CONCEPTS AND APPLICATIONS OF ENGINEERING ECONOMY IN THE HIGHWAY FIELD

THE ECONOMIC ANALYSIS ASPECTS OF PROPOSED HIGHWAY FACILITIES ARE DISCUSSED. BRIEF COMPARISON IS MADE OF THE RATE-OF RETURN SOLUTION AND BENEFIT-COST RATIO SOLUTION, AND A FEW OTHER TECHNIQUES. ANALYSIS OF THE ECONOMIC BENEFITS TO BE OBTAINED FROM A PROPOSED HIGHWAY FACILITY AS RELATED TO THE ECONOMIC COSTS OF THE FACILITY COULD BE MADE FOR THE FOLLOWING OBJECTIVES: (1) TO DETERMINE WHETHER THE FACILITY IS ECONOMICALLY JUSTIFIED, (2) TO AID IN THE CHOICE OF ENGINEERING FEATURES OF DESIGN, (3) TO OFFER MEANS OF DETERMINING PRIORITY OF ONE HIGHWAY FACILITY AS COMPARED TO OTHERS, (4)TO ASSIST IN TAX OR COST ALLOCATION STUDIES OR DECISIONS, (5) TO DEVELOP INFORMATION WHICH WOULD AID IN EVALUATING A SPECIFIC HIGHWAY PROPOSAL AS AGAINST OTHER PROPOSALS IN PUBLIC WORKS OR COMMUNITY PROJECTS. THE ANALYSIS FOR THESE ECONOMIC CONSEQUENCES INVOLVES SUCH FACTORS AS: MOTOR VEHICLE OPERATING COSTS; TIME VALUE OF INDIVIDUALS; SAFETY OF INDIVIDUALS AND PROPERTY; CHANGES IN THE ECONOMIC VALUE OF LAND, BUILDING, BUSINESS, AND RESOURCES; ECONOMIC COST OF CAPITAL INVESTMENT; AND MAINTENANCE AND OPERATING COSTS OF PHYSICAL PROPERTY. INVESTMENT IN HIGHWAYS IS COMPARED WITH INDUSTRY AND OTHER INVESTMENTS. THE FACTORS AND THEIR CONSEQUENCES INVOLVED IN THE ECONOMIC ANALYSIS OF A PROPOSED HIGHWAY FACILITY MAY BE GROUPED AS FOLLOWS: (1) CONSUMPTION OR CONSERVATION OF PHYSICAL GOODS AND NATURAL RESOURCES, (2) THE USE OF TIME BY INDIVIDUALS, (3) VALUE OF NON-HIGHWAY PROPERTY , GOODS, AND SERVICES, (4) MENTAL AND PHYSICAL CONDITION OF THE TRAVELER AND PERSONAL CONSEQUENCES OF HIS CHOICE OF ROUTE, AND (5) OTHER FACTORS SUCH AS SOCIAL LIFE, ENVIRONMENT, POLITICS, AESTHETICS, RECREATION, SCENIC VIEW, PLEASURES, AND OTHER INTANGIBLES. THE ECONOMIC ANALYSIS OF A SPECIFIC PROPOSAL FOR A HIGHWAY IMPROVEMENT, REQUIRES TWO BASIC DECISIONS; (1) SELECTION OF THE ECONOMIC FACTORS TO INCLUDE IN THE ANALYSIS, AND (2) SELECTION OF UNIT DOLLAR VALUES TO ASSIGN TO EACH ECONOMIC FACTOR TO BE INCLUDED IN THE ANALYSIS. AN EXAMPLE IS PRESENTED TO ILLUSTRATE THE PROCEDURE OF ANALYSIS. NUMEROUS ECONOMIC QUESTIONS FOR RESEARCH ARE LISTED.