Highway Infrastructure: FHWA's Model for Estimating Highway Needs Has Been Modified for State-Level Planning
Published: 2001-02-14T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: The Federal Highway Administration (FHWA) developed the state-level version of the Highway Economic Requirements System (HERS-ST) model as an investment-analysis tool for highway planning at the state level. FHWA officials believe that some state departments of transportation will find the analysis that the HERS-ST model produces useful because it demonstrates the potential results of highway investment decisions from an economic point of view. FHWA is conducting a pilot project for its prototype HERS-ST model with states that volunteered to test the model. FHWA distributed to these states HERS-ST software, technical manuals, and sets of state highway data with which to run the model. FHWA then provided an overall orientation and technical training and addressed states' questions during a workshop. Officials from a sample of the states planning to participate reported that they are primarily interested in taking advantage of the model's use of benefit-cost analysis to assess alternative highway improvements. If the pilot project shows that states view the HERS-ST model as a useful tool, FHWA expects to upgrade the model for future users. In doing so, it would consider both enhancements that have already been planned for the national-level HESR model and changes targeted specifically to HERS-ST. Changes to improve the HESR-ST model's usefulness to states include converting the model to a menu-driven system to improve its ease of use or revising the model's data input format so that it matches FHWA's current state highway data reporting requirements.

section_title: Letter
paragraphs: Federal and state governments have played a vital role in the nation’s  economy by facilitating the movement of people and goods through  significant investments in highways. At the federal level, the Department of  Transportation’s (DOT) Federal Highway Administration (FHWA) uses a  computer model known as the Highway Economic Requirements System  (HERS) to estimate the future investment required to maintain and improve  the nation’s highways. DOT reports the results of this analysis to the  Congress on a biennial basis. However, state governments make a large  number of highway infrastructure investment decisions. States currently  use a variety of analytic tools to make these decisions. Interest in using  HERS at the state level has grown. Two states—Indiana and Oregon—are  already using customized versions of the model, and in December 2000,  FHWA began a pilot project to test its state-level version of HERS, called  HERS-ST, with interested states.
The Transportation Equity Act for the 21st Century (TEA-21) directed GAO  to evaluate and report to the Congress on the extent to which the HERS  model can be used to provide states with useful information for their  planning efforts. Accordingly, this report describes (1) why FHWA  developed a state-level HERS model, (2) how FHWA is making the state- level HERS model available to states, (3) how states expect to use the  model, and (4) how FHWA could improve the model, including  improvements already planned and additional changes that might increase  the state-level HERS model’s usefulness, including the incorporation of  additional data. To address these issues, we built on our June 2000 report,  which focused on the federal HERS model, by reviewing documentation  for the federal and state-level models and interviewing the models’  developers and managers. We interviewed FHWA officials about the HERS- ST pilot project. In addition, to identify how states might use the HERS-ST  model, we first randomly selected 8 states from a list of 16 states that  initially volunteered to participate in FHWA’s pilot project. For each of the  selected states, we asked state transportation officials to identify how they  plan to use the HERS-ST model and how, based on their current  understanding, the model might be improved. Finally, to draw on the  experiences that Indiana and Oregon have had with other state-level HERS  models, we interviewed transportation officials from these states about  changes that could be made to the HERS-ST model’s assumptions and data  to improve the usefulness of the model. See appendix I for further  information on our scope and methodology.
subsections: section_title: Background
paragraphs: DOT submits biennial reports, called Conditions and Performance  Reports, to the Congress, detailing the state of the nation’s highways,  bridges, and other surface transportation systems along with investment  requirements for these systems. In developing its portion of the report,  FHWA bases its estimates of investment requirements for most highways  on the Highway Economic Requirements System (HERS) computer model.  Before using the HERS model, FHWA used an engineering model that  compared highway conditions with engineering standards, identified  deficiencies, and calculated investment needs by totaling the costs of fixing  all the deficiencies. In contrast, the HERS model compares the relative  costs and benefits associated with potential highway improvements, such  as widening or resurfacing, to identify those that are economically justified.  The HERS model begins by assessing the current condition of the highway  sections in its database. It then projects the future condition and  performance of the highway sections on the basis of expected changes in  factors such as traffic, pavement condition, and average vehicle speed.  (See fig. 1.) The model identifies deficient highway sections, ranks  improvements by economic merit (benefits exceeding costs), and then  selects improvements. Benefits considered include reductions in factors  like travel time, vehicle operating costs, accidents, and vehicle emissions  over the lifetime of the improvement, while costs considered include the  capital expenditures required to construct the improvement.
The total cost of constructing selected improvements represents the future  investment requirement for highways included in the HERS model. FHWA  can calculate these costs on the basis of several different scenarios. For  example, under the “economic efficiency” scenario, the model selects and  implements all the improvements for which benefits exceed costs. Under  the “maintain current (pavement) conditions” scenario, the HERS model  selects and implements the least costly mix of improvements that would  maintain average pavement conditions. Under a third scenario, designed to  address road congestion, the HERS model selects the least costly  improvements that would maintain current travel times.
