lane sites based on information provided by MoDOT for sites with loop detectors. A value of $3,400 was used for four-lane at two-lane sites with wireless communication. These values were more conservative than the estimated value of $625 used by NCDOT. In total, 69 two-lane at two-lane intersections and 24 four-lane at two-lane intersections were installed.

The analysis assumed that the useful service life for safety benefits was 10 years. This was based on information provided from Minnesota, Missouri, and North Carolina. This was likely conservative in that this was the minimum service life reported from the three States. MoDOT noted that loop detectors might need to be replaced every 5 years, and this cost was considered in the annual maintenance cost.

The FHWA Office of Safety Research and Development suggested using the Office of Management and Budget Circular A-4: Regulatory Analysis to determine the conservative real discount rate of 7percent that was applied to calculate the annual cost of the treatment for the 10-year service life.⁽¹⁴⁾ With this information, the capital recovery factor was computed to be 7.024 for all intersection types.

For the benefit calculations, the most recent FHWA mean comprehensive crash costs disaggregated by crash severity and location type were used as a base.⁽¹⁵⁾ These costs were developed based on 2001 crash costs, and the unit cost (in 2001 dollars) for fatal and injury crashes was $158,177 and $7,428 for property damage only (PDO) crashes. This was updated to 2014 dollars by applying the ratio of the USDOT 2014 value of a statistical life of $9.2 million to the 2001 value of $3.8 million.^(16,17) Applying this ratio of 2.42 to the unit costs for PDO and fatal and injury crashes and then weighting by the frequencies of these two crash types in the after period resulted in an aggregate 2014 unit cost for total crashes of $202,060 for two-lane at two-lane intersections and $219,876 for four-lane at two-lane intersections.

The total crash reduction was calculated by subtracting the actual crashes in the after period from the expected crashes in the after period if the ICWS strategy had not been implemented. The total crash reduction was then divided by the average number of after period years per site to compute the total crashes saved per year. The number of total crashes avoided per year was 65.69 for all two-lane at two-lane intersections and 19.08 for four-lane at two-lane intersections. Considering the number of intersections installed, this resulted in an average “savings” (avoidance) of 0.95 crashes per intersection per year for two-lane at two-lane intersections and 0.79 crashes per intersection per year for four-lane at two-lane intersections.

The annual benefits (i.e., dollar value of crash avoidance) were obtained by multiplying the crash reduction per site per year by the cost of a crash, with all severities combined. The B/C ratio was calculated as the ratio of the annual benefit to the annual cost. The B/C ratio was estimated to be 27:1 for two-lane at two-lane intersections and 10:1 for four-lane at two-lane intersections. USDOT recommended that sensitivity analysis be conducted by assuming values of a statistical life of 0.57 and 1.41 times the recommended 2014 value.⁽¹⁶⁾ These factors can be applied directly to the estimated B/C ratios to obtain a range of 16:1 to 39:1 for two-lane at two-lane intersections and 6:1 to 14:1 for four-lane at two-lane intersections. These results suggest that the ICWS strategy, even with conservative assumptions on cost, service life, and the value of a statistical life, can be cost effective in reducing total crashes at four-legged intersections with stop-control on the minor approaches.