How Risky Are Start-Up Toll Roads?Risk Assessment • August 25th, 2008
One factor that is not fully appreciated in the debates over the private sector’s role in developing new (“greenfield”) toll roads is risk transfer. In a well-structured long-term concession agreement, the toll road company takes on not only completion risks (cost to construct, keeping to the schedule) but also traffic and revenue risk. Thanks to a couple of recent procurements in Texas, both of them new urban toll roads in relatively affluent Dallas suburbs, the impression exists among many pundits, reporters, and public officials that a start-up toll road is a pot of gold. I was reminded of that when I read a relatively recent report on the state-of-the-practice in toll road traffic and revenue forecasting.