Guide to Incorporating Reliability Performance Measures into the Transportation Planning and Programming Processes (2013)

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49 5 INCORPORATING RELIABILITY MEASURES INTO PROGRAM AND PROJECT INVESTMENT DECISIONS The previous chapters provide a foundation for understanding the reliability of the transportation system and establishing agency priorities that incorporate reliability. This chapter turns toward using reliability performance measures to support decision making. Incorporating reliability performance measures into decision making occurs at three levels: program trade-offs (how much funding to provide to each program), project prioritization (how to select from among many projects within or across pro- grams), and project alternative selection (how to select the preferred alternative for a project in a specific location). Regardless of the level, practitioners need to be able to forecast reliability to be able to incorporate reliability performance measures along- side other performance measures. Detailed techniques for forecasting reliability are described in the technical reference. At the program level, reliability performance measures can be used to help an agency evaluate how much emphasis to give to operations and management programs relative to preservation, safety, capacity expansion, and other programs. Reliability measures can also be used as a component in evaluating capacity expansion, safety, and other programs, but the most common use of a reliability performance measure will be for evaluating operations programs. There are no widely used methods to set program funding levels. Many agencies distribute funding to programs based on federal and state funding requirements and historical practice. Performance measures can help answer this question: How do I find the right level of funding for all programs so that I can best meet the various needs of users? Color versions of the figures in this chapter are available online: www.trb.org/Main/Blurbs/168855.aspx.

50 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES This process often takes place separately from the development of a specific plan or program, but can happen as part of a long-range plan (LRP) or strategic plan and has a clear influence on STIPs and TIPs. For project prioritization, reliability performance measures can be used alongside other measures to identify a preferred, constrained list of projects to be implemented, usually in the form of a TIP or a STIP. This includes prioritizing investments within one program (i.e., using reliability performance measures to help prioritize operations projects) or across program areas (i.e., using reliability as one of several measures to prioritize a range of project types), as well as using reliability performance measures within either a cost-effectiveness analysis (i.e., developing a weighted score of project performance that includes reliability) or an economic analysis (i.e., estimating an eco- nomic value of reliability to use within benefit-cost analysis). Finally, reliability performance measures can be used to support the evaluation of project alternatives. When selecting a particular investment for a transportation corridor or segment, reliability performance should be considered alongside other measures. This can help ensure that the selected preferred alternative addresses the full set of concerns. In combination, these program, project, and project alternative decision points must fit within an overall framework of performance-based planning and program- ming. Incorporating reliability into the program- and project-level investment deci- sions requires that agencies use performance measures across all (or at least most) of their program areas. Measures from other areas—infrastructure, safety, capacity expansion, and others—must be used in combination with reliability performance measures to provide a robust analysis. While all agencies make investment decisions at both program and project levels, there are multiple methods for moving from program to project decisions and linking these two sets of decisions. For the purposes of this guide, two models are considered (Figure 5.1). Implications of both are discussed throughout this chapter. In the first model, all transportation funds are pooled into one bucket and all project types are prioritized together. In the second model, investment levels are set at the program level and projects are prioritized within separate funding programs. In this model, one can define which projects are allowed to compete with one another. Other combinations may be used as well; for example, some program areas may be prioritized together and others prioritized separately. Using a performance-based approach asks this question: Assuming no constraints on funding within individual programs, what are my ideal investments? Taking an unconstrained approach to analysis allows agencies to compare the ideal investments with investments constrained by the “color of money.” Regardless of the approach used to make investment decisions, several key techni- cal resources are needed, including the following: • Identify available funding. In principle, program and project investment analyses can be conducted without constraining total revenue; but, in practice, all agencies must work under a revenue constraint. Applying such a constraint from the begin- ning can help agencies both sharpen their focus on critical choices and create the opportunity to identify ways in which additional funding may produce benefits.

51 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES • Identify and exclude projects or programs that will not be analyzed. This can include earmarked projects, legislative requirements, or projects that already are programmed in the TIP or STIP. It can also include programs that an agency deter- mines cannot be easily analyzed using the methods that follow. From a technical perspective, funding earmarked for specific projects or purposes can be removed from the total available funding. • Organize programs. Decide whether and how to combine programs for analysis. A common set of programs may include preservation, safety, capacity expansion/ mobility, and operations and management. However, agencies can organize their programs to suit the way they make decisions. As described here, the purpose of a program is to define a type of investment with benefits that can be measured using a single or multiple measures of effectiveness. KEY QUESTIONS • How can reliability performance measures and operations investments be incorpo- rated into an analysis of program trade-offs, specifically the relationship between investment in operations and management and reliability performance? • How should reliability performance measures be used to support project prioriti- zation for a single program (e.g., operations and management investments)? • How can reliability be incorporated into a cost-effectiveness analysis of multiple programs? • How can reliability be incorporated into a benefit-cost analysis of multiple programs? Figure 5.1. Two models for investment planning and project prioritization.

