CONSIDERING BUILD-LATER FOR MAJOR TRANSIT INVESTMENTS
economics - capital costs, mode - mass transit
Transit, Theoretical studies, Public transit, Mass transit, Local transit, Investments, Investment requirements, Discount, Cost benefit analysis, Capital costs, Build-later, Benefit cost analysis
This paper uses a theoretical model of benefit-cost analysis to consider the timing of major transit investments. The model takes into account the net benefits of a project, the variation of net benefits with project age and investment timing, capital cost and its growth, and the discount rate. Three questions are examined: (1) when might build-later be evaluated? (2) how do changes in the discount rate and other parameters of an investment affect its optimal timing? and (3) how significantly do differences in the stream of net benefits from an investment affect its optimal timing? The first two questions are examined analytically, and the last question is examined numerically. Implications are discussed with respect to planning for major transit investments.
Chu, X, Polzin, S, (1998). CONSIDERING BUILD-LATER FOR MAJOR TRANSIT INVESTMENTS. Transportation Research Part A: Policy and Practice, Volume 32, Issue 6, p. 393-405.