The State of the Intelligent Transportation System Market

1. The State of the Intelligent Transportation System Market

2. Overview • The GOVERNING Institute conducted a research study to assess the current and projected spending on intelligent transportation system (ITS) technologies by state departments of transportation, including the overall estimated state-level spending for all 50 states as well as on a state-by-state basis. The study is intended to offer insight on trends and expected spending for the next 18 to 36 months. • This presentation provides a summary of the research survey data and additional projections about the state of the ITS market based off of planning documents such as strategic plans, state implementation plans and transportation improvement plans. • This report confirms what we have known for some time now; the ITS market is healthy and steadily growing.

3. Methodology Three research methods were used to compile the data in this presentation: • A survey of 140 public transportation ITS leaders was conducted via the GOVERNING Exchange, an online subscriber community of senior government decision-makers and officials. • Secondary research included analyzing state-level budgets and expenditures, state transportation plans, transportation improvement programs, etc. • In-depth phone interviews were conducted with public sector transportation members to receive more detailed information about specific states, as well as to confirm findings from the other two methods of research (participating states: AL, GA, IA, IL, KS, MN, NC, NJ, NM, OH, OR, UT, VA and WA).

4. What is ITS and What are the Drivers? • ITS consists of a combination of technologies that optimizes existing transportation infrastructure. • The availability of high-speed networks, along with the proliferation of mobile devices that can send and receive real-time vehicle or other information, are driving the adoption of ITS technologies. • ITS technologies could bring significant improvement in transportation system performance, including reduced congestion, increased safety, enhanced mobility and traveler convenience. ITS Drivers

5. The Importance of ITS • Many states recognize that ITS will play a major role in shaping the future of transportation. However, only 6% of responding states indicated that ITS is one of their most important objectives. • Proponents of ITS find it extremely vital. One respondent said that his state’s use of ITS resulted in an average annual motorist cost savings of $1.1 billion over the past five years compared to an average annual expenditure of approximately $30 million. The level of importance of ITS:

6. ITS Value Insights What is the value of ITS to your agency and department? “ITS is an integral component of the highway infrastructure used to increase capacity and manage traffic flow.” “It is the way of the future, however, in these poor economic times money for ITS is limited.” “Being a transit/transportation planner, I value ITS a great deal. However, management here has not realized the potential of ITS and therefore places no importance on it. As the world and transit markets slowly shift to upcoming digital/technical worlds, it should be in our best interests to move with it if progress is in our future.” “ITS is critical for the state in many ways. We use it for traffic, weigh in motion, traveler information, crash data reporting, public transit, highway safety, travel and traffic monitoring and reporting, and incident management. It provides the traveling public with information on weather and road conditions, and provides data to our agency that helps with remote monitoring, internal operations and management.” *This question was taken directly from the survey.

7. State of the Market • The current size of the state-level ITS market is roughly $5.4 billion and is projected to reach nearly $5.6 billion within the next three years. • ITS spend could increase as transportation agencies seek to optimize their existing infrastructure rather than fund new capital projects. While this news is encouraging, ITS spend is currently low compared to overall state transportation budgets. • The survey found that roughly 5% of state transportation budgets support ITS strategies. The state ITS market is projected to increase by 0.73% CAGR within the next 18-36 months. • A majority (63%) of state governments have an ITS strategy in place. Seventy-one percent of survey respondents that have a plan implemented ITS technologies to reduce congestionand traffic delays. • Many respondents acknowledged that their plan was outdated and that they are in the process of changing the organizational structure of their ITS department.

8. State Spending on Transportation Source: 2011 State GDP Information, guesstimated by projecting the latest change in reported number forward to future years. GSP deviation from national GDP growth cut by 40% per year.

9. State Spending on Transportation (cont’d) Source: 2011 State GDP Information, guesstimated by projecting the latest change in reported number forward to future years. GSP deviation from national GDP growth cut by 40% per year.

10. Annual State Spend on ITS • Overall, $108.1 billion was spent on transportation in 2012, with roughly $5.4 billion of that going to ITS. • Many interviewees stated that the ITS budget should continue to be increased and stabilized to focus more on new and existing projects.

