Do BCAs Really Add Up?
When we consider the complex mechanism that is “infrastructure investment,” and ask ourselves the big questions: Are we moving in the right direction? Are we answering the needs of industry and community? Are we truly investing? Or are we just stemming the tide? It then proves worthwhile to shine a light on the process by which such decisions are made.
OTNA Freight Transportation Lifecycle Project is all about shining that light.
One of the tools central to transportation and land-use planning is benefit/cost analysis (BCA). In the coming months we’ll be showcasing the thoughts, papers and works of the people who have watched, studied and applied BCAs themselves. We’ll be bringing together their perspectives and experience to share with their colleagues in the transportation sector.
From where we stand, the BCA needs replacement. We’ve begun gathering the intelligence and expertise it will take to develop an alternative —a logical, comprehensive tool that could drastically affect a positive and unprecedented outcome in the very near future.
But first things first. Realizing that job #1 is to prove to you, along with the transportation brother and sisterhood of our entire continent, that the BCA, as it has traditionally been applied, stands as a major impediment to a transportation system capable of answering the very robust set of 21st century societal needs.
Let’s start here: From A FEDERAL ROLE IN FREIGHT PLANNING AND FINANCE by the RAND Corporation, (Sandra Rosenbloom and Martin Wachs).
Even if they (public sector agencies) hire outside analysts, agency staff may not fully grasp what costs and benefits have been included—and which have been left out. They may not realize how nonmonetary costs have been monetized (or not). In addition, it is not clear that federal agencies reviewing project proposals based on BCAs and related economic analyses currently have the skill to understand the intricacies of these approaches.
That’s just one piece of a set of BCA weakness spotlighted in the monograph. And given that the RAND Corporation is considered by many to be one of the cradles of modern system analysis, it’s hard to imagine a more appropriate source to challenge the use of BCAs from the standpoint of pure logic.