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This research is carried out to evaluate the efficacy of toll roads in reducing travel time and improving travel time reliability on links within its vicinity, using data for the Triangle Expresswa...

Research on risk management in Public Private Partnerships (PPPs) has largely overlooked that the Special Purpose Vehicle (SPV) is made up of several project partners with different interests and objectives to manage risk. This paper makes an important contribution to this literature as it articulates SPV partners’ perceptions of how they manage risk in toll road PPPs. Our case studies show that the different skillsets of both the international and domestic partners with their sub-contractors provide opportunities for mitigating and managing risk but also pose potential problems in terms of measuring and obtaining value for money for taxpayers.

The uncertainty associated with future traffic levels in Build–Operate–Transfer toll road projects lead to difficulties in obtaining finance and thus to unsuccessful bids. In order to increase the ...

In toll-road projects there is exogenous demand risk. Thus, the government may be required to provide a minimum-traffic guarantee to induce potential private partners to participate. The government must offer the most appropriate level of guarantee while also justifying this controversial fiscal policy tool to society. This study demonstrates the use of financial modeling, risk analysis, and economic evaluation in a toll-road project in Turkey, contributing to the narrowing of a capacity gap in the field. One criterion is proposed to produce a socially equitable guarantee level. This case study exemplifies the policy implications discussed in the conclusions, with a critical look at the public–private partnerships within the context of the neoliberal economic development theory.

To bridge the gap between supply of and increasing demand for roads, public–private partnership (PPP) concession contracts in which the investment cost is recovered via payments from the end users have been established. Although this mechanism has been seen as an efficient way for road projects to be completed on time and within budget, the demand risk faced during the operation stage has considerably limited this efficiency. Demand depends on a range of interrelated and dynamic factors such as the demographic and economic conditions. In addition, uncertainty is an inherent aspect of most demand-underlying factors which always make demand estimation inaccurate. However, this uncertainty is largely ignored by modellers where a single demand estimate is often used when evaluating the facility. The aim is to develop a system dynamics model to assess demand risk in road projects. The model captures the factors affecting demand and their relationships and simulates their change over time. By employing Monte Ca...

This paper examines how capacity and toll choices of the Build–Operate–Transfer mode affect the benefit distribution among private sector, road users and public under the framework of cumulative prospect theory. In the proposed network equilibrium model, we divide all road users into several classes differentiated by their valuation of travel time, and let the class-specific travel demand be endogenous. Our numerical results show that the benefit distribution is indeed influenced by the travellers' risk preference parameters significantly. Thus, administrators should carefully consider the travellers' risk attitude and their heterogeneity before determining whether or not to employ the Build–Operate–Transfer mode.

In contemporary times, Public–Private Partnership (PPP) in transport infrastructure has gained considerable attention in developing regions following its success in the developed countries. However, Sub-Saharan Africa (SSA) is among the developing regions with few transport PPP projects and among the regions with high number of failed projects. Meanwhile the region's transport infrastructure need far exceeds it current provision. This paper therefore aims to examine the project experiences (success and failure factors) of three highly profiled transport PPP projects, namely the Lekki toll road concession project (Nigeria), N4 toll road (South Africa/Mozambique) and Port of Maputo (Mozambique) in order to develop policy measures for effective future implementation. The experiences of the three projects show that transport PPP policy is indeed feasible in SSA. However, to realise its full applicability, proper policy actions and measures must be carefully observed and these include effective and ef...

Faced with significant infrastructure deficits, U.S. governments at all levels are increasingly considering the use of public-private partnership (PPP) to leverage private finance to support public infrastructure development. This study focuses on PPP tolling in highway development and seeks to explain the determinants for adopting this innovation, using data on toll road activities in the United States during 1985-2010. The results show that the probability of adopting PPP in highway tolling projects is significantly affected by traffic demands and fiscal pressures, liberal political ideology and administrative inertia, state wealth, state PPP legislation, and earlier experiences of PPP adoption in the state and elsewhere.

Public-private partnerships (PPPs) are adopted throughout the world for delivering public infrastructure. Despite the attractiveness of the PPP structure, its implementation has not been without trouble due to multiple uncertainties embedded with PPP projects. Private investors often require some mitigation of these risks through government support. One of the most common forms of government support is minimum revenue guarantee (MRG). A real option-based model is developed that uses a new mechanism for setting the revenue guarantee level secured by the government, which balances the private sector’s profitability needs and the public sector’s fiscal management interests and uses the concept of fairness for structuring MRGs. The model uses Monte Carlo simulation to take into account the uncertainty. The model is applied to the projected 1 kilometre long ‘Camionale di Bari’ toll road that will link the port of Bari (located in Puglia, Southern Italy) with the existing road network without affecting the urba...