To run the HERS model, FHWA uses highway condition and performance  data that each state collects and annually updates on a sample of highway  sections representing different highway classes. The highway sections  range in length from 1 block to 10 miles. States are to report detailed  highway data for sampled highway sections. The data include information  on highway capacity, traffic volume, pavement roughness, lane widths, and  other physical characteristics. In addition to collecting these data, the  states develop forecasts of traffic growth for each section.
We reviewed the HERS model and reported in June 2000 that HERS  provided the Congress with a more useful and realistic estimate of needed  highway improvements than earlier models had. In particular, we found  that a major strength of the model is its ability to assess the relative  benefits and costs associated with making alternative highway  improvements. In addition, an expert panel of economists and engineers  from the public and private sectors convened by FHWA in June 1999 found  that FHWA has strengthened HERS over time and that recent refinements  have increased the model’s applicability and credibility. Nonetheless, we  found that the HERS model also has some limitations. First, since the  model analyzes each highway section independently rather than the entire  transportation system as a whole, it cannot reflect how changes in one part  of the system might affect another part of the system, such as how traffic  might be redistributed as improvements are made. Second, the HERS  model uses a computational “shortcut” to approximate the lifetime benefits  associated with an improvement. Several transportation modeling experts  have questioned whether this approach reasonably approximates future  benefits. Third, because the HERS model is not designed to quantify the  uncertainties associated with its methods, assumptions, and data, the  model cannot estimate the full range of uncertainty within which its  estimates vary. Finally, the model excludes certain classes of the nation’s  highways from its analysis, meaning that FHWA must use alternate  methods to forecast investment needs for these classes of highways.
Like FHWA, state departments of transportation undertake planning and  reporting activities to manage their highways and determine their capital  needs. For example, under federal transportation planning requirements,  states must carry out a process for considering the effect of transportation  projects on a variety of factors, including the economy and the  environment. States are also required to develop both long-range plans  covering at least 20 years and transportation improvement programs (state  investment plans) that cover at least 3 years. These requirements help  ensure that state transportation projects come from a systematic planning  process rather than from a “wish list” of transportation projects. To meet  these planning and reporting requirements, some state DOTs have had to  rely on their technical capabilities. Many states have developed pavement  management systems to help them systematically analyze data on existing  highways and project future pavement needs. For example, several states  have used models, based on pavement engineering criteria, to analyze  pavement needs either at the project level or for a whole statewide  network. Some states have also adopted a predecessor of the HERS model  developed by FHWA, called the Analytic Process model, that compares  highway conditions with engineering criteria to identify potential  improvements.
After FHWA developed the HERS model, two states contracted to have  customized state-level HERS models developed for them. Oregon DOT,  when updating its long-range statewide highway plan, hired the same  consultant that had produced HERS for FHWA. That consultant  recommended that Oregon DOT use a customized version of the HERS  model for its statewide plan. Similarly, when Indiana DOT engaged the  same consultant for a corridor planning study, the consultant  recommended that Indiana DOT use a customized version of the HERS  model for its corridor planning analysis. Indiana DOT subsequently used its  model’s results to draft a new statewide highway plan.
section_title: FHWA Developed the HERS-ST Model as an Investment Analysis Tool for Highway Planning at the State Level
paragraphs: After its positive experience with the national-level HERS model and the  model’s successful adaptation in Oregon and Indiana, FHWA began to  formally develop HERS-ST in 1999. FHWA expects that states will use the  model in a variety of ways to facilitate planning for highway investment.
subsections: section_title: The National-Level HERS Model Produces Useful Information About Highway Investments
paragraphs: Our review of the national-level HERS model showed that its results  provide legislative and executive branch officials with useful information  for decisions about highway investments. Legislative branch officials said  they use the estimates to obtain general information on the nation’s need  for infrastructure investments and find the HERS estimates more useful  than previous estimates that were based on engineering analyses alone.
FHWA views the national-level HERS model as a step forward in its efforts  to meet the statutory requirement to report on the conditions and  performance of the nation’s highways and future national highway  investment requirements. FHWA officials also said that the HERS model’s  benefit-cost approach complies with an executive order that requires  federal spending for infrastructure to be based on a systematic analysis of  expected benefits and costs. FHWA concluded that state transportation  and other officials might find HERS-type analysis helpful in analyzing  highway investments as well as supporting federal planning requirements.
