Development of a Prototype Least Cost Planning Model and its Initial Application to the Puget Sound Region

Phase II Report - December 1994

Dick Nelson

Don Shakow

The Institute for Transportation and the Environment

Least Cost planning: A comprehensive, technically consistent planning method that provides an economic framework to assess the cost-effectiveness of all transportation modes and management strategies, while taking into account all societal costs.


A least cost transportation planning model is being developed and applied to metropolitan transportation decision making in the central Puget Sound region.

The prototype model, which runs in a personal computer, weighs the benefits and costs of a large number of transportation options. Options range from those which increase transportation supply to those which manage travel demand. The model compares the costs to implement an option to the option's effect on the baseline cost of the surface transportation system over a 30 year planning period.

The baseline cost is calculated by accounting for all direct and indirect costs of travel, including time costs and environmental costs. Implementation costs include the costs of construction, operation, and maintenance in the case of supply options, and the costs of incentives and administration in the case of demand options.

Benefits are produced if an option reduces the baseline costs of the transportation system. For example, a transit option which attracts new riders is credited with benefits proportional to the number of single occupant vehicles reduced. Each SOV driver who becomes a transit rider reduces his or her travel costs, and may, depending on the transit mode, reduce congestion costs. Other benefits are realized if an option reduces the environmental costs of SOV travel. Walking and biking obviously will generate benefits in this category.

The model calculates the net social benefit of each option measured in dollars. Future dollars are discounted to take into account the higher value of present investments. Eventually the model will be refined to allow the selection of least cost portfolios, thereby providing a way to find the optimum set of transportation alternatives among a large number of investment opportunities.

The least cost planning model has been used to analyze 18 options under active consideration or discussion in the region. These include: the Regional Transit Project's rapid rail alternative developed several years ago and now superseded by light rail options, three of which are included in the list, two commuter rail proposals, a major bikeway investment, a traveler information system, HOV lane completion, and several incentives to encourage SOV drivers to use other modes or telecommute.

Major conclusions of the study include the following:

Net regional social benefit is a criterion which can be defined and quantified. It allows a level playing field to be established on which to conduct a comparative analysis of disparate transportation options. It also allows the benefits of a single major option to be calculated and assessed.

The least cost planning model (LCPM) is a practical tool for use in support of regional transportation decision-making. Subject to ongoing development and refinement, it can serve the purpose of computing net regional social benefit and comparing alternative combinations of transportation projects and policies.

Sufficient data exist to allow the design, analysis, and comparison of a significant number of transportation alternatives including both supply and demand-oriented options, and to estimate the impact of the options on the total public and private cost of regional transportation.

A simulation of the application of the least cost model to the central Puget Sound region produced the following preliminary results:

Rail options do not by themselves generate net social benefits. It is possible that benefits can be realized by rail in combination with policies such as parking charges and congestion pricing which internalize the substantial external and public costs of SOV use.

Completion of the HOV lane network and its full utilization by express buses and ride-sharing vehicles would appear cost-effective and potentially significant as a means to reduce single occupancy vehicle use and to improve the level of service on the existing road network. Unless new HOV lane capacity can be justified, completion should be accomplished by lane conversion.

While the contribution of a single policy or transportation demand management initiative may have a small impact on the overall regional transportation system, it is possible that a combination of several alternative strategies will have a powerful and mutually reinforcing effect in lowering social costs and reducing congestion.

Least cost planning is essential, given the serious fiscal constraints. Only a least cost analysis can find the set of options that will deliver the desired transportation benefits at a price the region is willing to pay.

The least cost planning model is being applied to help identify the most cost-effective investment options available to the region. Its development required a six-month effort by a two-person team supported by three private, non-profit foundations and one user group. Further development and application of this promising methodology will require the active interest and involvement of the region's public-sector planning professionals and political leaders.


This study has been funded by grants from the Energy Foundation, the Bullitt Foundation, the Medina Foundation, and the Cascade Bicycle Club. It has been guided by a steering committee composed of Emory Bundy, Bill Eager, Mike Ferro, Virginia Gunby, Stan Hallett, Phyllis Lamphere, Terry Lewis, and Mike Vaska. Thanks are also due to Jerry Schneider, Chris Leman, and Rich Harkness who reviewed the technical aspects of the report.

Development of a Prototype Least Cost Planning Model and its Initial Application to the Puget Sound Region

Table of Contents

Figures & Tables --- ii

Executive Summary --- iii

Acknowledgements --- iv

Preface --- v

Introduction --- 1

Chapter 1 - The Emerging Context for Least Cost Planning in Transportation --- 3

Chapter 2 - Framework of the Least Cost Planning Model --- 9

Chapter 3 - How the Least Cost Planning Model Calculates Costs and Benefits --- 21

Chapter 4 - Model Application --- 27

Chapter 5 - Results of Model Application --- 31

Chapter 6 - Criticisms of Least Cost Planning --- 51

Chapter 7 - Important Findings Made During the Course of Study --- 57

Chapter 8 - Conclusions --- 61

Chapter 9 - Recommendations --- 63

References --- 65

Appendix A: Descriptions of Options --- 69

Appendix B: Regional Rail vs.Regional Bus: Understanding the Capacity Issue --- 73

Appendix C: Discussion of Rail's Effectiveness in Producing Compact Land Use --- 81

Return to the Least-Cost Transportation Planning index page

Last modified: May 3, 1996