Over the last 10 years, a Denver toll road has taken a different approach to implementing a quality system. It uses a project-oriented approach.

At present there is a very high level of interest in public–private partnerships in the provision and timely maintenance of highway infrastructure. Although in the past a number of jurisdictions around the world developed toll ring roads and sometimes radial roads in major urban areas, the current heightened interest in toll facilities is unprecedented, given that it even extends to the level of toll lanes. The experience of a number of existing public–private partnership type of toll facilities suggests that risk variables are encountered in the development, operations and maintenance/rehabilitation phases. According to literature sources, although the financial and research community are aware of the need to address risk, only a small number of practitioners carry out a detailed risk assessment. There could be a number of reasons for inaction. One of these is the lack of awareness of methodologies that address risk in key parts of the life cycle. This article identifies risk factors in the lifecycle ana...

This article argues that the two prevailing perspectives that explain private sector participation in infrastructure in developing countries – new institutional economics and the rent-seeking approach – cannot account for the evident variations within and across sectors in a given country. This study uses two cases from Indonesia's attempt to promote private investment in toll road construction to demonstrate that a firm-level analysis is adequate to the task. In particular, the specific incentive structure that a rent-seeker faces may explain whether positive or negative rent will be facilitated.

A primary motivation of this paper is to draw together, in one source, information on the nature, extent and performance of Australia's evolving toll road network which is currently spread across many disparate published and unpublished sources. This paper provides key information (e.g. length, toll rates, year opened, operator(s) and payment alternatives) on all of the fully interoperable toll roads in Australia that are present in Sydney (e.g. the M2, M4, M5, etc.), Melbourne (CityLink and EastLink) and Brisbane (the Gateway Bridge, the Logan Motorway and the Gateway Extension). Where available, we compare and discuss actual traffic levels and forecasts, revealing the sizeable gap or ‘error’ in forecasts, especially during the first year of operation. Ordinary least squares regression and panel random effects regression models are developed to identify potential sources of explanation of differences in error forecasts between the Australian toll roads at various points post the opening date. A ...

The City of Padova is an important trading hub in the north-eastern industrious region of Italy, located near the intersection of the major highways crossing the country in east-west and north-south directions. The ring of speedways that distribute the vehicular flow inside the city was completed by a new viaduct, near the gate of A4 toll road. Its particular location and its relevant functional and architectural values make it the most important access to the city, and this was the expectation of the Public Administration of Padova. The Corso Argentina steel viaduct is 544 m long and 13,5 m wide. It has 11 spans in bending continuity and two separate ways are borne by V-shaped piers that are also in bending continuity at the top. The piers connect with the deck, making a “quasi-integral” bridge; only the lateral piers are not rigidly fixed to their diaphragm-wall foundations, and use steel-Teflon bearings. The typical deck cross section is conceived as a single-cell torsion-resistant shell, its wing shape stiffened only by reticular internal diaphragms. The orthotropic plate at the end of the deck, stiffened by channel-shaped ribs, reaches relevant width at the site of connection with side access lanes, which are served by similar smaller decks. (A)

In the early nineties, after the collapse of the communist system, many Central and Eastern European (CEE) countries hoped to expand their motorway network by offering concessions to private companies to finance, build and operate toll roads. Both the lack of public resources and the aim of increasing the role of private sector in the economy were behind that policy. In the nearly two decades since, roughly one‐third of the motorways built in CEE have been private concessions. But far fewer such motorways were built than expected, and many of those that were built were financed largely by payments from the government rather than by toll revenues. Moreover, all the toll roads are concentrated in three countries—Hungary, Poland and Croatia. This paper examines the history of toll road projects in those countries and the reasons of the gap between the expected outcomes and the actual results, which vary across countries.

The article describes the application of an integrated multi-household computable general equilibrium model to the analysis of the impacts on poverty and inequality of the construction of a toll road between Dakar and Thies in Senegal. Potential effects of the projected highway, such as productivity gains, decreases in transportation costs, and increases in labour supply are simulated. Foster-Greer-Thorbecke and Gini indices were applied to measure changes in poverty and inequality. Some results are counter-intuitive; gains are at times greater in rural areas than in the Dakar region.

