Review of Literature

Uncertainty in demand for tolled roadways is compounded by the introduction of more unknown variables. Yet such new understanding can be critical because private investment generally depends on cost recovery through toll collection. To begin to address this clear gap in the literature, Standard & Poor’s (S&P) (3–6) and Fitch Ratings (7, 8) produced a series of studies that examine the risk and uncertainty of tolled highway projects. This paper summarizes key elements of those results and investigates methods for accommodating (or at least recognizing) uncertainty in the forecasting process. The resulting synthesis is intended to offer guidance in planning and decision-making processes of tolled roadway projects. The first section of this paper describes the observed frequency and magnitude of traffic volume mispredictions (forecast versus actual), and the second explains the various sources of risk and uncertainty in traffic forecasts and how these relate to project financing. The third section describes methods for recognizing and incorporating uncertainty in models of travel demand.