Maximizing the value for money of road projects through digitalization

Carlos Oliveira Cruz and Joaquim Miranda Sarmento
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Carlos Oliveira Cruz: CERIS, Instituto Superior Técnico, Universidade de Lisboa, Portugal
Joaquim Miranda Sarmento: ADVANCE/CSG, Lisbon School of Economics and Management, Universidade de Lisboa, Portugal

Competition and Regulation in Network Industries, 2018, vol. 19, issue 1-2, 69-92

Abstract: Roads are a central element of transportation systems, enabling economic and social development, fostering territorial cohesion and facilitating the movement of people and cargo. Governments have devoted significant financial resources to developing and improving their road networks, and are still facing increasing pressure to ensure proper maintenance and payments to those concessionaires that developed roads under public–private partnership arrangements. As in other sectors, digitalization is paving a way towards significant changes in the way we build, operate and finance infrastructure. These changes will have a profound impact on the entire life cycle of an infrastructure, from the design and/or construction stage, to its operation and transfer. This article provides an overall overview of the main technological developments which are, or could impact road infrastructure in the short, medium and long term. For each technological development identified in our research, we analyse the potential impact on Capex, Opex and revenues as well as their level of maturity and expected lifetime for mass adoption, and also the main bottlenecks or barriers to implementation. Additionally, we explore potential savings on investment (capex) and operational costs (opex) and increase in revenues, using data from the Portuguese highway companies. Savings can represent almost 30% of capex and opex. Overall, savings and increases in revenues can represent an impact similar to 20–40% of current revenues. The findings show that digitalization and technological development in the road sector can significantly impact the economic performance of roads, thus enhancing the value of money for the society. The findings also show that there might be some excess capacity of road systems once autonomous vehicles achieve higher market penetration. However, there are still some relevant legal, regulatory, institutional and technological and economic barriers that are slowing down the digitalization process.

Keywords: Road projects; smart infrastructure; smart mobility; regulation; public–private partnerships and concessions (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:crnind:v:19:y:2018:i:1-2:p:69-92

DOI: 10.1177/1783591718811436

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