COST UTILITY ANALYSIS PROCEDURE FOR EVALUATING ALTERNATIVE SYSTEMS

THIS PAPER DESCRIBES THE COST/UTILITY ANALYSIS TECHNIQUE FOR SELECTING FROM COMPETING ALTERNATIVES UNDER COMPLEX PROBLEM CONDITIONS. A SPECIFIC EXAMPLE OF THE TECHNIQUE AS APPLIED TO A SIGNAL SYSTEM PROJECT IN THE CITY OF DETROIT IS GIVEN. THE EXAMPLE IS USED AS A DETAILED EXPLANATION OF THE TECHNIQUE. COST/UTILITY ANALYSIS IS A TOOL TO BE CONSIDERED FOR USE IN A COMPLEX DECISION PROCESS. IT DIFFERS FROM COST BENEFIT AND COST EFFECTIVENESS IN THAT THE VALUE OF A SYSTEM IS MEASURED IN THE LESS TANGIBLE FORM, UTILITY, INSTEAD OF DOLLAR BENEFIT OR DIRECTLY MEASURABLE EFFECTIVENESS. COST/UTILITY ANALYSIS ENTAILS IDENTIFICATION OF SYSTEM GOALS, DEVELOPMENT OF UTILITY MEASURES WHICH FULLY DEFINE THE GOALS, DETERMINATION OF THE RELATIVE VALUE OF "WEIGHT" OF THE GOALS AND MEASURES, AND RATING OF ALTERNATIVES AGAINST THE UTILITY MEASURES. THE OVERALL RATINGS OF ALTERNATIVE SYSTEMS ARE THEN COMPARED WITH COST, AND A COMPARISON OF THE COST/UTILITY OF SYSTEMS MADE. BOTH ABSOLUTE AND INCREMENTAL COST/UTILITY ANALYSES ARE PERFORMED. THE TECHNIQUE IS A STRUCTURED DECISION PROCESS INVOLVING JUDGMENTAL AND SUBJECTIVE ELEMENTS. ITS OVERALL VALUE IS IN ENFORCING EXPLICIT CONSIDERATION OF ALL SIGNIFICANT VARIABLES. THE TECHNIQUE IS NOT TOTALLY "OBJECTIVE" BECAUSE OF THE INCLUSION OF INTANGIBLE ELEMENTS. THE TECHNIQUE IS FELT TO BE MORE RELEVANT IN COMPLEX PROBLEMS THAN EITHER BENEFIT OR EFFECTIVENESS ANALYSIS, HOWEVER, BECAUSE OF THE EXPLICIT CONSIDERATION OF MULTIPLE GOALS. /AUTHOR/

• Corporate Authors:

  Institute of Traffic Engineers

  2029 K Street, NW
  Washington, DC    20006
• Authors:
  • Kay, J L
• Publication Date: 1972-9

Media Info

• Features: Figures; References; Tables;
• Pagination: p. 137-44
• Serial:
  • Institute of Traffic Engineers, Proceedings

Subject/Index Terms

• TRT Terms: Alternatives analysis; Benefit cost analysis; Decision making; Evaluation; Methodology; Systems analysis; Traffic control
• Uncontrolled Terms: Cost utility analysis
• Old TRIS Terms: Traffic control systems
• Subject Areas: Highways; Operations and Traffic Management;

Filing Info

• Accession Number: 00226559
• Record Type: Publication
• Files: TRIS
• Created Date: Apr 23 1973 12:00AM