section_title: Two States Are Using Customized Versions of the HERS Model
paragraphs: Facing increased funding constraints along with a greater demand for  expenditure accountability, Oregon officials made use of a customized  HERS model to prioritize needs and determine deficiencies in its highway  system. Oregon officials cite their HERS model’s effective use of benefit- cost analysis as a foundation for determining the best combination of  improvements and for allocating resources between programs. Oregon  officials have found these benefit-cost results useful for highway planning,  corridor planning, and goal setting. For example, when analyzing the 1999  Oregon Highway Plan (an element of the required long-range plan), state  officials evaluated investment tradeoffs between system preservation  projects—capital projects that ensure that a highway continues to serve its  intended purpose—and modernization projects—capital projects that  typically increase capacity. Oregon’s report said that this analysis helped  the Oregon Transportation Commission gain a clear picture of the  condition of the highway system under different funding scenarios and thus  helped the Commission make difficult investment decisions. (See app. II  for information on the technical features of the Oregon model.)
Indiana’s DOT sought out a modified version of the HERS model in an  attempt to improve its planning process and, more specifically, to  strengthen its technical planning tools. Indiana officials wanted a model  that would analyze benefits and costs for all of the state’s highway projects,  and they decided that a modified version of the HERS model would meet  their needs. These officials used their HERS model to analyze highway  investment needs over a 25-year period, including a comparison of the  status of the highway system at different levels of funding. In addition,  Indiana officials used their model to analyze highway investment needs at  the district level within the state. The Indiana model has a unique feature  that links specific model results with a geographic information system  (GIS) that visually displays results on state highway maps. This feature  allows the staff to compare district offices’ and metropolitan planning  organizations’ priorities with the ones the model identifies. (See app. II for  information on the technical features of the Indiana model.)
section_title: FHWA Developed the HERS-ST Model to Help States Plan and Manage Their Highways
paragraphs: After FHWA officials reviewed their positive experience with HERS, along  with the positive experiences of Oregon and Indiana with their customized  HERS models, they decided to consider developing a HERS model that all  states could use. FHWA’s Office of Asset Management commissioned two  studies to identify the potential role of a HERS model in helping states  assess their highway investment needs and develop state highway plans.  The studies demonstrated a potential state interest in a state-level HERS  model. Therefore, FHWA developed a prototype state model, HERS-ST,  from the national-level HERS model that any state could use for planning  and programming activities. FHWA officials believe that states could use  the HERS-ST model to perform benefit-cost analysis on highway  improvements and to forecast the future condition and performance of  state highway systems. In addition, the Office of Asset Management’s Asset  Management Primer explains that HERS-ST has the potential to help  state-level policy makers address resource allocation questions because  the model can analyze “what if” questions using specific funding levels. For  example, the model can show the long-term effects that different levels of  spending or different emphases in investment could have on the condition  and performance of highways. The primer also states that the model may  even help some states meet new Government Accounting Standards Board  provisions requiring states to report the cost of maintaining their  transportation infrastructure assets.
The HERS-ST model that FHWA developed is based on and operates in  much the same way as the national-level HERS model, with a few  noteworthy differences. Like the HERS model, HERS-ST (1) projects the  future condition and performance of a state’s highway system, (2) assesses  whether any highway improvements are warranted, and (3) selects  appropriate improvements using benefit-cost analysis. One difference  between the HERS and HERS-ST models is that the HERS-ST model has an  “override” feature that allows a state official to override highway  improvement selections made by the model in order to reflect specific,  local conditions. According to FHWA officials, the model’s override feature  will enable state officials to apply specific knowledge about highway  improvements (such as whether implementing a particular improvement is  feasible) that may not be reflected in the model’s database. For example, an  official might specify that the model reconstruct a highway section rather  than resurface it because of problems with the underlying structure of the  pavement that are not yet apparent from measurements of the pavement’s  roughness. The override feature is unique to the HERS-ST model. Another  difference is that the HERS-ST model is capable of providing detailed  results about each of the highway sections it analyzes, including  information on the particular improvement selected, the expected future  condition of the section, and the benefits and costs of making the  improvement. By contrast, the HERS model generates only summary  results for the classes of roads it analyzes.
In addition to these differences between the two models, the HERS-ST  model offers states further options regarding what data to consider. State  officials can adjust the HERS-ST model to reflect state conditions by, for  example, using state highway construction costs rather than national  average costs. And state officials may use HERS-ST either to analyze the  statistical sample of their state’s highways included in FHWA’s Highway  Performance Monitoring System (HPMS) database or, if they have the  appropriate data, to analyze all highway sections in the state’s system.  While the HERS model could also analyze all highway sections, it is  currently limited to analyzing only the sample of sections in the HPMS  database. When the HERS-ST model’s projections are based on sampled  sections in the HPMS database, the projections may not account for all the  highways for which a state department of transportation is responsible.  However, the state can, if it has appropriate data on all its highway  sections, use the HERS-ST model to analyze every section in the state  highway system, as Oregon and Indiana did with their customized HERS  models. (See app. II for a more detailed comparison of the national-level  HERS and HERS-ST models.)
section_title: FHWA Provided HERS- ST to States Through a Pilot Project
paragraphs: FHWA distributed the prototype HERS-ST model software to 20 states  volunteering to participate in its pilot project, which is intended to gauge  interest in the model and to further identify potential uses for and revisions  to it. Interest in the model was higher than FHWA expected. According to  an FHWA official, the agency expected to have five states participate in the  pilot. However, the number of interested states grew to 20, including  Indiana and Oregon, before the pilot began. (See fig. 2.) Indiana and Oregon  officials said they wanted to participate in the pilot program to learn about  new features incorporated into the HERS-ST model and to share their  customized HERS model experience with other pilot states.
