RANKING HIGHWAY CONSTRUCTION PROJECTS: COMPARISON OF BENEFIT-COST ANALYSIS WITH OTHER TECHNIQUES

Abstract

Three techniques for ranking highway construction projects are compared using 1,942 added-capacity projects. This is the first comprehensive comparison of ranking techniques using a large number of actual highway projects. The three techniques, (a) sufficiency ratings, (b) priority formula based on sufficiency ratings, and (c) benefit-cost analysis, are compared according to total benefits of project rankings for a fixed budget, rank correlation coefficients, and types of projects selected. For a 10-year budget for added-capacity projects of $5.742 billion, the benefit-cost procedure selects projects that provide more than $22 billion more benefits than does the sufficiency rating ranking, and about $7.8 billion more than does the priority formula. It is concluded that explicit use of a benefit-cost analysis maximizes benefits for a given highway budget. Also, a priority formula based on sufficiency ratings is much superior to use of the sufficiency rating alone. Because some version of sufficiency ratings is used to rank construction projects in most states, a large increase in benefits would result from using a priority formula or benefit-cost analysis.

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