Transportation Systems Management and Operations Benefit-Cost Analysis Compendium

CHAPTER 7. DEMAND MANAGEMENT

#	Case Name	Benefit-Cost Analysis (BCA) Model	Actual or Hypothetical Case
7.1	Hypothetical Centrally Controlled Ramp Metering Deployment	TOPS-BC	Actual
7.2	Florida DOT Road Ranger Program	Custom Stand Alone BCA Model Focused on Safety Benefits	Actual

Case Study 7.1 – Minnesota I-35W Urban Partnership

Strategy Type:	Demand Management and Congestion Pricing
Project Name:	Minnesota Urban Partnership Agreement (UPA)
Project Agency:	U.S. Department of Transportation
Location:	Urban Region
Geographic Extent:	Regional/Urban
Tool Used:	Project Developed BCA Tool

Note: Chapters 2, 3, and 4 of this Compendium contain a discussion of the fundamentals of benefit-cost analyses (BCA) and an introduction to BCA modeling tools. These sections also contain additional BCA references.

Project Technology or Strategy

In 2006, the U.S. Department of Transportation, in partnership with metropolitan areas, initiated a program to explore reducing congestion through the implementation of congestion pricing activities combined with necessary supporting elements. This program was instituted through the Urban Partnership Agreements (UPA) and the Congestion Reduction Demonstrations (CRDs). Minneapolis, Minnesota was selected for a UPA award. The projects under the Minnesota UPA focused on reducing traffic congestion in the I-35W corridor and in downtown Minneapolis. I-35W South is the section south of downtown Minneapolis and I-35W North is the section north of downtown Minneapolis.

The Minnesota UPA included 24 projects. A major focus of the Minnesota UPA was on reducing congestion on I-35W South. As a result, the Minnesota UPA Benefit-Cost Analysis (BCA) focused on projects associated with I-35W South. Table 33 describes the projects associated with I-35W South that were included in the BCA and how the portion of the costs included in the BCA were determined.

Table 33. Minnesota Urban Partnership Agreement Projects Included in the Benefit-Cost Analysis.

Urban Partnership Agreement Project	Notes on Costs Included
Expanding existing high-occupancy vehicle (HOV) to high-occupancy toll (HOT) lanes, new HOT lanes, priced dynamic shoulder lane (PDSL), and auxiliary lanes	The costs of these projects are included in the benefit-cost analysis
Kenrick Park-and-Ride Lot Cedar Grove Park-and-Ride Lot Apple Valley Transit Station and Park-and-Ride Lot Lakeville Park-and-Ride Lot	The cost of the projects included in the benefit cost analysis was based on the percentage of routes using I-35W South. For Kenrick this is 100%, for Cedar Grove it is 42% (5 of 12 routes), for Lakeville it is 100%, and for Apple Valley it is 66.7% (2 of 3 routes)
27 new buses, 22 in service and 5 spares	The cost was based on the number of buses (7) assigned to the I-35W South routes. This includes 5 for Kenrick (5 of 22 = 22.7%) and 2 for Apple Valley (2 of 22 x 66.7% = 6.1%)
Driver Assist Systems (DAS) for shoulder-running buses	All costs for the project were included in the benefit-cost analysis
eWorkPlace Telecommuting Program	Partial costs determined by number of eWorkPlace telecommuters using I-35W South (14 percent)
ATM signing and real-time transit and traffic informational signs	All costs of Advanced Traffic Management(ATM) and costs for real-time traffic and transit signs on I-35W South
MARQ2 contraflow bus lanes in downtown Minneapolis	All costs for the project were included in the benefit-cost analysis
"Transit Advantage" bus bypass lane/ramp at the Highway 77/Highway 62 intersection	All costs for the project were included in the benefit-cost analysis
Real-time transit and next bus arrival information in downtown Minneapolis and selected park-and-ride lots	All costs for the project were included in the benefit-cost analysis
Reconstruction of the Crosstown Commons section	All costs for this project w ere included since the benefits of the project were inseparable from the benefits of the Urban Partnership Agreement projects

Three Minnesota UPA projects were not included in the BCA because they are on I-35W North, outside the main UPA focus corridor of I-35W South. The projects not included in the BCA are the I-35W North and 95th Avenue park-and-ride lot expansion, the new park-and-ride lot at I-35W North and County Road C, and the real-time traffic and transit information signs along I-35W North.

Project Goals and Objectives

The addition of the MnPASS HOT lanes, the PDSL, the new and expanded park-and-ride lots, the new bus routes, the new auxiliary lanes on I-35W South, and the MARQ2 lanes in downtown Minneapolis provided additional capacity on I-35W South and travel options for users. The new general-purpose freeway lanes in the Crosstown Commons section, which were not part of the UPA, also added capacity and, along with other improvements in this section, eliminated a major bottleneck on the freeway. All of these improvements were expected to result in increased travel speeds, reduced travel times, and increased throughput.

Data

The BCA for the Minnesota UPA projects used several data sources:

• Data on the capital costs of projects were obtained from the Minnesota Department of Transportation (MnDOT), Metro Transit, and the City of Minneapolis.
• Data on the operation and maintenance costs associated with the projects was obtained from these same agencies. MnDOT had overall responsibility for the freeway projects and the eWorkPlace telecommuting program. Metro Transit had overall responsibility for the transit projects, although Minnesota Valley Transit Authority (MVTA) was the designated lead agency on the driver assist system (DAS) for shoulder running buses and one of the park-and-ride lots. The City of Minneapolis was the designated lead agency on the Marquette and Second Avenue (MARQ2) dual bus lanes in downtown Minneapolis.
• Information on benefits, including travel-time savings, fuel savings, emissions reductions, and changes in crash rates was obtained from the analyses presented in the Minnesota UPA Evaluation Report (http://www.dot.state.mn.us/rtmc/reports/hov/20130419MnUPA_Evaluation_Final_Rpt.pdf).
  • The trip-time savings and traffic volumes on I-35W South were obtained from the MnDOT loop detector data examined in Appendix A – Congestion Analysis.
  • The reductions in emissions from the UPA projects were obtained from Appendix H – Environmental Analysis.
  • The safety benefits were estimated using the Minnesota Department of Public Safety (DPS) Crash Database presented in Appendix F – Safety Analysis.
  • The change in fuel use was based on the information in Appendix H – Environmental Analysis and gasoline prices from the U.S. Energy Information Administration monitored in Appendix K – Exogenous Factors.

