Uh oh. The Dept. of Transportation has announced it is all but eliminating the cost-effectiveness metric from the popular “New-Starts” program:
Our Federal Transit Administration needs to consider key livability factors when evaluating non-Recovery Act transit proposals. Factors like enivronmental benefits and economic development opportunities. Unfortunately, FTA’s flagship programs use cost and performance requirements that are too narrow to allow for weighing these livability factors.
So we are opening them up to a broader set of six performance criteria:
- Economic development
- Mobility improvements
- Environmental benefits
- Operating efficiencies
- Cost effectiveness
- Land use
These criteria–that our old way of doing business simply didn’t account for–add up to a much fuller picture of how proposed projects will serve their communities.
Throughout much of its history, the New-Starts program was notorious for allowing politics to trump sound engineering judgement. Projects with dismal cost and ridership projections were getting funded through earmarks and other games. One of the few good things to come out of the Bush Administration was the introduction of clear cost-effectiveness measures. Unfortunately, those measures were too embarrassing for BART-San Jose and other white elephants.
In place of travel time and cost-effectiveness, the new FTA standard would rely on “liveability”. Liveability is a highly subjective term when scoring projects.
Even more worrisome is the incorporation of “development potential” in transit projects. The New-Starts program generally passes over transit-dependent lower-income urban neighborhoods in favor rail lines to far-flung greenfield sites. The highest priority transit projects should be those serving communities which already have transit-oriented development in place.
Systemic Failure 
It’s not that bad that they’re sidestepping the CEI. The CEI measures cost per travel time saved for commuters; this gives undue emphasis on rail extensions to the exurbs at the expense of good intra-city service, where the commute time reduction potential is lower. For example, in Minneapolis, the CEI forced a light rail extension to use an alternative going through lightly populated suburbs, on a route near a creek that’s not accessible even to said suburbs.
I’m not familiar with the Minneapolis project, but the usual FTA CEI metric (and the one that’s been causing considerable embarrassment) is cost per new transit trip.