CONSIDERING BUILD-LATER FOR MAJOR TRANSIT INVESTMENTS

This paper uses a theoretical model of benefit-cost analysis to consid er the timing of major transit investments. The model takes into accou nt the net benefits of a project, the variation of net benefits with p roject age and investment timing, capital cost and its growth, and the discount rate. Three questions are examined: (1) when might build-lat er be evaluated? (2) how do changes in the discount rate and other par ameters of an investment affect its optimal timing? and (3) how signif icantly do differences in the stream of net benefits from an investmen t affect its optimal timing? The first two questions are examined anal ytically, and the last question is examined numerically. Implications are discussed with respect to planning for major transit investments. (C) 1998 Elsevier Science Ltd. All rights reserved.