This article provides detailed instructions for carrying out the six steps required to assess productivity impacts of transportation projects. The instructions are necessarily detailed and technical.
Overall Framework and Sequence of Steps
This guidance was developed with four key methodology features:
- Allow for Flexible Use. Some agencies may wish to utilize the guide to calculate productivity gain specifically for the set of directly affected firms. (For instance, an analyst may wish to assess the business productivity benefits of a route that predominantly provides access to an industrial park, intermodal rail terminal or air freight facility.) Other agencies may wish to use that information to derive a broader estimate of state or regional macro-economic impact, using a regional economic simulation model. And yet others may wish to just pick out the elements of broader impact that are not already captured in existing benefit-cost analysis methods. Any of these approaches may be used for prioritizing, programming or planning processes. The guide should have the flexibility so that steps may be skipped or followed, as appropriate to allow for all of these uses.
- Provide a Screening Process to Reduce User Burden. While the method for calculating productivity impacts is designed to be usable by DOTs and MPOs across North America, it is also clear that it involves significant time and resources to assemble and process the required data. For that reason, it is worthwhile to screen out those projects or situations where the extra effort may not be worthwhile. Two types of situations should be screened out. The first is where the project is unlikely to have productivity implications much beyond what is already covered by widely-used standard travel benefit analysis (see inset box). The other is situations where the effects of calculating further productivity benefits are likely to be negligible or too small to warrant the extra effort.
- Use of Necessary Tools. Even for projects where analysis of productivity impacts is warranted, it is important to identify the type of project, the corresponding types of transportation system changes that are applicable, and the corresponding types of productivity impact tools that are relevant for use. In other words, depending on the type of project, traditional user cost impact, reliability impact, accessibility impact or intermodal connectivity impact tools may be applicable. It is usually not necessary to involve all of those impact assessment tools, and if that is done then extra effort may be necessary to adjust for double-counting
- Allow for Different Modeling Capabilities. The data assembly and calculation processes must be applicable for transportation agencies spanning a wide range of different transportation and economic modeling capabilities. It is recognized that some transportation agencies may have sophisticated travel demand, highway network, economic and land use models. Others may have none of these models, and instead rely on engineering estimates and sketch planning analysis methods. The analysis tools discussed in the guide must be useful for both types of situations, as a means to calculate time, cost, access, reliability and connectivity effects.
Six prescriptive steps address the preceding requirements and provide a means for measuring each of the previously-cited transportation factors and components that go into the productivity impact calculation. This sequence allows the analyst to estimate intermediate transportation factors, turn these into productivity elements, and then use those results to estimate broader, productivity impacts. The steps are:
Step 1: Screen to Assess the Need to Assess Productivity Impacts – Assess whether productivity analysis is appropriate for a given project, and apply a Screening Decision Table to determine whether available analysis tools can be utilized.
Step 2: Select Applicable Tools – Use Step 1 information with an Analysis Tool Selection Table, to determine the types of transportation impact factors that need to be analyzed, and analysis tools available for measuring them.
Step 3: Measure Standard Traveler Benefits – Assemble transportation data and calculate direct effect on travel-related business costs.
Step 4: Calculate Wider Transportation Benefits – Use data from Step 3 with tools from Step 2 to calculate reliability, market access or intermodal connectivity impact.
Step 5: Calculate Productivity Elements – Apply coefficients and elasticities to Step 4 results to calculate impacts on cost or output scale for directly affected businesses.
Step 6: Present and Interpret Productivity Results – Use results of Step 5 to calculate productivity impact and use results in project evaluation processes: MCA, BCA, EIA or “stand-alone presentation.”
For each step, this guide lays out (a) its logic, in terms of objective and intended use, (b) the procedure involved in taking input information and producing a result, and (c) the data sources and tools that are required or recommended for use.
