UBC Theses and Dissertations

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UBC Theses and Dissertations

Economic risk quantification of toll highway projects Hatakama, Toshiaki


The objectives of this thesis are to model economic and financial performance of user-pay highway facilities, to explore the sensitivity of project performance to changes in primary variables, to measure the uncertainty surrounding user-pay highway facilities, and to explore ways of reducing the uncertainty. Special attention is given to the revenue phase. The model consists of three levels: work package/revenue stream level; project performance level; and project decision level. The model calculates work package duration, work package cost, and revenue stream for the work package/revenue stream level; project duration, project cost, and project revenue for the project performance level; and project's net present value (NPV) for the project decision level. They are described by their expected value, standard deviation, skewness, and kurtosis. This model is applied to a numerical example patterned after a Japanese project to carry out a sensitivity and risk analysis, and highly sensitive primary variables are identified. The case study may be viewed as a comparison of current Japanese deterministic feasibility analysis with a probabilistic one, using the same underlying project model. Risk management strategies are presented, and their impacts on overall project risks are measured. Results from applying the model to a sample project show that it is very difficult for a highway operator alone to reduce risks. It is suggested that it is very important that risk sharing be negotiated with the government and some guarantee of support be received.

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