Minnesota UPA Projects – Costs

Data on the capital costs, the implementation costs, the operating and maintenance costs, and the replacement and re-investment costs for the projects were obtained from MnDOT and Metro Transit. To convert any future year costs to year 2009 dollars, a real discount rate of 7 percent per year was used (based on guidance from http://www.whitehouse.gov/omb/assets/a94/a094.pdf (page 9) and current FHWA guidance (Federal Register, Vol. 75, No. 104, p. 30476)).

A 10-year post-deployment timeframe was used for the BCA since many aspects of the projects were technology- or pricing-related. Both technology and pricing systems have relatively short life spans. Thus, only expenditures prior to December of 2019 incurred as a result of implementing the UPA projects were considered. In addition, only the marginal costs associated with the UPA projects and the reconstruction of the Crosstown Commons section were included in the cost data. The BCA timeframe began with the first expenses incurred and ends in 2019, after 10 years of operations. The Minnesota UPA projects with useful lives longer than 10 years, such as new park-and-ride lots or new HOT lanes, were accounted for by including their salvage value in year 10.

The U.S. DOT allocated $133.3 million for the Minnesota UPA projects. The state of Minnesota funded the eWorkPlace telecommuting program. The funding was used to plan, design, and construct the various projects. Operating and maintaining the projects over the BCA timeframe of 10 years will require additional funding. To address costs incurred in years other than 2009, those costs were adjusted to a common year using a discount rate of 7 percent. Therefore, determining the costs of the UPA projects was more difficult than simply assuming that the costs total $133 million. Table 34 describes the costs associated with the Minnesota UPA BCA.

Table 34. Minnesota Urban Partnership Agreement Project Costs included in the Benefit-Cost Analysis.

Urban Partnership Agreement Project Component	Planning, Design, and Construction/Purchase Costs (2009 dollars)	Operation and Maintenance Costs (years 2010 to 2019 in 2009 dollars)
High-occupancy toll lanes, priced dynamic shoulder lanes, and auxiliary lanes	$39,616,038	$836,600 per year for years 2010-2019 = $5,875,928
Four new or expanded park-and-ride facilities	Krenick ($12,515,367) + Lakeville ($2,263,590) + Cedar Grove (0.42x$2,521,227) + Apple Valley (0.667x$22,791,796) + MnDOT Project 2716-67 ($533,528) = $31,707,815	$40,000 per year for 10 years = $300,609
27 new buses	5 of the 22 (68%) were for Kenrick and 2 were for Apple Valley (x 0.667) plus 5 were spares. Cost = 28.8% x $12,743,259 = $3,668,514	Annual figures provided by METRO, converted to 2009 dollars = $5,548,871
Lane guidance system for shoulder-running buses1	$5,315,573	Annual figures provided by METRO, converted to 2009 dollars = $106,215
eWorkPlace Telecommuting Program	$3,304,355 x 14% = $462,610 Estimated 14% of travelers were on I-35W south of town.	na
Active traffic management signing and real-time traffic and transit informational signs	$22,558,642	$300,000 per year for 5 years starting in 2015 = $877,015
Double contraflow bus lanes on Marquette and 2nd Avenues (MARQ2) in downtown Minneapolis	$33,405,610	Annual figures provided by METRO, converted to 2009 dollars = $724,602
"Transit Advantage" bus bypass lane/ramp at the Highway 77/Highway 62 intersection	$714,779	$0
Real-time transit and next bus arrival information	$14,114,219	Annual figures provided by METRO, converted to 2009 dollars = $1,526,918
Crosstown Commons	$228,000,000	$632,122
TOTALS	$379,563,800	$15,592,281

In December 2019 some of the above items will still have value, which is known as salvage value. The salvage value will be subtracted from the total cost above (approximately $395,156,082) to determine the cost over the 10 year BCA timeframe. The electronic components of the DAS for shoulder-running buses, real-time transit and next bus arrival information, transit signal priority along Central Avenue, the telework program, and the real time traffic informational signs were assumed to have negligible salvage value at the end of 10 years. For the physical infrastructure (HOT lane, PDSL, P&R lots, MARQ2, and Transit Advantage Lane) Minnesota's BCA guidance was used (http://www.dot.state.mn.us/planning/program/benefitcost.html) to obtain the salvage value using the following formula:

Figure 32. Equation. Salvage Value.

Where

r = the discount rate (0.07)
n = number of years in the analysis period (10)
L = useful life of the asset

This same guidance suggests the useful life of surface (pavement) is 25 years, sub-base and base are 40 years, and major structures have longer timeframes. Since many of these items are additional lanes or parking lots, a life span of 40 years was chosen. The salvage value is therefore:

Figure 33. Equation. Salvage Value Calculated Using Minnesota Urban Partnership Agreement Data.

Salvage Value = 93.1% × ($39,616,038 × $31,707,815 × $33,405,610 × $714,779 + $228,000,000) × 93.1% × $333,444,242 = $310,367,064

The one remaining item is the salvage value of the 27 new buses after 10 years of service. Assuming that the buses have a useful life of 12 years then the salvage value equals: $3,668,514 × 22.8% = $835,075.

Therefore, the resulting 10-year costs from the Minnesota UPA projects were $395,156,082 − $310,367,064 − $835,075 = $83,953,942.

Benefits

The benefits of the Minnesota UPA projects are similar to benefits from many transportation infrastructure projects and the calculation methodology will follow standard practice (http://bca.transportationeconomics.org/). This section highlights how the benefits were calculated for the UPA projects.

The preferred option to estimate the impacts, and therefore benefits, of the UPA projects was to use the Metropolitan Council's urban planning model. Unfortunately, the output from the model for the year 2010 for I-35W South was considerably different than results recorded in the field based on data from Minnesota's extensive loop detector system. For example, the model output showed considerable congestion during the morning and evening peak period where actual data showed only minor congestion. Travel speeds in the model were between 10 mph to 30 mph slower than actual speeds (depending on direction, segment of I-35W and time of day). Thus, the model could not be expected to accurately capture the change in travel conditions caused by the UPA projects. Additionally, the amount of modifications and calibrations that would have been required to adjust model outputs to real world results would have yielded a model that was so altered that it could no longer be expected to properly estimate the impacts of the UPA projects.