52 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES HOW TO USE RELIABILITY PERFORMANCE MEASURES TO SUPPORT PROGRAM TRADE-OFFS Using the two-step approach requires first analyzing performance at the program level and then moving on to the project level. This section describes how to analyze program-level performance and use this information to support trade-off analysis. It builds on the performance-based approach to estimating needs described in Chapter 4. At the program level, reliability performance measures are most likely to be use- ful to evaluate an operations and management program, though other program areas could include capacity expansion (either instead of or in addition to a more traditional mobility measure). The primary focus is on examples of evaluating operations and management programs. In general, the assumption is that this analysis would be con- ducted as part of either long-range planning or to develop an investment plan that is used to inform capital programming (e.g., STIPs and TIPs). While investment plans are not a required product of the planning process, states in particular are increas- ingly using 10-year investment plans to consider program trade-offs. This investment level of analysis uses traditional program silos but helps agencies break them down by asking how investment in a given program area relates to overall performance. As noted, this may also include combining some silos. For example, agencies may wish to evaluate all operations and capacity investments together to evaluate how both affect system reliability. The steps in this process are described in the following section. Establish Measure of Effectiveness The measure of effectiveness (MOE) is typically a single measure of performance at- tributed to reliability projects, but multiple measures can be used, either by generating a scale or by simply presenting results from multiple measures. While not as common for this type of analysis, a scale can be developed from multiple measures, much as a single score can be generated for a project based on multiple performance measures (see section on p programming and budgeting, in this chapter). One disadvantage of this approach is that scales do not have an intuitive interpretation, limiting the ability to readily communicate the meaning of various investment levels. Analyze the Relationship between Investment and Reliability Performance The key step in this analysis is to build a performance curve that demonstrates the relationship between investment in operations and management and reliability per- formance. Unlike some other performance areas, no established management systems estimate system performance of management and operations programs. However, the tools and techniques described here and in more detail in the associated technical ref- erence can help to develop estimates of system performance. Generally speaking, the methods available to do this build up from individual projects or from corridor analy- ses. A range of methods could be used, but three potential types are described using examples from case studies conducted for this guide:

53 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES • Aggregate project benefits and costs to the system level. This is the method used by the Knoxville TPO, described in detail in Chapter 4. • Aggregate to the system level based on an analysis of representative corridors. See the Detroit MPO example in this chapter. • Estimate the expected benefits of operations investments based on the exposure of the system to reliability challenges and national and state or regional estimates of expected performance. See the Georgia Department of Transportation (DOT) example in this chapter. Estimate Program-Level Performance for Other Funding Programs To consider investments at the program level, it is necessary to define the other pro- gram areas with which an operations program would be compared and to establish complementary measures for these programs (e.g., well-developed tools for bridge, pavement, and general capacity-adding programs). Proprietary tools (pavement man- agement systems, travel demand models, and other tools) may be helpful for estimat- ing performance at the program level. A variety of federal and American Association of State Highway and Transportation Officials (AASHTO) tools can also produce this information, including the Pontis Bridge Management System and the National Bridge Investment Analysis System (NBIAS), the Highway Economic Requirements System— State Version (HERS-ST), and others. If these tools are not available, follow a similar process to that described in this chapter to develop performance-versus-cost curves for other programs. Present Scenarios to Decision Makers The final step is to combine the analysis results from several program areas into sce- narios for decision makers. These scenarios should relate to agency policy statements and directly address key decisions. Example scenarios may be program-focused (e.g., preservation or safety first), based on public and stakeholder input, or follow historic spending patterns. These scenarios can then be presented to decision makers and the resulting performance reviewed. Ideally, decision makers will be able to exam- ine the implications of shifting funding across various program areas. Examples of Using Reliability Performance Measures to Support Program Trade-offs Detroit MPO Analysis of Typical Corridors to Estimate Reliability System Performance The Detroit MPO, the Southeast Michigan Council of Governments (SEMCOG), wanted to incorporate reliability into its existing process for assessing the effectiveness of investment strategies on regional transportation benefits. Previously, this analysis examined hours of recurring delay per vehicle miles traveled (VMT). SEMCOG incor- porated reliability by estimating nonrecurring hours of congestion delay in addition to typical recurring hours of congestion delay. With limited resources and time to in- vest in the analysis, SEMCOG decided to apply sketch-planning methods to estimate total delay in the corridor. It reduced the geographic scope of the analysis by using