11. Estimated State Spend on ITS

12. Estimated State Spend on ITS

13. Estimated State Spend on ITS

14. Estimated State Spend on ITS

15. Top Areas of State ITS Spend • Traffic management systems will be an area of heavy investment. Specifically, video detection and the update of loop detectors, including a range of applications such as traveler information, congestion charging and adaptive signaling. • CCTV video cameras are relied on for use with vehicle detection software, as well as the deployment of count-down timers for pedestrians. • There is also potential in the use of adaptive signal controls in the area of traffic reduction.

16. ITS Areas of Interest What functions or capabilities would you like to have as part of your existing ITS capabilities? What are the benefits of those features? “Exchange of real-time data with trucking companies that will allow for retention of their proprietary information, yet still benefit the sub-region.” “Providing real-time driver information to the motoring public as it’s related to traffic conditions/incidents. Increased inter-agency coordination regarding traffic management issues resulting in decreased traffic delay.” “Communications with intersections, count information and additional CCTV feeds. Benefits would be improved response to traffic issues.” “Revised procurement rules/regulations that allow for the expedited development and deployment of ITS. This will allow our department to remain in the forefront of deploying cutting-edge technologies. Also, enhanced coordination and cooperation among internal and external ITS partners will provide for the deployment of sound and long-standing ITS projects.” *This question was taken directly from the survey.

17. State ITS Funding Sources • States have significantly underinvested in ITS in the past, preferring to fund traditional transportation investments such as new highway capacity. • When asked what funding sources they use for ITS initiatives, 76% of survey respondents said federal and state grants, while another 50% said funding from the state budget.

18. State of the States The next few slides will provide an in-depth look into ITS spending across the U.S., with a specific focus on North Carolina, New Jersey, Washington, Ohio, Oregon and Virginia.

19. North Carolina’s ITS strategy: • Duration of ITS Plan: NCDOT’s long-range planning process includes consideration for replacing the existing ITS infrastructure. • Overall ITS Expenditures: NCDOT has a designated budget for ITS O&M, but most new deployments are funded through the TIP process. • Summary of Plans: ITS planning is done on a division level, a regional level and a statewide level. Each division has plans to manage traffic based on local needs and conditions. Regionally, stakeholders seek to improve integration and cooperation with other stakeholders within the region. On a statewide level, NCDOT seeks to outfit all interstate highways and critical highways with ITS, and to connect all TMCs to the Statewide Transportation Center (STOC). • Top three motivating factors when evaluating ITS projects: • Safety and mobility • Need for traffic management/traveler information • Connectivity for improved interoperability among systems.

20. North Carolina’s future ITS plans: • North Carolina is conducting a variety of ITS-oriented projects and is incorporating the following technologies: • Several FMS deployments – various freeway management systems across the state. • Municipal traffic signal system upgrades – computerized traffic signal systems • Ramp metering feasibility study • Smartlinksystem • Fayetteville Area ITS Strategic Deployment Plan – regional ITS architecture • Statewide DMS upgrade – replacing non‐working and non‐NTCIP compliant message boards • Automated Weigh Stations (CVISN, WIM, ALPR) and Virtual Weigh Station • Roadway Weather Information System (RWIS) • Updating these signal systems greatly reduces total trip time by pushing groups of vehicles along a corridor at a steady pace. North Carolina’s U.S. 70 from the capitol in Raleigh to the beaches is the most impressive example of this type of signal system.

21. New Jersey’s ITS strategy and future plans: • Duration of ITS Plan: 10 years • Overall ITS Expenditures: $1 billion • Average Annual ITS Expenditure: $37.5 million • Summary of Plans: The I-295/I-76/Route 42 project will improve safety and reduce traffic congestion at the intersection of I-295, I-76 and Route 42. It will address quality-of-life issues relating to motorists, residents and the environment. • Top three motivating factors when evaluating ITS projects: • Economical: Using the most cost-efficient solution available and creating a form of electronic stress relief for the dollars spent. • Constant improvements: Technology continuously evolves everyday, so it is important to always be looking for new solutions and evaluating the newest technology. • Innovation: It is a major motivating factor for the state to stay ahead of the curve and predict new technologies and their uses.