Using actual data to estimate the impact of the UPA projects has one main advantage – it is the true data but has several disadvantages. The main disadvantages are (1) the impact of exogenous factors, for example the price of gas impacting travel or the new cross town connector, cannot be properly excluded and (2) actual data is good only for the year it was collected and impacts in future years must be estimated. An assumption was made that the impacts observed in the first year post- deployment will remain constant over the 10-year timeframe. In theory, using year one changes would represent a conservative estimate of benefits since many key benefits of the UPA projects would increase over time given the expected continued increase in regional traffic volumes and health care costs (which will equate to greater benefits associated with emissions reductions).

Finally, since the reconstruction of the Crosstown Commons section occurred at the same time as the UPA projects, it was impossible to separate the impacts (benefits) of the UPA projects from the Crosstown Commons section reconstruction. Therefore, the benefits outlined below are likely due to the UPA projects and the Crosstown Commons section reconstruction. As a result, the costs of both the UPA projects and the Crosstown Commons section were included in the BCA.

Travel Time Savings

The amount of time saved by travelers was converted to monetary benefits based on FHWA guidance (Table 4 in https://www.transportation.gov/sites/dot.gov/files/docs/USDOT%20VOT%20Guidance%202014.pdf). The value of time for the year 2009 was $12.50 based on local travel, weighted by the average of both business and other travel. This value was adjusted for future values of time by increasing it by 1.6 percent per year (prior to applying the discount rate) as outlined in the FHWA document https://www.transportation.gov/sites/dot.gov/files/docs/USDOT%20VOT%20Guidance%202014.pdf.

Travel time data for travelers on I-35W South was obtained from MnDOT's extensive system of loop detectors and analyzed as part of the traffic data analysis conducted as part of the UPA evaluation. These detectors provided a reliable source of data to determine travel speeds pre- and post-deployment of the UPA projects. The pre- deployment data used in the congestion analysis covered the period from October 2008 to April of 2009 and the post-deployment data covered the period from December 2010 to October 2011. The loop detector data was obtained from the following three sections of I-35W South for the congestion analysis.

1. From Burnsville Parkway to north of I-494 where the existing HOV lanes were expanded to HOT lanes. This section is referred to as the "HOT" section in Table 35.
2. From 76th Street to 42nd Street through the Crosstown Commons section, where a new HOT lane and a new general-purpose freeway lane was added in each directions of travel. This section is referred to as the "XTOWN" in Table 35.
3. From 42nd Street to 26th Street, where the new PDSL is located. This section is referred to as the "PDSL" section in Table 35.

Only peak periods travel times were included in the analysis. The UPA projects were expected to have minimal to no impact on travel times in off peak periods as those travel times were already free- flow. The travel time savings are shown in Table 35.

Table 35. Travel Time Savings on I-35W South (minutes).

Direction	Lane	Section	Time of Day (Half hour ending time
			6:30	7:00	7:30	8:00	8:30	9:00	9:30	10:00
Northbound	General purpose lane	High-occupancy toll lanes	0.7	0.87	2.515	4.465	3.2	1.995	1.12	1.06
Northbound	General purpose lane	Out of town lanes	1.155	2.17	3.065	4.98	4.735	5.13	3.695	2.57
Northbound	General purpose lane	Priced dynamic shoulder lanes	-0.135	-0.205	-0.435	-1.76	-1.36	-0.93	-0.395	-0.2
Northbound	High-occupancy toll lanes	High-occupance toll lanes	0.08	0.3	0.33	0.38	0.485	0.41	0.76	0.625
Northbound	High-occupancy toll lanes	Out of town lanes	0.715	1.88	2.89	6.44	6.115	5.835	4.13	2.9
Northbound	Single lane	Priced dynamic shoulder lanes	-0.44	-0.375	-0.56	-0.83	-0.69	-0.38	-0.16	-0.04

Direction	Lane	Section	Time of Day half hour ending time
			14:30	15:00	15:30	16:00	16:30	17:00	17:30	18:00	18:30	19:00
Southbound	General purpose lane	Priced dynamic shoulder lanes	1.34	1.6	2.61	2.355	2.71	2.715	2.43	2.175	1.605	1.07
Southbound	General purpose lane	Out of town lanes	1.55	1.81	2.015	2.405	2.73	2.495	2.52	2.85	2.715	1.835
Southbound	General purpose lane	High-occupance toll lanes	0.08	0.08	0.155	0.69	2.535	4.58	5.035	3.195	0.09	0.92
Southbound	High-occupancy toll lanes	Out of town lanes	1.72	1.88	1.995	2.38	2.555	2.38	2.38	2.61	2.33	1.555
Southbound	High-occupancy toll lanes	High-occupance toll lanes	0.21	0.12	0.2	0.35	0.2	1.685	1.095	3.87	2.145	1.455

The next step in the BCA was to determine the number of vehicles that obtained these travel time savings. Existing (before UPA projects) travelers will receive the travel time savings shown in Table 36. New vehicles (induced demand due to improved traffic flow) would not necessarily gain the entire savings based on their previous travel. To induce these new travelers, this route may save them anywhere from almost no time up to almost the full time savings shown in Table 35. It was generally assumed that a reasonable estimate is that half the time shown in Table 35 was saved by additional vehicles to the roadway.

Finally, the total vehicle hours of travel time savings was obtained using the following calculation:

Travel Time Saved = (Before Volumes) × (Travel Time Savings) + (Volume Change) × (0.5 x Travel Time Savings)

Figure 34. Equation. Total Vehicle Hours of Travel Time Savings.

Total time savings for all time periods amounted to 1,255 vehicle- hours in the morning and 2,987 vehicle hours in the afternoon. This figure was multiplied by the number of days per year with congestion (Monday through Friday minus holidays, approximately 254 per year) resulting in 1,077,324 vehicle-hours per year saved on I-35W South.