A classic question in transportation economics is whether optimal road capacity is greater with or without congestion tolls. This article addresses the question under two complications. One is that tolls are levied not only to relieve congestion but also to generate revenues. The other is that toll revenues may be earmarked. Under most plausible assumptions, capacity is found to be greater without tolls. The main exception is when the marginal cost of public funds is high, and revenues are earmarked to the toll road so that capacity investments are effectively “protected” from competing demands for scarce public funds.

Since 1934, Norway has made use of toll financing of road infrastructure. The toll road system has a mixture of urban cordon toll rings, tolled fjord crossings, tolled motorways, and tolled public–private partnerships (PPPs). This paper begins by providing an overview of the various toll road projects and the planning framework and toll financing regime in Norway. Then it summarizes evidence on the demand effects of road tolls for a representative selection of projects. Finally, it discusses the socioeconomic efficiency of toll funding vis-a-vis conventional public funding.

This paper proposes a model for assessing the effects of the integrated implementation of en-route transit information systems (ETIS) and time-varying transit pricing systems (TTPS). The proposed model reveals the interaction between ETIS and TTPS, and the potential benefit of the joint implementation. There are two classes of passengers: those equipped and those unequipped with ETIS. It is assumed that unequipped passengers make their travel choices according to stochastic dynamic user optimal principles, with equipped passengers having a lower perception variation of travel cost due to the availability of better information. A bi-level program is formulated to model the integrated effects on passengers’ departure time choice behavior, route choice behavior, transit network performance, and transit operators’ revenue. The lower level is a multi-class stochastic dynamic transit assignment model. The combined system total cost and operators’ benefits under varied transit conditions are investigate...

Recent concessions in France and in the USA have resulted in a dramatic difference in the valuation placed on the toll roads; the price paid by the investors in France was 12 times current cash flow whereas investors paid 60 times current cash flow for US toll roads. In this paper, we explore two questions: what accounts for the difference in these multiples? and what are the implications with respect to the public interest? Our analysis illustrates how structural and procedural decisions made by the public owner affect the concession price. Further, the terms of the concession have direct consequences that are enjoyed or borne by the various stakeholders of the toll road.

The participation of private capital in public infrastructure investment projects has been sought by many governments who perceive this as a way to overcome budgetary constraints and foster economic growth. For some types of projects, this investment may require government participation in the form of project guarantees in order to reduce the risk to the private investor, and as a consequence, the government assumes a contingent liability which may have significant future budgetary impacts. We present a minimum traffic guarantee (MTG) real options model that differs from most of the literature in the field by using market data to determine stochastic project parameters. This model can be used to assess the value of these guarantees, allows the government to analyse the cost–benefit of each level of support, and proposes an alternative to limit the exposure of the government while still maintaining the benefits to the private investor. We apply this model to the projected 1000 mile long BR‐163 toll road th...

A reliable, cost‐effective and safe transportation system is essential to economic growth. To keep pace with demands for network capacity, revenue‐generating projects are increasingly being used to complement the current procurement practices and lessen the pressure on public finances. In such transportation networks where there exists a mix of free access links and links with user fees, network interconnectivity is an important component of project valuation. A bilevel stochastic recourse model for valuating network flexibility is formulated. A key component of the model is consideration of network‐based managerial flexibility in context of the upper level project valuation objective and the lower level network user equilibrium solution under demand uncertainty. The results from a test network, for which a closed form solution is possible, indicate that the value of network flexibility directly depends on initial network conditions, variance in future travel demand and toll pricing decisions.

A recent environmental impact assessment of a proposed new toll road in Cape Town, South Africa raised some interesting questions, particularly with respect to the impacts of routing a road through an environmentally sensitive area. The paper discusses the challenges encountered in assessing the economic implications of this routing and how workable methodological solutions were arrived at. Our approach was to investigate the longer-term opportunity costs associated with the preferred routing. This was done through focusing on the strategic importance of the area without necessarily engaging in detailed quantification.

This article investigates whether there are strategic interactions between private traveler information service providers (ISPs) and private toll road operators (TOs), whose objectives are profit-driven. For this purpose, a multiclass stochastic user equilibrium assignment model capturing the elastic market penetration of traveler information services is developed through the nonlinear complementarity problem (NCP) approach, and a numerical study is set up. The result indicates that TO and ISP can have strong interactions and be competitive in nature. This article also provides models to determine their optimal strategies in both regulated and unregulated markets, and assist decision-making. These models are demonstrated and validated in a simple example.

