In a typical benefit-cost analysis, the value of travel time is calculated separately for various transportation modes (car, truck, bus, airplane), and trip purposes (which may include on-the-clock business travel, commuting to work, or personal travel) and conditions (congested, uncongested, comfortable, uncomfortable). Light trucks (vans, SUVs, and small pickup trucks) are generally classified with cars, which together are called automobiles or light duty vehicles. Regardless of the mode or trip purpose, the total value of time for vehicle occupants (driver and passengers) or freight is calculated as the average value per person, or per cargo ton, times the average vehicle occupancy (persons per vehicle or cargo tons per vehicle). Some specific factors that affect travel time unit costs are summarized below.
"On the clock" travel refers to trips conducted by workers during the work day, as part of their jobs. Many on-the-clock trips are made by truck drivers, but some are also taken in cars, vans, or light trucks used to deliver packages, provide repair services, or travel to and from meetings. Since the costs of excess worker time are borne by businesses, there is a consensus that the value of travel time includes the value of workers' wage and fringe/overhead costs. The US Dept. of Transportation recommends using $21.20/hour for on-the-clock business travel (values in year 2000 dollars) (US DOT 1997).
In some cases, business travelers are passengers rather than drivers, and so can perform productive work while traveling, for example, working on a bus, train or airplane. Transport Canada has adopted the practice of reducing the value of time savings for business travel by 25% under such conditions. In the US, this adjustment is generally not made, as a worker's ability to do work while riding in a car is limited.
In most regional travel demand forecasting and simulation models, "commute trips" refer to peak-period commuting and is distinguished from non-work (personal) travel. The value of time for commuting trips is usually defined as a fraction of the wage rate. The US Department of Transportation currently recommends using a value of 50% of the average wage rate of $21.20/hour, which comes to $10.60/hour (values in year 2000 dollars) for commuting travel time (US DOT 1997).
Commuting trips also tend to be more schedule-sensitive than personal travel, and hence there is a need to consider the costs of travel time variability under congested road conditions. Based on a survey in California, Small (1997) found that commuters have a strong aversion to unpredictable travel times under congested conditions, so that a minute of time savings under congested conditions is valued at 2.5 times that of an uncongested minute of travel time savings. A study by Cohen and Southworth (1999) refined this multiplier down to the range of 1.4 to 2.3. An earlier study by Waters (1992) concluded that a 1.3 to 2.0 mark-up factor is appropriate, depending on the level of congestion. In addition, separate studies of toll roads also show that peak period commuters make trade-offs between time and cost, in which they value their time at 1.4 to 1.8 times the normal value of time (see Sullivan, 2000). Litman (2009) recommends adjusting drivers' travel time costs to reflect the additional stress of driving under congested conditions, so unit time value are calculated as 50% of wages under level-of-service (LOS) A-C, but increase to 67% at LOS D, 84% at LOS E and 100% at LOS F. Passengers' travel time unit costs (cents per minute or dollars per hour) do not increase in this way, although congestion does tend to increase their total time and unreliability costs.
Non-work trips include travel for shopping, personal business, social, and recreational purposes. Various regional transportation studies commonly assign a value for personal trips ranging from one-third to one-half of the average wage rate, though a higher fraction can be justified for long-distance trips. (For instance, the San Francisco Bay Area Metropolitan Transportation Commission model assumes 32% of the wage rate for shopping trips as compared to 46% of the wage rate for commuting trips.). Studies in the UK also show evidence that shopping trips can have a lower time value than commuting trips (Mackie 2003). However, the US Dept. of Transportation currently recommends using $10.60/hour (50% of the wage rate, valued in year 2000 dollars) for local personal travel, the same value as for commuting trips (US DOT 1997). The higher recommended value for intercity personal travel is $14.80/hour (70% of the wage rate).
