Frequently Asked Questions

Federal Grants 101 Webinar Session 3: All About Benefit-Cost Analysis (BCA) FAQs

 

1. What are some general best practices for creating a competitive BCA?
   1. Caltrans: Make sure you have positive BC ratio, and some positive values on results tab such as Safety, Travel Time Savings, GHG reduction, Operational Cost Savings. If your project does not, make sure you look for aspect for project that you can set up with proper model so that you can best highlight your positive outcomes. Ex: Complete Street- AT model, interchanges- Corridor Model, Transit- Sketch model.
   2. USDOT: As its name implies, the benefit-cost ratio reflects both the estimated benefits and projected costs of a proposed project. On the benefits side, projects that either positively affect a larger number of users or result larger relative changes in outcomes for users (such as with more crash reduction, travel time savings, emissions reduction, etc.) will generally have higher estimated benefits. Similarly, projects that achieve their benefits at a lower cost will generally also have a higher benefit-cost ratio.

    

2. What is the main intention or item we are looking for when performing a BCA?
   1. Caltrans: Some things to look for are benefit ratio and that the project fits the grant’s purpose. For benefit ratio, you want to ensure you do not have a negative benefit cost ratio. It also depends on the project. If it's a safety project, make sure you have some Safety savings on the result tab so you can highlight in your grants. If it's GHG reduction, then you make sure emission is lower or reflect some savings in the result tab. If your project is about efficiency, make sure you have some travel time savings.
   2. USDOT: The goal of a BCA is to provide an objective assessment of a project that carefully considers and measures the outcomes that are expected to result from the investment in the project and quantifies their value. To conduct a good BCA, the first and most important step to have a clear understanding of what the project is and what it intends to accomplish. Once this is in hand, applicants will need a solid estimate of the costs associated with the project; an assessment of baseline conditions; measures of effectiveness to determine how the project will alter the baseline; and monetization values for those outcomes (which allows them to be converted to benefits that can be compared to the costs). USDOT reviewers of BCAs for projects submitted for discretionary grant funding are looking for a transparent analysis that clearly lays out the methodology and assumptions (including the nexus of the claimed benefits and costs to the proposed project), documents sources of information used, and presents the BCA calculations in a spreadsheet with editable formulas that can be audited and adjusted as necessary to make any needed technical corrections or to perform sensitivity analysis.

    

3. What are best practices for employing a BCA as a methodology? How do I make sure the BCA captures all relevant factors?
   1. Caltrans: Look at result tab and make sure there's no "N/A" or error messages. Read the instructions thoroughly and provide all the data in the green boxes as much as you have available. Skipping these user's input boxes may lead to missing calculation of benefits.

    

4. What are some common errors or shortcomings of BCAs?
   1. Caltrans: Common errors are in the data gathering process, time restrictions, and assumptions without source documentation when overriding parameters.
   2. USDOT: Common errors include, but are not limited to: (1) Failing to document the source of assumptions or explaining the rationale for an assumption, (2) submitting a BCA where the claimed benefits do not align with the scope of the project being proposed, (3) failing to show the independent utility of separable project components, (4) providing a locked BCA spreadsheet that does not allow for proper auditing, (5) submitting only the outputs of travel demand models without any contextual information, and (6) improper accounting for modal shift.

    

5. Are there different BCA calculations required by different funding sources? Is there a specific form we are supposed to use for all federal grants? Or does it vary for different grants?
   1. Caltrans: Federal grants applicants are encouraged to use the INFRA set of Cal-B/c. State grant applicants, for funding opportunities like SB-1 and SHOPP, are encouraged to use the original set of Cal-B/c models.
   2. USDOT: The process for performing and calculations for doing a BCA are identical across all USDOT discretionary grant programs where a BCA is required to be submitted. The only difference among programs is the way the results of the BCA are used in project selection, with certain programs requiring that the Secretary of Transportation affirmatively determine a project is cost-effective to make a grant award to a given project, while for others it is simply a consideration. Each USDOT discretionary grant program specifies what forms are needed in the relevant Notice of Funding Opportunity. Where the same project is being submitted for funding under multiple programs, it would be appropriate (and encouraged) to submit the same BCA spreadsheet and BCA technical memo as part of each application.