54 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES representative freeway corridors with operational characteristics (e.g., average traf- fic volume, interchange density, directional flows and surrounding land use) that are generally representative of other corridors throughout the Detroit region. The repre- sentative corridors included (1) an urban radial (Interstate 96); (2) a suburban radial (Interstate 75); and (3) a suburban beltway (Interstate 275). SEMCOG developed a regionwide analysis by identifying the representative cor- ridor’s percentage of regional VMT. Based on historical traffic data, SEMCOG deter- mined that urban radials carry 37% of regional VMT, suburban radials carry 30% of regional VMT, and suburban beltways carry 33% of regional VMT. SEMCOG used the delay rate from the representative corridors as a proxy for delay on all other simi- lar corridors in the region. SEMCOG’s regional travel demand model provided input data on a link-by-link basis, including peak period volumes, capacities, number of lanes, VMT, and speeds (congested and posted). Link data were averaged across the representative corridors, while free flow and congested travel times were estimated by dividing the link lengths by the compiled travel speeds. SEMCOG calculated future recurring and nonrecurring delay and estimated the benefits of a set of strategies using the sketch-planning meth- ods described in the technical reference. Table 5.1 shows the base conditions and the future conditions with strategies implemented. To estimate regional benefits, SEMCOG extrapolated the benefits of the study cor- ridor to representative corridors and then to the region as a whole. This allowed them to develop an improved performance curve that compared funding levels to reliability performance in conjunction with average travel time performance. Georgia DOT Estimate of System-Level Operations Benefits Using the FHWA Operations Benefit/Cost Analysis Desk Reference The Georgia DOT has examined the role that a performance-based approach can play in supporting investment decision making. Like many agencies, the Georgia DOT has traditionally relied on expertise in each of its program areas and guidance from TABLE 5.1. SEMCOG FORECASTS OF RELIABILITY PERFORMANCE MEASURES Segment Speed (MPH) Travel Rate (Hours/Mile) Recurring Delay (Hours) Incident Delay (Hours) Equivalent Delay (Hours/1,000 VMT) Equivalent Delay (Hours) Baseline Speed and Delay Estimates Urban Radial 52 0.0192 0.0010 0.0012 4.06 99 Suburban Radial 45 0.0222 0.0040 0.0010 8.48 101 Suburban Beltway 52 0.0192 0.0025 0.0024 8.36 177 Improved Speed and Delay Estimates Urban Radial 54 0.0185 0.0003 0.0008 2.05 50 Suburban Radial 52 0.0192 0.0010 0.0006 3.06 36 Suburban Beltway 55 0.0182 0.0015 0.0002 5.37 114

55 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES decision makers to put together the program of projects. Recently, GDOT has at- tempted to develop a trade-off analysis tool that can be used to illustrate major invest- ment choices across program areas. The Georgia DOT tool includes five program areas: pavement, bridge, safety, capacity, and operations. For each of these program areas, GDOT estimated a per- formance curve that showed the relationship between investment and performance. These curves were developed based on a variety of state and national tools, including a state-specific pavement management system, the Georgia Pavement Management System (GPAMS), the FHWA’s National Bridge Investment Analysis System (NBIAS), a state project prioritization tool to examine capacity investments, and detailed analysis conducted by GDOT on operations and safety investments. For operations, GDOT used the methods developed for the FHWA Operations Benefit/Cost Analysis Desk Reference, in combination with locally specific data, to estimate expected benefits from different levels of deployment of three types of strate- gies: ramp metering, incident response, and signal timing and coordination. GDOT has been actively pursuing strategies in each of these three areas and has been con- ducting detailed analysis of the effectiveness of these strategies, especially signal coor- dination. GDOT, along with its regional and local partners, has invested significant resources in developing coordinated and centrally controlled signal timing along most of the significantly congested arterials in the Atlanta metropolitan area. The resulting outputs by year were aggregated across the three strategies. They are presented in Figure 5.2 for 10-year and 20-year intervals. Figure 5.2. Georgia DOT estimate of the relationship between operations investment and future reliability. Color version of this figure: www.trb.org/Main/Blurbs/168855.aspx. $0 $5 $10 $15 $20 $0 $100 $200 Ex pe ct ed F ut ur e Be ne fi ts ($ B) Funding Level ($M) 10 year 20 year