Travel time for public transportation vehicles is valued as the sum of (1) the value of time for the professional driver (and conductors or other staff, if applicable), and (2) the value of time for passengers. Driver and staff time is calculated as the value of "on-the-clock" travel times the number of staff persons per vehicle. Passenger time may be calculated as any blend of the work-trip value of time and the non-work value of time, multiplied by the number of passengers per vehicle. (More conservative studies merely use 50% of the average wage rate, or $10.60/hour).
Sometimes, a separate time value is set for out-of-vehicle time, which includes time spent walking to and waiting at the transit stop. Since this may include some time spent standing around and being exposed to warm, cold, or rainy weather, the value of out-of-vehicle time may be set at a rate higher than the value of in-vehicle time (Small 1992). The US DOT (1997) recommends using 100% of the wage rate for time spent walking and waiting and 50% of the wage rate for time spent in transit vehicles. The UK Dept. for Transport (2001) also adopts a value for out-of-vehicle time that is double the in-vehicle time value. However, Cal-B/C uses 50% of the wage rate for all transit travel time.
Transit travel time unit costs can vary depending on travel conditions, with significantly higher values if walking, waiting and travel conditions are uncomfortable (crowded, dirty, too hot or cold, insecure, etc.) (Li 3003). Waiting time unit costs tend to decline if passengers have accurate real time bus and train arrival information, so they know how many minutes they must wait (Dziekan and Kotterhoff 2007). Litman (2007 and 2008) recommends adjusting travel time unit costs based on transit transit travel level-of-service (LOS), with significantly higher cost values for LOS D through F.
Medium and heavy truck travel is generally considered "on-the-clock" business travel. If the truck is empty or carrying cargo that is not time-sensitive, then the value of time is essentially the average labor cost for professional truck drivers and any accompanying loading staff (including wage and fringe costs). The US Dept. of Transportation recommends using $18.10 as the wage rate for truck drivers (year 2000). However, some urban toll and congestion studies indicate that heavy-duty truck drivers value their time closer to $20-25 per hour. The Bureau of Labor Statistics found the US average hourly wage for heavy truck drivers as of year 2000 was $15.78. Adding 25% fringe costs raises the total cost of truck driver time to $19.73/hour (year 2000 dollars). FHWA's Highway Economic Requirements System (HERS, a benefit/cost system for highways) adopts a value of $21.95/hour for truck drivers.
Cargo can also have a time value. In the aggregate it is based on the interest costs of the value of the cargo, though in reality this tends to be trivial. More important is the potentially substantial value of time for the portion of goods considered time sensitive. This is defined as the portion of truck deliveries in which the cargo user (i.e., the shipper or recipient) bears excess costs of late pickup or delivery. These excess costs apply largely to construction and technology-based manufacturing and include the following categories:
Research on the time value for cargo varies in its conclusions, depending on the nature of the cargo and industry, though there is a consensus that the value is not trivial. Updates to FHWA's HERS adds a value of inventory carrying cost alone, at $1.78/hour. A Montana benefit/cost analysis system developed by Cambridge Systematics and Economic Development Research Group (2004) adds an additional $2 to $28/hour for user costs of additional cargo delay. A 1997 study by the Texas Transportation Institute uses a truck time value of $45/hour, representing $25/hour on top of the standard USDOT value of driver time alone. A study by Levinson (2003) found a value of $49.42/hour for commercial vehicle operators in Minnesota. A study by DeJong (2000) found a range of values from $36-48/hour. A similar range of values was found by Waters (1995). At the high end, a survey of freight carriers by Small et al (1999) found values of freight transit time in the range of $144-$193/ hour, and costs of schedule delays of $371/hour. Additional case studies of the large value of "just-in-time" processing and scheduling benefits (sometimes exceeding $100/hour) are shown in reports of NCHRP 2-18.
Rail freight trips are valued similarly to truck trips: the value of "on-the-clock" time for all train staff plus the value of cargo time. However, the cargo of freight trains is much less likely to be time-sensitive. In addition, many rail freight trips involve loading and unloading time associated with intermodal transfers between trucks and rail cars. Thus train arrival and departure delays commonly also trigger accompanying truck time delays, which should be added to the total cost of delay.