In December 2000, FHWA distributed the model, along with technical  manuals and state-specific sample data on highway sections needed to run  the model, to the 20 pilot project states. This distribution took place about  2 months before the pilot’s February 2001 kickoff workshop in New  Orleans, Louisiana. The workshop was designed to train participating  states in the use of the HERS-ST model. It included general information on  the use of the model, information on Indiana’s and Oregon’s experiences  with their customized HERS models, and technical review and training.  FHWA officials plan to focus their efforts during the pilot program on  providing technical support to participating states. FHWA officials also  hope to provide training for state policymakers to explain how the HERS- ST results can be used.
FHWA anticipated that the pilot project would conclude after  approximately 2 months. However, the agency was prepared to extend the  duration of the pilot if states indicated that additional time would be  helpful. At the conclusion of the pilot, participants will be asked to report  on (1) their experiences testing the model, (2) their assessment of the  model’s usefulness in state planning and programming activities, and (3)  their recommendations for further FHWA initiatives with respect to the  model. FHWA expects to report by August 2001 on states’ comments and its  own recommendations for further HERS-ST model initiatives. FHWA  officials said that the agency will consider changes to the HERS-ST model  at the end of the pilot project, depending on the number of states that  identify particular changes as important.
section_title: States Participating in FHWA’s Pilot Project Expect to Use HERS- ST to Supplement Their Planning Tools With Economic Information
paragraphs: Officials from almost all of the eight states we randomly selected  indicated that although they had limited knowledge about HERS-ST, they  were looking forward to expanding their states’ technical tools to better  support their planning processes. When asked why they planned to  participate, the state officials said that, while they did not have details of  how the model works, they did not want to miss out on any tool that might  improve their planning and highway management. In general, the state  officials also expressed some level of dissatisfaction with their current  planning tools. As one state official explained, her DOT was always looking  to improve its planning process. (See app. III for the results of our  discussions with state officials about the HERS-ST model.)
A number of state officials indicated that the HERS-ST model’s benefit-cost  analysis capability is an important feature that made the model attractive to  them. In response to a question about why states wanted to participate in  the pilot, officials from most of the states said that they hoped the model  would help improve their knowledge about the economic impact of  investment decisions. Officials from five of these states believe this would  help the states prioritize projects and maximize the effect of their spending.  An official in one state said that the state’s highway funding depends, in  part, on a study of infrastructure needs. However, the state’s infrastructure  study is based on the assumption that highway funding is unlimited. Thus,  the official believes the results of the needs study are unrealistic. The  official hopes HERS-ST can contribute economic reality to the state  highway funding plan.
When presented with a list of potential uses for the HERS-ST model results,  state officials we interviewed said that, if the model provided realistic  results, they would consider using the results in the following tasks:  comparing benefits and costs of making alternative highway   developing state highway plans, such as state transportation investment  plans, long-range highway plans, local highway needs forecast  assessments, and corridor studies;  satisfying the requirements of the Government Accounting Standards  Board’s provisions for reporting on the value of transportation  infrastructure assets;  allocating funds to offices within the state highway agency (for example,  by district). (See app. III for a more detailed list of potential uses.)
For example, one state official indicated that his state plans to update its  long-range highway plan shortly and hopes that HERS-ST may be useful for  that work. Overall, officials indicated that the three most important uses  for their states would probably be (1) performing benefit-cost analysis of  alternative highway improvements, (2) developing or refining state  transportation investment plans, and (3) assessing highway needs forecast  by state district offices or local agencies.
section_title: Potential Improvements to the HERS-ST Model
paragraphs: If states involved in the pilot project find that the HERS-ST model is useful,  FHWA expects to upgrade it for future state users. First, FHWA plans to  make certain changes to the HERS-ST model to keep it current with  analytical improvements planned for the national-level HERS model.  Second, FHWA is considering changes designed to make the model easier  for states to use. Finally, states might also ask that FHWA enhance the  HERS-ST model so it can analyze more detailed highway information.