These 1,077,324 vehicle-hours were then split into trucks (heavy vehicles) and automobiles. According to MnDOT, during the peak periods trucks represent 8.1 percent of traffic on I-35W South. Therefore, there were 87,263 truck-hours of delay and 990,061 automobile-hours of delay. The automobile delay was then adjusted to person-hours based on average vehicle occupancy (AVO) on I-35W of 1.1 during the peak periods. This figure was provided by MnDOT. The resulting total savings of 1,089,067 person-hours of delay was for automobiles. These savings were assumed to continue from 2010 to 2019. The saved travel times were then multiplied by the value of time for trucks ($24.70/hour) and automobile travelers ($12.50/hour) (adjusted to 2009 values), resulting in a total benefit of $139,474,650 (in 2009 dollars).

The methodology to calculate the value of travel time savings obtained by transit riders was similar to that of automobile travelers. Additionally, the value of their time was identical to what was outlined for automobile travelers. In this case the number of transit riders before and after the UPA projects, along with their travel time savings, was obtained from the transit analysis in Appendix C of the Minnesota UPA Evaluation – Transit Analysis.

There was almost no change in the number of riders from 2009 to 2011 on I-35W South. The morning peak period increased from 4,814 riders per day to 4,859 riders per day. The afternoon peak increased from 4,592 riders per day to 4,602 riders per day. For existing (2009) riders, it was assumed they received the full travel time savings presented in Appendix C, which are 4 minutes and 26 seconds in the morning peak period and 1 minute and 15 seconds in the afternoon peak period. For new riders, it was assumed riders average half of those travel-time savings. This amounts to 21,441 rider minutes in the morning peak period and 5,746 rider minutes in the afternoon peak period. Multiplying by 254 days per year results in a total travel-time savings for transit riders of 115,095 rider hours per year on I-35W South.

Transit riders also saved considerable travel time in downtown Minneapolis from the MARQ2 lanes. Data from Metro Transit on travel-time savings are presented in Table 36. Combining all of the travel-time savings results in a total of 71,203 person minutes per day from the MARQ2 lanes. Assuming 254 work days per year where these travel-time savings occur results in a total of 301,426 person-hours per year of travel time savings. Combining both the I-35W South and the MARQ2 lanes travel-time savings for transit riders results in a savings of 416,521 passenger-hours per year. Assuming:

• The amount of travel time savings remains constant at 416,521 passenger-hours per year from 2010 to 2019.
• The inflation rate for the value of time is 1.6 percent.
• The discount rate for BCA is 7 percent.
• The in-vehicle value of time for a transit rider is $12.50/hour (in 2009 dollars).

The resulting benefit from travel-time savings for transit riders was $45,332,821 in 2009 dollars.

Table 36. Travel Time Savings for Transit Riders from the MARQ2 Lanes.

Location	Time of Day	Travel Time		Ridership		Travel Time Savings
		Before Urban Partnership Agreement (March 2008)	With Urban Partnership Agreement (Feb 2011)	Before Urban Partnership Agreement (March 2008)	With Urban Partnership Agreement (Feb 2011)	Existing Riders	New Riders
Marquette Ave.	AM Peak	8	6.1	6,380	8,294	12,182	1,827
Marquette Ave.	PM Peak	10.7	7.3	3,487	6,169	12,023	4,624
Second Ave	AM Peak	7.7	4.4	5,195	6,132	16,928	1,527
Second Ave	PM Peak	8.1	5.1	7,160	7,896	21,013	1,080

Safety Benefits

Crash data for I-35W South was obtained from Appendix F of the Minnesota UPA Evaluation Report – Safety Analysis. Any changes in crashes on I-35W South were monetized based on the values shown in Table 36. Table 37 presents the pre- and post-deployment crash data for I-35W South. The analysis assumes that any changes in the number of crashes were attributed to the UPA projects. These values were adjusted for future years using an inflation rate of 0.877 percent, based on 1.6 percent inflation rate raised to the power of .55 income elasticity) and a discount rate of 7 percent. (This calculation is estimating the value of a statistical life in future years where the change in income, as well as the general change in the price level (inflation) is accounted for. As we become more affluent, we value lives more, but a future dollar has lower value than a current dollar. Thus two adjustments are required.) Due to the small sample size of crashes in some categories (such as 0 fatal crashes and 2 incapacitating injury crashes), the number of crashes were combined into two categories: (1) no injury crashes and (2) possible/definite injury/fatality. To determine the monetary cost of a possible/definite injury/fatality crash a weighted average cost was developed using the following formulas:

Weighted Cost of a possible/definite injury/fatality crash = (Fatal Crashes (0) × $6,339,701 + Incapacitating Crashes (2) × $4,778,463 + Non-Incapacitating Crashes (40) × $741,925 + Possible Injury Crashes (153) × $307,037) / (0+2+40+153) = $442,106.

Table 37. Unit Costs for Police-Reported Injury Scale (KABCO) (2008 $).

Police Reported Injury	Economic Cost		Comprehensive Cost1
	Crashworthiness	Crash Avoidance	Crashworthiness	Crash Avoidance
O (No Injury)	$68,185	$74,129	$198,819	$204,764
C (Possible Injury)	$109,001	$115,088	$300,950	$307,037
B (Non Incapacitating)	$263,973	$273,270	$732,628	$741,925
A (Incapacitating)	$1,663,924	$1,701,826	$4,740,561	$4,778,463
K (Killed)	$1,248,086	$1,272,912	$6,314,875	$6,339,701
U (Injury Severity Unknown)	$100,776	$102,832	$291,925	$293,982

Table 38. Department of Public Safety Crash Data for I-35W South

Accident Severity	Pre-Deployment period (Nov 2008 – April 2009)	Post-Deployment Period (Nov 2010 – Apr 2011)	Percent change in crashes1
Fatal plus Injury2	90	105	-9.4 (12.1)
Property Damage Only	338	322	-25.6 (5.5)
Monthly average VMT	418,768	534,722
6-month average VMT (exposure in VMT for 6 months)	2,512,608	3,208,332

The 9.4 percent reduction in possible/definite injury/fatality crashes represents a decrease of 16.92 of these types of crashes per year. The 25.6 percent decrease in property damage only crashes represents a decrease of 173.06 of these types of crashes per year. Assuming that the number and severity of the crashes does not change from 2010 to 2019, the change in crash rates is due to the UPA projects, and the cost of crashes as outlined in Table 37, the total benefit of the reduced crashes was $317,582,808 in 2009 dollars.

