Evaluating Alternative Operations Strategies to Improve Travel Time ...

SHRP 2 L11: Final Appendices
Once the value of time for each user group is developed, the vehicular volume for each user group
may be identified so that the value of an increase in reliability can be determined for each user
group. Volume counts by vehicle class (or truck share of the total volume) are commonly reported
and tabulated from traffic recorder data. Truck share of the total volume is often captured from
loop-detector data, particularly in freight corridors. Truck volume data can also be derived from
Highway Performance Monitoring System (HPMS) data for sample segments.
The 2003 U.S. DOT Guidance suggests creating a weighted average for automobile travel by
assuming that 94.4 percent of vehicle-miles are personal trips and 5.6 percent of vehicle-miles are
business related. Household travel surveys conducted by state DOTs or regional metropolitan
planning organizations or the 2008 National Household Travel Survey are other sources for
determining the volume by user group or by trip purpose.
Applying the Methodology
Using the options-theoretic approach, the costs of unreliability or the benefits of potential
reliability improvement strategies can be assessed. By converting uncertain performance metrics to
certainty-equivalent values, valuation of reliability improvements can be achieved by simply
applying appropriate values of time to the certainty-equivalent delay measure. This can be done for
multiple user groups and trip purposes to the extent that the composition of the traffic stream can
be determined. To implement this approach, some judgments must be made:
1. The statistical nature of unreliability must be known or assumed. It must be determined
whether the unreliability occurs due to events that cause speeds to be distributed lognormally,
or by extreme-value-type, or other distributions. In some cases, it is easier to
represent the distribution of the events rather than the highway performance metric (such as
speeds or travel times). This is the case in situation in which highway performance metrics
are not collected comprehensively over a long period of time, but in which there is data
available on the events that cause unreliable travel conditions. Formal statistical tests for
the goodness of fit, like the Kolmogorov-Smirnov test can be used to verify the distribution
of the data, in addition to the use of descriptive statistics and visual inspection (e.g.,
histograms).
2. A time horizon for the evaluation effort must be defined that is appropriate to the reliability
measurement process. If a finite horizon to the evaluation is appropriate, then an options
formulation can be selected that has a finite life. If a long time horizon characterizes the
process that generates unreliability, then a perpetual options formulation may be more
appropriate. Thus, one might evaluate recurring congestion phenomena using short-life
options. Rare events (such as bridge failures, flood events, etc.) may require a longer or
even perpetual option-life assumption.
3. It must be determined whether the unreliability is to be valued only at the end of an
assumed time horizon or whether it is to be valued whenever (during the option’s life) the
unreliability is to occur. European option formulations are appropriate for the former and
American options formulations are appropriate for the latter.
4. After the appropriate framework for valuation is determined, data must be assembled. This
data should identify the necessary probability distributions.
DETERMINING THE ECONOMIC BENEFITS OF IMPROVING TRAVEL-TIME RELIABILITY Page B-28