subsections: section_title: FHWA Plans to Upgrade HERS-ST
paragraphs: According to FHWA officials, if the pilot participants find the HERS  concept attractive, FHWA will, as appropriate, provide for revising the  HERS-ST model so that it will benefit from upgrades to the national-level  version of the model. FHWA officials said their improvement plans for the  national-level version of HERS include eliminating the computational  shortcut that we identified as a limitation in our June 2000 report. This  shortcut is designed to approximate the lifetime benefits associated with a  highway improvement. However, the approximation may not fully  represent the lifetime benefits, and FHWA officials acknowledge that  improvements in computing power have made it unnecessary. FHWA also  plans to change the national-level HERS model by  incorporating pavement performance data based on climate zones  instead of assuming one rate of pavement deterioration,  revising its highway-capacity analysis to reflect changes in the  Transportation Research Board’s Highway Capacity Manual,  revising the emissions data used as soon as the Environmental  Protection Agency finishes revising its emissions model, and  updating pavement improvement costs, currently based on 1988 data, to  represent 1998 or 1999 data.
section_title: HERS-ST Could Be Modified to Make the Model Easier for States to Use
paragraphs: As part of its evaluation of the pilot project, FHWA plans to ask state  officials for suggestions of potential improvements to the model. Assuming  the project continues past the pilot phase, FHWA officials say they will  consider making those changes that will benefit multiple states. Our  interviews with state, FHWA, and other officials indicate that states may  ask FHWA to modify HERS-ST in ways that make the model easier to use  without altering the model’s analytical structure. One state official  expressed concern over the user-friendliness of the model, having heard  that the HERS-ST program is not user-friendly because it operates in an  older DOS-based computer environment that department staff might not be  familiar with. An FHWA consultant reviewing the HERS model concluded  that updating the model so that it can operate in a more user-friendly menu- driven environment might be the key to increasing the number of states  that use the model. FHWA officials agreed that a menu-driven program  would make the model easier for states to use.
The HERS-ST model would also be easier for states to use if it accepted  highway data in the same format that states use in their annual data  submissions for FHWA’s HPMS database. The HERS-ST model requires  input in the 1993 data reporting format, not the current HPMS format. To  assist states participating in the pilot project, FHWA provided each one  with its highway data already reformatted for use with the HERS-ST model.  However, state officials wishing to analyze other highway sections in their  states would have to reformat their data to the older format before the  model could use it. An FHWA consultant, commenting on ways that the  HERS model could be more useful to states, recommended that the model  accept data corresponding to the latest format that FHWA requires for state  HPMS data submissions. FHWA officials recognize that widespread use of  the HERS-ST model would require addressing this situation.
section_title: HERS-ST Could Be Modified to Better Fit States’ Analytic Needs
paragraphs: Our interviews with state and FHWA officials indicate that some states  would like the HERS-ST model to analyze more detailed pavement  management data. Many states have developed sophisticated pavement  management systems that analyze more data than the pavement  deterioration analysis done in the HERS or HERS-ST models. For example,  a number of states already have pavement management systems that  consider several types of pavement distress data. HERS-ST, like the HERS  model, relies on data states report in the form of the International  Roughness Index or the Present Serviceability Rating. Officials from  four of the states we spoke with reported that they collect both roughness  index data and serviceability rating data. However, these officials noted  that they do not use roughness index data for planning purposes, preferring  to rely on their serviceability rating or the other data for highway system  planning. Officials from half of the states we contacted said they only  collect roughness index data at FHWA’s request and they base their internal  planning analysis on pavement rating data in their pavement management  systems. In addition, officials from two states said they were not satisfied  with the quality of their states’ roughness index data and preferred to rely  on their pavement rating data.
FHWA officials also said they expect to address some of these concerns by  incorporating more pavement distress data in the HERS model at some  point in the future. However, they will not do so until such data are  available to FHWA from all the states. FHWA officials said they are willing  to support only one version of the HERS-ST model. But because states use  various pavement distress measures, it is not clear to FHWA officials  whether including these additional pavement data in the HERS-ST model  would satisfy all states’ concerns.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of Transportation for  review and comment. Officials from the Department generally agreed with  the report. These officials also provided technical and clarifying comments,  which we incorporated into the report as appropriate.
We conducted our review from June 2000 through February 2001 in  accordance with generally accepted government auditing standards.
We will send copies of this report to cognizant congressional committees;  the Honorable Norman Y. Mineta, Secretary of Transportation; and the  Administrator, Federal Highway Administration.
If you or your staff have any questions about this report, please contact me  at (202) 512-2834. Appendix IV lists key contacts and contributors to this  report.
section_title: Scope and Methodology
paragraphs: To determine why the Department of Transportation’s (DOT) Federal  Highway Administration (FHWA) developed a state-level version of the  Highway Economic Requirements System (HERS) computer model and  how FHWA expects that states will use the model, we first reviewed our  work and resulting June 2000 report on the strengths, limitations, and uses  of the national HERS model.  We then interviewed FHWA officials about  their state-level HERS model (HERS-ST).  We also reviewed FHWA  documents about the HERS-ST model and projects in FHWA’s Office of  Asset Management. Finally, FHWA officials and HERS contractors told us  that two states—Indiana and Oregon—were using state-level HERS  models.  We visited Indiana and Oregon to discuss the use of these models  with officials in the Indiana and Oregon state departments of  transportation and obtained and reviewed available model documentation  and state products generated using their HERS models.