(Step 1) Screen for Productivity Impacts
In this step, the analyst collects basic information on the type of project being considered and the setting in which it will be implemented. Using this information, the analyst is able to determine the likelihood of the project producing economic productivity impacts and whether the inclusion of these impacts in the evaluation is worthwhile. As part of the initial screening, the analyst identifies the forms of productivity impact that are likely to occur for the specific project type and setting. This allows the analyst to decide what forms of productivity impact to include and the types of tools to use in the analysis. The process for step 1 has two parts: (1-A) assemble basic information about the project to fill in a Project Classification Form, and (1-B) apply a Screening Decision Table to identify the likely types of productivity impact to be calculated in subsequent steps.
(Step 2) Select Applicable Tools
In this step, the analyst applies a Screening Decision Table to determine the types of transportation impact factors that need to be analyzed, and the analysis tools available for measuring them. The Decision Table is used with criteria that include thresholds, so the analyst can determine whether the economic productivity impacts are likely to be large enough to warrant continuing the analysis.
(Step 3) Measure Standard Traveler Benefits
In this step, the analyst calculates basic impacts on transportation conditions which are needed to estimate changes in vehicle-miles traveled (VMT), vehicle-hours traveled (VHT), and vehicle collision rates. Those changes are the basis for “standard traveler benefit” (STB) analysis in the US, which is more commonly called “standard Transport Economic Efficiency” (TEE) in the UK. There are further adjustments made in this step to calculate just the travelrelated cost savings for business. Some of this same data will also be used for the calculation of wider benefits in Step 4.
(Step 4) Calculate Wider Transportation Benefits
In this step, the analyst uses tools identified in Step 2 and builds upon standard traveler benefit data assembled in Step 3 in order to estimate the broader transportation effects (beyond direct traveler cost savings) that are drivers of productivity growth. This guide recognizes three classes of broader transportation effects – market access, intermodal connectivity and reliability effects. These are fundamentally transportation concepts, though they lead to effects on business productivity because they enable longer-term adjustment in business scale and operating processes.
For any given project, the need for reliability, market access or intermodal connectivity impact analysis tools will have been identified back in Step 2. In most cases there is a dominant project objective and only one of the three classes of tools will be necessary.
There is one common aspect to use of any of these analysis tools, and that is the need to define input data and collect output measures for both a “base case”( or “no-build”) scenario and a “project build” scenario. That makes it possible to identify the incremental impact of a project on wider transportation factors, which will then be applied to “business impact elasticity” factors in Step 5 to generate measures of productivity impact.
(Step 5) Calculate Productivity Elements
In this step, the analyst calculates the dollar value of impacts on the operational productivity of directly affected businesses. The impacts are in the form of either (1) decreases in business cost per unit of output, or (2) increases in output for a given base of labor and capital, which follow as a direct consequence of changes in reliability, market access or intermodal connectivity. The magnitude of cost or output change is determined by coefficients (drawn from prior research) that represent either the unit value of reliability and connectivity cost savings, plus elasticity factors that represent the percentage change in business output for a given percentage change in market size. There are two parts in the Step 5 process of translating wider transportation impacts from the prior step (travel, reliability, and accessibility) into business cost or output impacts that ultimately are elements of productivity.
(Step 6) Present & Interpret Productivity Results
In this step, it is shown how overall productivity impacts can be calculated, and how the results can be incorporated into one of three most common methods for evaluating and prioritizing projects: MCA, BCA, or EIA. In addition, the analyst can use economic impact analysis to report changes in macroeconomic productivity, using measures such as labor productivity and multifactor productivity. The process at this point depends on which economic presentation or application approaches is to be used. Four alternative approaches are described; only one alternative must be selected although multiple approaches may be used if desired.
Classifying Internal and External Benefits
Technology adoption effects enabled by reliability improvements may be classified as externalities, insofar as they affect parties beyond the traveler using the transportation system. However, if we define the class of all freight shippers and consignees (receivers) as the true users of the freight transportation system, then these impacts may alternatively be classified as internal economies associated with business reorganizations that may occur after a time lag.
Agglomeration and market access effects are technically classified as “external economies of scale” because they affect otherwise uninvolved residents and businesses in a region (who are not themselves users of the transportation system) by enabling product innovations