56 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES More information on implementing this approach can be found in the FHWA’s Operations Benefit/Cost Analysis Desk Reference, available online (http://www.ops. fhwa.dot.gov/publications/fhwahop12028/index.htm). Arizona DOT Uses Open Discourse to Set Funding Levels In its LRP, the Arizona DOT distributed funding to programs using stakeholder feed- back through committee meetings. Based on feedback, it split funding across programs as follows: 10% on non-highway expenditures, 27% on highway expansion, 34% on highway preservation, and 29% on highway modernization (1). Set Reliability (and Other) Targets As decision makers review the expected performance benefits, they can set targets based on the final scenario selected. Typically, targets take the form of having a certain percentage of the network achieve a certain level of performance by a certain year. For example, a reliability target might read “90% of urban arterials will have a ‘good’ planning-time index by 2030.” National Cooperative Highway Research Program (NCHRP) Report 666, Target-Setting Methods and Data Management to Support Performance-based Resource Allocation by Transportation Agencies, describes meth- ods that managers of state DOTs and other agencies can use for setting performance targets to achieve multiple objectives and interact with multiple decision makers and stakeholder groups (2). HOW TO USE RELIABILITY MEASURES TO SUPPORT PROJECT PRIORITIZATION For both the one-step and two-step performance-based planning and programming approaches, project prioritization supports the identification of priority investments that are presented to decision makers. In the one-step approach, all or many types of projects are combined for prioritization. In the two-step approach, projects have already been separated into buckets and a decision or guidance may be available about the total funding available for each bucket. This guide provides several specific exam- ples of how to apply analysis approaches, but they are a subset of a more general set of uses of analytic methods for ranking and prioritizing projects. Figure 5.3 presents a summary of some of the likely key uses and how they relate to a corresponding set of potential analysis methods, including those that examine unconstrained and con- strained funding amounts. Prioritization of Operations and Management Investments in Isolation The simplest application of reliability performance measures within project prioritiza- tion is to prioritize projects for a single program. If program funding levels have been established, projects can be prioritized within these funding buckets using one or more measures. For the purposes of this guide, agencies will likely be most interested in pri- oritizing operations and management projects using reliability, but other investment types such as capacity expansion and safety may also consider reliability.

57 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES Figure 5.3. Incorporating operations into the planning process: use cases and analytic techniques. Potential Uses for Project Prioritization Analytic Techniques and Expected Outcomes Consider an operations investment as an alternative to capacity. Reliability one of a number of measures. Select operations investments given a fixed funding amount. Reliability the only measure. Bundle operations investments into capacity projects. Reliability the only measure or one of a few. Screen projects for inclusion in a STIP. Reliability one of several measures. Weighted scores of quantitative measures. Produce a table of quantitative and qualitative outcomes to inform subjective decisions about preferred alternatives. Benefit/cost analysis. Benefit cost ratio capturing monetized benefits. Use the discount rate to examine the consequence of delaying investments. Marginal analysis. Incremental improvement of a project relative to incremental cost. Examines the effect on a ranking of projects by removing selected projects from consideration. Incremental benefit-cost. Relative benefits of project alternatives compared to the relative costs. Useful for examining deferred investments Constrained optimization. Optimal set of investments given funding and other constraints.* * See NCHRP Report 590, Multi-Objective Optimization for Bridge Management Systems, for more information on constrained optimization techniques. Projects can be prioritized simply, using a single measure such as improvement in the PTI or cost-effectiveness (cost per unit of improvement). Projects can also be prioritized using multiple factors. Figure 5.4 presents an example framework for pri- oritizing projects in Knoxville, based on the data presented in Chapter 4. The chart shows the existing PTI (the deficiency), the expected improvement in PTI (the benefit), and the cost-effectiveness of the investment (based on cost, benefit, and vehicle miles of

58 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES travel). Bubbles in the figure are sized relative to the cost-effectiveness of the proposed projects. Projects in the top right of the figure (darker blue area) are likely to be priori- tized first, as long as they reach some level of cost-effectiveness. Projects at the bottom are in areas that do not have deficiencies and may be excluded from prioritization. In between, projects have lower levels of deficiency and make less of a difference. Among these projects, cost-effectiveness is likely to be a primary consideration. Project Prioritization Using Cost-Effectiveness Many agencies look at the cost-effectiveness of projects across all or multiple program areas together and include reliability in the calculation, to prioritize projects of mul- tiple types. Other agencies use an approach in which scores for individual projects are combined into a single project performance score. Variations on these approaches include the following: • Qualitatively score projects based on data and judgment (i.e., ranking each project from zero for no improvement in reliability, to five for a substantial improvement in reliability). Figure 5.4. Example prioritization scheme of Knoxville operations and management investments. Note that bubbles are sized relative to the cost-effectiveness of the proposed projects. Second priorities Top priorities Third priorities Second priorities Not a priority 0 2 4 6 0.00 0.20 0.40 0.60 0.80 1.00 1.20 PT I o n Se gm en t b ef or e Im pr ov em en t Improvement in PTI Deficiency, but limited improvement and not cost-effective Significant deficiency,small improvement, very cost-effective Significant deficiency, large improvement, cost-effective Not a significant deficiency—likely not considered for prioritization