This article explores the traffic, land use and welfare impacts of road pricing in the Austin (Texas, USA) region, including the introduction of planned toll roads, bridge tolls, and a downtown cordon toll. Different tolling strategies are examined, including fixed versus variable toll rates. The travel demand model (TDM) incorporates joint mode and time-of-day choice models, as well as multinomial model of destination choice, relying on a full feedback of travel times and costs. Austin-calibrated DRAM-EMPAL models are used to predict future household and job distributions. Results include traffic redistribution over space and time, long-term location choice changes, and traveler welfare implications. While the proposed toll roads to generate revenues and enhance traveler options, their estimated project costs are not estimated to exceeds such benefits. In addition, the bridge tolls are expected to successfully redistribute traffic, while the downtown area appears highly sensitive to cordon tolls.

Applying the adjusted present value method enables the estimation of the general minimum traffic levels for the first year of operation required to make typical Indonesia's build, operate and transfer (BOT) toll road projects financially feasible. To determine the level, both average business risk as reflected by the opportunity cost of capital in the country's toll road industry, and project‐specific risk as reflected by traffic risk in terms of ramp‐up scale, ramp‐up duration and catch‐up extent are taken into consideration. Pessimistic and optimistic estimates reveal, respectively, that 18 000 vehicles per day (vhd) and 18 100 vhd are the minimum traffic levels under a low traffic risk scenario. This level increases particularly for optimistic estimate if traffic risk rises. To relax these high traffic requirements, the government should attempt to minimize traffic risk and average business risk or to provide financial supports. Sensitivity analysis results demonstrate that the threshold traffic levels...

Planning road network improvements over a long horizon often faces uncertainty. Under resource constraints, the government needs to carefully select a design strategy so as to cope with uncertainty and achieve its objective(s). Through sensitivity analyses, this paper discusses the social and financial aspects of three government's network design strategies, namely government-as-the-provider (GP), monopoly market (MM), and competitive market (CM). The first is the government acts as the sole toll road operator who provides the infrastructure but collects just enough tolls to recover costs. The second is the private sector builds all the toll roads based on the build-operate-transfer scheme and collects tolls in a monopoly manner. The third is the government allows multiple operators to build different toll roads but collect tolls under the build-operate-transfer scheme in a competitive manner. The results show that even though the GP strategy would produce the best total discounted consumer surplus (TDCS)...

Many architecture, engineering and construction (AEC) professionals would like to use real option (RO) and decision analysis (DA) to evaluate alternatives in investment in the face of uncertainty. However, they have difficulty deciding which one to use and many are not aware of the subtle differences in assumptions and techniques between the two methodologies. We explain how DA and RO can be applied in complete and incomplete markets and what implicit assumptions we need to be aware of in each scenario. Through a toll road example, it is shown that, in a complete market, DA and RO give the same valuation regardless of the choice of the utility function. A formula is provided for pricing any investment in a complete market. The paper also discusses why the values calculated using DA and RO differ in an incomplete market and when DA is more appropriate than RO and vice versa.

Public infrastructure owners are increasingly soliciting BOT arrangements to deliver needed infrastructure facilities. Such arrangements potentially preserve a public owner's capital capacity for allocation to projects that cannot support themselves by essentially ‘pulling’ projects from the private sector. Before soliciting these arrangements, however, owners should independently evaluate a project's economic viability to fully appraise the issues and variables involved. Unfortunately, project analysts often apply evaluation methods without regard for their assumptions and limitations. A case study of a toll road project in the USA provides the basis for examining the assumptions behind both traditional and option valuation models. The case demonstrates the use of an option pricing model to augment traditional project evaluation by capturing strategic considerations, in this case the value of project deferment. The presentation illustrates that the selection of a valuation model depends critically upon t...

Preventive maintenance (PM) has long been recognized as a method to increase equipment reliability and availability. However, for equipment in complex plant installations like toll road/tunnel systems, to carry out PM on all components may not be feasible, or, may end up with excessive maintenance costs. This paper describes how a risk‐based maintenance management model was formulated to systematically prioritize PM activities. The model was based on the five core elements of the risk management process (RMP): identification, measurement, assessment, valuation, and control and monitoring. This model was applied to a toll road/tunnel company in Hong Kong to enhance the PM operations of its lighting system. The improvements recommended in this case study show that the application of RMP in preventive maintenance could effectively identify and assess potential risks for equipment and facilities. The RMP results provide quantified information for decision‐makers to select the best course of actions for implem...