Airplane trips can include both passenger travel, cargo travel, and mixed passenger/cargo travel (in which cargo is carried in the belly of passenger aircraft). In general, passenger air travel delay is calculated much like bus/rail transit trips: as the sum of "on-the-clock" time for aviation staff (aircraft pilots, flight attendants and ground crew) plus the value of time for all passengers. Since air travelers typically have higher income levels and are paying a premium for fast travel compared to ground transportation alternatives, it is generally accepted that there should be a higher time value for air travelers. Research has generally confirmed that air travelers tend to have a high percentage of professionals with time-sensitive schedules and travellers with limited time schedules, which would make their time more valuable.
The US Dept. of Transportation recommends using $23.30 for personal air travel, $40.10 for intercity personal travel and $28.60 as a blended average (values in year 2000 dollars). FAA guidelines defining the value of time for aircraft crew varies depending on the type of aircraft, because staffing levels vary among aircraft types. The total crew time for a Boeing 737, one of the more common types of aircraft in use at the time the guidelines were set, is valued at $737/hour as of 1997.
There is currently an Airport Cooperative Research Program project (ACRP 03-19) that is exploring the use of benefit-cost analysis for airport capital investment decisions. The project will provide updated information on passenger value of time. Information about the project project can be found here.
Travel time costs are highly variable, including a small portion of travel with very high time values, to a significant portion of travel with little or no cost, since travelers enjoy the experience and would pay nothing to reduce it. High-time-value travel includes commercial travel, urgent personal trips, travel under uncomfortable or congested conditions, unexpected delays. Below are some general guidance for quantifying travel time unit costs.Commercial (paid) travel costs include driver wages and benefits, and the time value of vehicles and cargo. This type of travel has the greatest impacts on economic productivity.
The table below summarizes a framework developed by Litman (2009) for adjusting travel time values to reflect travel conditions as measured by level-of-service values, which can be calculated using methods described in the new Highway Capacity Manual (TRB 2010) and other sources (VTPI 2010).
Potential Travel Time Values Relative to Prevailing Wages (Litman 2009)
This summarizes recommended travel time values, based on Waters (1992) expanded to include public transit and non-motorized travel. These are default values that should be calibrated and adjusted to reflect specific conditions and the preferences of affected 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; summarized at www.worldtransitresearch.info/research/3749.
Booz-Allen & Hamilton Inc. (1999), California Life-Cycle Benefit/Cost Analysis Model (Cal-B/C)-Technical Supplement to User's Guide, California Department of Transportation. Available at: www.dot.ca.gov/hq/tpp/offices/ote/benefit_files/tech_supp.pdf
H. Cohen and F. Southworth (1999), "On the Measurement and Valuation of Travel Time Variability Due to Incidents on Freeways," Journal of Transportation and Statistics, Volume 2 Number 2, December. Available at www.bts.gov/publications/journal_of_transportation_and_statistics/volume_02_number_02/
Federal Aviation Administration (1998). "Economic Values for Evaluation of Federal Aviation Administration Investment and Regulatory Programs," FAA-APO-98-8.
Federal Highway Administration (2002) HERS-ST v20: Highway Economic Requirements System - State Version Technical Report. Federal Highway Administration, FHWA-IF-02-060.
Gerard de Jong (2000), "Value of Freight Travel-Time Savings", in Hensher, D.A. and K.J. Button (eds.): Handbook of Transport Modelling, Elsevier.
K. Dziekan and Karl Kotterhoff (2007), “Dynamic At-stop Real-Time Information Displays For Public Transit: Effects on Customers,” Transportation Research A, Vol. 41, Issue 6 (www.elsevier.com/locate/tra), pp. 489-501. Also see Customer Perceptions And Behavioural Responses To IT-Based Public Transport Information, Banverket. Available at: www3.banverket.se/raildokuffe/pdf/MN2158.pdf.
