Abstract
The objective of this study was to consider evaluation methods for
intelligent transport system (ITS) investments, to point out some shortcomings
of traditional methods (mainly benefit-cost analysis), to develop alternative
methods and to make recommendations how the profitability of ITS investment
should be evaluated. The results can be used when ITS investments are compared
with each other and also when ITS investments are compared with road building
investments.
This paper identifies the fundamental differences between ITS and road
infrastructure investments and how they impact on the profitability
evaluation. The conclusion is that traditional cost-benefit analysis (BCA),
which was developed for investments in physical infrastructure, does not
capture all the benefits or costs related to ITS.
Economic evaluation methods for ITS investments need improving. This paper
illustrates how BCA could be used to take into consideration the option value
of ITS investment and risks due, for example, to different time horizons of
investments. The paper also discusses and demonstrates the use of
multi-criteria analysis (MCA) in profitability evaluation. It illustrates how
a method called analytical hierarchy process (AHP) could be utilised to
evaluate other risks that do not have specific monetary values and to compare
the results of different profitability analyses.
These evaluation methods can be used within the project assessment framework
in the transport sector to highlight different aspects of the profitability
and efficiency of transport investments. None of the methods themselves can
reflect all the aspects in decision making, but by using a suitable set of
different methods depending on the decision situation, and by comparing the
results, a wider and more realistic picture of investments can be obtained.
Original language | English |
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Pages (from-to) | 276-286 |
Journal | Journal of Transportation Engineering |
Volume | 128 |
Issue number | 3 |
DOIs | |
Publication status | Published - 2002 |
MoE publication type | A1 Journal article-refereed |
Keywords
- transport telematics
- intelligent transport systems
- investment
- profitability
- cost-benefit analysis
- multi-criteria analysis