The problems and support needs of small road contracting enterprises and of the prospects for entrepreneurship and enterprise growth in the South African road construction sector is the focus of this investigation. This study examines the building of the N4 toll road which is the anchor project for the Maputo Development Corridor. It draws on a wide range of source material, including existing secondary sources, primary project documentation relating to the N4 anchor project, a set of interviews with key individuals and business associations involved with implementation of the project, and a questionnaire survey that was administered to 30 emerging contractors that had successfully secured contracts for work on the Maputo Development Corridor. Overall, the article investigates the progress and workings of South Africa's targeted procurement approach towards stimulating small contractors in road construction.

The dynamic system-optimal route choice problem is formulated as a discrete-time link-based model using the variational inequality approach. This model complies with the dynamic system-optimal equilibrium condition in which for each origin-destination pair, the marginal route travel times experienced by travellers are equal and minimal. A nested diagonalisation procedure is then proposed for obtaining the solution. Numerical examples are provided for showing equilibrated route travel times, demonstrating Braess's paradox and an approximating static counterpart solution. In addition, a two-stage procedure is used for computing a toll imposition such that a dynamic system-optimal is also a dynamic user-optimal solution.

Recent trends in the construction industry indicate continued use of alternative procurement methods such as design-build, construction management, build-operate-transfer, and privatization. Increased use of these evolving methods produces higher levels of uncertainty with respect to long term performance and profitability. The uncertainties inherent in implementing new procurement methods necessitate investigation of enhanced methods of pre-project planning and analysis. This is particularly true for revenue dependent privatization projects such as toll roads. Poor initial performance of toll road projects suggests traditional methods of project analysis are inadequate. Sustaining investor and stakeholder support of privatized revenue dependent projects is dependent upon successful financial performance. Enhanced risk analysis tools provide improved information for pre-project decision making and performance outcome. One such risk analysis method is the Monte Carlo. Monte Carlo methods are especially use...

This paper examines the dynamics of urban development of the Jakarta metropolitan region, called Jabotabek, from 1980 through the early 1990s. We focus on the rapidly changing spatial allocation of residences and business, finding that Jabotabek is following expected developmental patterns but faces special and some critical problems Population densities remain unusually high and urban development is hindered by very poor land market institutions—weakly defined property rights particularly for traditional low income residents, complete lack of active land use planning, and relatively low infrastructure investments. Industry is rapidly suburbanising to take of advantage of low land prices and wages in suburban Botabek. With toll road construction east and west from the city, within the five-year period 1986–1991, Jabotabek moved from being a monocentric city where core city industrial activity dominated to a predominantly multi-centred city. These developments and implicit government policy have hurt small...

The Trans-Tokyo Bay Highway is a 15 km long toll road linking Kawasaki City on the western side of Tokyo Bay with Kisarazu City on the eastern side. While the Kawasaki side (10 km) will run in a sh...

A 22-km-long, six-lane toll motorway, called the Yellow Line, opened to traffic in November 1997. This stretch of the motorway includes the Covanca Tunnel, one of the longest urban tunnels in the w...

This paper investigates the role of transport pricing in network design and describes two facts about flow pattern in a transportation system. The first, illustrated by an example of Braess paradox, is that adding a new link to the network does not necessarily minimize the total travel time. The second is that introduction of appropriate toll pricing may reduce not only the total network time but also the travel time for each individual traveller. It follows with the investigations of different system objectives and different pricing policies (only toll pricing and distance-based pricing are considered), and shows how they affect the system performance and flow pattern. Lastly, a systematic optimization process is proposed for integrated planning of transport network and pricing policies.

Substantial changes in urban transport policy have taken place over the past decade. The concern with expanding infrastructure and the preoccupation with providing sufficient road capacity to meet the increasing demand of unrestricted car use, which characterized transport policy in the 1950s and 1960s, has gradually given way to the idea that there is a need to restrain motor traffic if urban society is to function efficiently. A variety of restrictive physical traffic management, land use planning and economic policies have, in consequence, been pursued. One option which has attracted considerable attention in the academic literature, but which has been received more cooly by policy‐makers, is the possibility of optimizing urban traffic congestion through the imposition of road pricing. The introduction and relative success of the area licensing scheme in Singapore has added fuel to the arguments of the advocates of such a policy. This review is not directly concerned with either the experiment...