OutlineThe Roman roads are still visible – and often still usedHighway Programs: Early Toll RoadsThe Scale of the Road Network Matches the Scale of Society and the Available TechnologyLondon BridgeMillennium Bridge, LondonRehabilitation & Maintenance: Reduce Costs of ROW & OperationWhat Does it Take to Implement a Project?Highway Programs in US: Early 20th CenturyLimited Access HighwaysInterstate Highway System - BackgroundInterstate Highway System: Changes and ChallengesAssessment of Road Projects (Asian Development Bank Study)Financial & Economic AnalysisTime Value of MoneyNet Present Value (NPV)What is an Appropriate Discount Rate? Risk vs. Returns for YOUR OpportunitiesWHOSE Discount Rate?What Route? What Technology? Where to Place Stations? Noise Abatement?Project EvaluationCarl D. MartlandOutline• Examples of Projects• Motivation for Projects• Financial & Economic Assessment– NPV of Cash Flows– Capital Budgets– Cost Effectiveness– Economic vs. Financial Assessment• Broader Social, Economic, and Environmental IssuesWhat Is a Project?For the planner (dreamer?):A vision, a dream or a hopeA monumentA way to solve a problemFor the construction company:A specific task to be completed within a specific timeA way to make money through constructionFor the owner: Potential benefits over the life of the projectA way to make money through operationA monumentFor others:Potential improvement in opportunities, environment, etcPotential disruptions and degradation in environmentThe Roman Empire was Held Together by Roads Source: “The Builders, Marvels of Engineering”, National Geographic Society Map showing network of roads throughout the Roman Empire. Image removed due to copyright restrictions.The Roman roads are still visible –and often still usedRoman Road, Lake District, EnglandRoman Road & Fort, Hardknott Pass, Lake District, EnglandPhotographs removed due to copyright restrictions.Highway Programs: Early Toll Roads• Early toll roads in U.S. circa 1800– No public capital– Authority to construct and operate toll road– Routes required to be as direct as possible• Toll roads all failed– Railroads provided superior service– Tolls would no longer cover maintenance– Roads given back to publicSource: Wood, “The Turnpikes of New England”, Branch Line PressHistorical map showing major roads in Massachusetts. Image removed due to copyright restrictions.The Scale of the Road Network Matches the Scale of Society and the Available TechnologyPedestrian Street in Bayeux, France, Unchanged for Hundreds of YearsPhotograph removed due to copyright restrictions.London BridgeResidences and Stores on BridgeTollsDraw BridgeExtensive River CompetitionOnly Bridge Allowed Across Thames Near LondonExpenses Supported by Income From LandholdingsMillennium Bridge, LondonPhotograph of the Millennium Bridge. Image removed due to copyright restrictions.Rehabilitation & Maintenance:Reduce Costs of ROW & OperationPhotographs of maintenance operations. Images removed due to copyright restrictions.Benefits of Improved AccessReduced transport costs for existing usersLower transport expense ($ saved)Less travel time (hrs saved x value of time)Fewer accidents ($, injuries, fatalities avoided)Increased demand for transportationAdditional consumer surplus (difference between value of trip and cost of trip)Changes in economic geographyIncreased land values and development potentialMore location options for time and $ constraintsMore options for trade (spatial price equilibrium)Chesapeake Bay Bridge & Tunnel• 17.6 mile bridge/tunnel• Alternate to congested I-95• Shortest route to and from Delmarva peninsula• Seasonal access to excellent beachesBackground: Chesapeake Bay Bridge-Tunnel1920s - various private ferry services1930 - Chesapeake Bay Ferry CommissionIssued bonds to buy out private ferry companiesEstablished regular shuttle service1955 - Lucius Kellam, member of the Commission pushed for permanent crossingVA General Assembly approved concept, authorized study of bridges and tunnelsUS Navy would not accept a bridge; 17.6 mile tunnel deemed too expensive; selected a combination1960 - Commission became "Chesapeake Bay Bridge-Tunnel CommissionFinancing: Chesapeake Bay Bridge-Tunnel$200 million raised from sale of bonds to build bridgeThree levels, with increasing interest ratesAnnual financing costs approx. $13 million (30 years at 5%)Substantial tolls possible because of markets served ($10/auto, $60/truck)Tolls averaged $20 million per year and were immediately able to cover bond interest paymentsExpansion also financed through tollsParallel Crossing - will eventually create a second two-lane bridgeParallel Tunnels - after Parallel Crossing is completedFinancing: Chesapeake Bay Bridge-Tunnel$200 million raised from sale of bonds to build bridgeThree levels, with increasing interest ratesAnnual financing costs approx. $13 million (30 years at 5%)Substantial tolls possible because of markets served ($10/auto, $60/truck)Tolls averaged $20 million per year and were immediately able to cover bond interest paymentsExpansion also financed through tollsParallel Crossing - will eventually create a second two-lane bridgeParallel Tunnels - after Parallel Crossing is completedFinancing: Chesapeake Bay Bridge-Tunnel$200 million raised from sale of bonds to build bridgeThree levels, with increasing interest ratesAnnual financing costs approx. $13 million (30 years at 5%)Substantial tolls possible because of markets served ($10/auto, $60/truck)Tolls averaged $20 million per year and were immediately able to cover bond interest paymentsExpansion also financed through tollsParallel Crossing - will eventually create a second two-lane bridgeParallel Tunnels - after Parallel Crossing is completedChesapeak Bay Bridge-Tunnel: IssuesThreat to private ferry operatorsLegislature created Commission with authority first to operate the ferry service and then to become the bridge commissionNaval security - required more expensive approach Disruption of the Bay's ecosystemThe islands built for the tunnel exits became bird sanctuariesCapacityThe 2-lane facility is congested during peak periodsPace of expansion is balanced against ability to finance through tolls• Solving the security problem: a bridge with two tunnels• Poor sight distances• Inadequate roadside clearances• Steep grades• Sharp curvesProjects May Be Needed to Improve SafetyPhotographs illustrating