	Background

The scope of the nation’s transportation system is vast and increasingly  congested. IV for  additional information about the level of usage of and investment in the  nation’s highway and transit systems.) However, measuring all the potential benefits and costs of proposed  highway and transit investments can be challenging and subject to several  limitations and sources of error. The extent to which these indirect benefits are relevant depends to some  degree on whether the project is viewed from a local or a broader  perspective. Research further indicates that to realize desired land-use changes and  higher density development, transit investments need to be coordinated  with supportive local land-use policies and that impacts need to occur  more readily in rapidly growing regions with demand for high-density  development.In a similar fashion, the extent to which highway  investments will result in improvements in freight productivity will depend  on economic conditions; the amount of freight traffic on the local network;  the presence of alternative freight modes, such as rail or waterways; and  various other locally specific factors. Analysis of Benefits and Costs Not Usually Systematic, and Results of Analysis Are Only One Factor Among Many Considered in Investment Decision Making

According to our survey results and case studies, although the costs and  benefits of projects were almost always considered in some way, formal  analyses such as benefit-cost analysis were not usually conducted when  considering project alternatives, and they were completed less frequently  for proposed highway projects than transit projects. 2). Similarly, our survey of transit agencies and state DOTs also showed that  the results of economic analysis of a project are not necessarily the most  important factor considered in highway and transit investment decision  making. 3). 4). Transportation officials we interviewed generally contend that completed  projects have achieved other outcomes that were projected to flow from  the highway and transit investments, such as positive changes in land use  and economic development. Transportation Officials Cite Several Reasons for Not Conducting Outcome Evaluations

Transportation officials we spoke with offered several reasons why they do  not typically conduct evaluations of the outcomes of highway and transit  projects. These options focus on improving the value of this information for decision  makers to make more fully informed choices and in helping ensure that  projects can be evaluated on the results they produce. However, as noted previously, the  outcomes of completed projects are not typically evaluated. Factors that Work Against Greater Use of Analysis in Investment Decisions

As our survey responses showed, decisions about transportation  investments are based on many things besides the results of economic  analyses of a project’s benefits and costs, such as the availability of funding  or public perception about a project. As a result,  the federal government misses an opportunity to use financial  incentives to improve performance and to hold agencies accountable  for results. Given the current and  long-term fiscal challenges, careful decisions need to be made to ensure  that transportation investments systematically consider the benefits of  each federal dollar invested. Nevertheless, the increased use of systematic analytical tools such as  benefit-cost analysis, and the continued improvement of such tools through  dissemination of new methods and advancement of existing techniques,  can provide important additional information that can be used to inform  discussions about community needs and values, which could then lead to  better-informed transportation investment decision making. Finally, both FTA and FHWA  offered a number of technical comments, which have been incorporated in  this report, as appropriate. Scope and Methodology

To identify the categories of benefits and costs that can be attributed to  highway and transit investments and the challenges in measuring these  benefits and costs as well as options to improve the information available  to decision makers, we reviewed the economics literature, academic  research, and transportation planning studies containing evaluations of  various economic analytical tools, with an emphasis on benefit-cost  analysis. To determine how state, local, and regional decision makers consider the  benefits and costs of new highway and transit investments and the extent  to which select capacity-adding highway and transit investments met their  projected outcomes, we conducted a survey and a series of case studies. We chose these five metropolitan areas because they  each had both a New Starts project and a capacity-adding highway project  completed within the last 10 years and were identified by the Texas  Transportation Institute as among the top 25 most congested areas in the  United States. 1. Information on Benefits Attributable to Highway and Transit Investments

Measuring benefits that can potentially result from highway and transit  investments can be quite contentious and spur vigorous debates among  experts in the field and in literature, although there tends to be more  agreement about the nature of the direct user benefits associated with  highway and transit investments, as opposed to the wider social benefits or  the indirect benefits. Not all projects that affect travel-time savings will  affect reliability and vice versa.
Why GAO Did This Study

Mobility is critical to the nation's economy. Projections of future passenger and freight travel suggest that increased levels of investment may be needed to maintain the current levels of mobility provided by the nation's highway and transit systems. However, calls for greater investment in transportation come amid growing concerns about fiscal imbalances at all levels of the government. As a result, careful decisions will need to be made to ensure that transportation investments maximize the benefits of each federal dollar invested. In this report GAO identifies (1) the categories of benefits and costs that can be attributed to new highway and transit investments and the challenges in measuring them; (2) how state, local, and regional decision makers consider the benefits and costs of new highway and transit investments when comparing alternatives; (3) the extent to which investments meet their projected outcomes; and (4) options to improve the information available to decision makers. To address these objectives, we convened an expert panel, surveyed state departments of transportation and transit agencies, and conducted site visits to five metropolitan areas that had both a capacity-adding highway project and transit project completed within the last 10 years. DOT generally agreed with the report's findings and offered technical comments, which were incorporated as appropriate.

What GAO Found

A range of direct and indirect benefits, such as savings in travel time and positive land-use changes, and costs can result from new highway and transit investments. The extent to which any particular highway or transit investment will result in certain benefits and costs, however, depends on the nature of the project and the local economic and transportation conditions where the investment is being made. In addition, measuring project benefits and costs can be challenging and is subject to several sources of error. For example, some benefit-cost analyses may omit some benefits or double-count benefits as they filter through the economy. Officials we surveyed and visited said they considered a project's potential benefits and costs when considering project alternatives but often did not use formal economic analyses to systematically examine the potential benefits and costs. Even when economic analyses are performed, the results are not necessarily the most important factor considered in investment decision making. Rather, our survey responses indicate that a number of factors, such as public support or the availability of funding, shape transportation investment decisions. Officials we interviewed indicated that they often based their decision to select a particular alternative on indirect benefits that were often not quantified in any systematic manner, such as desirable changes in land use or increasing economic development. Available evidence indicates that highway and transit projects do not achieve all projected outcomes; in addition, our case studies and survey show that evaluations of the outcomes of completed projects are not frequently conducted. A number of outcomes and benefits are often projected for highway and transit investments, including positive changes to land use and increased economic development. These projected outcomes were often cited as reasons why the projects were pursued. However, because evaluations of the outcomes of completed highway and transit projects are not typically conducted, officials have only limited or anecdotal evidence as to whether the projects produced the intended results. Several options exist to improve the information available to decision makers about new highway and transit investments and to make analytic information more integral to decision making. These options, such as improving modeling techniques and evaluating the outcomes of completed projects, focus on improving the value this information can have to decision makers and holding agencies accountable for results. Even if steps are taken to improve the analytic information available to decision makers, however, overarching issues, such as the structure of the federal highway and transit programs, will affect the extent to which this information is used. Nevertheless, the increased use of economic analysis, such as benefit-cost analysis, could improve the information available, and ultimately, lead to better-informed transportation investment decision making.