Refining Return on Investment Methodology/Tool for Mnpass October 2017 6
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Refining Return on Investment Methodology/ Tool for MnPASS Laura Fay, Principal Investigator Western Transportation Institute Montana State University October 2017 Research Project Final Report 2017-37 • mndot.gov/research To request this document in an alternative format, such as braille or large print, call 651-366-4718 or 1- 800-657-3774 (Greater Minnesota) or email your request to [email protected]. Please request at least one week in advance. Technical Report Documentation Page 1. Report No. 2. 3. Recipients Accession No. MN/RC 2017-37 4. Title and Subtitle 5. Report Date Refining Return on Investment Methodology/Tool for MnPASS October 2017 6. 7. Author(s) 8. Performing Organization Report No. Na Cui, Paul Morris (SRF), Laura Fay, Anburaj Muthumani, and Ashley Kroon 9. Performing Organization Name and Address 10. Project/Task/Work Unit No. Western Transportation Institute SRF Consulting Group, Inc. 11. Contract (C) or Grant (G) No. Montana State University 1 Carlson Parkway North, PO Box 174250 Suite 150 (c) 99006 (wo) 9 Bozeman, MT 59717 Minneapolis, MN 55447 12. Sponsoring Organization Name and Address 13. Type of Report and Period Covered Minnesota Department of Transportation Final Report Research Services & Library 14. Sponsoring Agency Code 395 John Ireland Boulevard, MS 330 St. Paul, Minnesota 55155-1899 15. Supplementary Notes http:// mndot.gov/research/reports/2017/201737.pdf 16. Abstract (Limit: 250 words) A refined return on investment (ROI) methodology is explored to supplement existing benefit-cost analysis (BCA) tools, data, and methodologies available to evaluate MnPASS managed lane projects. This would also facilitate more consistent and standardized measures for MnPASS system assessment and comparison. In this study, researchers investigated a more comprehensive set of factors, variables, and perspectives to include within the refined ROI analysis framework based on the limitations summarized in the current MnPASS BCA methodology; the major concerns identified from agency staff interviews; and available data resources. The selected cost components included initial capital costs, annual operating and maintenance costs, remaining capital value, and the potential benefit components consisted of travel time savings, vehicle operating cost savings, safety benefits, travel time reliability, transit benefit, induced traffic, emergency response, emissions impacts, and noise impacts. Tractable calculation methods were further explored for each cost and benefit measurement in order to facilitate use of the economic analysis tool. To verify the performance of the proposed methodology, the research team conducted a comparative demonstration, which produced a higher benefit-cost ratio than previous work. Furthermore, the contributions from additional benefit considerations highlighted the importance of integrating a wider range of project impact categories in the MnPASS ROI analyses. 17. Document Analysis/Descriptors 18. Availability Statement Return on investment, benefit cost analysis, life cycle analysis, No restrictions. Document available from: automated toll collection, measures of effectiveness National Technical Information Services, Alexandria, Virginia 22312 19. Security Class (this report) 20. Security Class (this page) 21. No. of Pages 22. Price Unclassified Unclassified 196 REFINING RETURN ON INVESTMENT METHODOLOGY/TOOL FOR MNPASS FINAL REPORT Prepared by: Na Cui Laura Fay Anburaj Muthumani Ashley Kroon Western Transportation Institute Montana State University Paul Morris SRF Consulting Group, Inc. SEPTEMBER 2017 Published by: Minnesota Department of Transportation Research Services & Library 395 John Ireland Boulevard, MS 330 St. Paul, Minnesota 55155-1899 This report represents the results of research conducted by the authors and does not necessarily represent the views or policies of the Minnesota Department of Transportation and/or The Western Transportation Institute at Montana State University. This report does not contain a standard or specified technique. The authors, the Minnesota Department of Transportation, and the Western Transportation Institute do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to this report because they are considered essential to this report. ACKNOWLEDGMENTS We would like to thank the Minnesota Department of Transportation (MnDOT) for supporting this project. In particular, we would like to acknowledge the help, support, and cooperation of Brad Larsen, Brian Isaacson, and Jim Henricksen of MnDOT Metro District, John Wilson, Kenneth Buckeye, and Philip Schaffner of MnDOT Central Office, Jonathan Ehrlich, Steve Peterson, and Brad Utecht of the Metropolitan Council, Brian Kary and Morrie Luke of MnDOT RTMC, and Debra Fick. Their hard work made this project a success. Additionally, we would like to thank SRF Consulting Group for its role in finalizing the project. TABLE OF CONTENTS CHAPTER 1: Introduction ....................................................................................................................1 1.1 Background Review on MNPASS Related Studies .............................................................................. 4 1.2 Priced Managed Lane System Study outside of Minnesota ............................................................. 13 1.3 Economic Analysis Methodologies for MnPASS System Evaluation................................................. 17 1.4 Literature Review on ROI, BCA and LCCA Methodologies ................................................................ 34 1.5 Conclusions ....................................................................................................................................... 43 CHAPTER 2: Agency Response Memorandum .................................................................................... 44 2.1 Agency Interview Structure .............................................................................................................. 45 2.2 Agency Reponses .............................................................................................................................. 46 2.3 On Time Performance ....................................................................................................................... 52 2.4 Non-Recurring Congestion ............................................................................................................... 53 2.5 Transit ............................................................................................................................................... 54 2.6 Travel Behavior Considerations ........................................................................................................ 55 2.7 Findings and Conclusions .................................................................................................................. 56 CHAPTER 3: Identification of MnPASS ROI Investment Categories ..................................................... 61 3.1 Benefits and Costs of MnPASS Program ........................................................................................... 64 3.2 Economic Cost Components ............................................................................................................. 65 3.3 Economic Benefit Components ........................................................................................................ 67 3.4 Summary ........................................................................................................................................... 72 CHAPTER 4: Refinement Framework of ROI Methodology for MnPASS .............................................. 75 4.1 Travel Demand Forecasting .............................................................................................................. 79 4.2 Approaches for Benefit-Cost Analysis .............................................................................................. 83 4.3 Total Cost Estimation ........................................................................................................................ 84 4.4 Potential Impact Measures ............................................................................................................... 88 4.5 Summary ......................................................................................................................................... 108 CHAPTER 5: Demonstration ............................................................................................................ 110 5.1 Background Information on Case Study ......................................................................................... 110 5.2 Cost and Benefit Estimation by Using the Refined Methodology .................................................. 113 5.3 Benefit-Cost Analysis Results .......................................................................................................... 129 5.4 Comparison Analysis and Conclusion ............................................................................................. 133 CHAPTER 6: Conclusions and Summary ........................................................................................... 135 REFERENCES .................................................................................................................................. 138 APPENDIX A: Operations and Maintenance Costs APPENDIX B: Travel Times Savings (VHT) APPENDIX C: Vehicle Operating Cost (VMT) APPENDIX D: Crash Cost