    

6. What care the main differences between the Caltrans Cal-B/C Model and the USDOT BCA Model?
   1. Caltrans: Cal-B/C INFRA/RAISE templates are for used with Federal discretionary grants because the values have been updated to accommodate/resemble those recommended on USDOT annual Benefit Cost Guidance. Things that are typically different: based year on the Parameter tab, Discounting values 4% or 3 % or 7% depending on that Guidance, Value of Time, changed to Federal hourly wage, Accident Costs, and AVO. Depending on the Federal's grant’s purpose, sometimes it might be necessary to use Federal template like BIP grants because our Cal-B/C doesn't have the seismic function or climate change/resiliency components yet. Also, we don't have residuals values in many of our B/C. If applying for state grants like SB-1, SHOPP, use the regular Cal-B/C because these templates have defaulted California values. If applying for Federal grants, use the INFRA/RAISE Cal-B/C templates because we try to update some of the values to meet the USDOT Benefit-Cost Guidance ‘s recommended values for that published year. The Cal-B/C Model was created and is maintained by the State of California and includes a suite of several models that are more particular to certain types of projects, like FHWA’s BIP BCA Tool. Like the BIP BCA Tool, most Cal-B/C Models require inputs but also perform more of the calculations automatically than does the USDOT BCA Spreadsheet Template. In addition, within all the 5 SB-1 programs- only Local Streets and Roads Program is the only one that does not require BCA.
   2. USDOT: USDOT provides a BCA Spreadsheet Template, which is a simple open-ended template that provides a basic structure for a BCA that can handle any project type. However, by the nature of being open-ended, it requires the applicant to perform many of the calculations needed for the BCA separately, while also automatically performing a few key calculations common to all BCAs such as discounting. FHWA also provides the BIP BCA Tool, which can perform a BCA on certain types of bridge preservation and replacement projects, with more of the calculations and performed automatically while still requiring user inputs. For USDOT, the BCA submittal is largely the same across different discretionary grant programs, though not every Federal discretionary grant program requires an applicant to submit a BCA.

    

7. Are we supposed to use Cal B-C for USDOT projects for BCA?
   1. USDOT: USDOT does not require any particular model to be used for the purposes of creating a BCA, and applicants are free to develop their own BCA spreadsheets. Many other tools have also been made available to assist with BCA by both public and private entities, with Cal-B/C spreadsheet models being one such tool. For the convenience of applicants, USDOT does provide an open-ended BCA spreadsheet template that applicants can use to get started on a BCA. This spreadsheet template performs a few of the calculations common to all BCAs, such as discounting, while also allowing for applicants to input their own methodologies in workspace set aside for custom calculations. This template can be accessed here: https://www.transportation.gov/mission/office-secretary/office-policy/transportation-policy/benefit-cost-analysis-spreadsheet-template. Additionally, FHWA also provides a BCA spreadsheet tool that is particular to certain types of bridge projects. Applicants are not required to use this tool, but it is another option and it is available here: https://www.fhwa.dot.gov/bridge/bip/bca/

    

8. Is there a way to have a planning project have a competitive BCA?
   1. Caltrans: Depending on USDOT’s requirements or CTC’s definition on what is it that is competitive.
   2. USDOT: Some DOT discretionary grant programs have specific provisions that direct us to consider planning grant requests separately and differently from capital projects. Where this is the case, DOT typically does not apply any BCA requirements to planning projects. In other programs, however, while planning and other pre-construction activities may technically be eligible, all projects are evaluated on the same basis. For purposes of the BCA evaluation, where the focus is on the outcomes that would directly result from the proposed project, planning-related activities would not yield a completed, functional transportation asset. As a result, such projects would not yield any direct economic benefits while still incurring costs to society to carry out, so they will automatically receive a Low rating (benefits of the project will exceed its costs). Note, however, that capital projects should include any planning or design costs associated with bringing about a proposed project in their BCA, in the interest of fully accounting for the total costs of a project. This includes planning and design costs incurred prior to grant award.

