Demand Traffic Risk in Toll Roads Projects
Rajaa Alasad, CH2M HILL
Demand risk faced during the operation stage of toll roads has heavily limited efficiency of PPP method. This research is devoted to developing a system dynamic simulation model to assess demand risk in PPP projects.
Road infrastructure is a major driver of prosperity and economic development. In filling the gap between increasing demand for roads and supply, the role of private financing has increasingly become critical. Concession contracts in which the investment cost is recovered via payments from the end users are dominant. Although this mechanism has been seen as an efficient way for road projects to be completed on time and to budget, the demand risk faced during the operation stage has heavily limited this efficiency. Evidence has shown that shortfall in demand can seriously jeopardize the schemes viability. Demand is dependent on a range of interrelated and dynamic factors such as economic conditions, willingness to pay, and tariff for using the facility. In addition, uncertainty is an inherent aspect of most demand-underlying factors which make demand estimation subject to high level of uncertainty. However, this uncertainty is largely ignored by modellers and planners where single demand estimate is often used when evaluating the facility. Given the threat to project success resulting from variations between actual and estimated demand, it is believed that a demand risk assessment model is essential. This research is therefore devoted to developing a system dynamic simulation model to assess demand risk in PPP projects. The model captures the factors affecting demand and their relationships and simulate their change over time. By employing Monte Carlo simulation, the model assesses the likelihood and potential effect of an event on the outcome and provides a full picture of the various effects of potential risk.
Association for European Transport