Refined ROI Methodology Shows Added Benefits of MnPASS Lanes

Researchers have developed a more comprehensive, standardized method for evaluating and selecting MnPASS managed lane projects. The new methodology uses a return on investment (ROI) and benefit–cost analysis framework that includes a more extensive set of factors, variables and perspectives than earlier methods. After applying the broader range of impact categories from the new methodology to an earlier study of a MnPASS corridor, researchers found that the MnPASS projects provide more benefits than previously reported.

In the past, MNDOT used a series of evaluation methods—cost estimation, performance measures and travel demand forecasting—to select new MnPASS corridors. While the recommendations and results from these assessments were adequate, each evaluation used a different set of objectives and assumptions. The range of benefit–cost factors in earlier evaluations was also limited to travel time savings, operating costs and crashes.

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An overhead sign above a MnPASS express lane explains that drivers must have MnPASS or two or more occupants in a vehicle to use the lane during peak travel time of 6 a.m. to 10 a.m., Monday through Friday.

“Our previous corridor studies each had different benefit–cost elements, making direct comparisons difficult. This project makes it possible to quantify the transit, environment and travel time reliability benefits that we knew were there all along,” John Wilson, Economic Policy Analyst, MnDOT Office of Transportation System Management

MnDOT needed a more thorough and consistent benefit–cost analysis methodology to help decision-makers better assess MnPASS project alternatives; compare potential MnPASS corridors; and communicate why MnPASS is a financially effective, long-term strategy for addressing mobility and congestion issues.

What Was Our Goal?

The goal of this project was to develop a refined, standardized methodology to more accurately assess the ROI of MnPASS programs and projects. A refined assessment framework would include a broader range of financial and performance measures, allowing MnDOT to more thoroughly evaluate MnPASS investments.

What Did We Do?

Using ROI as the central framework, the research team set out to generate a more comprehensive method for estimating benefits and costs. To begin, team members identified limitations in the existing benefit–cost analysis methodology and developed a list of factors to include in the refinement process. Then they interviewed stakeholders from various agencies to better understand MnPASS planning and operations needs, as well as the data required to support the research and system benefits and costs.

Next, they began to develop the enhanced framework by defining economic, environmental and social ROI categories for MnPASS investments, and mapping the relationship between these categories and their associated benefits and costs. Benefit– cost analysis methods then were used to build the refined framework and to estimate benefit–cost ratios for projects. Finally, researchers applied the new framework to an earlier benefit–cost analysis of the Interstate 35 West (I-35W) North Managed Lanes project to compare the results of the new framework with the results from the earlier analysis.

What Did We Learn?

Researchers used additional benefit factors such as transit use, travel time reliability, emissions and noise to refine the ROI calculation methods. When they applied the new ROI framework to the I-35W project, they found that the MnPASS benefit–cost ratio significantly improves with the inclusion of transit and travel time reliability benefits.

“Benefit–cost analysis had not changed for a long time; we had looked at travel time, vehicle operating costs and safety. Now we have added travel time reliability, which is important because we are moving people, not just vehicles.”—Paul Morris, Senior Associate, SRF Consulting Group, Inc.

What’s Next?

The results from the comparative analysis yielded a notably higher benefit–cost ratio of 3.40 for the test corridor compared to a benefit–cost ratio of 2.11 in the original study, indicating that MnPASS projects have more positive effects than previously identified. Based on these findings, MnDOT will revise its benefit–cost guidance for evaluating MnPASS investments.

The research team was also able to measure the impacts of specific categories on the overall outcome of the calculations. Team members found that while the measures for reliability and transit impacts produced a meaningful change in the overall benefits, those for emergency response, emissions and noise impacts were very small relative to overall project costs. MnDOT will consider these findings in establishing updated procedures.

This post pertains to Report 2017-37, “Refining Return on Investment Methodology/Tool for MnPASS,” published October 2017. Other research initiatives to improve MnPASS operations can be found by searching “MnPASS” on MNDOT Research Services’ project pages.

 

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