Safety Evaluation of Profiled Thermoplastic Pavement Markings

Chapter 7. Economic Analysis

The project team conducted an economic analysis to determine the estimated B/C ratio for this strategy. Nighttime wet-road crashes, which were reduced, were considered for this analysis. The observed benefit—a CMF of 0.908—was not unexpected because this was the principal target crash type. Although the estimated CMF was based on a small sample of crashes and was not statistically significant at the 95-percent confidence level, it was consistent between the two States, which suggests that it was justified to use it for this purpose.

On the cost side, specific costs and information provided by SCDOT were used because these were reasonably consistent with the range of costs provided by FDOT for various contracts. It was conservatively assumed that the base condition that characterized the reference group of untreated sites consisted of flat-line thermoplastic pavement markings with a cost of $0.40/linear ft. The cost provided for profiled thermoplastic markings was $0.50/linear ft, so the relative cost of $0.10/linear ft was used as the unit treatment cost for the analysis. With these assumptions, the estimated treatment cost for the two States combined was $524,691.

Although service lives of between 3 and 5 years were provided by the two transportation departments, the analysis assumed, conservatively, a useful service life for safety benefits of 2.5 years, the average after-period length at the treatment sites.

Based on information from the Office of Management and Budget’s Circular A-4, the project team used a real discount rate of 7 percent to calculate the annual cost of the treatment based on the 2.5-year service life.⁽⁴⁾ With this information, the installation costs converted to annual costs of $125,926.

For the benefit calculations, the most recent FHWA mean comprehensive crash costs were used as a base.⁽⁵⁾ Council et al. developed these costs based on 2001 crash costs and found that the unit costs (in 2001 U.S. dollars (USD)) for property damage only and fatal plus injury crashes for all speed limits combined were $7,428 and $158,177, respectively.⁽⁵⁾ These were updated to 2015 USD by applying the ratio of the U.S. Department of Transportation’s (USDOT’s) 2015 value of a statistical life of $9.4 million to the 2001 value of $3.8 million.⁽⁶⁾ By applying this ratio of 2.47 to the unit costs for property damage only and fatal plus injury crashes and then weighting by the frequencies of these two crash types in the after period (from table 12), the aggregate 2015 unit cost for total crashes was obtained as shown in figure 10.

Fatal crashes were not considered independently because of the very low numbers of such crashes in the data, which would skew the results.

The project team calculated the crash reduction by subtracting the actual crashes in the after period from the expected crashes in the after period had the treatment not been implemented (based on table 12). The number of nighttime wet-road crashes saved per year was 4.48, which the project team obtained by dividing the crash reduction of 11.28 by the average number of after-period years per site (2.52).

The annual benefit (i.e., crash savings) of $862,033 was the product of the crash reduction per year (4.48) and the aggregate costs of a crash, with all severities combined ($192,337). The B/C ratio of 3.65:1 was calculated as the ratio of the annual benefit to the annual cost. USDOT recommends conducting a sensitivity analysis by assuming values of a statistical life 0.55 and 1.38 times the recommended 2015 value.⁽⁶⁾ These factors can be applied directly to the estimated B/C ratio to obtain a range of 2.01:1 to 5.04:1. These results suggest that the treatment, even with conservative assumptions on cost, service life, and the value of a statistical life, can be cost effective despite the relatively small crash reduction effects.