FHWA's Web-Based Benefit-Cost Tool for Highway Projects

The growing requirements for highway investments and constrained fiscal resources point to the need for a tool to facilitate the benefit-cost analysis of highway investments. Surveys of available tools show the need for an easy-to-use tool that incorporates recent research findings, thereby enhancing the accessibility of highway project benefit-cost analysis to the practitioner. The challenges of deploying software in diverse information technology environments with increasing security requirements strongly suggest that a new benefit-cost analysis tool be an Internet-based application.

To meet this need, the FHWA developed BCA.Net, which is a web-based decision support tool that assists Federal, State and local authority decision-makers in evaluating the benefits and costs of highway projects. The BCA.Net system enables users to: manage the data for an analysis; select from a wide array of sample values; develop cases corresponding to alternative strategies for managing highway facilities; evaluate and compare the benefits and costs of improvements; and, provide summary indicators for informing resource allocation decisions.

A BCA.Net analysis evaluates the relative economic merits of pursuing alternative multi-year improvement and maintenance programs for highway projects. Based on the users-provided project information, BCA.Net forecasts the transportation and non-transportation effects of highway investments and maintenance strategies, and estimates the economic value of these effects over the useful life of projects in dollar terms. The benefit-cost of an investment is calculated by comparing the time-stream of expected economic benefits with the time-stream of investment-related and other costs, while adjusting for the timing of the realization of costs and benefits. Known as “discounting”, this adjustment enables decision makers to inspect future benefits and costs in terms of their present-day value. This is a standard way of giving appropriate weight to nearer-term versus distant (thus less valued) outcomes. By comparing the present values of net benefit (e.g., benefits less costs), the analyst can determine which alternative has greater economic worth.

The computational approach in BCA.Net allows the users to develop unitary, point estimates (e.g., single values) for the result metrics. Alternatively, the users can use the risk analysis features of BCA.Net to develop probabilistic inputs and results. The probabilistic method is a way of explicitly handling the uncertainty associated with some of the analysis inputs (e.g., forecast growth) and its impact on the analysis results. Probability functions describe the probabilistic inputs, which convey the range of likely inputs and the likelihood of their occurrence. Risk analysis allows for the simultaneous computation of differing assumptions for many different variables. The results of a risk analysis are presented as probability distributions, rather than point estimates. These risk analysis outcomes promote informed decision-making that accounts for both the downside risk and upside potential of candidate projects. BCA.Net includes an array of charts and reports that enable the users to interpret results, refine analyses, and develop risk-mitigating contingencies.BCA.Net’s underlying methodology is consistent with the current benefit-cost methodologies employed by the FHWA. The model is transparent in all of its assumptions and the model inputs are readily accessible to users who may want to adjust model inputs to reflect local circumstances. BCA.Net is designed to minimize the data needs and technical expertise required of the users while at the same time providing analytical flexibility and reliable benefit-cost results.