5738295.pdf - Background of the Case Project Strategic Decisions for Highway Operation \u201cA construction company has recently completed their highway

5738295.pdf - Background of the Case Project Strategic...

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Unformatted text preview: Background of the Case Project Strategic Decisions for Highway Operation “A construction company has recently completed their highway construction project, which has been awarded with a BOT contract”. Highway City A Old Road City B “The highway runs from City A to City B in a more direct way than the existing road, and has service facilities for drivers”. 401.661  Advanced  Construction  Technology    11 “A discounted cash flow analysis shows some numbers for toll charges that can return their investment within the operation period”. “However, the top management of the company won’t believe the numbers, thinking that highway operation might not be a simple mathematics”. 401.661  Advanced  Construction  Technology    12 “According to their experience, drivers choose a drive road depending on cost-convenience tradeoffs, having the following two options:” •  •  A highway with a lot of services and toll An old road without services “Because of such a recognition, the top management wants to understand dynamics caused by drivers’ tendency in choosing a drive road and to know how to maximize their profits, while keeping an acceptable level of service”. 401.661  Advanced  Construction  Technology    13 Lecture Outline ü  Typical Modeling Method ü  Background of the Case Project Ø  Dynamic Modeling Process 401.661  Advanced  Construction  Technology    14 Problem Statements Ø  Ø  Figuring out the dynamics involved in highway operations including tradeoffs among toll charges, service level, volume of traffic, and congestion level. Finding an optimal level of toll charges and maintenance costs, which can maximize their profits, keeping an acceptable level of service. 401.661  Advanced  Construction  Technology    15 List of Variables Toll Charges Degree of Congestion Highway Capacity Time Reduction through Highway Travel Time GDP* Traffic Volume Population* Service Quality Price of Gasoline per Mile* Trip Frequency Road Attractiveness 401.661  Advanced  Construction  Technology    *Exogenous Variables 16 Reference Mode HOPE Traffic Volume on Highway FEAR Maintenance Costs HOPE Profits FEAR 0 Operation Starts 401.661  Advanced  Construction  Technology    End of Concession Now TIME 17 Dynamic Hypotheses The Spaghetti Service Capacity Deteriorate Service Capacity + + + ServiceLevel OfOldRoad ServiceLevel + GapOfServiceLevel InvestmentOn Maintenance + Perceived Attactiveness OfHighway Capacity - FractionOfRevTo Invest + TrafficOn Highway Revenue + + + Congestion + For the first stage of the development, one needs to analyze feedback loops that have the most significant impacts on the system and established dynamic hypotheses of them. AttactivenessOf Highway - TollPerCar AvgTravelTime 401.661  Advanced  Construction  Technology    18 Congestion <Service Capacity> + ServiceLevel ServiceLevel OfOldRoad + GapOfServiceLevel Perceived Attactiveness OfHighway Capacity If toll becomes cheaper, traffic goes up, congestion becomes more, and drivers have a higher average travel time. That affects negatively on the Attractiveness of Highway with the consequent reduction in traffic. The following hypotheses on the system’s behaviors are established when toll is decreased. + TrafficOn Highway - + + Congestion Congestion + AttactivenessOf Highway - AvgTravelTime Will be stabilized at a certain point that is determined by other conditions Traffic on Highway TollPerCar Profits Will be determined by Traffic Volume 0 401.661  Advanced  Construction  Technology    Toll decrease Operation End 19 Service <Service Capacity> + ServiceLevel ServiceLevel OfOldRoad + GapOfServiceLevel ServiceDeteriorate Perceived Attactiveness OfHighway Capacity The same hypotheses on the system’s behaviors as Congestion Loop are established when toll is decreased. + TrafficOn Highway - + + Congestion + The attractiveness of the Highway with respect to the service level depends on both the service on highway and in the alternative route. As an increase in traffic deteriorate the Highway’s service level and in turn its attractiveness. AttactivenessOf Highway - TollPerCar AvgTravelTime 401.661  Advanced  Construction  Technology    20 ...
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