TY - GEN
T1 - Location and Development of Light Rail Stations under Demand Uncertainty
T2 - International Conference on Transportation and Development 2020: Planning and Development, ICTD 2020
AU - Abdulla, Bahrulla
AU - Sousa, Rita
AU - Galadari, Abdulla
N1 - Funding Information:
The authors gratefully acknowledge the funding support from the Masdar Institute of Science and Technology (now part of Khalifa University of Science and Technology) for conducting this study.
Publisher Copyright:
© 2020 American Society of Civil Engineers.
PY - 2020
Y1 - 2020
N2 - Given the deepening awareness of the limited nature of fossil fuel reserves and the environmental consequences of consuming it, the increasing appetite for better public transportation infrastructure persists worldwide. A huge amount of investments and resources is being injected into the development of transportation infrastructures, including light rail, as the need for better and faster transportation is correlated with the economic development of a country. However, there is a serious lack of understanding regarding the underlying uncertainties, as well as their impact on the performance of these infrastructure projects. As a consequence, performance results that are lower than the forecasts are very common in rail transportation and financial or social benefit of light rail transits deviate hugely from what is expected. In many of these cases, either the overall cost of the project turns out to be much higher or the patronage proves to be far less than originally forecasted. This study aims at reducing such a gap in the literature by considering the uncertain nature of the demand. More specifically, this study proposes a real options-based framework for the feasibility analysis of the potential locations of light rail stations. First, it estimates the demand for each proposed station location considering the endogenous uncertainties involved in the forecasting of demand. Second, the feasibility of different station development scenarios is analyzed using the net present value (NPV) method. Third, a real options analysis is done on various development scenarios by considering the possible values of incorporating flexibility in the development. Fourth, based on the level and nature of the uncertainty in the station demand for each location, the economic benefits of incorporating flexibility for the station-development are quantified. Using a case study approach, the proposed model is applied for a station location on Dubai Metro Purple Line. The results suggest that recognizing the major uncertainties at an early stage and incorporating flexibility into the system design accordingly pays off under certain circumstances.
AB - Given the deepening awareness of the limited nature of fossil fuel reserves and the environmental consequences of consuming it, the increasing appetite for better public transportation infrastructure persists worldwide. A huge amount of investments and resources is being injected into the development of transportation infrastructures, including light rail, as the need for better and faster transportation is correlated with the economic development of a country. However, there is a serious lack of understanding regarding the underlying uncertainties, as well as their impact on the performance of these infrastructure projects. As a consequence, performance results that are lower than the forecasts are very common in rail transportation and financial or social benefit of light rail transits deviate hugely from what is expected. In many of these cases, either the overall cost of the project turns out to be much higher or the patronage proves to be far less than originally forecasted. This study aims at reducing such a gap in the literature by considering the uncertain nature of the demand. More specifically, this study proposes a real options-based framework for the feasibility analysis of the potential locations of light rail stations. First, it estimates the demand for each proposed station location considering the endogenous uncertainties involved in the forecasting of demand. Second, the feasibility of different station development scenarios is analyzed using the net present value (NPV) method. Third, a real options analysis is done on various development scenarios by considering the possible values of incorporating flexibility in the development. Fourth, based on the level and nature of the uncertainty in the station demand for each location, the economic benefits of incorporating flexibility for the station-development are quantified. Using a case study approach, the proposed model is applied for a station location on Dubai Metro Purple Line. The results suggest that recognizing the major uncertainties at an early stage and incorporating flexibility into the system design accordingly pays off under certain circumstances.
UR - https://www.scopus.com/pages/publications/85092072634
M3 - Conference contribution
AN - SCOPUS:85092072634
T3 - International Conference on Transportation and Development 2020: Planning and Development - Selected Papers from the International Conference on Transportation and Development 2020
SP - 151
EP - 160
BT - International Conference on Transportation and Development 2020
A2 - Zhang, Guohui
PB - American Society of Civil Engineers (ASCE)
Y2 - 26 May 2020 through 29 May 2020
ER -