Fuel Benefits

A reduction in congestion has the potential to change the vehicle operating cost of passenger vehicles and trucks. These operating costs are comprised of items such as maintenance, reduced wear and tear on a vehicle, reduced fuel use, and other factors due to reduced congestion and a smoother driving cycle. The reduction in fuel use is often the largest change from a monetary perspective. For this analysis, the change in fuel use was the only vehicle operating cost calculated, since the urban planning model could not be used to calculate any other changes. Although not ideal, the amount of costs or benefits not included will be very small in comparison to travel time and safety benefits and would have had little to no impact on the BCA.

The change in fuel use was calculated as part of the environmental analysis in Appendix H of the Minnesota UPA Evaluation. The change on I-35W South was estimated to be a reduction of 363.89 gallons per day. Assuming 254 days per year when this savings occurs, this yields a total reduction in fuel use of 92,428 gallons per year. This was the assumed to be the amount of fuel saved for all years from 2010 to 2019. Again, this is likely a conservative assumption since fuel savings due to the UPA projects should increase as traffic congestion increases on the highway.

The cost of fuel (minus taxes) for 2010 and 2011 was obtained from the U.S. Energy Information Administration and is for all grades of gasoline for an entire year for Minnesota (http://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_smn_a.htm). Taxes of 18.4 cents (Federal) and 27.1 cents (State of Minnesota on gasoline) were then removed from the final amount shown in Table 39. The estimated cost of fuel (minus taxes) for future years was obtained from Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2011 Passenger Cars and Light Trucks (Office of Regulatory Analysis and Evaluation, National Center for Statistics and Analysis, National Highway Transportation Safety Administration, March 2009 http://www.nhtsa.gov/DOT/NHTSA/Rulemaking/Rules/Associated%20Files/CAFE_Final_Rule_MY2011_FRIA.pdf).

Table 39 also presents actual and estimated future year gas prices based on the Corporate Average Fuel Economy (CAFE) legislation. Multiplying the amount of fuel saved per year (92,428 gallons) by the cost of the fuel (in 2009 dollars as shown in Table J-10) resulted in a total benefit of $2,866,642.

Table 39. Gasoline Prices.

Year	Actual Gasoline Price Excluding Taxes	Actual Gasoline Price Excluding Taxes Adjusted to 2009 $/gallon
2010	2.330 (2010 $/gallon)	2.493
2011	3.095 (2011 $/gallon)	3.543

Year	Forecast Gasoline Price Excluding Taxes in 2007 $/gallon	Forecast Gasoline Price Excluding Taxes Adjusted to 2009 $/gallon
2012	2.558	2.929
2013	2.611	2.989
2014	2.668	3.055
2015	2.688	3.077
2016	2.736	3.132
2017	2.801	3.207
2018	2.846	3.258

Emissions Benefits

The volume of emissions reduced from the Minnesota UPA projects was calculated in Appendix H of the Minnesota UPA Evaluation Report and is summarized in Table 40. Note that these values were calculated only for I-35W south of town.

Table 40. Volume of Reduced Emissions.

Pollutant	Reduction in Emissions (pounds per day)	Reduction in Emissions (tons per year)
Volatile organic compounds (VOC)	7.98	1
Nitrous oxide (NOx)	22.29	2.8
Carbon monoxide (CO)	228.71	29
Carbon dioxide (CO2)	7320.95	845.2

The current year value of the societal benefit from reduced pollution was derived from the U.S. Environmental Protection Agency estimates of the value of health and welfare-related damages (incurred or avoided) and are recommended for use in current FHWA guidance (Federal Register, Vol. 75, No. 104, p. 30479). The values are found in the report Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 2011 Passenger Cars and Light Trucks (Office of Regulatory Analysis and Evaluation, National Center for Statistics and Analysis, National Highway Transportation Safety Administration, March 2009 http://www.nhtsa.gov/DOT/NHTSA/Rulemaking/Rules/Associated%20Files/CAFE_Final_Rule_MY2011_FRIA.pdf, Table VIII-5, page VIII-60) and are shown in Table 41.

Future year values are taken from the Highway Economic Requirements System documentation (Highway Economic Requirements System, Federal Highway Administration https://www.fhwa.dot.gov/infrastructure/asstmgmt/hersdoc.cfm) and are also shown in Table 41. Note that neither of these references provides a value per ton of CO and therefore CO has not been included in this calculation. These values were interpolated (assuming a linear change in values per year) to obtain the monetary benefit of the three pollutants in each year from 2010 to 2019. Multiplying these values by the amount of pollution reduced (Table 41), then adjusting the 2007 dollars to 2009 dollars using a discount rate of 7 percent, results in a total benefit of $154,110 from NOx, $228,864 from CO₂ and $15,606 from VOC. Combining these, results in a total environmental benefit of $398,580.

Table 41. Values of Reduced Emissions (in 2007 $).

Pollutant	Cost in 2009	Cost in 2015	Cost in 2020
Carbon monoxide (CO)	Not included	Not included	Not included
Volatile organic compounds (VOC)	$1,700 per ton	$1,200 per ton	$1,300 per ton
Carbon dioxide (CO2)	$21 per metric ton	$24 per metric ton	$26 per metric ton
Nitrous oxide (NOx)	$4,000 per ton	$4,900 per ton	$5,300 per ton

Summary of BCA

The total planning, construction, operation, and maintenance cost (in 2009 dollars) for the I-35W and MARQ2 UPA projects, along with the Crosstown Commons section reconstruction, was $395,156,082. Components of the UPA projects will have salvage value at the end of the 10- year BCA timeframe and this salvage value was subtracted from the total cost. For the physical infrastructure the salvage value was found to be:

Salvage Value = 93.1% × ($39,616,038 + $31,707,815 + $33,405,610 + $714,779 + $228,000,000) = 93.1% × $333,444,242 = $310,367,064

For the buses, the salvage value was found to be:

Salvage Value = 22.8% × $3,668,514 = $835,075

Therefore, the resulting 10-year costs from the Minnesota UPA projects, along with the Crosstown Commons section reconstruction, were $395,156,082- $310,367,064 - $835,075 = $83,953,942. The benefits that were identified in previous sections for I-35W South and the MARQ2 lanes are shown in Table 42.

