 This is Bill Grenke. He is a safety engineer with a state highway department. He has been reading about a highway safety improvement program management system. According to the National Cooperative Highway Research Program report he is studying, this system will identify real problems instead of perceptions. The solutions will be cost-effective. And in the event of legal action, the existence of the system will aid the defense. The system has six phases. Phase one, identify safety problems. Phase two, identify alternative improvements. Phase three, evaluate alternatives and select improvements. Phase four, develop and implement the Highway Safety Improvement Program. Phase five, evaluate each safety improvement. And phase six, evaluate overall safety program. In the previous program of this series, identifying highway safety problems and solutions, we followed Bill as he learned about the system's first two phases. In this program, Bill will work his way through the third phase, evaluating alternatives and selecting improvements. And the fourth phase, developing and implementing the program. For the third phase, he will find the best alternative improvement through an economic analysis. The best improvement is the one returning the greatest net benefit in terms of the cost of the improvement, as well as reduced costs to society by preventing accidents. His first step is to look at the alternative improvements for each high accident location. Then, he must estimate the reduction in number and severity of accidents for each alternative. His agency may have results of previous, similar improvements. If not, there are international research results. These forecast documents provide information like percent reduction expected and service life of an improvement. Now, starting with the first location. Bill has to calculate the expected accident reduction for each alternative. He should use this formula. The accident reduction, A sub R, is in terms of accidents per year. It is calculated by using the annual accident rate, or R, in accidents per million vehicles per year, approaching the spot or intersection, or little M, and the expected percent reduction in accidents for the type of proposed improvement, or P sub R. Next, Bill will calculate the safety benefits to society for each alternative. He will figure this value by multiplying the number of accidents prevented by the total cost of each accident to society. The cost of an accident will vary depending on the country and jurisdiction. In the United States, the Urban Institute estimated societal costs in 1988. The costs associated with motor vehicle accidents and injuries were $4,490 for property damage, $69,590 for non-fatal injury, and $2,722,550 for fatal injury. Now, based on the average distributions of types of accidents, Bill can determine the average cost per accident. In 1988, one state estimated that the average cost per accident was $51,770. By using a consumer price index, Bill can calculate current year costs. Here's the formula. C sub A is the current year cost per accident. C sub X is the cost of accidents in previous year X. R is the annual rate of growth in accident costs in percent. And N is the number of years of growth. In other words, the difference between current year and previous cost year. This procedure works for any country with accident cost figures. If data is not available, engineers can convert USA figures using a relative cost of living index. Then update the costs to current year figures using a local consumer price index. That should only be an interim measure until there is more precise local data. Now, Bill can estimate the first year benefit from each improvement. B is the first year safety benefit from the accidents prevented in monetary units. A sub P is the annual reduction in number of accidents. And C sub A is the current year cost of an accident in monetary units. There is still one last calculation. It adjusts first year safety benefits to allow for future increases in traffic growth. It also converts benefits to equivalent uniform annual benefits so they are comparable to improvement costs. EUAB is the equivalent uniform annual benefit in monetary units. B is the total first year safety benefit in monetary units. And EUS is the equivalent uniform series factor based on the traffic growth rate and the money interest rate for the number of years of service life of the safety improvement. As an example of the size of the EUS factor, if the traffic growth rate is 2% per year, the interest rate is 6% per year, and the service life of the improvement is 15 years, the EUS factor is 1.151. Next, Bill has to calculate the improvement costs. Initial capital investment or implementation costs are usually the largest. They may be design and construction costs for large improvements like a grade separation interchange structure or simply labor and equipment costs for maintenance forces doing removal of a roadside obstacle. Initial investment costs can be estimated from the cost of similar projects in past years. If the previous costs are more than one year old, they should be adjusted to the current year using a suitable price index. The formula for updating costs has C sub i as the cost of investment in current year monetary units. C sub i x as the cost of investment in previous year x. P sub i as the price index for the current year and P sub i x as the price index for previous year x. After determining the initial investment cost, Bill must convert that to an equivalent uniform annual cost. This formula places initial costs on the same annual cost basis as all other costs and benefits. In this equation, EUAC sub i is the initial investment cost expressed as an equivalent uniform annual cost. C sub i is the initial investment cost in current monetary units and CRF is