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Dynamic demand risk assessment for toll road projects

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  • Rajaa Alasad
  • Ibrahim Motawa

Abstract

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 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. The model can help public, private, and financial stakeholders of PPP facilities make more informed decisions.

Suggested Citation

  • Rajaa Alasad & Ibrahim Motawa, 2015. "Dynamic demand risk assessment for toll road projects," Construction Management and Economics, Taylor & Francis Journals, vol. 33(10), pages 799-817, October.
    • Handle: RePEc:taf:conmgt:v:33:y:2015:i:10:p:799-817
    DOI: 10.1080/01446193.2016.1143561
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    Cited by:

    1. A. Sardi & E. Sorano, 2021. "Dynamic Performance Management: An Approach for Managing the Common Goods," Papers 2102.04090, arXiv.org.
    2. Alberto Sardi & Enrico Sorano, 2019. "Dynamic Performance Management: An Approach for Managing the Common Goods," Sustainability, MDPI, vol. 11(22), pages 1-22, November.
    3. Zezhou Wu & Kaijie Yang & Xiaofan Lai & Maxwell Fordjour Antwi-Afari, 2020. "A Scientometric Review of System Dynamics Applications in Construction Management Research," Sustainability, MDPI, vol. 12(18), pages 1-16, September.
    4. Bridget Tawiah Badu Eshun & Albert P.C. Chan, 2021. "An Evaluation of Project Risk Dynamics in Sino-Africa Public Infrastructure Delivery; A Causal Loop and Interpretive Structural Modelling Approach (ISM-CLD)," Sustainability, MDPI, vol. 13(19), pages 1-24, September.

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