    

9. What makes a well-constructed technical memo? What are common errors or omissions you often encounter?
   1. USDOT: A well-constructed technical memo should allow reviewers to understand the thought process and methodology applied in constructing the BCA. Such a memo can be useful for explaining the rationale for calculations included in a BCA spreadsheet, as well as documenting sources and assumptions. The technical memo can be useful for providing the logical and sequential thought process in a BCA, which may not be as readily apparent when looking at the formulas and calculations in a spreadsheet. Additionally, in the case of mistakes in the BCA spreadsheet, the technical memo can provide insight into what an applicant was intending to do, sometimes allowing reviewers to make necessary corrections retain estimated benefits that might otherwise have been discarded as unreliable. Perhaps the most important thing to include in a technical memo is a description of precisely how the scope of the proposed project achieves the benefits being claimed in the BCA. The second most important thing is documenting sources of outside information used in the BCA. One common error is sending a technical memo that is simply a PDF version of a BCA spreadsheet. To evaluate a BCA, USDOT needs access to the actual calculations in an editable spreadsheet format. Submitting only a PDF version of a BCA spreadsheet can result in delays in the review of an application as USDOT requests the underlying spreadsheet. Another common error or omission is providing only the outputs from travel demand modeling (such as VMT, VHT, or AADT) without any context as to where, how, or why changes in those values may be occurring. More spatially-granular information and segment-level data can help reviewers understand where and how travel behavior is occurring in response to a proposed project. For projects that are claiming safety benefits, figures mapping the location of crashes used to define the baseline can also be helpful in giving reviewers context as to exactly how a project may be reducing crashes in an area.

    

10. What’s an example of a quality summary page for a BCA?
    1. Caltrans: Our Result tab is the summary of all the BCA components such as reduction in GHG, Savings in Operating, Accident, Travel Time costs.
    2. USDOT: A quality summary page would include the discounted benefits by category (e.g., crash reduction, travel time savings, emission reduction), the total discounted benefits, the total discounted costs, net benefits, and the benefit-cost ratio.

     

11. What are the BC analysis requirements for the HBP and IIJA for bridge replacements?
    1. Caltrans: If applying for Federal Bridge Programs, please use BIP tool. Cal-B/C suites do not have the information from national bridge inventory program like BIP does and our Cal-B/C tools are made for general highway project; they are not geared toward bridge projects that asked for probability of structural damagesand design fixed structures that have residual values;nor our Cal-/BC do not haveposting requirements nor seismic components for assessing along with general constructions.
    2. USDOT: For Federal programs at USDOT, there are many different discretionary grant programs where a bridge replacement would be an eligible project. Some of these programs require a BCA, some do not, and applicants should refer to the specific Notice of Funding Opportunity for more information. For programs that require the submittal of a BCA, the requirements for a BCA are the same across programs. The only difference amongst these USDOT discretionary grant programs is the way the results of the BCA are used in project selection, with certain programs requiring that the Secretary of Transportation determine a project is cost-effective to make a grant award to a given project.
12. What is the applicability of competitive BCA best practices in other situations, such as, emergency recovery funding from FHWA & FEMA?
    1. USDOT: The practices laid out in USDOT’s BCA Guidance covers all discretionary grant programs at USDOT where a BCA is required. For questions regarding analytical requirements associated with FHWA’s emergency relief program, please see information available on their website at https://www.fhwa.dot.gov/programadmin/erelief.cfm

       Questions on FEMA’s process or methodology for conducting BCAs should be directed to that agency.

     

13. Are there Benefits from Climate Change Adaptation Measures?
    1. USDOT: For more information of methodologies for estimating resilience-related benefits, please see the section on resilience in the USDOT BCA Guidance for Discretionary Grant Programs in Section 5.8.

     

14. For bridge projects that remove a fish barrier, how do we put a dollar value for environmental benefit?
    1. USDOT: USDOT does not currently have a recommended methodology for valuing the preservation of wildlife. However, where relevant, applicants are encouraged to describe these impacts quantitively if possible (such as estimated wildlife impacts), or qualitatively if such information is not available. If attempting to monetize any wildlife impacts, applicants should clearly document the methodology, sources, and underlying data and assumptions used.