To determine how FHWA is making the state-level HERS model available to  states, we spoke with FHWA officials about their pilot-project plans. We  also reviewed the pilot project workshop agenda and attended the  workshop in February 2001. We reviewed HERS-ST model documents,  including the draft Highway Economic Requirements System Technical  Manual and the draft Highway Economic Requirements System Users  Manual, and we talked with model developers to determine how the model  was developed.  Finally, we reviewed FHWA’s evaluation plan for the HERS- ST pilot project and the time frame for the project.
To determine how states expect to use the HERS-ST model and its results,  we reviewed reports by FHWA consultants on the potential role of HERS in  state-level investment decisions and talked with officials from a random  selection of 8 of the 16 states that planned to participate in FHWA’s pilot  project.  The 16 states represent all states that FHWA reported were  planning on participating in FHWA’s pilot program as of September 5, 2000,  with the exception of Indiana and Oregon. We excluded Indiana and  Oregon from this random sample because both states are already using  customized state-level HERS models, and we were already planning to  conduct site visits for these two states. Table 1 shows the 8 states we  contacted, as well as the 16 states from which we chose the sample.
To obtain consistent information from the eight states we contacted, we  used a semi-structured interview format. See appendix III for a copy of the  interview document with the results of our discussions with the eight  states. As of December 11, 2000, the number of states that planned to  participate in FHWA’s HERS-ST pilot had grown to 20.  See figure 2 in the  letter for a map of the 20 states.
To identify potential changes that could be made to the model, we  discussed this issue with a wide variety of groups, including FHWA  officials, the consultant who developed the HERS-ST and the Indiana and  Oregon HERS models, state officials using the Indiana and Oregon models,  state officials planning on using the HERS-ST model, and others, such as  academics, who have used the HERS model.  We also reviewed information  on pavement measurement data, including our previous work on pavement  measures.
section_title: Information About HERS Models
paragraphs: This appendix describes technical aspects of the HERS computer model  and the three related models designed for use by state highway planners.
subsections: section_title: FHWA’s HERS Model
paragraphs: The HERS model simulates infrastructure improvement decisions for the  highways it models by comparing the relative benefits and costs associated  with alternative improvement options. In conducting its analysis, HERS  uses an extensive set of data that are primarily collected and updated by  the states and maintained by FHWA in the Highway Performance  Monitoring System database. In addition, the HERS model performs its  analysis using several submodels representing specific highway processes,  including traffic growth, pavement wear, vehicle speed, accidents, and  highway improvement costs. The analysis, which is based on the current  condition of the highway system, is conducted over four 5-year periods, for  a total of 20 years. The HERS model draws information from the database  and analysis from the submodels to identify deficient sections, evaluate  alternative improvement options, and select and implement improvements.  HERS uses benefit-cost ratios (benefits divided by costs) to evaluate and  select improvements under several investment scenarios that FHWA  developed. The benefits include reductions in travel times, vehicle  operating costs, and agency maintenance, while the costs include the  capital expenditures necessary to construct the improvement. The model  reports its results in a series of tables showing the cost of improvements  needed to support the model’s investment decisions for each highway class  and funding period analyzed.
The HERS model has several strengths:  The model’s major strength is its ability to assess the relative benefits  and costs associated with alternative options for making improvements  on the nation’s highways. The HERS model selects for implementation  only those improvements that are economically justified according to its  analysis, a significant improvement over FHWA’s previous methods,  which used engineering standards to identify deficiencies and select  improvements without regard to economic merit.
Another strength of the HERS model is that FHWA has consulted with  experts in order to assess the model’s reasonableness and improve it.  For example, in June 1999, FHWA convened an expert panel consisting  of economists and engineers from the public and private sectors. This  panel found that FHWA has strengthened the model over time and that  the recent refinements have increased its applicability and credibility.
The HERS model has some limitations:  First, because the HERS model analyzes each highway section  independently rather than the entire transportation network, it cannot  completely reflect changes occurring among all highways and modes in  the transportation network at the same time. For example, it will not  reflect how, as improvements are made, traffic might be redistributed  from other existing highway sections to an improved highway section.  By incorporating price elasticity into the model, FHWA officials assume  that the model captures the net effect of all changes in the  transportation network as well as in the overall economy. Although the  implication of this limitation is unclear (it may over- or under-state the  effect of changes in traffic resulting from a highway improvement),  explicitly modeling the entire transportation network is not possible  with the current state of the art in modeling or available data.
