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    <copyright>Copyright © 2026. National Academy of Sciences. All rights reserved.</copyright>
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      <title>Feasibility of Flexible Term Concessions based Real Options in Indian Highway Sector</title>
      <link>https://trid.trb.org/View/1672853</link>
      <description><![CDATA[Public Private Partnerships (PPPs) are considered as effective tools for transferring risks and responsibilities to the private sector for infrastructure creation, particularly in road transport sector. The uncertainty in demand forecasts makes choice of PPP model susceptible to errors, resulting in non-performing projects and demands for renegotiations. Multiple non-performing projects have resulted in falling competitiveness in Indian Highway sector and government absorbing most risks to attract investors. This article explores the feasibility of offering Flexible Term Concessions (FTC) as a real option over two ongoing Built Operate Transfer (BOT) highway projects in India. The forecast made from actual data using Geometric Brownian Motion and the risk neutral valuation through spreadsheet analysis indicated positive values and risk reduction with the flexibility. Subsequent interviews with key stakeholders in the sector presented some of the barriers to implement flexibilities in Indian PPPs.]]></description>
      <pubDate>Wed, 26 Feb 2020 10:51:53 GMT</pubDate>
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      <title>Dealing with Traffic Risk in Latin American Toll Roads</title>
      <link>https://trid.trb.org/View/1305026</link>
      <description><![CDATA[This paper presents a cross-country analysis of traffic risk allocation in road concessions of Latin America. It shows that some countries such as Chile, Colombia, and Peru have been greatly concerned with mitigating traffic risk, either by putting into practice public guarantees, implementing flexible term concessions, or through availability payment concessions; whereas other countries such as Mexico and Brazil have assigned traffic risk to the private concessionaire by using fixed-term concession contracts without any traffic guarantees. Based on an analysis of data from 1990 to 2010, the paper finds that shifting traffic risk from the concessionaire to the government or users was not confined to the riskiest projects, as one might expect. The analysis also suggests that the implementation of traffic risk mitigation mechanisms in Latin American toll roads has not been very successful in reducing renegotiation rates or in increasing the number of bidders in the tenders.]]></description>
      <pubDate>Wed, 28 May 2014 15:24:05 GMT</pubDate>
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      <title>Economics, Demand Management, and Parking Policy</title>
      <link>https://trid.trb.org/View/1090407</link>
      <description><![CDATA[This issue contains 19 papers on the subjects of transportation economics, demand management, and parking policy.  Specific topics discussed include the following:  tax increment financing; revenue performance and bonding costs of toll roads; pass-through tolling agreements; flexible-term highway concessions; a vehicle mileage-based user fee; impact fees emphasizing vehicle miles traveled; equity in road pricing; equitable congestion pricing; congestion pricing and managed lanes in metropolitan transportation planning; drivers opinions of congestion pricing; economic incentives to influence drivers' route choices for safety enhancement; value of travel time estimation using hierarchical Bayesian mixed logit approach; hybrid econometric-network models for freight and passenger modeling; the Olympics as a potential catalyst for enhancing urban transport; encouraging transit and bicycle use by restricting parking provision; the influence of parking policy on the built environment and travel behavior; dynamic ridesharing markets; comparison of parking requirements in zoning and form-based codes; and carsharing parking policy.]]></description>
      <pubDate>Fri, 04 Feb 2011 11:23:39 GMT</pubDate>
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      <title>The role of the discount rate in tendering highway concessions under the LPVR approach</title>
      <link>https://trid.trb.org/View/987551</link>
      <description><![CDATA[Flexible-term highway concessions are becoming quite popular around the world as a means of mitigating the traffic risk ultimately allocated to the concessionaire. The most sophisticated mechanism within flexible-term concession approaches is the least present value of the revenues (LPVR). This mechanism consists of awarding the concession to the bidder who offers the least present value of the revenues discounted at a discount rate fixed by the government in the contract. Consequently, the concession will come to an end when the present value of the revenues initially requested has been eventually reached. The aim of this paper is to evaluate the effect that the discount rate established by the government in the bidding terms has on the traffic-risk profile ultimately allocated to the concessionaire. To analyze this effect, a mathematical model is developed in order to obtain the results. I found that the lower the discount rate the larger will be the traffic risk allocated to the concessionaire. Moreover, I found that, if a maximum term is established in the contract, the lower the discount rate, the less skewed towards the downside will be the traffic-risk profile allocated to the concessionaire.]]></description>
