The Oregon Department of Transportation recently completed a study of the rate of return method of evaluating highway projects. Sensitivity analysis, the most interesting feature of the research, derives from the flexibility of the computer program that was developed to facilitate the calculations. Most sensitivity analyses have tested the effects of varying the assumptions underlying road-user studies such as project life, discount rate, or terminal value. The Oregon program can analyze the sensitivity of variables such as speed, average daily traffic, and maintenance costs calcualted for each project. Using the program, rates of return were computed for 66 projects and then recomputed with a number of specified changes in each of the major variables. Average errors and confidence intervals were calculated for every variable. Changes in some items such as right-of-way and construciton costs, average daily traffic, value of time, and, especially, speed greatly affected rate of return. Increases or decreases in other factors such as vehicle operating cost and maintenance and operation cost had negligible effects. This study clearly shows that estimates of some factors need to be improved and that care should be exercised in using the results of highway economy studies. Until better estimates exist, the use of a range of values for a rate of return is more defensible than is specifying a particular number.

Media Info

  • Media Type: Print
  • Features: Tables;
  • Pagination: pp 63-66
  • Monograph Title: Application of economic analysis to transportation problems
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00129481
  • Record Type: Publication
  • ISBN: 0309024560
  • Files: TRIS, TRB
  • Created Date: Mar 10 1976 12:00AM