Table 42. Benefit-Cost Summary for the Minnesota I-35W Urban Partnership Agreement.

Travel Time Savings	$139,474,650 + $45,332,821 = $184,807,471
Reduced Auto Fuel Use	$2,866,642
Reduced Emissions	$398,580
Reduced Crashes	$317,582,808
TOTAL	$505,655,501

As shown in Table 43, the benefit-to-cost ratio for the Minnesota UPA I-35W South and MARQ2 projects, along with the Crosstown Commons section reconstruction, was 6.0 ($505,655,501 / $83,953,942).

Table 43. Minnesota Urban Partnership Agreement Benefit-Cost Analysis Results.

Hypotheses/Questions	Result	Evidence
What are the overall benefits, costs, and net benefits from the Minnesota UPA projects?	Positive	Benefits: $505,601,501 Costs: $83,953,942 Net Benefits: $421,701,558 Benefit-to-cost ratio of 6.0 The costs and benefits of the Crosstown Commons section reconstruction are included in these figures.

Key Observations

The analysis had several limitations and required numerous assumptions. None of these would change the overall conclusion of a benefit to cost ratio above 1.0, although the exact value of that ratio could change.

For example, the reduction in crashes by VMT on I-35W South represent a major benefit in the BCA. The estimated BCA would be lower if the crash reduction by VMT had not occurred. Crash data over a longer period of time is needed to fully assess possible changes in crashes by VMT, which would influence the BCA. In addition, vehicle operating costs included only reduced fuel consumption for automobile travel. Data on possible reduction in fuel used by buses was not available. The future year costs and benefits represent the best estimates available, but they are only estimates, and the actual costs and benefits may vary. Possible costs and benefits associated with Highway 77 were also not included in the BCA due to lack of data.

Case Study 7.2 – Interstate I-95 Express Managed Lanes

Strategy Type:	Demand Management
Project Name:	I-95 HOT Lanes
Project Agency:	Florida Department of Transportation (FDOT)
Location:	Urban Freeway
Geographic Extent:	Regional/Urban
Tool Used:	TOPS-BC

Note: Chapters 2, 3, and 4 of this Compendium contain a discussion of the fundamentals of benefit-cost analyses (BCA) and an introduction to BCA modeling tools. These sections also contain additional BCA references.

Project Technology or Strategy

The following case study was prepared by Cambridge Systematics, Inc. for the Florida Department of Transportation (FDOT) as part of the "TOPS-BC Florida Guidebook" and is reproduced here with permission.

The I-95 Express Managed Lanes began operating Phase 1A in December 2008, providing travelers with an alternative to the congested general purpose travel lanes between downtown Miami and the Golden Glades Interchange to the north. The project was funded by the United States Department of Transportation's (USDOT) Urban Partnership Agreement (UPA)/Congestion Reduction Demonstration (CRD) program. The UPA is an agreement between the USDOT and FDOT, the Miami-Dade and Broward metropolitan planning organizations (MPO), Miami-Dade Transit (MDT), Broward County Transit (BCT), the Miami-Dade Expressway Authority, and Florida's Turnpike Enterprise. The UPA was formed to address the problem of congestion, and it consists of two components: (1) converting HOV lanes into Managed Use Lanes (MUL) and (2) implementing Bus Rapid Transit services within the portions of the newly converted lanes. The UPA funded the construction of the MULs and the capital portion of the transit using Federal funds. Revenue generated from I-95 Express tolls support the operations and maintenance of the transit service.

Project Goals and Objectives

I-95 Express was scheduled to be constructed in the following phases:

• Phase 1A opened in December 2008 and runs northbound on I-95 from I-195/SR-112 to the Golden Glades area just north of 151st Street in Miami-Dade County. Phase 1B opened for tolling in January 2010 and runs southbound on I-95 from just south of Miami Gardens Drive/NW 186th Street to just north of I-395/SR-836.Phase 1B also extended the northbound express lanes further to the south from just north of I-195/SR 112 to I-395/SR-836. In this report, where it states Phase 1, it refers to both Phase 1A and Phase 1B.
• Phase 2 construction started on November 28, 2011, and will last approximately three years. Phase 2 will extend the express lanes to provide a continuous facility between I-395/SR-836 in Miami-Dade County and Broward Boulevard in Broward County. Phase 2 Express Lanes should be operational near the end of 2014.

The UPA calls for additional Bus Rapid Transit service as part of Phase 2 implementation, and FDOT will be working closely with BCT and MDT to plan the additional service.

The I-95 Express project involved replacing one high occupancy vehicle (HOV) lane in each direction with two variable-priced managed lanes in each direction that allow registered carpools of three or more occupants to travel free, together with enhanced express bus services. The number of general purpose lanes and shoulders were restriped in order to provide for the same number of lanes as before, four in each direction, with the lanes and shoulders being slightly narrower. The result was to improve the peak-period operations on this corridor through:

• Increased vehicle and person throughput;
• Increased travel speeds;
• Improved travel time reliability; and
• Enhanced transit service.

These improvements resulted largely from increased capacity due to the addition of one travel lane in each direction. This was accomplished within the existing right-of-way by relying on design variances for roadway lane and shoulder widths. However, the addition of 12 peak hour express buses and accommodating registered vanpools and carpools have been a valuable contributor to the successful management of this corridor for reliable peak period travel.

