Putting Safety to theBy Baselinemag Print
Technology is available to make railroads safer by using sensors, computers and digital communications to control trains. But is it worth $3 billion to $5 billion to save one or even a half-dozen lives?Test">
Putting Safety to the Test
In 1982, Burlington Northern undertook a project to test the feasibility of a PTC system using defense satellites to track trains. Burlington Northern installed its Advanced Railroad Electronics System (ARES) prototype on its Iron Range route through Minnesota and operated it from 1987 to 1989. The railroad spent approximately $15 million on ARES, while its technology partner, Rockwell International, had spent three times that amount, according to a Harvard Business School case study of the project. As a result, Burlington Northern estimated that deploying ARES nationwide would cost $350 million.
Burlington Northern at the same time installed a state-of-the-art network operations center in Fort Worth, Texas. That 180,000-square-foot, disaster-proof center still exists, and operates as the nerve center of BNSF's dispatching operations.
Burlington Northern brought in a battery of consultants to help the railroad perform a variety of analyses to determine if fully deploying ARES made sense. The consultants estimated everything from the effect of ARES on the efficiency of carrying freight, to impacts on labor, safety and capacity.
The analyses, detailed in the Harvard study, indicated "the potential benefit of ARES is large but uncertain." In the end, the gross benefit was pegged at $400 million to $900 million over the life of the system, with an expected present value of about $600 million. Those benefits greatly outweighed costs that were estimated to represent $220 million in upfront or "present value" dollars, at time of deployment.
But Burlington Northern's top brass wasn't convinced by the findings, according to the Harvard study and interviews with some of those connected with the ARES study. The case study researchers quote Dick Lewis, then vice president of strategic planning, as calling ARES "a technology in search of a problem." Then-Chief Operating Officer Bill Greenwood said ARES technology was "the least of our concerns," and expressed dismay that implementing ARES would require Burlington Northern to change its underlying business processes.
"Railroads heavily prefer hard-dollar savings to soft-dollar savings," says Steven Ditmeyer, head of the Federal Railroad Administration's Office of Research and Developmentand former chief engineer of research, communications and control systems for Burlington Northern. "That was true then, and it's still true now." Ditmeyer identifies soft-dollar savings as improved running times, greater reliability, improved service, fewer train collisions and the like. For railroads, hard-dollar savings are monies saved from, for example, layoffs and reduced fuel costs, he says.
Ditmeyer and the FRA are still pushing for railroads to adopt PTC and similar intelligent railroad systems. The FRA is funding two PTC demonstration projects at the moment: one in Michigan, in conjunction with Amtrak, called the Incremental Train Control System, and another in Illinois, jointly with Amtrak and the Association of American Railroads.
Outside the government, the debate over whether PTC systems are cost-justifiable continues to rage, just as it has for years.
"Railroads have been making arguments about why they can't or won't implement these kinds of (PTC) systems since Burlington Northern did several analyses nearly two decades ago," says one transportation analyst, who requested anonymity. "But there is no economic reason why they haven't done this. These systems would pay for themselves in three to four years."
In the end, however, improving safetyone of the main benefits accrued from PTC systemsdoesn't fare well in cost/benefit analyses.
Carl Martland, senior research associate at the Massachu-setts Institute of Technology, says the FRA has estimated railroads could save an estimated $20 million to $50 million a year, based on a $2.5 million per fatality cost figure. Even there, passenger lines are the ones likely to reap the greatest savings from improved safety. According to preliminary 2001 FRA data, there were only 2,962 accidents involving trains, with six resulting fatalities (not including accidents and deaths resulting from highway-train and/or crossing-grade incidents).
"With seat belts in cars and helmets on motorcycle riders, you get a lot of benefits," notes Martland. "With PTC, you don't get a lot because there aren't that many train (collision) accidents."
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