Guidance for Calculating the Return on Investment in Transit State of Good Repair (2019) / Chapter Skim
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Pages 19-44
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19 C H A P T E R 3 This chapter details the steps involved in performing an ROI analysis for a proposed SGR investment or program of investments. The seven steps of an analysis are illustrated in Figure 3-1.
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20 Guidance for Calculating the Return on Investment in Transit State of Good Repair These must be determined for both the investment case, which describes the investment being analyzed, and for a counterfactual base case, in which the investment is either not made or is deferred. Generally speaking, an analysis should extend to as broad a range of assets and as long a time period as is meaningful for decision making and for which the analyst has or can estimate data.
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ROI Calculation Guidance 21 case, the analyst often must allow for some form of SGR investment in the base case, if only in the form of reactive maintenance. However, it is also important to keep the base case consistent between analyses that are being compared with one another.
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22 Guidance for Calculating the Return on Investment in Transit State of Good Repair 3. Define the base case against which the investment case will be compared.
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ROI Calculation Guidance 23 later time. Note that the cost of the investment is calculated as the difference between the capital costs of the investment and base cases.
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24 Guidance for Calculating the Return on Investment in Transit State of Good Repair rate, recommending a rate of 7 percent for investments that "displace both private investment and consumption" and the U.S. Treasury's borrowing rates for other types of analysis, such as cost-effectiveness analysis or evaluation of internal investments.
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Figure 3-3. Enter costs for base case and investment case.
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Figure 3-4. Enter other costs.
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ROI Calculation Guidance 27 Figure 3-5. Enter discount rate.
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28 Guidance for Calculating the Return on Investment in Transit State of Good Repair investment case. This parameter is used to address instances where two cases result in very different estimates in asset condition as of the end of the analysis.
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ROI Calculation Guidance 29 instance, if the average age of the bus fleet is predicted to increase from 6 to 12 years, the tool calculates a ratio of 1.24 for vehicle O&M costs and multiplies the baseline vehicle O&M cost by this value to calculate future costs. Use of asset ages to predict future costs is recommended only in cases where the analyst has no other estimates available, given that age is an imperfect proxy for asset state of repair.
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Figure 3-7. Enter costs.
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ROI Calculation Guidance 31 5. Calculate the initial investment need for achieving SGR and the projected need as of the end of the analysis period for the investment and base cases.
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Figure 3-9. Enter average age.
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ROI Calculation Guidance 33 Figure 3-10. Enter other parameters.
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Figure 3-12. Enter other social costs.
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ROI Calculation Guidance 35 Procedures 1. Review the data requirements in Chapter 5 of TCRP Research Report 198 to determine whether to use the simplified or comprehensive version of the EJT Calculator.
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36 Guidance for Calculating the Return on Investment in Transit State of Good Repair Step 5. Calculate Change in Travel Demand and Its Effects Overview Ultimately, if the impact of SGR investment (or disinvestment)
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ROI Calculation Guidance 37 changes in demand. Additional parameters specify the value of time and average duration of an automobile trip that substitutes for a transit trip and average vehicle occupancy.
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38 Guidance for Calculating the Return on Investment in Transit State of Good Repair Figure 3-15. Enter required, general, and automobilerelated parameters.
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ROI Calculation Guidance 39 – Annual auto VMT in the initial period, as well as at the end of the analysis period for the investment and base cases. – Annual auto VHT in the initial period, as well as at the end of the analysis period for the investment and base cases.
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40 Guidance for Calculating the Return on Investment in Transit State of Good Repair – Social benefits include reduced emissions costs for transit and automobiles, reduced congestion costs, and reduced other social costs. • Costs.
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ROI Calculation Guidance 41 To address uncertainty in a more comprehensive manner, the analyst can perform a Monte Carlo simulation to obtain a distribution of results for a large set of simulated cases. Such an analysis can be structured to consider cross-correlations between different modeling parameters in determining how to vary parameters for each case.
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42 Guidance for Calculating the Return on Investment in Transit State of Good Repair 2. As necessary, review the analysis assumptions and calculations to gain insights into the results.
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ROI Calculation Guidance 43 different set of assumptions to calculate a different set of measures from BCA. One cannot add the results from an economic impact analysis to the results from BCA.
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44 Guidance for Calculating the Return on Investment in Transit State of Good Repair of Public Transit Investment," details an economic impact analysis for transit investments (15)
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