     

15. How do you effectively calculate benefits from emissions reductions?
    1. Caltrans: Cal-B/C has input required for Sketch/Corridors and usually it can take percentage difference from no build to build and do calculations, based on volume x speed x length to give estimates of GHG emissions.
    2. USDOT: Reductions in emissions stemming from a transportation improvement will generally stem from a reduction in fuel consumption. This could stem from reduced travel distances, reduced time spent idling, shifting travel to more efficient modes, or other sources. Depending on the source of reduced emissions and its use in the BCA, emissions may be calculated directly in relation to fuel consumption, or more sophisticated methods (such as specifically considering emissions rates at different operating speeds) may be employed. Once an estimate of emission reduction is estimated, these values can be converted from their existing units to dollars using the emissions monetization values in Table A-6 of USDOT’s BCA Guidance for Discretionary Grant Programs. Monetization values on a per-vehicle mile bases are also provided in Table A-14. Note that for reductions in criteria pollutants, the benefits should be discounted at 3.1 percent, similar to other benefits and costs in the BCA. For reductions in greenhouse gas emissions, however, the benefits should be discounted at 2.0 percent. See Section 5.4 of the USDOT BCA Guidance for more details.

     

16. How do you address cycling growth in a BCA?
    1. USDOT: For a new cycling or pedestrian bridge that provides a shorter route, it would be reasonable to assume the reduction in travel times generated by the bridge would lead to new cycling and pedestrian trips. These could come via both modal shift and new trips. The USDOT BCA Guidance for Discretionary Grant Programs does not have a recommended value to assume for demand elasticity for cycling and walking trips at this time. Thus, if applicants assume induced walking and cycling trips, they should cite the source used for that assumption, whether it be academic literature, a case study, or other research.

     

17. How does one evaluate and use a Cal B/C corridor model for projects, rather than a sketch model?
    1. Caltrans: When users have projects that involved variable speeds, variable accident rates, variable road layouts such as freeways onto expressway, complicate interchanges, HOT/HOV conversions then users should use the Corridor model. The Sketch can only assess two roads at a time, if users use the macro button and it only allows users to use the macro button 3 times and it aggregate all the results on the final calculating tab. The Corridor model allows significant amount of roadway layouts models, accidents models and users can upload the data. The only thing is that users would have to run some sort of microsimulations or have VHT, VMT and trips data before users can activate the Corridor model and this can be a problem with some smaller districts because they don’t have money or manpower to run microsimulations on certain roadways, and estimate future trips before getting on the Corridor. Larger districts and MPO’s can do so with no problems.

     

18. How do you calculate BCA for active transportation projects when you don’t have existing data due to lack of resources/rural locations?
    1. Caltrans: Applicants may need to do additional research for nearby streets or city level, Streetlights, Replica to help create counts.
    2. USDOT: In general, some information on existing usage and/or an analysis that estimates the number of future users will be required to perform a BCA for any project. A good place to start would be any planning or engineering documents associated with the project, which will presumably have information on why the project is being pursued and designed in a certain way based on expected usage rates. If local estimates and forecasts aren’t available, one alternative is case studies on similar projects in similar contexts, though applicants should take care when comparing different locations. For example, a new active transportation project is likely to have more users in a denser location than in a sparsely populated one, and thus results from case studies may require a proportional adjustment to generate forecasts that are more reliable for the project location. Additionally, some active transportation projects may yield safety benefits stemming from reducing crashes through safer infrastructure. The safety baseline may be established by looking at historical roadway crash outcomes using Federal (such as NHTSA’s Fatality Analysis Reporting System), State, or local data or some combination thereof.

     

19. How do you include community benefits and the projected outcomes in your BCA?
    1. Caltrans: Cal-B/C, like most BCA excel based tools, is not one size fits all application. It can only assess the following outcomes of a project in no build vs. build scenarios: Travel Time Savings, Vehicle Operating Costs, Accident or Safety Saving Costs and Emission cost savings. Some model like AT can also assess journey quality. For things like community benefits, jobs, climate change, and equity, these would have to be done on different economic assessment tools like IMPLAN for jobs, some type of Risk and Resiliency tool for climate changes, and Equity Index would have to be assessed on REMI model that has customized feature for these location-specific equity based projects.
    2. USDOT: Most benefits of transportation projects typically accrue to the users of the transportation system itself, such as crash reduction or travel time savings. Other benefits (or dis-benefits) may accrue to the community at large, often referred to as externalities. These include reductions in noise, air pollution, or other impacts that affect more than just the direct users of a transportation facility. Appendix A in the USDOT BCA Guidance for Discretionary Grant programs includes factors and monetization values for different types of benefits commonly associated with transportation infrastructure projects, both benefits that accrue to users directly as well as societal benefits. For projects that are expected to result in a reduction in road use, the table on External Highway Use Costs is of particular relevance for evaluating the community benefits of reductions in related externalities.
    