Second, because the HERS model is not designed to quantify the  uncertainty associated with its methods, assumptions, and data, the  model cannot estimate the full range of uncertainty within which its  estimates vary. As a result, the precision of the model’s estimates is  unknown. The HERS model’s estimates rely on a variety of estimating  techniques and hundreds of variables, all of which are subject to some  uncertainty. However, changing the model to fully account for  uncertainty in its factors is not likely to be cost-effective because it  could require extensive and expensive reprogramming. We  recommended in our June 2000 report that FHWA clarify, when  publishing the results of HERS model analyses, that there is uncertainty  associated with the results. State-level users can account for some  uncertainty by conducting “sensitivity analyses” to measure how much  the model estimates change when the values of certain key inputs or  assumptions used in the model are changed.
Third, the HERS model uses a computational “shortcut” to approximate  the lifetime benefits associated with an improvement. Conceptually,  benefits such as reductions in travel time accrue over each  improvement’s full lifetime, 20 years or more. However, in its initial  evaluation of whether to improve a highway section, the HERS model  calculates benefits only during the first 5-year period. To account for the  benefits accruing after the first 5-year period, FHWA developed a  shortcut that essentially uses an estimate of the improvement’s  construction cost as a proxy for the improvement’s remaining future  benefits. FHWA developed the shortcut several years ago, when  limitations in computer processing power necessitated simplifying some  of the calculations. Given recent improvements in computing power,  FHWA officials plan to modify the HERS model to account for lifetime  benefits and see correcting the shortcut as a potential improvement for  the HERS-ST model as well.
Fourth, although FHWA has taken steps to ensure that the data used in  the HERS model are reasonable, some of these data vary in quality. For  example, the model uses emissions data that may not be representative  of actual conditions. To estimate the emissions associated with traffic  on a given section, the model uses information from the Environmental  Protection Agency (EPA) on emissions rates per vehicle type and speed.  Vehicle emissions, however, may depend more on how the vehicle is  driven than on the total miles driven. FHWA officials told GAO they will  update these data once EPA finishes revising its emissions data. In  addition, we reported earlier that the pavement roughness data reported  by the states to FHWA are not comparable, partly because the states use  different devices and approaches for measuring roughness. The HERS  model uses the roughness data in projecting the pavement condition of  each section. FHWA is supporting efforts to standardize states’  pavement roughness measurements. Moreover, some information used  in the model is dated. For example, the pavement resurfacing costs used  in the HERS model are based on 1988 data (adjusted for inflation from  1988 to 1997). FHWA officials said they plan to update the HERS model’s  resurfacing costs, and the HERS-ST model offers users the option of  introducing their own construction cost data.
section_title: HERS Model Used in Oregon
paragraphs: The Oregon Department of Transportation obtained the first customized  HERS model in 1998. Oregon hired a consulting firm, Cambridge  Systematics, Inc., to help the state develop a long-range statewide highway  plan. The consulting firm, which also developed the HERS model for  FHWA, worked with Oregon officials to customize the HERS model, which  resulted in the creation of HERS/OR. Oregon never received specific  documentation for its model. But according to Oregon officials and the  consultant, the model differs from the national-level HERS model in the  following ways:  HERS/OR allows the user to override the model’s improvement  decisions for specific sections, for example, for a road that cannot  feasibly be widened due to a nearby mountain.
HERS/OR’s output includes two innovations: a section-by-section report  providing details on individual improvements for each segment for each  funding period and a revised summary table of improvements for the  state’s four unique highway classifications.
HERS/OR’s procedures for analyzing price elasticity are rudimentary  when compared with the current HERS model, and data on vehicle  accident costs are older.
section_title: HERS Model Used in Indiana
paragraphs: The Indiana Department of Transportation contracted in 1998 for a  customized HERS model known as HERS/IN. HERS/IN is also similar to  HERS, but has more unique features than HERS/OR:  HERS/IN, like HERS/OR, analyzes all sections of its state highway  system.
HERS/IN uses its own data on construction costs, allowing the model to  base its estimates of construction costs on more exact, local data.
HERS/IN is capable of using pavement improvement decisions from the  state’s sophisticated pavement management system. However, Indiana  DOT staff had not used this feature by the time we conducted our work.  Unlike the national-level HERS model, HERS/IN allows its user choices  for overriding modeled improvement decisions. For example, the user  can specify the type of improvement, its cost, its timing, and the  improvement’s effect on highway capacity. Indiana DOT has not used  this feature, according to officials.
