The Value of Travel Time (VTT) refers to the cost of time spent on transport. It includes costs to businesses of the time their employees and vehicles spend on travel, and costs to consumers of personal (unpaid) time spent on travel. The Value of Travel Time Savings (VTTS) refers to the benefits from reduced travel time costs.
Travel time savings is often the principal benefit of a transportation project. Congestion relief projects are justified primarily by the reduction in travel time they will bring about. Travel time savings can also lead to reductions in vehicle operating costs. Those benefits are discussed in the Vehicle Operating Cost Reduction section.
An important step in valuing a project's travel time savings is establishing travel time unit costs (cents per minute or dollars per hour). Various factors can affect travel time unit costs, including the types of trips, travelers, and travel conditions. If possible, different travel time unit costs should be assigned to different types of travelers and travel conditions, as discussed in more detail in the Categories of Travel Time and the Issues to Consider sections.
Because there is no market for buying and selling travel time, indirect methods must be used. Several types of studies have been conducted to determine the monetary value businesses and travelers place on travel time costs, based on analysis of business costs, traveler surveys, and by measuring behavioral responses by travelers faced with a trade-off between time and money, for example, when offered the option of paying extra for a faster trip. Below are some general conclusions from this research.
Once both travel time savings and travel time unit costs are established for each trip category, the project's total travel time savings value can be calculated. These travel time savings should be applied to travelers who made trips on the facility before the implementation of the project. A transportation project that increases capacity or efficiency may induce travel on the affected link. The section on Induced Travel explains how to evaluate benefits to these new users.
For many trips, improved reliability of travel time creates additional value. This reflects the fact that uncertainty makes travelers and freight operators adjust their departure times to account for the possibility that their trips may take longer than usual. The less uncertain they are about the extra time they need to allocate for this contingency, the more precisely they can schedule their trip, which saves them time.
Additional value may result from the elimination of "schedule delay," which is the amount of time a trip is forced to take because the desired scheduled transportation service being used does not accommodate arriving at the destination exactly when required. Schedule delay can also occur where en route congestion makes it impossible to arrive at the destination at the desired time, so one is forced to arrive early. Transportation improvements which reduce "schedule delays" can be credited with these additional travel time savings under certain circumstances.
In practice, improved reliability and reduced schedule delay benefits are seldom counted as travel time benefits for several reasons. First, obtaining suitable behavioral data with which to estimate these changes requires special effort and may not be worth the trouble. Also, the justification must exist that the disutility of these time elements is equivalent to time consumed in traveling. This is often a hard sell since in many situations there exist useful ways for people to use the extra time from arriving early, so the extra time is not really lost in the same way as time consumed in traveling. Nevertheless, in some cases, benefits from improved reliability and reduced schedule delay may be significant and should be accounted for, perhaps with a weighting factor to represent these potential differences in disutilities.
Some transportation agencies establish standard methods for valuing travel time savings. For example, the U.S. Department of Transportation has issued memoranda on this subject entitled "The Value of Travel Time: Departmental Guidance for Conducting Economic Evaluations" (U.S. DOT, 1997 and 2003). These documents provide detailed discussion of the issues involved with evaluating travel time savings and offers recommended values. They recommend valuing travel time savings at 50% of the wage rate for local personal travel, 70% of the wage rate for intercity personal travel, 100% of the wage rate for local business travel, 100% of the wage rate for intercity business travel, and 100% of the wage rates for walk access, waiting, and transfer times on transit. Some other agencies use different values of travel time and divide travelers into more distinct groups.
Pedro A.L. Abrantes and Mark R. Wardman (2011), “Meta-Analysis Of UK Values Of Travel Time: An Update,” Transportation Research Part A, Vol. 45, pp. 1–17.
ITF (2009), Value of Travel Time Reliability and Cost-Benefit Analysis, International Transport Forum (www.internationaltransportforum.org); Available at: www.internationaltransportforum.org/Proceedings/reliability/index.html.
Todd Litman (2009), "Travel Time," Transportation Cost and Benefit Analysis, Victoria Transport Policy Institute (www.vtpi.org). Available at: www.vtpi.org/tca/tca0502.pdf.
Todd Litman (2008), “Valuing Transit Service Quality Improvements,” Journal of Public Transportation, Vol. 11, No. 2, Spring, pp. 43-64. Available at www.nctr.usf.edu/jpt/pdf/JPT11-2Litman.pdf; more complete version at www.vtpi.org/traveltime.pdf.
Patricia L. Mokhtarian (2005), Transportation Research – Special Issue: The Positive Utility of Travel, Vol. 39A, Issues 2-3 (www.elsevier.com/locate/tra), February/March.
TRISP (2005), “Valuation of Travel Time Saving,” Economic Evaluation Notes, UK Department for International Development and the World Bank (www.worldbank.org); at http://go.worldbank.org/ME49C4XOH0. Summarizes travel time valuation methods suitable for developing country transport project evaluation.
U.S. Department of Transportation (1997), Departmental Guidance for the Valuation of Travel Time in Economic Analysis, Office of the Secretary of Transportation, U.S. Department of Transportation. Available at: http://ostpxweb.dot.gov/policy/Data/VOT97guid.pdf.
U.S. Department of Transportation (2003), Revised Departmental Guidance: Valuation of Travel Time in Economic Analysis, Office of the Secretary of Transportation, U.S. Department of Transportation. Available at: http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11-03.pdf.
:uca Zamparini and Aura Reggiani (2007), “Meta-Analysis and the Value of Travel Time Savings: A Transatlantic Perspective in Passenger Transport,” Networks and Spatial Economics (www.springerlink.com); at www.springerlink.com/content/h663q51u448078x1.
Anming Zhang, Anthony E. Boardman, David Gillen and W.G. Waters II (2005), Towards Estimating the Social and Environmental Costs of Transportation in Canada, Centre for Transportation Studies, University of British Columbia (www.sauder.ubc.ca/cts), for Transport Canada; at www.sauder.ubc.ca/cts/docs/Full-TC-report-Updated-November05.pdf.