Optimal Decision Making of Interdependent Tollway Capital Investments Incorporating Risk and Uncertainty

Abstract

A new methodology is proposed to address issues of networkwide effects of highway projects and interdependencies of jointly implementing multiple projects to support optimal investment decisions. Specifically, a multicommodity minimum cost network (MMCN) model is introduced to help obtain link-based traffic volumes, vehicle compositions, and speeds for a highway network that could be used for project benefit estimation using life cycle cost analysis approaches. A hypergraph knapsack model is formulated to identify the best subcollection of interdependent projects to achieve maximized overall benefits for a given budget level. A computational study is conducted using the proposed methodology for tollway capital investment decision making. It is revealed that the overall project benefits with risk and uncertainty considerations for facility construction and treatment costs, traffic forecasts, and the discount rate are significantly lower than the estimated project benefits without risk and uncertainty considerations. In addition, project interdependencies are found to exist for all joint project implementation scenarios. With the continuing growth of budget levels, the overall benefits of projects selected for implementation using the hypergraph knapsack could reach a maximum, beyond which no extra benefits could be obtained. The methodology may be adopted by state and local transportation agencies and metropolitan planning organizations to enhance investment decisions.