the capital recovery factor for a given interest rate and service life. There is still the annual maintenance and operating cost of the improvement. Bill must figure that as well. Routine maintenance costs include items such as damage repair, sign cleaning and signal light replacements. Operating costs include items such as energy consumption for traffic signals or street lights. Bill can get cost estimates for these items from the maintenance or operations manager. He simply adds the annual cost of operation of the improvement to the annual cost of maintenance of the improvement. Finally, Bill must find out if the improvement may have some terminal or salvage value at the end of its service life. For example, rusted or damaged guardrail may have some value as scrap metal. If the salvage value is small compared to initial capital cost, say 1 to 2%, Bill should ignore it. If not, he should estimate the value of the salvage for the terminal year and convert it to an equivalent uniform annual cost using a sinking fund factor. Here is the formula. EUAC sub s is the salvage value in equivalent uniform annual cost. C sub s is the salvage value at the end of the service life. And SFF is the sinking fund factor for a given interest rate and service life. Now, Bill can figure the total equivalent uniform annual cost of each improvement. He does it by combining the initial cost, the operating and maintenance costs, and the salvage value. Some improvements will have an abbreviated service life. For example, the service life of an improvement may be 10 years. But if a major road reconstruction project is scheduled on the same road in 5 years, the improvement will really only have a service life of the 5 years. When he has computed the total cost of improvement for each alternative, Bill is ready to evaluate the alternatives. To do that, he must figure out the net annual benefit. The greater the net annual benefit, the more desirable the improvement. If the NAB is positive, then society will experience a monetary net benefit as a result of making the improvement. If the NAB is zero or negative, then the money would be better spent on a different type of improvement or on a different location. Another useful measure is the benefit cost ratio, B over C. When the B over C ratio is greater than one, the project is desirable. The larger the B over C ratio, the more desirable the project. Bill's last step in this phase is to rank the alternative improvements. There are convenient worksheets for recording the economic analysis for each alternative at each location. These worksheets should be included in a safety project planning report for each location. Normally, Bill would recommend the most cost-effective improvement. If funding is limited, however, he might hold off on something like a major grade separation interchange and pick a lower priced improvement. Now it is time for Bill to learn about phase four, developing and implementing a safety program. It will not be easy. The program must have quick, efficient, and orderly improvements, and they must be within the limits of available funds and other resource constraints. The first step is development. A safety improvement program is a bit unique. Projects are wide-ranging, from minor improvements, such as signs and pavement markings, to major at-grade intersection reconstruction or grade separation interchange construction. So dealing with them is a bit different. Some work may be done by in-house forces and some by private contractor. Engineers often like to concentrate on large, glamorous projects and ignore small but urgently needed ones. Creating a separate safety improvement program may ensure that small but urgent projects get appropriate attention. Some countries have dedicated funds for safety improvements. That means developing a separate program to utilize funds properly. In any case, development is basically applying available funds to proposed projects in priority order. If the cost for all improvements is high, it may require a multiple-year program. The next step is implementation. The agency will handle large safety projects the same as regular capital improvement projects. They will involve design and either in-house or contract construction forces. Traffic or maintenance forces may perform smaller projects with a minimum of design work. The key to success is to make sure procedures and responsibilities are well-defined and carried out. Managers must understand safety improvements are generally low-cost, quick projects with highly effective results. Also, a traffic engineer should be on-site for small jobs done by in-house forces without construction plans. There may be questions about such things as size, type and location of signs and signals or proper placement of pavement markings, guardrail and other safety devices. The engineer can make sure improvements conform to acceptable standards and address the safety need at the location. A last, very important step is documentation of the as-built improvement. There are two important dates to document as well. The date of the last day the unimproved condition existed and the date that traffic began operating under the improved condition. Safety analysts need this information to compare accident experience before and after the improvement and determine the extent of the improvement success. In this program, Bill Grenke has worked his way through the third and fourth phases of the Highway Safety Improvement Program process, evaluating alternatives and selecting improvements and developing and implementing the program. In the next program of this series, Evaluating Safety Program Results, we will cover the final two phases. For more information on this or other IRF videotapes, write to the International Road Federation or call the numbers on your screen.