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.
Levinson, D. and B. Smalkoski (2003), "Value of Time for Commercial Vehicle Operators in Minnesota", University of Minnesota, TRB International Symposium on Road Pricing.
Todd Litman (2007), Build for Comfort, Not Just Speed: Valuing Service Quality Impacts In Transport Planning, Victoria Transport Policy Institute (www.vtpi.org). Available at www.vtpi.org/quality.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.
Yuen-wah Li (2003), “Evaluating the Urban Commute Experience: A Time Perception Approach,” Journal of Public Transportation, Vol. 6, No. 4, pp. 41-67; at www.nctr.usf.edu/jpt/pdf/JPT%206-4%20Li.pdf.
Peter J. Mackie, et al. (2003), Value of Travel Time Savings in the UK - Summary Report, Institute for Transport Studies, University of Leeds, for the UK Department for Transport. Available at: www.dft.gov.uk/stellent/groups/dft_transstrat/documents/pdf/dft_transstrat_pdf_022708.pdf
D. Metz. (2008), “The Myth of Travel Time Saving,” Transport Reviews, Vol. 28, No. 3, pp. 321- 336; at http://pdfserve.informaworld.com/149983__910667966.pdf.
Patricia Mokhtarian and I. Salomon (2001), "How Derived is the Demand for Travel? Some Conceptual and Measurement Considerations" Transportation Research A, Vol. 35, No. 8, September, pp. 695-719. Available at: http://repositories.cdlib.org/itsdavis/UCD-ITS-REP-01-15/
Keneth A. Small (1991), Urban Transportation Economics. Hardwood Academic Publishers, Chur, Switzerland.
Keneth A. Small, R. Noland, X. Chu and D. Lewis (1999), "Valuation of Travel-Time Savings and Predictability in Congested Conditions for Highway User-Cost Estimation." NCHRP Report 431, Transportation Research Board.
Nariida C. Smith, Daniel W. Veryard and Russell P. Kilvington (2009), Relative Costs And Benefits Of Modal Transport Solutions, Research Report 393, NZ Transport Agency (www.nzta.govt.nz). Available at www.nzta.govt.nz/resources/research/reports/393/docs/393.pdf
E. Sullivan (2000), Continuation Study to Evaluate the Impacts of the SR 91 Value-Priced Express Lanes: Final Report, State of California Department of Transportation; at: http://ceenve.calpoly.edu/sullivan/SR91/final_rpt/execsumm.pdf
Transport Canada (1994), Guide to Benefit-Cost Analysis in Transport Canada. Economic Evaluation Branch, Transport Canada, Ottawa; at: www.tc.gc.ca/finance/BCA/en/TOC_e.htm.
Paul Tranter (2004), Effective Speeds: Car Costs are Slowing Us Down, University of New South Wales, for the Australian Greenhouse Office (www.climatechange.gov.au). Available at www.environment.gov.au/settlements/transport/publications/effectivespeeds.html.
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.
UKDfT (2001), Transport Economics Note, UK Department for Transport; at: www.dft.gov.uk/stellent/groups/dft_transstrat/documents/downloadable/dft_transstrat_029006.pdf
VTPI (2010), "Muti-Modal Level-of-Service Indicators," Online TDM Encyclopedia, Victoria Transport Policy Institute (www.vtpi.org); at www.vtpi.org/tdm/tdm129.htm.
William G. Waters II, et al. (1995), "The Value of Commercial Vehicle Time Savings for the Evaluation of Highway Investments: A Resource Saving Approach," Journal of the Transportation Research Forum, v.35, n.1.
William Waters (1992), The Value of Time Savings for The Economic Evaluation of Highway Investments in British Columbia, BC Ministry of Transportation and Highways.
A. 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
Luca 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). Available at www.springerlink.com/content/h663q51u448078x1.