An Evaluation Procedure for Mutually Exclusive Highway Safety Alternatives under Different Program Missions

Snehamay Khasnabis, Sabyasachee Mishra, and Chirag Safi (2012)

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The purpose of evaluating mutually exclusive alternatives is to select the one with the highest benefits for implementation. A number of analytic techniques are available for such evaluation purposes. Four such techniques: Cost Effectiveness (C/E), Benefit Cost Ratio (B/C), Internal Rate of Return (IRR), and Pay-off Period (PP) are discussed in this paper, including their theoretical foundation and data requirements, Also discussed are the measures of effectiveness (MOE) associated with each of these techniques, and how these are to be interpreted.

Alternatives to be selected for implementation following such evaluation can typically be funded under different policy objectives. Three such objectives are identified in the paper: Objective A, constrained resource perspective; Objective B, investment perspective; and Objective C, face value perspective. The possible relationship between the alternative selection and program is discussed in the paper. A case study for a set of six mutually exclusive highway safety alternatives is presented using the four analytic techniques and three objectives, resulting in various possible solutions. 

Results show that under compatible assumptions, and for a given policy objective, the outcome of the evaluation is not affected by the choice of the analytic technique. However, for a given analytic technique, the outcome may be affected by the choice of the policy objective chosen. The principles presented are relevant for most public projects (e.g. transit, airports, etc.) involving the investment of taxpayer resources, even though the case study involves a highway safety project.