Fall

ACCOUNTING FOR DECISION MAKING

Hamza Sharif
Group 1
12-4970
Sec-A

Submitted to
Sir Raheem Sheikh

DETAIL ON RESEARCH PROJECT

14

BREAKEVEN ANALYSIS ON STATEWIDE ITS

PROJECT IDENTIFICATION AND ASSESSMENT

Discussion:
The research revolves around the implementation of ITS systems statewide. The two
approaches that have been discussed are Goal oriented approach and economical
analysis approach. The benefits discussed in the break-even analysis are only a
partial picture of what would occur if various ITS systems were deployed. The
benefits are to the system as whole or external benefits and will vary for individual
users.

When we talk about external and internal benefits we must keep in mind that the
benefits must for the betterment as a whole not focusing on a group of individuals.
For example, a good throughput may transfer to time saving for individual travelers.
But in many other cases, an overall benefit may not lead to an individuals internal
benefits. For instance, ramp metering may lead to increased vehicle throughput along
a freeway corridor, but it may lead to delays for ramp meter users, especially for
short-distance commuters. Similarly, a good internal benefit for individual travelers
may not lead to good external benefits either.

WHY USE BREAKEVEN ANALYSIS?

The process of doing a breakeven analysis is relatively straightforward. Essentially it

involves solving benefit cost equations backwards assuming a benefit cost ratio of
1.0. Benefits are set equal to the annualized costs of an ITS element (e.g. ramp
metering, CCTV) and the number is then divided by value of time and the number of
operating days per year to get a daily benefit level. The resulting numbers are usually
in terms of vehicle hours or daily crashes or some other indication of performance.
These terms are converted to per vehicle terms and then to the specific performance
parameters like speed and delays

BENEFITS OBTAINED FROM BREAKEVEN ANALYSIS

Ramp Metering:
Benefits from ramp metering are primarily based on accident reductions and the
expected increase in speeds from ramp metering minus delays on parallel arterials and
ramps. There are positive benefits if ramp metering saves freeway vehicle time that
exceed the increased delays on arterials and ramps.

Commercial Vehicle Operator Systems:

There are a variety of CVO systems. Our analysis considered weigh in motion
systems. The benefits from timesavings and vehicle operating cost savings as a result
of bypassing static scales are calculated