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Damnjanovic, I, Duthie, J and Waller, S T (2008) Valuation of strategic network flexibility in development of toll road projects. Construction Management and Economics, 26(09), 90.
- Type: Journal Article
- Keywords: infrastructure planning; real options; network analysis; tolls
- ISBN/ISSN: 0144-6193
- URL: https://doi.org/10.1080/01446190802272707
- Abstract:
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.