Financial Evaluation for Toll Road Projects Considering Traffic Volume and Serviceability Interactions

Abstract

The rapid increase in both financial demands and the need for large and comprehensive highway infrastructure systems necessitates public authorities to muster support from the private sector. Public-private partnerships (PPP) have been increasingly adopted and cited as one of the most effective project delivery systems, which bring balance to risks and rewards between involved project participants. However, a number of PPP infrastructure projects around the world have been reported to have operating deficits and difficulties in debt-servicing. One of the major reasons for these difficulties is the unrealistic and inaccurate prediction of project investment performance during the initial stages of project viability and profitability analysis. Therefore, the research reported in this paper presents a formulation of a comprehensive framework that evaluates financial viability of PPP toll road projects. The framework utilizes a modified user-equilibrium traffic-assignment algorithm to estimate toll road traffic volume considering critical demand-influencing factors, which include travel time, pavement serviceability, and out-of-pocket user trip expenses. The proposed framework also considers the effects of the rehabilitation maintenance activities on the equilibrium flow pattern and project financial viability. This makes possible an estimation of the maintenance costs and frequency as well as an evaluation of the effects of rehabilitation programs on the traffic volume. The research reported in this paper also demonstrates the difference in traffic-flow patterns with and without interactive changes in pavement performance and traffic volume to demonstrate the need for incorporation of pavement performance and network levels of service into PPP highway project evaluation.