Douglass B Lee

Induced traffic and induced demand

Although terms such as “induced demand” and “latent demand” have been used in transportation planning for several decades, the concept of induced demand has not been precisely defined nor has it been translated into an operational form suitable for modeling. This paper defines “induced” as referring to a movement along a travel demand curve, in which the price dimension includes travel time and other user costs. Selecting the relevant demand curve is then an analytic choice. For FHWA’s Highway Economic Requirements System (HERS) model, movement along the within-period, short-run demand curve is referred to as “induced traffic,” while movement along the between-period longrun demand curve constitutes a shift in the short-run demand curve and is referred to as induced demand. The model employs this definition to evaluate highway improvement projects using benefit-cost analysis, incorporating effects of short-run traffic volume on changes in the generalized price, as well as effects of long-run land use and other economic feedback. These features were used in the HERS model to prepare the 1997 “Conditions and Performance” report to Congress.

Fundamentals of life-cycle cost analysis

Benefit-cost analysis (BCA) is a framework for evaluating the desirability of transportation capital and maintenance investments. Life-cycle cost analysis (LCCA) has been used for similar purposes, so it may be helpful to compare these two methods for scope and consistency. It is concluded that LCCA is a restricted form of BCA that can be applied in situations where benefits are assumed to be equal for all alternatives. Under these conditions, the project alternative with the lowest discounted cost is preferred. User costs may be included if relevant to the evaluation.

Comparing Public–Private Partnerships with Conventional Procurement: Incorporating Considerations from Benefit–Cost Analysis

Value for money (VfM) analyses have been used in evaluating various approaches to highway projects to help government officials determine whether a public–private partnership (PPP) is likely to be preferable for financial reasons to conventional approaches. VfM is a tool that focuses primarily on the financial impacts of procurement models from the perspective of the agency sponsoring a project. Nonfinancial impacts, such as benefits to users or nonusers of a facility, are not generally considered or are relegated to a qualitative evaluation. Benefit–cost analysis (BCA) has been used by public agencies in planning and project development phases to determine whether an investment is worth making. BCA is a more comprehensive tool than VfM that is capable of quantifying and monetizing nonfinancial impacts, such as benefits to users or nonusers that may accrue from earlier delivery of a project. This paper discusses how BCA considerations may be incorporated into a more analytically comprehensive approach to comparing PPPs with conventional procurement. The approach uses some results from VfM analysis and adds new items that are consistent with a BCA approach. The paper illustrates the approach with a hypothetical project.

BENEFIT-COST EVALUATION OF TRAVELER INFORMATION: SEATTLE'S WASHINGTON STATE DEPARTMENT OF TRANSPORTATION WEBSITE

The Washington State Department of Transportation website allows those with access to a computer and the Internet to obtain current information about traffic conditions on freeways and bridges in the metropolitan Seattle area. Potential benefits of disseminating real-time traveler information are time and cost savings to users as a result of informed travel choices (route, time, mode, destination, add or forgo a trip), increased user confidence in travel choices, and reduction in congestion, pollution, and other external costs. These benefits depend on how many users access the information, what choices they make, how much time they save or in what other ways they find the information valuable, and how their choices affect the transportation system. Although a good deal of this information is available for Seattle or can be estimated from comparable contexts, the data are inadequate to determine within a broad range whether net benefits are positive or negative. A spreadsheet model is presented that allows relevant data to be applied—and “what if” numbers to be inserted where necessary—as a basis for identifying the performance characteristics and levels needed to make a traveler information service a worthwhile investment.