    
    
20. Should residual benefits be added into benefits or subtracted from the costs?
    1. Caltrans: Cal-B/C does not have residual values. Federal BIP and other models do have them.Residual values are often seen on projects that involved fixed assets like Bridges, Building structures and transportation fleets like busses and trains. Our models are not catered to bridges and fleet investments therefore we don’t have much information on residual values other than we asked user to input the Residual Values on a properties on Park and Ride projects in Park and ride model so that it can sum up all the total cost for that project.
    2. USDOT: Residual value should be added to the numerator (with other benefits) when calculating the benefit-cost ratio.

     

21. Some benefits are difficult or require extensive study to quantify or place a dollar value? What are the guidelines for these situations?
    1. USDOT: Applicants are encouraged to quantify and monetize any claimed benefits to the extent possible. Where applicants are unable to quantify or monetize a benefit that would likely stem from a project, USDOT recommends that they describe this benefit qualitatively in the BCA Technical Memo portion of the application. Any information available that can help illustrate the potential scale of benefits that are being described qualitatively can also be helpful for USDOT to understand the potential scale of those unquantified benefits.

     

22. Do you expect oversight agencies to evaluate and determine if projected project benefits were actually fairly achieved by comparing the projected build data/benefits against measured benefits?
    1. USDOT: Generally, the BCAs submitted under most USDOT discretionary grant programs are forward looking, rather than an evaluation of past performance. Individual discretionary grant programs may have evaluation and performance monitoring requirements, outside of the process for submitting a BCA for evaluation prior to selection decisions. Thus, it’s important to check for any such requirements in a specific program Notice of Funding Opportunity. Apart from any requirements, however, DOT does encourage project sponsors to undertake ex post analyses of completed projects as a way of measuring outcomes and contributing to the body of knowledge that will help improve future analyses of transportation infrastructure investments.

     

23. During the grant process, the Fed Economics team unilaterally removed benefits that dropped our BCA below 1.0.How can they do this?
    1. USDOT: The USDOT economics team is required to make an assessment of the benefits and costs of a project proposed for discretionary grant funding and assign a rating based on both the magnitude of the benefits and costs and the degree of uncertainty attached to that finding. To make this determination, USDOT economists will first review the BCA submitted by the applicant and will make adjustments for any technical errors or questionable analytical assumptions that they encounter, which may result in the benefit-cost ratio being recalculated to reflect what the reviewers believe is the most accurate result.

     

24. How do you address changes to BCA when construction occurs?
    1. Caltrans: On the project input tab, first thing it asks for is length of constructions, so users need to determine the years of construction up front. If the construction years changed, users would have to run a brand-new Cal B/C template because all the calculations such as benefits, and ROI have changed.
    2. USDOT: Generally, BCAs submitted for projects applying to USDOT discretionary grant programs would occur before project construction. To the extent some construction or pre-development costs have already occurred, those previously incurred costs should be included in the BCA for the proposed project.

     

25. What source do you use to determine the service used for different types of proposed facilities & constructed items?
    1. Caltrans: It depends on the Grants and purpose. If it’s BIP, I would say use Federal BIP tool. If it’s active transportation, I would say use our Cal-B/C AT tool, and if Corridor project, use the Corridor BC tool.
    2. USDOT: Travel forecasting is a complex process and generally involves looking at project-area context, recent employment and population trends in an area, and future population and employment forecasts. Thus, there are many different sources that could be used to forecast or estimate future use on a facility, including forecasts by metropolitan planning organizations, state governments, or adopted regional and local land use plans. Data on recent population trends may also be available from the US Census Bureau. Whatever sources are used, applicants should be sure to clearly document them.

     

26. How do you address HSIP Cycle 11 Changes & Impacts with multiple safety countermeasures, multiple collision years utilized simultaneously?
    1. Caltrans: When applying all these CMF, the total of all the countermeasures should not exceed 1. We have not received instructions for HQ HSIP to change our crash parameters yet. If we have the values, we will incorporate it into our new 9.1 Cal-B/C version.