59 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES • Estimate a weighted score from multiple performance measures and rank-order the projects from highest to lowest. Similar to the qualitative approach, this approach develops a weighted numerical value for each project. The approach requires esti- mating multiple performance measures for each project, normalizing scores across projects, and weighting measures to reflect their significance. • Estimate the cost-effectiveness (per unit of benefit) of projects and rank-order them from the highest to the lowest cost-effectiveness. The unit of benefit is typically the weighted project score. Cost-effectiveness analysis allows for the comparison of projects based on the cost required to purchase a package of performance benefits. Tools for Estimating Reliability Benefits Chapter 4 introduced the concept of estimating expected future improvements in reli- ability at the project or segment level. The technical reference Chapters 3, 4, and 5 pro- vide descriptions of tools for estimating the benefits of reliability projects, including • Sketch planning. These analysis methods provide a quick assessment of reliability (and the impacts of projects affecting reliability) using readily available data as inputs to the analysis. • Model post-processing. These analysis methods apply customized analysis routines to more robust network supply-and-demand data from regional or state travel demand models to generate specific estimates of travel-time reliability. • Simulation. These methods make use of an advanced traffic simulation model’s ability to test and assess likely driver reactions to nonrecurring circumstances. Use simulation method if a corridor study, CMP, or operations plan is being developed. • Multiresolution/ multiscenario modeling. These approaches integrate several stan- dard analysis tools (e.g., microsimulation and travel demand models) to combine different tools’ abilities to assess shorter- and longer-range impacts of various projects on reliability performance. The FHWA Operations Benefit/Cost Analysis Desk Reference describes in detail the process for estimating the benefits and costs for operations projects. In addition, the project developed a spreadsheet tool that can be used to estimate the benefit-cost ratio of many operations projects (http://www.ops.fhwa.dot.gov/publications/ fhwahop12028/ index.htm). A brochure on the FHWA Operations Benefit/Cost Analysis Desk Refer- ence is also available (3). Estimating Cost-Effectiveness Estimating cost-effectiveness requires taking estimates of benefits (in the units used to calculate them), normalizing these across several measures, developing a method to weight performance measures, and then calculating an overall cost-effectiveness score. While the guide provides information specific to estimating reliability performance, a framework of performance measurement has been developed by the SHRP 2 capacity program that provides useful information for selecting other measures (4).

60 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES The steps to estimate overall cost-effectiveness include the following. • Normalizing measures. One simple approach to normalize performance measures is to generate project points that reflect the relative benefits of the best and worst projects. Project Effectiveness – Minimum Project Effectiveness = Project Points Maximum Project Effectiveness – Minimum Project Effectiveness • Weights. A simple method to calculate weights is to distribute 100 points among all measures. Distribute points based on stakeholder feedback, professional judg- ment, simple pairwise comparisons, or the quantifiable pairwise method called an- alytical hierarchy process (AHP) informed by structured stakeholder feedback (5). • Estimate cost-effectiveness. To estimate cost-effectiveness, divide the current year costs by current year reliability measure or project score, depending on how the programs are organized. Project Cost = Cost-Effectiveness Change in Project Score Incorporating Reliability-Oriented Strategies into Other Projects While most of this guide has focused on directly analyzing how investments improve reliability, another approach may be to first identify and prioritize operations and management strategies that address reliability deficiencies and then incorporate these investments into other projects when those projects become agency priorities. The Minnesota Department of Transportation (DOT) uses this type of approach within the Twin Cities. The DOT develops packages of mutually supportive solutions to address urban peak period recurring and nonrecurring delay-related reliability in the Twin Cities. A corridor strategy package may include a combination of a managed lane, active traffic management ITS technologies, electronic tolling to support congestion pricing, and express bus routing through the managed lane. Such a package’s strategies are complementary and include managed capacity expansion, ITS, operations, and transit solutions. Examples of Prioritizing Projects Using Cost-Effectiveness The Maricopa Association of Governments (MAG), the MPO for the Phoenix metro- politan area, developed a project screening process for its CMP that includes reliabil- ity. The tool is intended to evaluate several projects of the same type. The evaluation factors include the following. • Quantitative Criteria Based on Performance Measures. The tool includes a CMP Toolbox with a selection of measures, including volume, crash rate, and congestion-related measures to assess congestion reduction impacts. • Qualitative Criteria Based on Consistency with CMP Objectives. Consistency with CMP objectives is evaluated qualitatively on a 4-point scale (1 = no impact, 4 = greatest impact). The CMP includes seven objectives: minimize delay and improve travel time; reduce travel time variability; improve system connectivity;

