Transportation Decision Making – Principles of Project Evaluation and Programming

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Transportation Programming

Chapter 20

Kumares C. Sinha and Samuel Labi

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Programming

Matching of needed projects to available funds

Performance-based and focus on accountability

Statewide process should be coordinated into metropolitan and trade and economic development planning activities

Increasing emphasis on multimodal tradeoffs

System preservation and management

Influenced by a wide range of policy, political, and qualitativefactors.

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Role of Programming

1. To make optimal investments to achieve strategic policy goals

2. To evaluate tradeoffs among investment options

3. To assist in the budgeting process

4. To facilitate efficient program and project delivery

5. To provide a mechanism to assess agency performance

6. To guide business process and give direction to agency operations

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Transportation Programming Process

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Transportation Programming Process

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Transportation Programming Process

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Programming Period and Unit

Amount of time over which specific decisions are made of facilities: 3-7 years

Long range planning period spans over several programming periods

A programming unit is defined by the geographical jurisdiction and the functional area

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Needs Assessment

Physical and Monetary

Role of Standards

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Fiscal Analysis

Required of both the State and MPO’s.Annual revenues from existing and proposed sources.Annual costs of construction, maintenance and operation.Comparison by category.Matching requirements.Maintenance and preservation.Balance for new projects.Iterative process.

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Program Performance Measures

Open process involving all stakeholders and should be updated periodically

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Table 20.2

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Trade-off Analysis

Between categories within a mode

Between modes

Between jurisdictional levels

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Programming Tools

1. Priority settinga. B/C Ratio or NPVb. Cost-Effectivenessc. Utility – cost

2. Heuristic Optimization

3. Mathematical Programming

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Figure 20.2

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Setting Project Priorities Using the Utility-Cost Ratio Method

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Integer Programming

Objective Function

Subject to Constraints

(total annual cost cannot exceed the yearly revenue)

1,

n

j jj

MaximizeTotalUtility U u x=

=∑

11, 2,.....,

n

jk j kj

c x B k m=

≤ =∑

j

jk

x =0or1(either a project is selected or not)

j= projectk=yearB=budgetc =cost for project ' j' in year 'k'

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Constraints

Available Funds, yearly or multi-year

By category, location, highway class

Non-budgetary constraintsCondition targets

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Multiyear Program

1n

ijkj

x for all i and all k=∑

0 1ijkx or=

( )h n m

ijk ijki j k

M ax U x U= ∑ ∑ ∑h n m

ijk ijki j k

x c B≤∑∑∑

0ijk ix if k y= <

Subject To:

ijk

i

c =cost for project 'j' for facility 'i' at year 'k',

B = total budget for the periody = year when facility 'i' is expected to have a need for improvement

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Constraints on Yearly Budgets, Possible Carryovers

( )h n m

ijk ijki j k

MaxU x U=∑∑∑

Subject To:

1

h n m m

ijk ijk ki j k k

x c B for all k=

≤∑∑∑ ∑

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Annual Budget Constraint, One or More Non Budget Constraints

( )h n m

ijk ijki j k

Max U x U=∑∑∑

min1 h n m

ijk ijki j k

x H H for all kh

≥∑∑∑

h n m

ijk ijk ki j k

x c B for all k≤∑∑∑Subject To:

max1 h n m

ijk ijki j k

x V V for all kh

≤∑∑∑

Hmin = performance targets for the network (floor)Vmax = performance targets for the network (ceiling)

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Example 20.3

A 5-year transit capital program.

Total cost of all projects is $963 million and total budget $600 million. Determine projects in optimal mix.

(i) Yearly budget constraint, no carryover(ii) Projects 1 and 7 cannot be simultaneously

implemented(iii) Yearly budget, carryover allowed

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Table E20.3.1

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Solution

0 1jx or=

10

1

5 10

1 1

1,2,3, 4,5

0 1

j jj

j jk kk j

j

Max U x U

subject to x c B for k

x or

=

= =

=

≤ =

=

∑

∑∑

10

1

1, 2,3, 4,5j jk kj

x c B for k=

≤ =∑

10

1j j

j

Subject To:

MaxU x U=

=∑

1 7 1x x+ ≤

(i)

(ii)

(iii)

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25

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(ii)

27

28

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(iii)

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Goal Programming

To minimize adverse deviations

11 2 2Min Z w d w d− −= +

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Keys to Successful Programming

1. Link between Planning and Programming• Establish consistent criteria for long range planning and

programming

• Use management systems to generate candidate projects

• Update plans and programs on a consistent cycle

• Establish phased implementation strategies as part of the long range planning process

• Use consistent financial constraints

• Monitor key elements of programming constantly in order to update long range plans

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Keys to Successful Programming

2. Effective Fiscal Analysis• Careful revenue projections• Reliable cost estimates

• Maintenance and preservation• Capital projects

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Keys to Successful Programming

3. Adequate Capacity to Implement

Timely compliance with statutory requirements

Human resources to deliver projects

Agency’s capacity to implement the program –proper scheduling and cash flow management

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Keys to Successful Programming

4. Uncertainties Affecting Programming

Assume the useful life of a project is less than its economic life

Add a “risk premium” to the discount rate

Stage projects over time

Use scenario analysis to evaluate the effect of alternative futures

Perform sensitivity analysis for key variables

Incorporate risk analysis using Monte Carlo simulation.

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Keys to Successful Programming

5. Intergovernmental Relationships and Public Involvement

Effective state-MPO – local agency partnershipsLegislative supportEffective communication

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Keys to Successful Programming

6. Equity Issues in ProgrammingTemporal (across programming periods) as well as spatial (across districts)

Engineering need vs. geographic formula

Equity concerns can be incorporated in performance measures.