Transportation Economics & Finance Flashcards

Which economic analysis method calculates the ratio of a project's benefits to its costs to evaluate feasibility?

Answer: Benefit-Cost Analysis (BCA)

Benefit-Cost Analysis (BCA) divides total quantified benefits by total costs to determine whether a transportation project is economically justified.

In transportation finance, what does the term 'obligated funds' mean?

Answer: Federal funds formally committed to a specific project

Obligated funds are federal funds that have been formally committed by FHWA to a specific project, triggering the federal-aid reimbursement process.

What discount rate concept is used in LCCA to convert future costs to present-day dollars?

Answer: Real discount rate

The real discount rate, which excludes inflation, is used in LCCA to bring future maintenance and rehabilitation costs back to present value for fair comparison.

Which federal funding program is the largest source of highway capital investment in the United States?

Answer: National Highway Performance Program (NHPP)

The National Highway Performance Program (NHPP) is the largest federal highway program, providing funds to improve the condition and performance of the National Highway System.

What is the standard federal-aid matching ratio for most highway projects in the US?

Answer: 80% federal / 20% state

Most federal-aid highway projects use an 80% federal / 20% state or local match ratio, though some programs like Interstate projects historically used 90/10.

Which economic concept measures the reduction in vehicle operating costs, travel time savings, and crash reduction benefits attributable to a highway improvement?

Answer: User benefits

User benefits capture the direct economic value to travelers from transportation improvements, including saved travel time, reduced fuel costs, and fewer crashes.