61 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES increase alternative mode share; improve level of service and reduce congestion; reduce emissions and fuel consumption; and ensure cost-effectiveness. Table 5.2 shows the criteria for the “reduce travel time variability” objective. • Project/Mode Specific Criteria. Finally, candidate projects are evaluated based on project or mode-specific qualitative criteria. These are a series of yes-or-no ques- tions that depend on the specific mode and a score of 1 through 4 based on the number of yes responses. Weights for each factor are generated based on committee discussion of the relative importance of each of these factors. Bonus points are awarded if a project addresses more than one strategy type. An example is provided in Figure 5.5. In that example, Project 7 would have the greatest impact on congestion, while Project 2 would have the least impact. Figure 5.5. Example weighting based on quantitative and qualitative criteria (6). Color version of this figure: www.trb.org/Main/Blurbs/168855.aspx. Note: Blue indicates projects with the greatest potential to mitigate congestion; red, projects with the least impact on congestion; other colors, between the greatest and the least potential to mitigate congestion. GP = general purpose lanes. TABLE 5.2. MAG CMP OBJECTIVES AND EVALUATION CRITERIA CMP Objectives Evaluation Criteria Addresses Reduce Travel Time Variability Travel Time Reliability (hours of unexpected delay) Does the project reduce crash risk? Does the project reduce weave/merge conflicts? Note: Blue indicates projects with the greatest potential to mitigate congestion; red, projects with the least impact on congestion; other colors, between the greatest and the least potential to mitigate congestion. GP = general purpose lanes. CRITERIA Weight 1 2 3 4 5 6 7 VOLUME/AADT 25% 2 1 5 3 6 4 7 CONGESTION / LOST PRODUCTIVITY GP 30% 6 1 2 3 4 4 7 CMP OBJECTIVES 25% 2.6 2.1 2.4 2.0 2.3 2.6 2.0 PROJECT/MODE SPECIFIC ASSESSMENT 20% 3.5 3.0 3.0 2.0 3.5 3.0 2.7 Total Weighted Score: 1.3 1.1 1.2 0.9 1.3 1.2 1.0 Bonus Points: 1 1 0 1 1 1 1 Total Score: 4.6 2.7 3.1 3.6 5.0 4.4 5.9 Rank Order: 3 7 6 5 2 4 1 PROJECT NUMBER: Q ua nti ta ti ve Q ua lit ati ve

62 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES Prioritize Projects Using Benefit-Cost Analysis Where possible, agencies often look to benefit-cost analysis to come up with an economic valuation of a project. There are two general approaches to implementing benefit-cost analysis. The simple approach can be used when comparing projects or alternatives where the benefits of various alternatives generally accrue in the same years. This is described in this chapter as the average annual approach. This is useful for comparing projects with similar deployment and expected life cycles. A more complex method may be considered if the projects and alternatives under consideration have substantially dif- ferent expected life cycles or the benefits or costs vary over the course of the project. This approach requires estimating the net present value (NPV) of benefits and costs. This ap- proach is useful for normalizing the benefits received in different years. For example, the NPV approach would be useful for comparing an operations strategy, which could be deployed in the near term and start producing benefits immediately, with a longer term capital project, which may not produce benefits until many years in the future. Regardless of the approach used, incorporating reliability into benefit-cost analysis requires two basic questions to be addressed. • What is the monetary value of reliability? If a simple average annual approach is used, a future forecast year needs to be predicted where all analyzed alternatives and strategies are predicted to be in place and fully operational to provide for a meaningful comparison. If, on the other hand, the net present value approach is used, benefit-cost analysis is based on the notion that benefits can be valued in monetary terms, allowing for a direct comparison of benefits and costs. For reli- ability to be used within benefit-cost analysis, it is important to understand its value to travelers. Valuing travel time and delay is typically done through surveys of trav- elers, often as part of the development and calibration of a travel demand model. Using stated or revealed preferences, agencies can estimate not just how travelers of different types value average travel time, but also how they value reliable travel time. A recent synthesis of estimates from several studies suggests that reliability can reasonably be valued at 0.8 times the value of average travel time (7). In other words, people are willing to pay a little less to avoid the possibility of being stuck in traffic caused by a crash than they are to avoid being stuck in traffic caused by normal everyday congestion. The U.S. DOT recommends using $18 per person- hour for average travel time for all purposes, in 2009 dollars (8). Based on this, reliability would be valued at $14.40 per person-hour (18 x 0.8 = $14.40). • What is the time frame? Benefit-cost is conducted over a planning horizon, often 20 years. Many agencies maintain their own procedures for conducting benefit-cost analysis and can use their own time frame. Otherwise, the time horizon should begin when the first expenditures on the first project begin (i.e., during the planning phase) and extend until the end of the useful life of the longest-lived alternative or at a future point when analysis no longer is meaningful (i.e., discount costs and benefits until they have nearly no value in today’s dollars). Note that the longest- lived project within the reliability program will be shorter if the program excludes capacity projects. The time frame should be the same for benefits and costs.

