Safety Evaluation of Multiple Strategies at Stop-Controlled Intersections

Chapter 9. Economic Analysis

An economic analysis was conducted to estimate the B/C ratio for implementing various low-cost pavement marking and signing improvements at stop-controlled intersections. The statistically significant aggregate reduction in total crashes was used to calculate the benefits for an average intersection. The research team performed the economic analysis of total crashes as a conservative estimate of the economic benefit.

Based on work order cost data for over 800 unsignalized intersections provided by SCDOT, the economic analysis assumed an average total construction cost of $5,900. In addition, annual maintenance and operations costs were not available and are assumed to be zero (i.e., these costs will not be incurred within the service life). PE, project management, and other general costs were not provided; however, a large portion of project planning was completed by State forces, and other costs for two contractors would have been split across all intersections if the costs were available. In future economic analyses of similar projects, all of these preliminary costs should be added to the construction costs.

The analysis assumed the useful service life for safety benefits was approximately 7 years. Pavement markings were assumed to last roughly 4 years and signs roughly 10 years for an approximate average of 7 years for the overall project. A conservative analysis using a service life of 3 years was also conducted.

The FHWA Office of Safety Research and Development suggested using the Office of Management and Budget Circular A-4 as a resource for the real discount rate of seven percent to calculate the present value benefits and costs of the treatment over the service life.⁽²⁰⁾ With this information, the capital recovery factor was computed for all intersection types as 2.62 for a service life of 3 years and 5.39 for a service life of 7 years.

For the benefit calculations, the most recent FHWA mean comprehensive crash costs disaggregated by crash severity and location type were used as a base.⁽¹⁾ These costs were developed based on 2001 crash costs and the unit cost (in 2001 dollars) was $158,177 for fatal and injury crashes and $7,428 for property damage only (PDO) crashes. This was updated to 2015 dollars by applying the ratio of the USDOT 2015 value of a statistical life of $9.4 million to the 2001 value of $3.8 million.^(1,22) Applying this ratio of 2.474 to the unit costs for fatal and injury and PDO crashes yields values of $391,280 and $18,375, respectively. The research team then weighted the values at approximately 30 percent fatal and injury crashes in the after period, which resulted in a total crash cost of $132,071 in 2015 dollars.

All project costs were brought forward to 2015 dollars for consistency with crash cost values based on the same 7-percent discount rate, assuming original project costs are in 2011 dollars.

The total crash reduction was calculated by subtracting the actual crashes in the after period from the expected crashes in the after period had the intersection treatments 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 treatments saved 119.7 crashes per year for the sample sites, or an average reduction of 0.3 crashes per site per year across the 434 treatment sites. Similarly, the treatments reduced fatal and injury crashes by 45 crashes per year across the sample sites, or an average reduction of 0.1 fatal and injury crashes reduced per site per year.

The annual economic benefits were calculated by multiplying the crash reduction per site per year by the cost of a crash. Total crash reduction and total crash cost were used in the calculation. The B/C ratio was calculated as the ratio of the present value of benefits to the present value of all costs. USDOT recommended a sensitivity analysis be conducted assuming values of a statistical life of 0.57 and 1.41 times the recommended 2015 value.⁽²²⁾ These factors can be applied directly to the estimated B/C ratios to obtain a lower and upper bound of the B/C ratios. Table 45 presents the resulting B/C ratios.

These results suggest that the unsignalized intersection treatments, even with conservative assumptions of service life and the value of a statistical life, can be cost effective in reducing total crashes at stop-controlled intersections.