Taxonomy of Costs Related to the I-210 Pilot

Categories of expenses

In order to deliver the I-210 Pilot, funds are being expended to pay for personnel, software, hardware, and support expenses.  These expenses can be divided into categories:

Expense Category Components
One-time
  • Outreach – Establishment of overall stakeholder support for the project. Involves communication, funding establishment, and agreements on charters and memorandums of understanding. 
  • Systems engineering – Project management, requirements definition, systems integration, and deployment
  • Analysis, modeling, and simulation – Involves building a model of the corridor, defining traffic management strategies for use during an incident, and evaluation of the results
  • Software and software systems – DSS, ICM, TMC/ATMS upgrades
  • Infrastructure – Upgrading signal lights, new sensors, better communication, etc.
Ongoing
  • Administrative – Attending meetings, answering questions, reviewing documents, updating agreements
  • Operations – Operating the DSS and related ICM systems and ensuring the underlying models are up to date
  • Maintenance – Maintaining and upgrading the infrastructure, the software, and the ITS elements
Research
  • Caltrans has funded and will continue to fund applied research/pilot development on modeling, new data sources, and decision support tools.

Cost strategies

A number of these costs are joint costs shared with many projects or initiatives and cannot be allocated to each individually except in an arbitrary way. One way to further refine the categorization of costs is to determine the level of reuse of products that have been delivered or the applied research that can now be brought into practice. Toward this end, the project team explored five strategies:

  1. I-210 Pilot-specific – Only to be used for the I-210 ICM effort
  2. Corridor-level – Used within the corridor for more functions than just the ICM efforts
  3. Region-level – Used within other corridors in the LA region
  4. State/Caltrans HQ-level – Used state-wide, not including research
  5. State/Caltrans HQ-level – Used state-wide, including research

Questions to consider

There are a number of important questions to consider when determining costs for the I-210:

  1. Multiple use. If an item was purchased specifically for the I-210 Pilot, will it be used for normal traffic management in addition to its use for incident-related congestion mitigation? This is true for nearly all hardware upgrades. If so, how much of its costs should be allocated to Pilot costs?
  2. Reusability. Will the item be used on other corridors? This is true for nearly all software. Again, how much of its costs should be allocated to the Pilot costs?
  3. Pre-planned. Would the item be purchased irrespective of the I-210 Pilot effort? There are many items in this category, including ITS elements. If so, should any of the costs be allocated to the I-210 Pilot?
  4. Pre-existing. Are needed items already in place? There are many, including existing ITS elements. Should any of these costs be included in the I-210 Pilot cost? This includes costs that have already been incurred and are “sunk” in the sense that they cannot be re-allocated to new uses. They will be incurred regardless of whether these new uses occur or not.

The answers to these questions greatly affect the final cost. Answers are determined by analyzing both the reason that the costs are being requested and the cost incidence (source of funding, cost responsibility, the discounting and amortization approaches, etc.).

In the context of a cost/benefits study, for example, the final ratio may change dramatically depending on how one answers the above questions. This is important because the tendency for these questions to be answered differently is one of the reasons that cost/benefit numbers might not be trusted.