Traffic rate forecasting inaccuracy influence on road construction and reconstruction projects' economic efficiency

Abstract

Timeliness. Today financing road development and maintenance is one of the defining issues in ensuring the economic growth of any country since investments in road infrastructure are strategic. There is no doubt that only with the adequate quality road infrastructure, the state can fully use its export and logistics potential. Special significance in the light of the indicated factors gets an effective toolkit for evaluating investment projects for the construction of new and reconstruction of existing roads. This issue acquires critical importance when it comes to the use of budgetary subsidies. The subsidies' cost-effectiveness is known to be influenced by a wide range of factors and various determinants. In this regard, the study's purpose is to consider methods to assess the impact of inaccurate traffic forecasting on the economic efficiency of subsidies. Study's methodological framework. To achieve this goal, a wide range of scientific knowledge tools was used, namely: comparative analysis, deduction, and induction, modeling, forecasting, generalization, systematization. Results. The article describes in detail and highlights the factors influencing the subsidies economic efficiency allocated for road construction. Using the Logical Framework Approach, the risk impact and consequences of inaccurate traffic forecasting on the overall project efficiency and the economic return on allocated subsidies are demonstrated. To carry out specific calculations and implement analytical procedures, the methodology used in the countries of the European Union (EU) is considered, which allows for assessing the impact of the subsidies effectiveness through the payment for the use of the road by various vehicles, the potential savings in transportation time and reduction in the distance of transportation. In addition, an approach is described that takes into account the distribution of project financing between the state and a private investor, as well as the predicted traffic intensity, which together determine the economic effect magnitude received by each of the partners. The particular emphasis within this approach is placed on the need for a clear formalization, categorization, and calculation of all costs associated with the preparation and implementation of the project.