Influence of Value of Time on Profitability of Railway Projects: Theoretical Formulation and Case Study
The recent worldwide financial crisis has imposed limitations on public and private spending on new transport infrastructures. As a result, there is a need for new stricter criteria to prioritize projects in a more socioeconomically efficient way. Project appraisal is a common tool used for this effort. The value of time (VOT) is a relevant element in the appraisal of transport projects. VOT is essential for the calculation of the gain derived from the reduction of overall travel time for users by the development of a project. Because demand for the planned infrastructure is predicted on the basis of VOT, the estimation of VOT is a key element for the determination of the global modal split. This study analyzed the influence of VOT on the profitability of railway projects. Specifically, the components affected by VOT were studied according to their presentation in a railway project appraisal manual. The analysis was performed from two points of view. First, a theoretical formulation was deduced for the relation between VOT, which was included in the cash flow of the different components identified, and the internal rate of return, which represented the profitability of an infrastructure project. Second, a practical case for a suburban railway line was studied to identify the sensitivity of the internal rate of return to VOT, that is, the influence of VOT on the profitability of the project.
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- Summary URL:
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Availability:
- Find a library where document is available. Order URL: http://www.trb.org/Main/Blurbs/166818.aspx
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Authors:
- Criado, O
- Sanchez-Borras, M
- Robuste, F
- Publication Date: 2011
Language
- English
Media Info
- Media Type: Print
- Features: Figures; References; Tables;
- Pagination: pp 86-94
- Monograph Title: Railways 2011, Including 2011 Thomas B. Deen Distinguished Lecture
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Serial:
- Transportation Research Record: Journal of the Transportation Research Board
- Issue Number: 2261
- Publisher: Transportation Research Board
- ISSN: 0361-1981
Subject/Index Terms
- TRT Terms: Appraisals; Case studies; Cash flow; Passenger transportation; Profitability; Railroad transportation; Rate of return; Theoretical studies; Value of time
- Uncontrolled Terms: Intercity passenger rail; Internal rate of return; Rail extension projects
- Subject Areas: Economics; Passenger Transportation; Railroads; I10: Economics and Administration; I70: Traffic and Transport;
Filing Info
- Accession Number: 01337479
- Record Type: Publication
- ISBN: 9780309222969
- Report/Paper Numbers: 11-3790
- Files: TRIS, TRB
- Created Date: Apr 21 2011 7:26AM