Highway toll roads, bridges and tunnels are included in the industry category referred to as toll roads. A toll road may include service areas which will generate additional revenues. Such projects
- Are technically simple but may become a little more complex if the terrain is difficult (e.g. bridges and tunnels)
- Have a capital cost that is very dependent on terrain and rights of way, and can be difficult to predict
- Contain little equipment and material which may need to be imported
- Need a reasonably high volume of traffic to make them economically viable
- Have traffic forecasts which are difficult to predict
- Revenues usually collected directly from motorists through toll gates but sometimes there are no toll gates and the government authority pays the operator with a shadow toll arrangement
- Serve a market which is price elastic. The usage will depend on the toll rate and the model should include a formula for the usage which contains an elasticity factor
- Are subject to road resurfacing and/or additional lanes which may be required during the life of the project/concession
- Contain revenues which usually come from tolls paid by road users but can be from the government based on availability or a combination of the two
- Have varying degrees of government support. Sometimes the government will pay the concessionaire capacity and operations and maintenance costs. At other times the concessionaire will pay the government
- May be partially funding by a section of the highway which is opened to the public before the entire project is completed
- Contain straightforward taxation calculation.
How Promoter handles Toll Road projects
- Promoter carries out a simple design and cost estimate.
- It determines the number of lanes for each operating period through the life of the project in order to maintain a required level of service. It gives the user the option to make an additional investment and add more lanes when necessary.
- It contains procedures for handling periodic road resurfacing and the sinking funds to ensure that funds are available
- It contains a variety of features for handling State support.
- The user places key coordinates so that Promoter can illustrate the network.
- It diverts net operating revenues from early opening to fund parts of the project still under construction
Promoter uses the following speed flow curve
It then produces a vehicle density chart over the life of the toll road in order to determine the time when additional lanes must be added for a specified level of service (LOS).
Typical Project Cash Flows
The revenues typically increase over the life of the project. They may reach a plateau if the demand exceeds the design capacity. And there may be a step wise increase in the revenues as the operator increases the tolls. The operating and maintenance costs are usually a small fraction of the revenues. There will be significant additional costs due to
- resurfacing at intervals which depend on the type of usage (typically 15 to 30 years).
- expansion for the addition of extra lanes in order to ensure a specified level of service. The interval will depend on the rate at which the usage increases