The use of ITS for a temporary construction zone management in Michigan yields a positive benefit-to-cost ratio.
The cost of the system was derived from Michigan Department of Transportation records on the tabulation of contractor bids for the proposed project. All of the benefit values and costs of the system were inflated using a three percent annual growth rate to bring their net present value to 2001 dollars. The project was expected to last one year.
The term ITS was defined as "state of the art technology to provide real time traffic information which can be used to improve transportation system operations." The author indicated that some elements of the ITS contract (advanced construction zone signing, portable changeable message signs (CMS), traffic control items, and a proportional amount of the mobilization costs) would need to be implemented during the construction project even if real-time information were not provided; therefore, the costs of these items were not included in the system costs estimate.
The results of the cost analysis are shown below:
- System Costs $2,500,000 (cost of real-time information components)
- Opportunity Costs $2,500,000 (cost of lost opportunities for other projects)
The real-time traffic information component of the work zone management system was estimated to cost $1,900,000 (no other detail was provided on the components of the real-time information system). In addition, the costs for project design, contract administration, and construction engineering were estimated at $600,000. Overall, the cost to design the system, furnish and install hardware and software components, and operate and maintain the system for the duration of one year was estimated at $2,500,000. In addition to the ITS system cost, the cost of lost opportunities to implement other transportation projects were accounted for. This lost “opportunity cost” was simply the cost of the system (i.e., $2,500,000).
The results of the benefit-cost analysis were positive. A benefit-to-cost ratio was calculated by dividing the benefits of the system ($9,874,000) by the overall cost of the deployment ($5,000,000) to yield a benefit-to-cost ratio of 1.97 and a net benefit of $4,874,000.
Author: Kratofil, Joseph A. Jr.
Prepared for Louis A. Reibling, Ph.D. in Partial Completion of the Degree of Master of Science in Administration, Central Michigan University, Mt. Pleasant, Michigan
Source Date: 14 March 2001
EDL Number: 13591URL: http://ntl.bts.gov/lib//jpodocs/repts_te/13591.html
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