      <pubDate>Mon, 29 Nov 2010 07:39:11 GMT</pubDate>
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      <title>CONCESION DE PLAZO VARIABLE PARA AUTOPISTAS: EL CASO DE ARAGON</title>
      <link>https://trid.trb.org/View/953816</link>
      <description><![CDATA[El sistema tradicional de concesion mediante el que las empresas privadas construyen, conservan y operan carreteras de peaje presenta debilidades importantes. La imposibilidad de predecir el trafico para periodos superiores a los treinta años contamina la seleccion del concesionario al ser imposible distinguir entre eficiencia y optimismo sobre el trafico futuro. En este articulo se propone un nuevo sistema concesional de plazo variable, en el que las ofertas de los licitadores se desligan de sus creencias sobre cual sera la demanda futura. El sistema que se analiza en este trabajo es el que el Gobierno de Aragon ha escogido como formula para el contrato de construccion y operacion de la autopista Cariñena-Gallur. Sus principales ventajas consisten en mejorar la seleccion del concesionario, reducir costes, independizar al concesionario de los intereses a corto plazo del Gobierno y permitir el equilibrio financiero de la empresa sin recurrir a renegociaciones. (A). Resumen en ingles: Concessionary contracts for the construction, maintenance and operation of road infrastructure are subject to uncertainty about future demand levels. The conventional mechanisms commonly used in practice for awarding highway concession contracts induce a bias towards the selecction of concessionaires who are optimistic about demand, but are not necessarily cost-efficient. In this article a new system is proposed based on flexible-term contracts. This is the system chosen by the Government of Aragon for the highway Cariñena-Gallur. This new auction mechanism reduces the probability of selection errors and contract renegotiation, allows cost saving, isolate the concessionaire from short-term political interests, and guarantee financial equilibrium without renegotiation. (A).]]></description>
      <pubDate>Thu, 07 Oct 2010 14:59:21 GMT</pubDate>
      <guid>https://trid.trb.org/View/953816</guid>
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      <title>Flexible-Term Highway Concessions: How Can They Work Better?</title>
      <link>https://trid.trb.org/View/909573</link>
      <description><![CDATA[Highway concessions are becoming popular around the world. One of the main issues in adequately designing concession contracts is how best to allocate traffic risk. Many concession contracts, therefore, are incorporating traffic risk mitigation mechanisms to limit the amount of traffic risk ultimately taken on by the concessionaire. One of the most interesting approaches in the mitigation of traffic risk is the design of flexible-term concessions (FTCs) that end automatically when a certain level of accumulated traffic or revenues is reached. The concession duration may be extended if real traffic becomes lower than expected and shortened when real traffic is higher than expected. The aim of this paper is to survey and assess the implementation of FTCs to explore why these mechanisms have so seldom been adopted. The author found that the main reason for the scarce implementation of these mechanisms lies in the strong opposition of the private sector to FTCs because of the asymmetric risk profile that FTCs present. This risk profile means that the potential gains for the concessionaire are substantially limited, while potential losses are not limited to nearly the same degree. The paper ends with some recommendations for improving the acceptability of FTCs.]]></description>
      <pubDate>Tue, 20 Apr 2010 08:44:27 GMT</pubDate>
      <guid>https://trid.trb.org/View/909573</guid>
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    <item>
      <title>FLEXIBLE-TERM CONTRACTS FOR ROAD FRANCHISING</title>
      <link>https://trid.trb.org/View/699256</link>
      <description><![CDATA[A concession contract is a popular form of franchising which allows a private firm to charge tolls to road users during a predetermined period in order to recover its investment. Concessionaires are usually selected through auctions at which candidates submit bids for tolls or payments to the government. This paper discusses how this mechanism does not generally yield optimal outcomes and frequently induces contract renegotiations. A new franchising mechanism is proposed, based on flexible-term concessions and auctions with bi-dimensional bids for total net revenue and maintenance costs. This new mechanism improves outcomes compared to fixed-term concessions by eliminating traffic risk, ensuring that efficient candidates are selected and eliminating the need for contract renegotiation in situations of low demand.  This mechanism also would reassure the firm that its declared costs will be covered and that it will obtain the desired revenue.]]></description>
      <pubDate>Fri, 05 Mar 2004 00:00:00 GMT</pubDate>
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