Why is demand forecasting important in a PPP ?
It must be remembered first that demand forecasting is a necessary step in any road project appraisal, whatever the implementation or institutional scheme. But some issues are more specific to PPPs and will be developed below. While public-private partnerships in the delivery of transport infrastructure and services are expanding, there is also growing evidence of the lack of appreciation of the importance of demand forecasting in preparing and monitoring these partnerships. This often gives an opportunity to the private operators of transport services to complain, soon after taking over a business, about over or underestimations of demand based on the initial information provided by governments. It tends to result in an excuse for the private operators to try to renegotiate the contract to improve its terms. It is quite common for both regulators and concessionaires or bidders to devote much more money to the construction cost studies than to the demand analysis. Forecasting the Deman