HERS/IN’s output includes the basic national-level HERS output tables,  plus section-by-section improvement tables like those of HERS/OR and  tables that summarize highway improvements’ benefits for users due to  decreased travel time, decreased operating costs, and increased  highway safety. In addition, HERS/IN’s output is used to generate maps  to display the location of its improvement plans. The model is designed  to feed its output data into a geographic information system software  package that produces maps of the model’s proposed improvements.  The Indiana Department of Transportation officials said that this feature  improves their ability to display the location of the HERS/IN model’s  decisions to policymakers. Furthermore, the maps help the state staff  determine whether or not HERS/IN’s decisions are realistic. For  example, if two major improvements are proposed for nearby sections  of highway, the maps could alert the agency that, to avoid traffic  problems in that area, the projects should not be performed  simultaneously.
HERS/IN is able to consider the construction of new highways that  might be needed to provide capacity for future travel demand. The  Department has a sophisticated travel-demand model that supports this  HERS/IN feature. Found in no other version of the HERS model, this  feature allows Indiana DOT to specify new highways and the effect of  capacity improvements on traffic systemwide, as well as to compare  alternative improvements for addressing a capacity problem. Indiana  DOT has not used this feature, according to officials.
Unlike the HERS model, the HERS/IN model is not used to assess the  effect of highway travel on the environment. According to state officials,  the HERS/IN model could take environmental data into account when  making its decisions, but the officials did not feel this feature was  feasible in their model.
subsections: section_title: The HERS-ST Model
paragraphs: The HERS-ST model is the most recently designed HERS model. Generally,  HERS-ST offers the analytic approaches available in the most recent HERS  model revision. Because it is based on the HERS model, it has the same  strengths and limitations that were noted above. However, the HERS-ST  model differs from the national-level HERS model in the following ways:  Unlike the HERS model, the HERS-ST model has an “override” feature  that allows a user to override some or all of the improvement decisions  made by the model. For example, the user can specify the particular  type of improvement to be made on a highway section in any particular  funding period. In the override mode, the model selects the user- specified improvements regardless of whether they are economically  justified. According to FHWA officials, the model’s override feature will  enable state users to apply specific knowledge about highway  improvements (such as whether implementing a particular  improvement is feasible) that may not be reflected in the model’s  database.
In addition to the override feature, the HERS-ST model differs from  HERS in the number of highway classes it can analyze and the level of  detail of the results it generates. For example, the HERS-ST model can  analyze highway sections from all 12 of FHWA’s classes of roads,  including rural minor collectors and urban and rural local roads. The  HERS model is designed to analyze sampled sections from 9 of the 12  highway classes. Also, the HERS-ST model is capable of providing the  user with detailed results on the highway sections it analyzes, including  information on the particular improvement selected, the expected  future condition of the section, and the benefits and costs of making the  improvement. FHWA officials stated that this feature would enable the  state user to study what happens on individual sections. By contrast, the  HERS model generates only aggregate results for classes of roads.
Both the HERS-ST and the HERS models also use data from studies of  the national economy. However, the state user can modify some of these  data to reflect conditions in his or her state. For example, both models  count as a benefit any reduction in travel time brought about by a  highway improvement. In making this calculation, FHWA uses average  national hourly compensation data from the Department of Labor’s  Bureau of Labor Statistics to quantify the dollar value of travel time  saved by travelers on work-related trips. In the HERS-ST model, the  state user could substitute state-level data to derive an alternative  estimate of travel time savings.
The HERS-ST model also offers the state user a choice between analyzing a  statistical sample of highways represented in FHWA’s HPMS database or  the option of analyzing all highway sections in the state’s system.
section_title: State Use of the HERS Model
paragraphs: While the HERS-ST model pilot project is FHWA’s first attempt to promote  state use of a HERS model, the agency previously released copies of the  HERS model. The model’s existence was well publicized because it had  been described in DOT’s biennial Conditions and Performance reports  starting with the 1995 edition, it was profiled in studies, and it was cited in  TEA-21. By 1998, FHWA was providing HERS model documentation and  computer files to parties who requested them. FHWA reported that 18  requesters, including state DOT officials, academics, and consultants,  obtained copies of the model between April 1998 and September 2000.  Michigan DOT officials who obtained copies of the model found that it did  not suit their needs. They said that the HERS model was not useful to them  because it would not handle all of the roads the department needed to  study; available data would need reformatting to work with the model; and  the results were aggregated at the network level, which was too general to  be useful for the state’s purposes. On the other hand, a researcher at North  Dakota State University’s Upper Great Plains Transportation Institute  found the HERS model useful for state-level applications. He analyzed  intermodal freight diversion (rail to truck or truck to rail) on behalf of two  state transportation agencies. He also used HERS equations to analyze  rural highway preservation for a third state transportation agency.
To compare key differences between the HERS model and related state- level models, see table 2.
section_title: Questionnaire for States That Asked to Participate in FHWA’s Pilot Program for the State HERS Model
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to those named above, Richard Calhoon, Catherine Colwell,  Timothy J. Guinane, Luann Moy, Judy K. Pagano, and Raymond Sendejas  made key contributions to this report.