Strategies for road network design over time: Robustness under uncertainty

Planning road network improvements over a long horizon often faces uncertainty. Under resource constraints, the government needs to carefully select a design strategy so as to cope with uncertainty and achieve its objective(s). Through sensitivity analyses, this paper discusses the social and financial aspects of three government's network design strategies, namely govemment-as-the-provider (GP), monopoly market (MM), and competitive market (CM). The first is the government acts as the sole toll road operator who provides the infrastructure but collects just enough tolls to recover costs. The second is the private sector builds all the toll roads based on the build-operate-transfer scheme and collects tolls in a monopoly manner. The third is the government allows multiple operators to build different toll roads but collect tolls under the build-operate-transfer scheme in a competitive manner. The results show that even though the GP strategy would produce the best total discounted consumer surplus (TDCS), maintaining cost recovery might be a problem. On the other hand, the MM strategy would mostly likely be profitable to the operators, at the expense of producing a much lower TDCS. It appears that the CM strategy would maintain a good balance between TDCS and profitability under uncertainty. This finding is consistent with the current trend of privatizing government services to multiple companies.