63 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES Using the average annual approach, typically a single year of benefits is estimated that captures an average improvement in reliability and used as an average benefit for the project. These benefits are then multiplied by the value of reliable travel time developed above to estimate the monetary benefit from improving reliability. Costs are simply estimated by amortizing the capital deployment costs across the average useful life of the strategy and then adding in an estimate of annual costs necessary to oper- ate and maintain the deployment. For the average annual approach, the comparison between the average annual benefits and average annual (life-cycle) costs represents the conclusion of the analysis stage and provides the basis for project prioritization. Because operations and management investments take place on different time frames and scales than capacity improvements, the net present value approach may be useful to better capture not only average benefits, but also the timing of benefits and dis advantages, particularly when comparing operations investments directly with more traditional capi- tal (capacity increasing) projects. There are three distinct benefits to measure when con- sidering reliability projects, listed below (see the technical reference, Chapter 6, for a step-by-step process for estimating reliability benefits and disadvantages). • Construction disadvantages. Construction work zones are one of the leading causes of unreliable travel, causing 10% of total delay. Appendix D, Section 4 of the technical reference describes additional analysis methods for estimating the impacts of work zones. • Operations and maintenance. Ongoing operations and maintenance (O&M) costs of new projects should be considered along with the up-front capital cost of deployment to capture the full life-cycle costs of the project. This is particu- larly important for operations-type projects, because they may often experience a greater proportion of their overall costs as continuing O&M costs rather than up-front capital costs, as compared with more capital-intensive capacity projects. • Project benefits. For estimating reliability, it is important to estimate benefits care- fully to properly value reliability for the benefit-cost analysis. For benefit-cost, agen- cies should measure the actual amount of unreliable travel time for valuing reliabil- ity. The current best practice for estimating the amount of unreliable travel time is to estimate the difference between the 80th percentile and 50th percentile travel time. Once benefits are estimated, standard procedures for estimating net present value should be followed. • Select a discount rate. The Office of Management and Budget (OMB) circular A-94 identifies a recommended discount rate that can be used for estimating ben- efits over time. This value fluctuates with capital markets, so the OMB resource should be checked for the latest recommended value. • Estimate the net present value (NPV) of project costs and benefits. For each project, estimate project-specific costs and benefits using the roster of costs over the analysis time frame. Planning and construction costs typically accrue in the early years. Construction reliability disadvantages also accrue in the early years while reliability benefits begin accruing only after construction is complete.

64 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES • Apply the discount rate and estimate the NPV. Apply the discount rate for each year in the cost stream and sum the discounted costs to calculate the NPV of project costs. NPV Costs Costs in Year i Discount Rate/ 1 Year i n 1 0 ∑ )(= + = • Apply the discount rate and estimate the NPV. Convert project benefits into dollars using the value of reliability. Sum the NPV of the total reliability benefits of the project over its full useful life. NPV Benefits Benefits in Year i Discount Rate/ 1 Year i n 1 0 ∑ )(= + = Tools for Estimating Benefit-Cost Values for Operations and Reliability The following tools are available for estimating benefit-cost values for operations and reliability: • The FHWA Primer on Economic Analysis and the FHWA Operations Benefit/Cost Analysis Desk Reference provide detailed instructions on how to perform benefit- cost analysis. The Operations Benefit/Cost Analysis Desk Reference includes a sketch-planning tool for estimating the benefit-cost ratio of operations projects called the “Tool for Operations Benefit/Cost (TOPS-BC).” The tool includes a database of likely impacts of various strategies on various measures of effective- ness (MOEs), including reliability. For each strategy and MOE, the tool displays a typical range of benefits. Many of the costs and benefits were derived from the ITS project cost and benefits database maintained by the U.S. DOT ITS Joint Program Office at http://www.benefitcost.its.dot.gov/. • SHRP 2 produced a white paper on valuing reliability that provides a valuable and detailed description of the ways that researchers have monetized reliability benefits and current trends in the literature. This research suggests that unreliable travel time be valued at about 80% of the value of average travel time. Ongoing research in this area will help agencies incorporate reliability into benefit-cost analyses. • Florida is building a benefit-cost analysis tool that will compare the benefits and costs of projects costing more than $50 million. At times, agencies perform basic sketch-level benefit-cost analysis on large numbers of projects, but typically this is done with a more limited number of costs and benefits and with estimated using sketch planning tools. Not All Users Value Time Equally The value of reliability varies by user, time of day, and trip purpose. SHRP 2 Projects C04 and L04 derived an expansive set of values of reliability for combinations of trip type, income, and trip length. In general, the influence of these factors is as follows. • Trip Type: the reliability ratio for the trip to work is higher than the trip from work or non-work trips.

