Conservative Benefit-Cost Analysis of Vehicle-Infrastructure Integration Initiative estimates a benefit-cost ratio of 1.6.

METHODOLOGY

Costs calculated for the analysis include development, deployment/installation, and operations and management of the infrastructure, components, applications and network needed to make VII functional. Benefits focus primarily on gains from improved safety. When the technologies evaluated had a related existing technology, benefits were only calculated for the additional benefit gained from upgrading. Some benefits were not calculated as part of this report for their complexity or context dependence or lack of reliable estimates for specific types of benefits, such as the impact of traveler information impact on traveler behavior.

The report utilizes a present value approach in the calculations in order to account for calculated future benefits and costs accrued over the project horizon. When estimating factors based on empirical data, low-end values for benefits and high-end values for costs were used in order to produce the most conservative estimate. Factors such as the value of an avoided crash or value of travel time were from USDOT guidance, while other factors were chosen based on guidance from multiple agencies.

Upon completion of the "base case" for the BCA, sensitivity analysis was conducted in order to test the robustness of the analysis. Major assumptions made for the "base case" analysis include: 40 year project horizon, five year deployment period, seven percent discount rate with a 2008 base year, and on-board equipment (OBE) as standard in all new cars within four years of the beginning of deployment period.

FINDINGS

The benefits from the VII Initiative derive almost entirely (95 percent) from reductions in crashes, due to the heavy focus on safety with the applications that will be developed. The other five percent of benefits are generated through increased mobility, typically due to reduced travel times because of the reduction in crashes and more efficient roadway management strategies that will be possible with the use of the VII technology. Only benefits beyond what is currently achievable with existing technology were counted as a benefit. Benefits were measured for each of the eight applications designated in the report. All benefits were calculated at present value.

TABLE 6.1: Summary of Estimated VII Benefits and Costs (Present Values, Billions of 2008 Dollars)

Application/Cost Element	Safety Benefits	Mobility Benefits	Costs
Signal Violation Warning	11.0	0.1
Stop Sign Violation Warning	2.7	0.0
Curve Speed Warning	14.6	0.1
Electronic Break Lights	13.6	0.2
Ramp Metering		0.3
Traffic Signal Timing		0.3
Winter Maintenance		0.4
Traveler Information		0.9
Total Benefits	41.8	2.4
Roadside Equipment			9.3
Onboard Equipment			12.4
Network Backhaul, O&M			3.7
Governance & Program			1.0
Application Specific Costs			0.8
Total Costs			27.3
Net Benefits: 16.9 B/C Ratio: 1.6

The BCA was calculated for the "base case" assumptions described in the Methodology, with a value of 1.6:1. These assumptions were tested for their sensitivity and all tests achieved a B/C ratio of at least 1.0. Table 6.2 below demonstrates the results of the sensitivity testing.

TABLE 6.2: Summary of Initial BCA Sensitivity Testing

	Present Values in Billions of 2008 Dollars			B/C Ratio
	Benefits	Costs	Net Benefits
VII Base Case (All Values as in report text)	44.2	27.3	16.9	1.6
Sensitivity Case Tested:
Discount Rate of 3%	104.2	57.4	46.8	1.8
30 year project horizon	37.6	24.7	12.9	1.5
OBE Costs Double ($100/installation, $200/replacement)	44.2	39.7	4.5	1.1
Backhaul requires 500 kbps Bandwidth	44.2	29.2	15.0	1.5
Future VMT is 20% higher than estimated	50.3	27.6	22.7	1.8
Future VMT is 20% lower than estimated	37.9	26.9	11.0	1.4
Safety Applications: 15% Effectiveness Rate	27.3	27.3	0.0	1.0
Safety Applications: 35% Effectiveness Rate	61.1	27.3	33.8	2.2