Least cost planning methodology
Encyclopedia
Least cost planning methodology (LCPM), also referred to as "least cost planning" (LCP) is a relatively new technique used by economists for making rational decisions about investments in transportation and other urban infrastructure projects.
It is based on cost-benefit analysis
. However, it is more comprehensive in that it looks at not only the total costs and total benefits for an individual project, but it also examines the total costs and benefits for all alternatives or combinations thereof and treats them on an "equal footing." These alternatives include not only construction projects but also demand reduction measures, such as road pricing
, developing more walkable neighborhoods and promoting telecommuting
.
Equal footing means that there is no discrimination against some alternatives based on political or ideological factors.
LCPM itself is generally more costly than cost-benefit analysis, because of the requirement to study objectively all potential alternatives. However, it can provide large savings to taxpayers because it will do a better job of selecting those projects which maximize benefits while minimizing costs.
There has been a trend towards making LCPM mandatory for regional transportation plans. For example, it has been required by Washington State law (RCW 47.80.030) for regional transportation plans since July 1, 1994.
It is based on cost-benefit analysis
Cost-benefit analysis
Cost–benefit analysis , sometimes called benefit–cost analysis , is a systematic process for calculating and comparing benefits and costs of a project for two purposes: to determine if it is a sound investment , to see how it compares with alternate projects...
. However, it is more comprehensive in that it looks at not only the total costs and total benefits for an individual project, but it also examines the total costs and benefits for all alternatives or combinations thereof and treats them on an "equal footing." These alternatives include not only construction projects but also demand reduction measures, such as road pricing
Road pricing
Road pricing is an economic concept regarding the various direct charges applied for the use of roads. The road charges includes fuel taxes, licence fees, parking taxes, tolls, and congestion charges, including those which may vary by time of day, by the specific road, or by the specific vehicle...
, developing more walkable neighborhoods and promoting telecommuting
Telecommuting
Telecommuting or telework is a work arrangement in which employees enjoy flexibility in working location and hours. In other words, the daily commute to a central place of work is replaced by telecommunication links...
.
Equal footing means that there is no discrimination against some alternatives based on political or ideological factors.
LCPM itself is generally more costly than cost-benefit analysis, because of the requirement to study objectively all potential alternatives. However, it can provide large savings to taxpayers because it will do a better job of selecting those projects which maximize benefits while minimizing costs.
There has been a trend towards making LCPM mandatory for regional transportation plans. For example, it has been required by Washington State law (RCW 47.80.030) for regional transportation plans since July 1, 1994.