22. Washington’s ITS strategy and future plans: • Duration of ITS Plan: 20 years • Overall ITS Expenditures: $651 million • Average Annual ITS Expenditure: $32 million • Summary of Plans: WDOT will be expanding on its three current ATM operating systems by creating hard shoulder running during peak hours, which initially will be implemented north of Seattle. The state will use ATM systems on the primary mountain pass that facilitates East-West traffic to inform drivers of conditions requiring chains and potentially carve up lanes for chain placement and removal. • Barriers: WDOT’s ITS operations engineer believes that ITS is a small industry and there are not as many entrenched career pathways and opportunities within WDOT. That has led to limited technical skills available to WDOT for planning and implementing ITS technologies. He says that retaining employees is crucial in developing the institutional knowledge necessary to maintain advanced transportation technologies. WDOT can be reliant on vendors to repair equipment, a process that leads to increased costs and lead times for the replacement of parts and services.

23. Ohio’s ITS strategy and future plans: • Duration of ITS Plan: 10 years • Overall ITS Expenditures: $2 billion per biennium • Average Annual ITS Expenditure: $4 million • Summery of Plans: ODOT and the IT Department are actively working on incident management systems. This will be a new unified dashboard for ODOT operators to observe and manipulate a variety of ITS systems as they are currently deployed. Additionally, ODOT is actively rolling out a 511 system with additional “Reverse 511” capabilities. ODOT is also conducting camera feed software updates, and working on the Cleveland Innerbelt Modernization Plan, which is focused on improving safety, reducing congestion and modernizing interstate travel in and around downtown Cleveland. • Barriers: ODOT’s deputy director of IT states that funding is always a challenge. However, ITS deployment and ODOT in general have been able to keep costs down by using pre-existing technology, such as buckeyetraffic.com. This website allowed ITS and ODOT to gather the necessary information about UX and data gathering to build a new system aimed at the individual traveler needs.

24. Oregon’s ITS strategy: • Duration of ITS Plan: 20 years • Overall ITS Expenditures: ODOT’s ITS operations manager says that the ITS budget fluctuates as there are several individual components that comprise the operations portion of the transportation budget. He notes that there have been increased funds available to ITS more recently. • Top three motivating factors or drivers in deploying ITS: • Making the most out of available funds and utilizing technology that will give the state the best opportunity at meeting infrastructure demand • Environmental issues such as energy and greenhouse gas reduction • Improving traffic flow and reducing congestion • ITS importance:Oregon anticipates that ITS will continue to evolve and grow over the coming years as many of the technologies Oregon is adopting lead to long-term cost savings. As more data is accumulated from piloted technologies, such as connected vehicles and variable speed notifications, the state will begin to shift its focus in those areas.

25. Oregon’s future ITS plans: • Oregon has many projects and the state is as busy as it has ever been in recent years. • Oregon 217 in the Portland area is currently under construction from both a software and maintenance standpoint. The state is installing an active traffic management system which includes flow/condition monitoring with sensors to alert drivers’ trough variable advisory speeds, acute warning systems and travel times. It would be the most device-intensive stretch of highway in Oregon. • Oregon also discussed a weather-based variable speed system on US 26 near Mount Hood. The state is implementing an electronic message bus infrastructure for connecting the ODOT dispatch center to the state police and 911 dispatch centers for emergency management purposes.

26. Virginia’s ITS strategy and future plans: • Duration of ITS Plan: 3 years • Overall ITS Expenditures: $263 million • Average Annual ITS Expenditure: $25 million • Summary of Plans: Virginia is working on a $5 million to $7 million project that will create the nation’s first 511 service to transmit transportation data and live video streaming from across the state in HD. Virginia is consolidating communication, MTC management, and field device maintenance and technology in one contract for outside industry to bid on. This initiative will cost approximately $65 million annually. ITS deployment is also being geared towards congestion management. • The Value of ITS: VDOT finds significant value in the state’s deployment of ITS and remaining an innovative practitioner. ITS’ value is less about its functional value to VDOT and more about the value it provides to citizens. VDOT cites examples of clearing incidents, and the capacity to warn citizens about roadway hazards, accidents and detours.