     

27. What is the applicability of BCA on different types of procurements, and if analysis is needed on sole source waivers.
    1. Caltrans: Not sure, Procurement should be directed to DPAC for Caltrans people.
    2. USDOT: USDOT’s BCA guidance is aimed at evaluating capital projects themselves rather than any procurement methods that may be applied. With regard to analyses required for sole source waivers, we would suggest checking with the relevant Federal agency administering the funding program.

     

28. Caltrans has their Cal-BC model, including a version for federal grants. Please comment on its delay estimates for future no-build.
    1. Caltrans: Delays- We update our INFRA/RAISE grants around Jan/Feb or as soon as Federal government release their USDOT Benefit Cost Guidance. If it’s about the rolling out the new version of INFRA/RAISE Cal-B/C for federal grants, we usually do that around January after the USDOT Benefit Cost Guidance has been published. We just have two scenarios No Build and Build. We don’t have anything on delay estimates for future no build. Please contact Caltrans’ Transportation Economics Team at eab@dot.ca.gov to elaborate on this question.

     

29. Can you simplify the B-C Analysis process such that local officials can do themselves without having to rely on consultants to do?
    1. Caltrans: Cal B/C is one of the few states models out there that has full training videos, pdf and case studies and is opened source with Excel. Some other model might be interactive, but they are not as transparent. It takes time to learn these excel tools.
    2. USDOT: USDOT has worked to provide capacity building opportunities and technical assistance through a variety of avenues, including the BCA Guidance for Discretionary Grant Programs, program-specific BCA webinars with examples of BCAs, BCA templates and tools, and technical assistance via project debriefs and program-specific inboxes where staff economists can answer technical questions. USDOT has received quality BCAs from smaller applicants and believes even applicants with limited in-house capacity can put together a high-quality BCA. One key is matching the complexity of the BCA to the complexity of the project. For a simple project, there might only be one or two benefit categories that are relevant, and thus the BCA can be relatively simple and straightforward. The most important part of developing a BCA is first understanding what problem you’re attempting to solve, and understanding how and to what extent a proposed project achieves that goal.

     

30. How can agencies without the staff capacity develop a BCA?
    1. Caltrans: Cal B/C is one of the few states models out there that has full training videos, pdf, and case studies and is opened source with Excel.

       Some other model might be interactive, but they are not as transparent. It takes time to learn these excel tools.

        

31. How would start up agency/companies apply for these grants?
    1. USDOT: Applicants should check the Notice of Funding Opportunity to understand the eligibility requirements and application process for a particular grant program.

     

32. What factors to use, and where to find this data/info?
    1. Caltrans: Provided videos and instructions have these recommendations.
    2. USDOT: Many factors and monetization values are available in Appendix A of the USDOT BCA Guidance for Discretionary Grant Programs: https://www.transportation.gov/mission/office-secretary/office-policy/transportation-policy/benefit-cost-analysis-guidance. Other common data sources include: FRA’s Grade Crossing Accident Database: https://safetydata.fra.dot.gov/OfficeofSafety/PublicSite/Crossing/Crossing.aspx. The Crash Modification Factors Clearinghouse: https://www.nhtsa.gov/research-data/fatality-analysis-reporting-system-fars. NHTSA’s Fatality Analysis Reporting System: https://www.cmfclearinghouse.org/

     

33. Are there any other resources on how to learn more about BCA’s?
    1. Caltrans: Watch videos, allow yourself to learn/play along with the models. Allow time to gather the data necessary for input sheets.

       USDOT: Go to our Econ website; watch videos under Cal-B/C training modules, can find reference books and case study and examples https://dot.ca.gov/programs/transportation-planning/division-of-transportation-planning/state-planning/transportation-economics. For advice on how to fill out the USDOT BCA Spreadsheet Template, please see the webinar on the topic given earlier this year for the RAISE Program: https://www.transportation.gov/RAISEgrants/outreach  

     

34. Speaker contact information:
    1. Caltrans: The Transportation Economics Branch can be reached at eab@dot.ca.gov. 
    2. USDOT:  The Office of the Chief Economist can be reached at 202-366-4051 Monday-Friday, 8:30am-5:00pm Eastern.