Questions (Please solve in Microsoft Excel) A. Please briefly explain the relationship between toll rates, revenue and traffic speeds. Maximum length for answer 1 page B. What is the minimum toll rate required in order for the project to not negatively impact SDOTs budget? (Provide answer as a single estimated amount) C. Do you think that SDOT will charge tolls at the revenue maximizing toll rate? Please explain your response. Maximum length for answer 1/2 page D. Operations and maintenance expenses are equal to 25% of toll revenues. Estimate an affordable capital cost for the project, assuming that SDOT will not provide any upfront subsidy to fund construction of the project. Please provide the key assumptions used to calculate your estimate and, if applicable, any spreadsheet(s) you developed to derive your answer.

The Project Your client, a state department of transportation (SDOT), has a major existing highway with heavy rush hour congestion and the following characteristics: -Two un tolled, General Purpose Lanes (GPL) in each direction -One High Occupancy Vehicle (HOV) lane in each direction -Demand is heavy in the direction of the typical commute (westbound in the morning and eastbound in the afternoon)

In order to reduce congestion, SDOT is planning to expand the highway, and the project scope includes: -Complex construction to add one additional lane in the median -Conversion of the two HOV lanes and the new lane into three reversible (in direction of rush hour demand) express toll lanes (ETL)

Currently no lanes are tolled but going forward, the ETL will be tolled to pay for the project

Project Goal and Constraints The primary objectives of SDOT are to: -Reduce congestion and improve rush hour travel times for all drivers (including users of the GPL) -Maintain speeds of no less than 55 mph in the ETL -Undertake the project without impacting SDOTs budget, i.e., to cover all project costs, including financing, with the ETL tolls

If the total average toll revenues reach $12,000 per weekday by the second year of operations, it can be assumed that the project is not going to negatively impact SDOTs budget Tolls are charged in both Westbound and Eastbound directions, and the toll rates and demand are roughly the same for each direction Drivers willingness to pay for the ETL is dependent on congestion levels in the GPL

(see following illustrative graphs)

No additional references provided. Is a for a consulting case study class

Traffic & Revenue Consultant 2nd Year Forecast for Westbound Weekdays Tolled Traffic Revenue 10,000 $10,000 9,000 8,000 7,000 6,000 Daily Transactions $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 5,000 Daily Toll Revenue 4,000 3,000 $3,000 2,000 $2,000 1,000 $1,000 0 $0 $- $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Toll Rate Toll Rate Speed (mph) 80 70 60 Express Tolled Lanes 50 Revenue maximizing toll rate 40 Travel Speed (mph) General Purpose Lanes 30 20 Note: demand is evenly split (largely Westbound in the morning and largely Eastbound in the afternoon). Tolls will be paid by both Westbound and Eastbound drivers. 10 0 $- $1.00 $2.00 $4.00 $5.00 $6.00 $3.00 Toll Rate