65 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES • Income: for the work trip, lower income groups have a higher reliability ratio (presumably because their work schedules are more rigidly fixed by employers). • Trip Length: for the work trip, the reliability ratio decreases with trip distance. • Studies of How Freight Users Value Reliability Are Not as Plentiful as for Passenger Travel: Some evidence exists that both the value of reliability and the reliability ratio are higher than for passenger travel, but these values are highly dependent on the type and value of commodity. Using a Hybrid Approach In practice, agencies may wish to combine the above prioritization techniques. For ex- ample, combining benefit-cost ratio or cost-effectiveness with an overall project score supports decision making from an economic perspective and from a performance-based perspective. Using multiple pieces of information allows easy organization of projects into tiers based on both dimensions. Figure 5.6 presents this concept graphically. Figure 5.6. Example of a hybrid prioritization scheme comparing cost-effectiveness (benefit-cost ratio) and project score. C os t-E ffe ct iv en es s ( L ow to H ig h) High (Tier 1): High benefit- cost ratio, high performance Medium (Tier 2): High benefit-cost ratio, mediocre performance or high performance and mediocre benefit-cost ratio Low (Tier 3): Mediocre performance and mediocre benefit-cost ratio Score (Low to High) Medium High Low Medium

66 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES PROGRAMMING AND BUDGETING A fundamental assumption of the analysis presented here is that decisions will be based on performance, that better performance at the program and project level will take precedence over worse performance. However, all agencies must also take into account the funding constraints they face, particularly from specific funding sources. This is an especially significant issue for operations investments, because most federal funding sources cannot be used on operations and some states’ gas tax revenues are also similarly proscribed. The consolidation and reorganization of federal programs under MAP-21 may have implications for how funding can be used to support operations. But more fun- damentally, it may encourage agencies to focus on identifying the investments that will improve performance and then figure out how various federal, state, and other funding sources can most efficiently support those investments. This approach helps ensure that programming and budgeting decisions yield the best performance achiev- able given available resources. REFERENCES 1. Arizona Department of Transportation. What Moves You Arizona: A Transporta- tion Plan for 2035. 2011. http://www.whatmovesyouarizona.gov/PDF/LRTP-2011- 1129.pdf. Accessed July 15, 2013. 2. National Cooperative Highway Research Program, Transportation Research Board of the National Academies, U.S. Department of Transportation. Report 666: Target-Setting Methods and Data Management to Support Performance-Based Resource Allocation by Transportation Agencies. Washington, D.C. 2010. http:// onlinepubs.trb.org/ onlinepubs/ nchrp/ nchrp_rpt_666.pdf. Accessed July 15, 2013. 3. Federal Highway Administration, U.S. Department of Transportation. Operations Benefit/Cost Analysis Desk Reference (Brochure). http://www.ops.fhwa.dot.gov/ publications/fhwahop13004/fhwahop13004.pdf. Accessed July 15, 2013. 4. Transportation Research Board of the National Academies, U.S. Department of Transportation. SHRP 2 S2-C02-RR: Performance Measurement Framework for Highway Capacity Decision Making (web page). http://www.trb.org/Publications/ Blurbs/161859.aspx. Accessed July 15, 2013. 5. Saaty, Thomas L. How to make a decision: The Analytical Hierarchy Process. European Journal of Operational Research 48, (1990), 9-26. http://www.sbuf. se/ ProjectArea/ Documents/ ProjectDocuments/ 06F167EF-B243-48ED-8C45- F7466B3136EB% 5CWebPublishings%5CHow%20 to%20make%20 decision%20 AHP.pdf. Accessed July 15, 2013. 6. Maricopa Association of Governments, Performance Measurement F ramework and Congestion Management Update Study, Phase III: Baseline Congestion Management Process Report. 2011. http://www.azmag.gov/Documents/ TRANS_2010-11-02_MAG-CMP-Final-Baseline-Report.pdf. Accessed March 20, 2014.

67 GUIDE TO INCORPORATING RELIABILITY PERFORMANCE MEASURES INTO THE TRANSPORTATION PLANNING AND PROGRAMMING PROCESSES 7. Cambridge Systematics, ICF International. Value of Travel Time Reliability: Synthesis Report and Workshop Working Paper. SHRP 2 Workshop on the Value of Travel Time Reliability, April 26, 2012. http://onlinepubs.trb.org/onlinepubs/ shrp2/L35RFP/DraftSynthesis-ValuingReliability.pdf. Accessed July 15, 2012. 8. Office of Transportation Policy, U.S. Department of Transportation. Revised Depart mental Guidance on Valuation of Travel Time in Economic Analysis (Revi- sion 2). http://www.dot.gov/sites/dot.dev/files/docs/vot_guidance_092811c_0.pdf. 2012.