Thursday, September 17, 2009

Costly Construction

Occasionally, when I'm running late to work in the morning, I take a taxi. The most efficient path for the taxi runs along the Franklin Delano Roosevelt (FDR) Drive along the east side of Manhattan Island. But recently the Drive suffered a minor structural collapse that shut down the northbound lanes of this important New York City pathway for 24 hours.

Although partially repaired, the Drive will have one of the three northbound lanes closed indefinitely until the structure is repaired. This disruption slows traffic significantly for a portion of the way. From my recent taxi-travels, I've realized that this change adds about 5 to 10 minutes to my normally 15-minute journey.

Even though this might be short amount of time, it does keep me from working for 5 to 10 minutes. If taken in aggregate, this one-lane closure affects quite a few people in New York. How does this translate into an actual monetary estimate?

  • The Drive carries around 300,000 vehicles per day
  • Since about a third of the drive is affected by the traffic, only 100,000 of those vehicles are slowed by 5 to 10 minutes
  • This must be halved once again since it's only northbound traffic that is slowed - giving us 50,000 vehicles
  • It's hard to to estimate how many passengers per car there are - but it's probably safe to say there are between 1 and 2 passengers on average - so we'll say 1.5
  • This gives us a total of 75,000 people affected by the delay daily
  • Let's say that half of these people are going to work and thus would be working if they weren't stuck in traffic - thus 37,500 are losing productive time in traffic
  • The average hourly wage for New York City is around $25 - so that 10 minutes would equate to approximately $4 per person for lost time
  • If we multiply 37,500 by $4 we get a productivity cost of $150,000 per day
  • This means that the one closed lane would cost New York City $54,750,000 in lost productivity per year.

It seems that the indirect cost of keeping one lane closed may hurt the NYC economy by $55 Million per year.

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