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4.0 Step 1: Project Benefit-Cost Analysis

The first step assesses whether the project's economic benefits under the Delayed PSC (i.e., delayed conventional delivery) outweigh the economic costs and risks compared to the No Build alternative. The DOT would conduct a BCA for the project using standard methodologies. It would use real dollars to monetize costs and benefits, a real discount rate, a delayed construction start date, and an analysis timeframe of 50 years to match the proposed term of the concession. The analysis would include incremental consumer surplus benefits to induced traffic. The project's stream of costs and benefits is illustrated in the Figure below.

Figure 3: Delayed PSC Project Benefits and Costs relative to No Build

View larger version of Figure 3

Toll revenues would be excluded from the BCA, as tolls are a transfer from an economic perspective. (They are a cost to toll-payers that provide an equal benefit to the facility operator, with a net societal economic benefit equal to zero.) Net present value (NPV) of the project would then be calculated as shown in the Table below.

Table 1: Process to Estimate Delayed PSC Net Benefits relative to No Build

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