Evaluating Alternative Operations Strategies to Improve Travel Time ...

SHRP 2 L11: Final Appendices
answer the question posed above with a certainty-equivalent delay, which can be converted to
additional travel time per mile.
Measuring the Economic Cost of Unreliability
Once the certainty-equivalent value of a stochastic incidence of a performance metric or the
underlying events has been determined, valuation can proceed as if the values involved were
deterministic. To continue the example of recurring unreliability phenomena, the certaintyequivalent
value of the uncertain travel-time performance greatly facilitates monetization of the
roads' unreliability.
Specifically, let us assume that the option value of the travel-time unreliability is one minute per
mile. That is, the traveler would be willing to spend an additional minute per mile if the downside
uncertain risk of slower speeds or longer travel times were eliminated by some technical or policy
action. This implies that the unreliability cost to the traveler is equal to whatever value he or she
places on each minute of additional delay.
Using available evidence on the value of time in a given travel setting allows the traveler to place a
dollar value on a road's unreliability. To repeat the example that was previously provided in this
appendix: If the average value of time of users of the roadway is twenty dollars per hour, then the
value of time is 33.3 cents per minute, per mile, per user. If the certainty-equivalent value of delay
is one minute per mile, the road segment displaying this unreliability is 10 miles long and there are
6000 users per hour at the time of day that this unreliability is displayed, the cost of unreliability is
approximately $20,000 per hour or $7 million per year for each hour of the day that this level of
unreliability occurs.
Using the same example as above, the dollar value of the reliability can be easily calculated to
account for multiple road user groups or trip types. Assume that there is a 10-mile road segment
with an equivalent option value for the travel-time unreliability equal to one minute per mile.
Using the A.M. Peak Values of Time developed by the Puget Sound Regional Council, the dollar
value associated with the unreliability on this road segment is shown in Table B.1.
Table B.1 - Example Dollar Value of Reliability for Multiple Road User Groups
Road User Group Share of Volume Volume Value of Time per
hour
Single Occupancy
Vehicle
High Occupancy
Vehicle, 2
High Occupancy
Dollar Value of
Reliability per Hour
70% 4,200 $26 $18,200
15% 900 $30 $4,500
8% 480 $38 $3,040
Vehicle, 3+
Vanpool 2% 120 $102 $2,040
Heavy Trucks 5% 300 $50 $2,500
Total 6,000 $30,280
The dollar value of reliability is calculated as the certainty-equivalent of delay (1 minute),
multiplied by the user group volume, multiplied by the Value of Time per minute (VoT per
hour/60 minutes) x facility length (10 miles).
Evaluating Reliability Management Policies
Having established the cost of unreliability, this information can be used to evaluate the costeffectiveness
of strategies to manage unreliability. To do this, it is necessary to determine the
DETERMINING THE ECONOMIC BENEFITS OF IMPROVING TRAVEL-TIME RELIABILITY Page B-7