ITS and Funding: Delivering ROI
February 21, 2017

Pete Goldin

Continuing my discussion on ITS funding — I wrote some articles about ITS funding for Pulse in 2015, and I think many of the points below are still relevant, especially about the return on investment of ITS.

Part of the funding problem may be that ITS is still viewed by many decision makers as conceptual rather than real world. ITS is often categorized as research and development for the future, rather than as a very effective real world solution that delivers return on investment (ROI) today.

Photo courtesy of Wavetronix

The ROI of ITS can be very impressive. For example, according to a GAO study on traffic information in 2009, an investment of $1.2 billion in a real-time transportation system information program would generate $30.2 billion in environmental, mobility and safety benefits to the public.

The state DOTs on the front lines know this better than anyone. When interviewed for the Pulse article, David Fink, Director, Transportation Management Systems, Houston District, TxDOT, conservatively estimated ITS ROI at 11:1, meaning for every $1 spent in operating and deploying ITS, the return to the general public is about $11. Similarly, an ITS manager from Colorado DOT estimated ITS ROI at 10:1.

“Many ITS options give 50% of the infrastructure construction equivalent but at 20% of the cost and 15% of the time,” said Professor Eric Sampson of Newcastle University, Ambassador of ITS-UK.

“In Europe the ROI from ITS has varied from 3% to over 100%,” added Sampson. “As a working guide I would suggest 15% is usually easily achieveable.”

As one GAO study on the state of ITS deployment in the United States found, “unfortunately, information on benefits does not have a decisive impact on the final investment decisions made by state and local officials.”

Selling the ROI Concept

One solution may be a different approach to “selling ITS” as an option to decision makers, focusing on the ROI aspects – the bottom line benefits to the public, as well as the transportation agencies – rather than the technology components.

“Communication is the key to a continual funding stream,” Fink advised. “Educating decision makers, highlighting the value of the data to the general public to garner their support, and continual provision of accurate, high quality information is necessary.”

ITIF (The Information Technology & Innovation Foundation) recommends pressuring states to seek out the ROI inherent in ITS by judging them on performance: “Repurposing transportation funds to ITS systems that have a far greater cost-benefit return would spur innovation and improve performance of the transportation system. If the federal government tied federal surface transportation funding to states’ actual improvements in transportation system performance, it would encourage states to deploy the intelligent transportation systems delivering the greatest bang for the buck.”

Bold leadership is needed to push for ITS, like what we are seeing in agencies like California's Contra Costa Transportation Authority (CCTA), which hosted a number of public workshops as part of updating the Countywide Transportation Plan – a 25-year look ahead at transportation needs. CCTA polled participants, and 78% of respondents said it was important to include funding for technology in the plan.

“In order to ensure that we stay competitive, our agency plans to invest a large sum of our future dollars into projects that utilize technology to help increase mobility,” Randy Iwasaki, ‎Executive Director, Contra Costa Transportation Authority in California, explained. “Ultimately, while there are significant upfront costs to development and implementation, I believe this technology will pay for itself by reducing accidents, reducing congestion and thus greenhouse gases, and improving quality of life. The market will drive ITS around the globe and increase demand for solutions utilizing ITS technology.”