Data

Costs

• Total Phase 1 construction cost from FDOT District 6 = $132,000,000 (includes roadway construction, ITS and tolling equipment installation.
• Tolling software cost for adding module to FDOT SunGuide = $2,000,000
• Project life cycle is 25 years
• Expected life cycle is 10 years for ITS equipment, project start was 2008
• Replacement costs, assumes two replacements over the 25 year life cycle.
  • Closed Circuit TV = 40 × 2 × $24,000 = $1,920,000
  • Microwave Vehicle Detection System = 54 × 2 × $10,000 = $1,080,000
  • Dynamic Message Sign (brick) = 18 × 2 × $50,000 = $1,800,000
  • Dynamic Message Sign (full matrix) = 22 × 2 × $135,000 = $5,940,000
• Total Capital + replacement cost = $142,740,000
• Express lane = 9 miles, D6 total ITS Miles Managed = 48.1, Express lanes are 18.7% of total miles managed by ITS, use 25% of total ITS budget (Express Lanes are more tightly managed.
• 2012-2013 FDOT District 6 ITS Operating cost = $17,100,950
• Assumed I-95 Express Lanes annual operating cost = 25% × $17,100,950 = $4,275,237

Benefits

• Current volume and speed data was obtained from the I-95 Express Monthly Operations Report provided by FDOT District 6. The volumes and speeds used in the analysis were from the December 2013 report.
• The monthly operations report provides volumes in terms of 3-hour peak periods. The reported periods are 6:00-9:00 a.m. for southbound and 4:00-7:00 p.m. for northbound. The length of analysis period is then 3 hours.
• The number of general-purpose lanes throughout the corridor is four lanes in each direction. There are two express lanes in each direction.
• The FDOT Systems Planning Office standard for free flow speed is the speed limit plus 5 mph. The speed limit in all lanes in the I-95 corridor is 55 mph. The free flow speed should then be 60 mph. In this case study it is important to use the differential speeds in the express lanes and in the general purpose lanes. The speed used is the I-95 Express Monthly Operations Report is an average overall speed by direction (for GP lanes - 57 mph SB, 56 mph NB, for Express lanes – 66 mph SB, 64 mph NB). This study used the speeds reports in the I-95 Express December 2013 monthly report.
• The case study corridor length is 9 miles.
• FDOT District 4 and 6 has been monitoring the I-95 High Occupancy Vehicle lanes for many years. The 2008 HOV Monitoring Report provided an analysis of the HOV and GP lane operations (before tolling was initiated) just prior to opening the Express Lanes. The baseline congested speeds were obtained from this 2008 HOV Monitoring Report. The speeds reported were from two segments: Golden Glades Interchange to 125th Street and 125th Street to I-195 (SR 112), these two sets of reported speeds were averaged. The baseline speeds used for the a.m. SB period were 15.0 mph in the GP lanes and 20.5 mph in the HOV lane. The baseline speeds used for the p.m. NB period were 20.9 mph in the GP lanes and 27.2 mph in the HOV lane.
• The number of analysis periods was assumed 250, which is the average number work days in a year (total days minus weekends and holidays). This assumption is because most benefits are accrued during the peak periods in the peak direction.
• National average (default) input data was used for crashes, fuel price, and the value of time. This was due to that data being difficult to collect and summarize or not being available.

Limitations

1. While TOPS-BC does include the benefits due to time savings in recurring and non-recurring travel during each analysis period, the impacts of improvements due to improved travel time reliability are not included.
2. Reliability has been recognized as an important consideration to travelers. Improving reliability is a benefit to travelers. The SHRP 2 research project dedicated a significant portion of its resources to defining, understanding and measuring reliability. SHRP 2 has released several reports relating to the topic. Not all of this research has been added to the TOPS-BC model Version 1. TOPS-BC V1 now estimates only the benefits from reducing incident related delay. In the future, TOPS-BC will add new code to address the current reliability benefits and add these benefits to the full BCA. The latest model will be available on the FHWA, Planning for Operations web site.
3. TOPS-BC does not have a trip assignment or mode choice module, therefore the operations strategy analysis only accounts for the number of trips given for each corridor, there are no assumed trip diversions or mode changes due to congestion.
4. TOPS-BC will provide conservative estimates of benefits because only the benefits accrued during the selected time period are calculated. In many cases, additional benefits may be produced in off-peak times that are not included.
5. Changes in air quality due the operations strategies are not accounted for in TOPS-BC.

Methodology

The following are the steps to enter input data for the I-95 Express Lanes case study. Note that separate TOPS-BC calculations are required for each of the northbound and southbound directions. The steps are the same for each direction but the volumes and speeds input are different. The same cost figures were calculated for each direction; however, the actual cost must be divided by two so that a separate B/C ratio can be calculated for each direction. The costs are then added back together to obtain a total project B/C ratio.

• Open the TOPS-BC spreadsheet template
• Click on the Active Transportation and Demand Management (ATDM) High Occupancy Toll Lanes page under section 3 – Estimate Costs
• Since this analysis assumes that the Express Lanes were added to the existing I-95 roadway, we will assume that there is no cost for the existing road and ITS equipment and the Express Lanes project is an incremental addition
• Change the title under the Incremental Deployment Equipment first row to Project Total Cost
• Using the cost assumptions described in the preceding Assumptions sections, enter $144,740,000 in the Capital/Replacement Costs column
• Using the cost assumptions described in the preceding Assumptions sections, enter $4,275,237 in the O&M Costs column
• Enter 25 years into the Useful Life column. This assumes a relatively long life for the project. Actually, after 25 years some type of reconstruction or repair, which will cost less than the original investment, will be more likely than a complete reconstruction.
• Enter 0 into the Number of Infrastructure Deployments green box
• Enter 1 into the Number of Incremental Deployments green box
• Enter 2008 into the Year of Deployment green box

The spreadsheet immediately calculates the Average Annual Cost as an output. This is the annualized initial capital cost plus the annualized replacement cost (for two equipment replacements over the 25 year life of the project) plus the annual operating and maintenance costs for the portion (assume to be 25 percent) of the total District 6 ITS O&M budget.

See Figures 35 and 36 for screenshots of the costs page for this case study.

Benefits

The steps for the benefits calculations are described for the southbound direction. The step for the northbound direction must use a separate TOPS-BC spreadsheet template, but they are identical. Refer to the benefits assumptions described above.

