In some cases, Congress may designate  specific transportation projects for funding. In  particular, the requirements describe various planning tasks that states  and MPOs must perform, including (1) involving a wide range of  stakeholders in the process; (2) identifying overall goals and objectives  and data to support transportation investment choices; (3) developing  long- and short-range transportation programs and plans; (4) specifying  financing for the transportation programs and projects; and (5) ensuring  that the transportation planning and decision-making process reflects a  variety of planning factors, such as environmental concerns. Transportation Planning Requires Identifying an Overall Vision and Analyzing Alternatives before Deciding on Projects

In initiating the transportation planning process, states and MPOs are  expected to have a long-term vision that articulates broad goals for the  future of the transportation systems in the state or region. Transportation Planners Generally Have Discretion in Selecting Analytical Tools

Other than the NEPA requirements for environmental analyses, federal  requirements give states and MPOs considerable flexibility in selecting  specific analytical tools and elements used to evaluate projects and make  investment decisions. Researchers acknowledge several  practical challenges of benefit-cost analysis, such as difficulties in  quantifying some benefits and costs and defining the scope of the project. Federal Guidance Supports the Use of Benefit-Cost Analysis

While federal planning regulations for transportation generally do not  require the use of specific analytical models, several federal sources have  identified benefit-cost analysis as a useful tool to help decision-makers  determine trade-offs between alternatives and identify projects with the  greatest estimated net social benefits. The systematic process of benefit-cost analysis also helps decision-makers  because it organizes information about the alternatives and converts  dissimilar values, such as hours of travel time and number of accidents, to  a comparable dollar measure. Ensuring that  investment choices will maintain the existing infrastructure or improve its  operation, rather than expand the transportation system’s capacity, also  appears to be an important priority for decision-makers. Finally, decision- makers are recognizing the importance of longer, multistate transportation  corridors and the special challenges that they pose for investment  decisions. Federal Financing Structure and Other Factors Limit Intermodal Investment Decision- Making

In evaluating and deciding on investments, the structure of federal funding  and the lack of freight stakeholder involvement are important factors that  focus decision-making principally on highways and transit and on  stakeholders associated with these modes. This uneven influence may mean that a  project’s priority can be determined by which agency sponsors the project. The  department also provided technical comments, which we incorporated  into this report as appropriate. Appendix I: Scope and Methodology

Our scope of work included reviewing the processes that decision-makers  at all levels of government use to analyze and select surface transportation  infrastructure investments. Using benefit-cost analysis, as described below, analysts determine the  project that will result in the greatest benefit to society for a given level of  cost. Finally, both passenger and freight options for addressing congestion  should be considered. Office of Management and  Budget (OMB) provides guidance on choosing appropriate discount rates  for different types of investments. In addition,  according to Executive Order 12893, OMB guidance, and our past  research, in the likely event that not all benefits and costs could be  quantified and monetized when developing the benefit-cost analysis, the  decision-maker should consider the nonquantifiable factors in addition to  the numeric results of the analysis when evaluating alternatives.
Why GAO Did This Study

Passenger and freight traffic are expected to grow substantially in the future, generating additional congestion and requiring continued investment in the nation's surface transportation system. Over the past 12 years, the federal government has provided hundreds of billions of dollars for investment in surface transportation projects through the Intermodal Surface Transportation Efficiency Act of 1991 and its successor legislation, the Transportation Equity Act for the 21st Century. Reauthorization of this legislation is expected to provide hundreds of billions of dollars more in federal funding for surface transportation projects. For this investment to have the greatest positive effect, agencies at all levels of government need to select investments that yield the greatest benefits for a given level of cost. This report provides information about the processes that state and regional transportation decisionmakers use to analyze and select transportation infrastructure investments. GAO identified (1) key federal requirements for planning and deciding on such investments, (2) how benefit-cost analysis facilitates sound decisionmaking, and (3) other factors that decision-makers consider in evaluating and deciding on investments.

What GAO Found

Federal requirements specify the overall approach that states and regional organizations should use in planning transportation infrastructure projects, but generally do not specify what analytical tools planners should use to evaluate projects. These key requirements include developing strategic goals and objectives; considering a wide range of environmental and economic factors; preparing long- and short-range plans; and ensuring an inclusive process that involves many stakeholders. The Office of Management and Budget, the Department of Transportation (DOT), and GAO have identified benefit-cost analysis as a tool to help decision-makers identify projects with the greatest net benefits. The systematic process of benefit-cost analysis helps decision-makers organize information about, and determine trade-offs between, alternatives. Researchers also acknowledged challenges in applying benefit-cost analysis, including quantifying some benefits and costs, defining the scope of the project, and ensuring the precision of estimates used in the analysis. Ongoing research by DOT and others is aimed at improving and expanding state and regional decision-makers' application of benefit-cost analysis. Many of the transportation planners we interviewed said that factors other than the analyses developed during the planning process often influenced final investment decisions. For example, state and regional decision-makers must consider the structure of federal funding sources. Since federal funding often is tied to a single transportation mode, it may be difficult to finance projects that do not have dedicated funding, such as railroad improvement projects. In addition, decision-makers must ensure that wideranging public participation is reflected in their deliberations and that their choices take into account numerous views. In some cases, voter support through referenda is required before a project may proceed or financing can be secured. The physical constraints of an area may also affect investment choices. Difficulties in expanding capacity and limits on existing infrastructure may direct investments to preserving and maintaining existing facilities or improving operations. Finally, multistate transportation corridors present special challenges in coordinating investment decisions.