Analysis Period. The time horizon over which alternatives are evaluated.
Annualized Average Risk. The expected average annual cost of damage considering a range of event frequencies and damage severities.
Benefit-Cost Analysis. An economic analysis that compares benefits as well as costs in selecting optimal projects or implementation alternatives. For highway projects, benefits are typically those accrued by the user such as shorter travel distance or time, reduced vehicle operating costs, improved safety, and may include benefits to the general public such as reduced emissions and noise.
For the ERFO Program, the only benefit that can be included in a Betterment economic analysis is the avoidance of future repair costs.
Betterment. Added protective features, such as, the relocation or rebuilding of roadways at a higher elevation or the extension, replacement or raising of bridges and added facilities not existing prior to the natural disaster or catastrophic failure.
Catastrophic Failure. The sudden failure of a major element or segment of a facility which is not primarily attributable to gradual and progressive deterioration or lack of proper maintenance.
Cost Estimate. A prediction of all costs and the value of any resources needed to complete the design, right-of-way activities, environmental studies, construction, project management, etc. as well as costs and resources paid to others for work related to a project such as utility adjustments, and environmental mitigations.
Discount Rate. The interest rate used in calculating the present worth of future benefits and costs.
Economic Analysis. Using quantitative and qualitative techniques (e.g. engineering design, engineering judgment, probability, and time value of money) to analyze the risks and uncertainty associated with competing design alternatives.
For the ERFO Program, the analysis must weigh the cost of the alternative against the risk of eligible recurring damage and the cost of future repair.
Economic Justification. The presentation of the findings and supporting documentation of an Economic Analysis that recommends a preferred alternative.
Federal-aid highway. A public highway eligible for assistance under 23 USC Chapter 1, other than a highway functionally classified as a local road or rural minor collector.
Federal lands transportation facility. A public highway, road, bridge, trail, or transit system that is located on, is adjacent to, or provides access to Federal lands for which title and maintenance responsibility is vested in the Federal Government, and that appears on the national Federal lands transportation facility inventory.
Functional Classification. Classification of roadways according to the character of service they are intended to provide. The main categories are; arterials, collectors and local roads.
Heavy Maintenance. Work usually done to repair damage normally expected from seasonal and occasionally unusual natural conditions or occurrences. This includes work at a site required as a direct result of a disaster which can reasonably be accommodated by a state or local road authority's maintenance, emergency or contingency program.
In-kind Repair. Repair to the as-built or as-maintained standard or condition, or to current geometric and construction standards.
Life-Cycle Cost Analysis. A process for evaluating the total economic worth of an alternative by analyzing initial costs and discounted future costs over the life of the alternative.
Natural Disaster. A sudden and unusual natural occurrence such as a flood, hurricane, severe storm, tidal wave, or earthquake, that causes serious damage over a wide geographical area.
Nominal discount rate. A discount rate that includes an inflation component and should only be used with inflated estimates of future costs.
Nominal dollars. Dollars that fluctuate in purchasing power as a function of time. They are normally used to fold in future general price rises resulting from anticipated inflation.
OMB. Office of Management and Budget.
Other federally owned roads. Federally owned roads that are maintained, open to the general public, and can accommodate travel by a standard passenger vehicle, without restrictive gates or prohibitive signs or regulations.
Present Worth (PW). The discounted monetary value of future benefits and costs. Discounting benefits and costs transforms gains and losses occurring in different time periods to a common unit of measurement.
Real Discount Rate. The true time value of money with no inflation premium, which should be used in conjunction with non-inflated dollar cost estimates of future repairs.
Real or Constant Dollars. Dollars which are measured in terms of constant purchasing power over time and their value is not affected by general price inflation. For example, if hot-mix asphalt concrete (HMAC) costs $20/ton today, then $20/ton should be used for future year HMAC cost estimates.
Recurrence Interval. The average time interval between actual occurrences of an event of a given magnitude.
Remaining Service Life. The summation of the depreciated value of any activity (structural and functional) that extends beyond the analysis period. It is primarily used to account for differences in the remaining value of alternatives at the end of the analysis period.
As an example for the ERFO Program, the initial cost of a bridge (structural cost of $2 million) with a design life of 100 years, that is periodically repaired after future ERFO disasters (functional cost of $20,000) every 30-years, would have a remaining service life value at the end of a 40-years analysis period of: ($2million)(60/100) + ($20,000)(20/30) = $1,213,333.
Resilience. The ability to anticipate, prepare for, and adapt to changing conditions and withstand, respond to, and recover rapidly from disruptions.
Service Life. The period of time an asset's service condition declines to an unacceptable level; it is no longer economically feasible to repair or retrofit the asset and replacement is the only remaining option.
Time value of money. The concept that all benefits and costs are worth more if they are experienced sooner.
Tribal transportation facility. A public highway, road, bridge, trail, or transit system that is located on or provides access to tribal land and appears on the national tribal transportation facility inventory.
User Costs. The delay, vehicle operating, and crash costs incurred by the users of a facility. For the ERFO Program, user costs cannot be used in an economic justification for a Betterment.