In this time of limited resources and competing demands for public services, government spending is closely scrutinized. This paper describes how transportation agencies can use the analytical process of benefit-cost analysis (BCA) to demonstrate accountability for expenditures from their budgets. The BCA process estimates the benefits and costs to society of transportation investments. When discounted future benefits equal or exceed the discounted life-cycle costs, a project is considered economically efficient. Applied correctly, BCA can support the selection and prioritisation of projects that have the best potential to achieve long-term performance objectives of transportation investments. BCA explicitly identifies the benefits to the users of the system and the costs to the agency, providing transparency and accountability for investment decisions. Most BCA ensures that transportation investment decisions are based on more than immediate benefits and initial construction costs. BCA includes benefits such as savings in travel time and vehicle operating costs, plus reductions in crashes. BCA also includes the life-cycle costs of a project, such as construction and maintenance costs incurred over an analysis period. Various software tools are available for performing a BCA on a project level as well as on a network level. These tools employ an engineering economic analysis process of analysing highway projects to identify, qualify, and value the benefits and costs of highway projects and programs over a multiyear timeframe and to identify those projects that generate the highest return for each dollar invested in the Nation's transportation system. The use of consistent tools within an agency can help standardize the BCA and facilitate consistent and fair comparisons among projects. (Author/publisher)
Abstract