Transportation projects can develop a bad reputation. When people hear “Bridge to Nowhere” or “Big Dig” for most people their thoughts likely go to government waste and inefficiency, and they are less likely to support future transportation investments as a result. But what fewer people realize is that the Bridge to Nowhere was never actually built, and the Big Dig was a tremendous economic success for the Boston region despite its high cost. Enormously wasteful transportation projects are far less prevalent than people think. While they certainly exist, even if we eliminated all of them, the funds saved would certainly not amount to enough to solve our funding woes.

But this does not mean that all transportation investments are created equal. A new and excellent report from T4 America emphasizes the critical need to evaluate our transportation investments based on performance outcomes. This is not necessarily the same as preventing “bad” projects. At a recent Eno workshop, as the group was discussing how to evaluate transportation investments, an issue arose regarding how many “bad” projects are actually funded by federal money. Most states and localities receiving federal money are unlikely to want to waste it on “bad” projects, so the vast majority of funds are being spent appropriately. Therefore, this line of thinking goes, why does the federal government need to create a methodology for evaluating project investment decisions at all?

The answer is that the primary benefits from effective project evaluation do not include weeding out “bad” projects (though that could be a side benefit). As the T4 America report says “measuring the impact of transportation investments in a way that resonates with the public is critical.” A performance-based project evaluation process is essential for expenditures of public resources, just as any private organization needs to create an evaluation process for its investments. If we are going to move forward on this issue, it would be a mistake to present performance measurement and project evaluation as a method of eliminating “bad” investments. Rather, this process provides three other essential benefits as follows:

1. Better prioritization of scarce resources

While there are in many cases unlimited potential transportation investments with positive cost-benefit rations, financial resources are finite. While this situation has been exacerbated by the ongoing funding crisis for federal transportation, and by a general anti-tax sentiment, it has always been and will always be present because we cannot build everything. Therefore, we must prioritize among worthy investments.

For example, two bridges may be in need of replacement. But if one bridge carries 1,000 people per day and another carries 100,000 people per day, which one would you fix first? Under our current system, there is nothing to discourage authorities from fixing the one with lower traffic volumes first if only because it might be in slightly worse condition. A system of prioritization, and using economic analysis that includes life cycle costs, ensures that the busier bridge gets fixed first.

2. Transparency in decision-making

Transportation observers often grow concerned with the idea that project prioritization could occur based on performance measures. The concern is that this means that the performance measures have to be exactly the right ones and based on perfect data. Since we are unlikely to achieve either of these things, the thinking goes, using performance measures to prioritize investments won’t actually result in any improvement in decision-making.

This line of thinking ignores the fact that decisions will never be made on the basis of performance measures alone, nor should they be made that way. Transportation investment decisions are inherently political, and the people’s representatives should have a strong role in making them. However, the advantage of using evaluation criteria in addition to political weight to make project decisions is that it creates transparency with respect to the politics. If an elected official wants to push a specific project, despite a low performance ranking for that project, so be it. But at least this move would be transparent if we have performance rankings. As it is now, elected officials can push any project they want without any evidence supporting its value. Transparency about the tradeoffs we are making can only improve the process, even if the measures and the data are not perfect.

3. Accountability for taxpayer revenues

As we head towards yet another crisis for transportation funding at the federal level, it is tempting to be frustrated with the elected officials who refuse to resolve this issue by raising necessary revenues for transportation. However, it is difficult to blame Congress when there is little accountability for how these new revenues will be spent. The track record is not there to explain all of the benefits derived from federal transportation spending. This allows some members of Congress to hide behind devolution bills and claim that the federal program is a waste. It also fails to provide the necessary ammunition for members of Congress who might be supportive of a transportation revenue increase.

Accountability can help change this dynamic and raise revenues, particularly at the federal level. One of the major barriers to increased investment at the federal level is a lack of specific projects (such as the now banned earmarks) that Congress can point to as evidence for the need to raise revenues. Voter initiatives supporting transportation revenue increases at the state and local level have been more successful at least in part because they can promise specific deliverables. A process that ensures accountability may not be able to specify projects, but at least in can specify outcomes. If Congress can see clear benefits for its constituents in terms of safety, reduced emissions, economic benefit, or greater mobility, then there might be more support for increased revenue.

Conclusions

An effective project evaluation methodology for major transportation investments would seem to be a no-brainer. Unfortunately, we are not doing this basic assessment for most transportation expenditures in the U.S. While the federal government has created national goals and performance measures for grantees, there is no requirement that these measures be used to evaluate projects or competing investment options. And while some states and localities have created evaluation processes for investments in transportation, these remain the exception rather than the rule.

Meanwhile, as Eno continues to work on this issue we are finding that other countries do have systems in place to ensure better project selection. Australia has an independent body, Infrastructure Australia, which evaluates projects of national significance and makes recommendations to Parliament. Germany has a series of multi-year infrastructure plans that include investments made on the basis of national interest. And Canada has a federal agency called Infrastructure Canada, which is independent from Transport Canada, which helps evaluate major infrastructure investment decisions. We are well behind our peers in this regard.

The report from T4 America is well timed, as federal surface transportation authorization legislation, already extended once and set to expire September 30, is an ideal place to continue creating a project evaluation process. At a minimum, such a process needs to be in place for large projects of national significance. But beyond that, the federal government should assist state and local grantees in creating their own processes, so that taxpayers can have confidence that their investments are bearing fruit. While states and localities might develop some of these measures and performance criteria on their own, it is still the federal government’s role to lead them in the right direction. If they do, not only will we help discourage “bad” projects, more importantly, we will begin to prioritize the good ones.