Stochastic model for the assessment of acceptable tollrates

by Nevena M Vajdi

Institution: Univerzitet u Beogradu
Year: 2017
Keywords: - ; ; ; ; ; ; ; ; ; .
Posted: 02/01/2018
Record ID: 2154334
Full text PDF: https://fedorabg.bg.ac.rs/fedora/get/o:15170/bdef:Content/get


Opis (sr): Civil engineering - Construction andmaintenance of roads and airports, Construction management /o - , Private participation in the delivery of toll roadprojects has been used worldwide. It is a model which incorporatesprivate sector knowledge and experience in the management ofhighway projects and mobilizes private capital throughPublic-Private Partnerships (PPP). One of the most prevailingcharacteristics of PPP projects is risk sharing between the publicand private partners. Assessment of a projects financialsoundness, a crucial factor for private sector involvement, is thebasic underlying process throughout the projects development untilthe project reaches financial closure. The traditional cash flowanalysis of the financial feasibility of a project has shownweaknesses in many cases. From the pool of delivered projects whichhave experienced difficulties in their operations, it can belearned that advanced probabilistic models need to be introduceddue to their feature of representing uncertainties morerealistically. It is important to capture a projects uncertaintieseven in early phases of financial analysis since this informationhelps in the identification of potential financial risks andassists all sides to structure the deal properly. Parameterscommonly used for the evaluation of a projects financialfeasibility are the annual debt service cover ratio (ADSCR), theinternal rate of return (IRR), and the return on equity (ROE).Although some existing models for analysis of a project may seemdifficult for decision makers and stakeholders to interpret andunderstand, there are prospective ways of describing andrepresenting the problem in more understandable and meaningfulways. This research presents a methodological framework for anearly assessment of acceptable toll rates for PPP toll roadprojects taking into account multiple uncertainties. A toll rate isconsidered acceptable if it is acceptable for all stakeholders.This approach takes into account predefined financial constraintsADSCR, IRR and ROE on one side, and the projects uncertainties,such as volatility of traffic volumes, construction costsvariation, and operation and maintenance costs variation on theother side. Selected financial parameters represent the preferencesor requirements of potential investors that must be fulfilled inorder for them to invest in a PPP project. These preferences andfinancial requirements are based on investors' assessments of aproject's risk profile and also depend on activities on capitalmarkets...Advisors/Committee Members: Mladenovi, Goran, 1961-.