1. Click on ATDM HOT Lanes under Section 4 - Estimate Benefits. Input data into the Facility Characteristics section.
2. Enter 3 into the Length of Analysis Period (hours) green box. The volumes were provided by District 6 for a three hour (6:00-9:00 a.m.) peak period for the SB direction.
3. Enter the volume for the general purpose lanes, in this case it is 17397, as reported in the Express Lanes Operations December 2013 Monthly Report. Enter the volume into the Freeway General Purpose Volume green box
4. Enter 4 into the Freeway General Purpose Number of Lanes green box
5. Enter 57 into the General Purpose Free Flow Speed green box. This is the overall average speed report in the Express Lanes Monthly Operations Report for December 2013 for the GP lanes.
6. The capacity for the general purpose lanes is then calculated by the TOPS-BC spreadsheet as an output.
7. Enter 9 into the Freeway Link Length green box. This is the total project corridor length in miles. This covers phase 1 of the Express Lanes project, which what is operational at this time (March 2014).
8. Enter the volume into the Freeway HOV Volume green box. In this case, it is 8877, as reported in the Express Lanes Operations December 2013 Monthly Report.
9. Enter two into the Freeway HOV Number of Lanes green box.
10. Enter 66 into the Freeway HOV Free Flow Speed green box. This is the overall average speed report in the Express Lanes Monthly Operations Report for December 2013 for the Express Lanes.
11. Enter 6600 into the Baseline Override for Freeway HOV Capacity. This is the capacity of the "before" condition for one HOV lane.
12. The capacity for the freeway HOV lanes is then calculated by the TOPS-BC spreadsheet as an output.
13. Now input data into the Facility Performance section.
14. First for the Freeway General Purpose Performance area, enter the GP lanes speed for the corridor obtained before the project was implemented (in this case, prior to 2008) into Congested Speed row for the Baseline Override column. If that baseline speed is not known, it could be estimated by using the MPO's modeled speed for that corridor. In this case, the 2008 speed was found in the I-95 HOV Monitoring Report, which is 15 mph.
15. Then in the Congested Speed row, enter the current corridor speed (in this case the SB a.m. peak period speed) into the Improvement Override column, which is 46 mph.
16. Repeat these two steps for the Freeway HOV Performance area. Insert 2008 corridor speed (20.5 mph) into the Congested Speed row, Baseline Override column and the current corridor speed (64 mph) into Congested Speed row, Improvement Override column.
17. Enter 250 into the Number of Analysis Periods per Year green box.

The spreadsheet immediately calculates the Total Average Annual Benefit. All of these steps are repeated for the northbound TOPS-BC spreadsheet using the appropriate northbound volumes and speeds.

All of the green boxes may be used to enter additional local data if they are available. In this case study, there may have been crash data and value of time data available by conducting extensive analysis. However, previous studies have indicated that local data does not usually vary significantly from the national default data and it was decided that the effort to obtain local data for crashes and time value was not worthwhile. Additionally there is a need for data collected over a long period of time, especially for injuries and fatalities, since a small sample can skew the results.

See Figures 37 and 38 for screenshots of the benefits page for the southbound direction in this case study.

Preliminary Benefit Cost Evaluation

Based on the northbound and southbound benefits and costs calculations using the TOPS-BC spreadsheet, the results are shown in Table 44.

Table 44. Benefits and Costs for the I-95 Express Lanes Case Study

Corridor	Peak Time / Direction	Benefits	Costs	Benefit-C Ratio
I-95	PM NB	$11,723,238	$4,992,418	2.35
I-95	AM SB	$57,870,543	$4,992,419	11.59
Total System	N/A	$69,593,591	$9.984,837	6.97

The large difference between the AM and PM peak numbers is due to the AM SB direction experiencing greater congestion (slower congested speed) than the PM NB peak period.

Key Observations

After conducting this case study and other TOPS-BC case studies and applications, several "lessons learned" have been identified. There are also a few hints to setting up the spreadsheet that will help TOPS-BC users achieve better results.

• Speed is the most important factor affecting the benefits of an operations strategy. A difference in "before" and "after" speed is the primary way to account for congestion and delay and improvement benefits in TOPS-BC. In the I-95 Express Lanes case study, the speed differential between before and after deployment provided the data to calculate the vehicle hours of travel and delay in the corridor. It is relatively easy to collect current travel times using GPS travel time runs or Bluetooth detectors. However, it is more difficult to obtain historic corridor speeds for project already implemented or to estimate speeds for a project being planned. When actual historic data is not available, it is best to consult with the local MPO and obtain model speeds for the corridor.
• The free flow speed is important. The FDOT Planning Office free flow speed is the posted speed limit plus 5 mph. When conducting operations analysis and when historic data is available the free flow may be determined from collected data. For freeways, the average off-peak (uncongested) speed collected over time from detectors is the calculated free flow speed. For arterials the stop time at traffic signals must be accounted for, so the FDOT Operations method of determining free flow speed is to calculate average off-peak corridor travel times. When conducting planning studies the speed limit plus 5 mph should be used as the free flow speed.
• Volume and volume/capacity ratio are also important factors in TOPS-BC calculations. The current volume is the only volume input, however, when needed (such as an intersection improvement) the capacity can be overridden for both the baseline and the improvement scenarios. Volume and V/C are used to calculate vehicle miles traveled and crash rates and affect the benefits calculation.
• The period of analysis must be correct in order to obtain accurate results. The number of hours of the analysis must match the length of the period of the volume data, that is, if the volumes are for a peak one hour, the period of analysis must be "1". In the I-95 Express Lanes case, the volumes were for a three hour peak period, so the period of analysis was entered as "3."
• The number of analysis periods per year can be used to account for additional benefits not measured directly by data input.
• In conducting several case studies, it has been determined that the crash data and value of time factors do not often vary significantly from the national data used as the default in each data item. The data for these factors are difficult and expensive to collect and a large amount of data collected over a period of time is needed. It is suggested that the effort to collect these data are not usually worth the amount of impact to benefits that local data would make on these factors. Likewise, the cost of fuel will not create a measurable change to benefits unless the price is significantly different from the default price. It must be noted that the price of fuel is not the cost of regular grade gasoline, but a blended cost of all grades of gasoline, diesel, and liquefied natural gas fuel.
• For the cost calculations, there are several important considerations. The costs of providing basic services – services that would be provided whether or not the project being studied was implemented – and the cost of the incremental services enabled by the project must be sorted out and correctly assigned. Each cost item should have a corresponding operations and maintenance cost entered in the spreadsheet.
• The user must be careful to pay close attention to the units that are assumed in the spreadsheet cells, i.e. be sure determine if the model is assuming a daily rate vs. an annual rate for a factor.