Sensitivity test provided a BCA range of 1.0 - 2.2.
United States
Vehicle-Infrastructure Integration (VII) Initiative: Benefit-Cost Analysis - Version 2.3 (Draft)
Summary Information
In this 2008 Draft Report created for the Intelligent Transportation Systems Joint Program Office (ITS JPO), a high-level, conservative Benefit-Cost Analysis (BCA) of the Vehicle-Infrastructure Integration (VII) Initiative was conducted based on comments received on a previous version of the report and from members of the VII Working Group, as well as with updated cost and assumption information from the ITS JPO. This analysis was conducted at a societal level and not for specific "agencies" that may bear much of the cost of this program's implementation, but not see many direct benefits.
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, but also include some mobility and environmental benefits (where possible) gained from VII implementation. 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, such as emissions, or lack of reliable estimates for specific types of benefits, such as the impact of traveler information impact on traveler behavior or value per metric ton of various emissions.
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 the White House Office of Management and Budget (OMB), the Energy Information Administration (EIA), and the Environmental Protection Agency (EPA).
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 |