Examining Toll Road Feasibility Studies

Traffic congestion on urban highways has increased steadily for the last 15 years. Toll roads are seen as an avenue for new highway construction. The feasibility of toll roads, though, is based on forecasts derived from complicated models, which determine the credit worthiness of a toll road project. This article reviews the results of a study that compared the actual revenue performance of 14 new urban toll roads with the revenue forecasts of their original feasibility studies. Overall, toll road feasibility studies exhibit a high degree of variability. Economic analysis is key to forecast success. Most successful toll roads are built in congested, high-income corridors where time savings are in excess of 5 minutes. For 10 of the 14 toll road forecasts examined, revenues on average missed projections by 20 to 75 percent in the initial years. Because of the variability, a need exists for added protection and security during the early years of a toll road project.