1. Highway Costs Spring 2015

2. Highway Transportation Costs Type of CostExamples Highway investment costEngineering design, ROW, grading, drainage, pavement Highway maintenance costMowing, lighting, care of roadside parks Highway user cost a)Motor vehicle b)Travel time c)crashes a)Fuel, lubrication, tires b)Vehicle-hours unit value of time c)Crash rate versus unit crash costs Transit capital costsTerminals, shops, administrative offices Transit operating costsDriver’s wages, maintenance of buses Transit user costs a)Transit money costs b)Transit travel time costs a)Auto running costs to get to terminals, sum of fares b)Time waiting for bus, time riding buses

3. HIGHWAY USER COSTS SeverityCost (Y2009) Death$1,290,000 Non-Fatal Injuries$68,100 PDO$8,200 Direct Crash Costs (per person) TypeCost Person-hour$2.40* Persons-vehicle1.25 Total$3.00 Value of Time * $7.00 per single-unit trucks, $8.00 for combination trucks (include wage and benefits for drivers)

4. Comprehensive Crash Costs (per person) TypeCost (Y2012) Death$4,538,000 Injury A$230,000 Injury B$58,000 Injury C$28,000 No injury$2,500 http://www.nsc.org/news_resources/injury_and_death_statistics/Pages/Estima tingtheCostsofUnintentionalInjuries.aspx http://www.nsc.org/NSCDocuments_Corporate/Estimating-the-Costs-of- Unintentional-Injuries-2014.pdf

5. USER BENEFITS Unit highway user cost: Where, HU = Highway user costs in dollars per 1,000 vehicles B = basic section costs (travel time, vehicle running costs as a function of highway geometric characteristics) A = Crash costs L = length of section T = Transition section costs due to change in speed between adjacent sections D = additional costs caused by delay at intersections

6. USER BENEFITS User Benefits (between two alternatives): Where, U 0 = user cost per unit of traffic without the improvement U 1 = user cost per unit of traffic with the improvement V 0 = traffic volume without the improvement V 1 = traffic volume with the improvement Induced and Diverted Traffic (may need to take average traffic volumes between alternatives):

7. Wright & Dixon (2004) Figure 4-1 Basic Section Costs (B)

8. Wright & Dixon (2004) Figure 4-2 Section Transition Costs (T)

9. Wright & Dixon (2004) Figure 4-3 Intersection Related Costs (D)

10. Wright & Dixon (2004) Figure 4-4 Intersection Related Costs – Idling (D)

11. Important Economic Equations Present Value of some future single payment: Present Value of a series of uniform annual end payment: Present Value Factor when user benefits change from year to year: r = average growth rate, = future annual value estimate/first year value, Y = number of years between estimates

12. Benefit-Cost Ratio Where, PV = Present value ΔU = user benefits, the reductions in highway costs ΔM = increase in annual maintenance, operating and administrative cost due to investment ΔR = increase in residual value due to the project at the end of the project life ΔI = increase in investment costs due to the project

13. EXAMPLE A highway agency is considering eliminating an S-Sharp curve on a multilane highway. The total construction cost for the improvement is estimated to be $2 million and will be incurred at the inception of the project. Annual maintenance costs are anticipated to be $2,000 less after the improvement because the elimination of the curve reduces pavement and guardrail damage. The characteristics of the proposed alternatives:

14. Key Assumptions Two curves have same geometry: can be analyzed together There is no speed differential for passing one curve to the other The design speed increases from 50 mph to 60 mph for the alternative design (#1) One-way hourly volume is equal to the ADT divided by 18 (the number of hours used for the analysis) The capacity is reduced in year 20 to reflect normal deterioration of the roadway

15. TRAFFIC DATA

16. CALCULATION OF USER COSTS

17. Basic Section Costs – Alternative 0 Year 1 3 7120 B = 3 + 71 + 20 + (27.8 x $3/hour) = $177.4 27.8

18. CALCULATION OF USER BENEFITS Assuming a 25-year analysis period and a 4-percent discount rate, the present value of benefits is then PW g x first year of project: 18.7 x $172,827 = $3,231,865 For two-way traffic: 2 x $3.231,865 = $6,463,730 Note:

19. CALCULATION OF PROJECT-RELATED COSTS NET PRESENT VALUE OF PROJECT NPV = $6,463,730 – $1,718,198 NPV = $4,745,532 BENEFIT-COST RATIO B/C = $6,463,730 / $1,718,19 NPV = 3.62 > 1

20. UPDATING USER COSTS Wright & Dixon (2004) Table 4-9

21. UPDATING USER COSTS Wright & Dixon (2004) Table 4-10

22. UPDATING USER COSTS Wright & Dixon (2004) Example 4-6

23. Construction Unit Costs http://www.fao.org/docrep/T0579E/t0579e06.htm Some useful websites: http://www.dot.state.tx.us/insdtdot/orgchart/cmd/cserve /bidprice/s_0101.htm http://www.bookmarki.com/index.asp?PageAction =VIEWPROD&ProdID=45