SAULT STE. MARIE, Mich. – The U.S. Army Corps of Engineers, Detroit District New Lock at the Soo project fiscal year 2023 (FY23) Supplemental Economic Update has been approved with a policy-compliant Benefit Cost Ratio (BCR) of 2.1 at the 2.5% Federal Discount Rate, allowing the Corps of Engineers to more accurately document benefits and analyze the value this project will bring.
“The economic update was completed to evaluate critical assumptions and uncertainties in the BCR, justification of the project was not in question,” Mollie Mahoney, Senior New Lock Project Manager said. “The primary focus was on updating the benefits identified in the 2018 Validation Study, including the cost estimate for the Escanaba Build Out.”
The 2018 outdated cost estimate for the hypothetical Escanaba Build Out required a robust reevaluation. The cost of the Escanaba Build Out included expansion of the Port of Escanaba and associated rail infrastructure from Duluth to Escanaba as well as operation and maintenance costs. To calculate the BCR, the U.S. Army Corps of Engineers updated and evaluated the hypothetical plan of constructing the Escanaba Build Out to calculate what the costs of an alternative mode of transportation would be in the case of an unscheduled Poe Lock outage to derive the benefits.
“Construction of the New Lock at the Soo has continued through the economic update based on the total project benefits and criticality to the nation,” said Mahoney. “Resiliency of the Soo Locks is vital to America’s economic and national security.”
The economic update, including the new BCR of 2.1 (at 2.5% Federal Discount Rate for FY23), further emphasizes justification of the project and its value to the nation.
With the updated BCR and more accurate comparison of benefits to cost, the New Lock at the Soo project will continue to follow the agency’s budgeting process for project implementation and should compete more favorably with other construction projects throughout the country.