27. The Future of ITS • In the future, it is the hope that ITS will integrate existing transportation infrastructure with communication networks in an effort to reduce congestion and travel time. The use of ITS will become increasingly important as population increases. • The survey revealed that over half of states indicated that their department will have an increased focus on ITS within the next two years. Additionally, 54% of respondents said their department has developed a regional (or agency-specific) ITS architecture; another 13% plan to do so in the future.

28. Future Investing • Despite many public sector cutbacks, investments in ITS will continue to be stable. In fact, investment will gain momentum over the next 18-36 months. • Data sharing between state operated traffic management centers and state/municipal run traffic management centers, as well as predictive analysis will continue to be areas of investment for states. Anticipated growth in overall budget for ITS?

29. Future Investment Priorities Fixed sensors: Traffic/lights/signals:

30. Future Investment Priorities cont’d Data sharing: Other ITS technologies:

31. ITS Barriers • Financial and investment constraints will continue to hamper the deployment of ITS programs and their consolidation. Fifty-six percent of survey respondents indicated that lack of funding was the No. 1 barrier to deploying transportation technologies, followed by the lack of understanding of ITS and its benefits. • One state official noted that the constant evolution of technology has created its own barriers to ITS deployments. This lack of education and understanding around ITS proved to be a common theme throughout our research. • Professional development is needed for ITS employees, and research suggests that there is a breakdown in communication between vendors and ITS, resulting in stagnant relationships.

32. Strategizing for Improvement • Funding:Many states understand the value of ITS, however they lack the appropriate funds to increase efforts. Many states have no specific budget for ITS solutions in place. ITS needs to be viewed distinctly from the state transportation budget as a whole. • Lack of understanding: Without its benefits being completely realized, this will continue to delay the urgency for increasing the ITS budget. ITS shouldn’t be looked at as only dealing with traffic issues; its presence is critical on the state level in many ways. From public transit to highway safety and incident management, the message on the benefits of ITS must be conveyed to the public sector.

33. Future Considerations • Evaluate and upgrade maintenance programs on an ongoing basis. • Consider public-private partnerships and unique financing methods as ways to cover costs for ITS projects. • Examine multiple funding sources and anticipate unforeseen costs associated with deploying ITS. • Agencies can benefit from hiring a software/system vendor who has a local partner company that supplies hardware, message boards, and can be more readily available to perform routine inspection and maintenance of the system. • Agencies should develop goals for ITS based on systematic consideration of the potential impacts to traffic from the planned construction activities so that the system design is appropriate for the conditions.

34. Appendix I In-depth Survey Findings from GOVERNING Exchange

35. Methodology • Research report from the GOVERNING Exchange, an online subscriber community of senior state and local government decision-makers and officials • Targeted sample of 140 senior government ITS leaders in the public transportation sector. • The data from the online survey was collected in March 2013 and April 2013. • The results are reflective of those who subscribe to Governing magazine with an overall maximum sampling error in this survey of +/- 8.2 percentage points at 95% confidence. The results of this survey cannot be projected to the entire population.

36. ITS Investing My agency or department is currently focused on investing in Intelligent Transportation Solutions to reduce congestion, traffic delay, etc.

37. ITS Plan My agency or department has an Intelligent Transportation System (ITS) strategy or plan.

38. ITS Importance Please select the level of importance for the following statements regarding ITS:

39. ITS Funding Source What funding sources do you use to fund your ITS initiatives?

40. ITS Focus My agency or department will have an increased focus on Intelligent Transportation within the next two years.

41. ITS Factors In your current ITS strategy, please select your top three motivating factors, besides improving safety, in deploying ITS.

42. ITS Barriers What are the barriers to deploying transportation technologies and/or ITS?

43. ITS Projects My agency or department has ITS projects and pilot projects in place.

44. ITS Budget Growth In the next 12-18 months and 18-36 months, do you anticipate that your overall ITS budget will:

45. Anticipated Growth What is the anticipated growth in overall budget for ITS?

46. Fixed Sensors Do you currently utilize or plan to implement fixed sensors such as:

47. Traffic Lights/Signals Do you currently utilize or plan to implement update of traffic lights and signals such as:

48. Data Sharing Do you currently utilize or plan to implement real-time data sharing and capture:

49. Other Technologies What other transportation technologies do you currently utilize or plan to implement?

50. Other Technologies (cont’d) What other transportation technologies do you currently utilize or plan to implement?