Open AccessINDOT Research Program Benefit Cost Analysis—Return on Investment for Projects Completed in FY 2019
Author(s) -
Bob McCullouch
Publication year - 2020
Language(s) - English
Resource type - Reports
DOI - 10.5703/1288284317279
Subject(s) - fiscal year , return on investment , net present value , internal rate of return , investment (military) , cash flow , rate of return , cost–benefit analysis , finance , present value , cash , actuarial science , operations management , business , operations research , economics , engineering , production (economics) , ecology , politics , biology , political science , law , macroeconomics
To demonstrate the value of research and its implementation, the Governor’s Office requested an annual financial analysis of the INDOT Research Program to determine the return on the research investment (ROI). This report is for the 35 research projects that completed in FY 2019. The ROI analysis will supplement the annual IMPACT report by adding a more rigorous quantitative benefit cost analysis (BCA) to the Research Program. Previous financial analyses used the approach of calculating net present values of cash flows to determine a benefit cost ratio and this report uses the same approach. Additionally, an overall program rate of return (ROI) is reported and will be accumulated over time into a rolling 5-year average. The ROI is expressed as a BCA ratio, which is commonly used by State DOTs and national transportation research agencies when expressing the return on the research investment. By using total program costs in the analysis, rather than just the individual project cost, a very conservative BCA ratio is obtained. Interestingly, the quantified cost savings from a single project frequently underwrites the cost of the entire research program in a fiscal year.