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[quote user="MP173"]I am really interested in knowing how a company will determine if capacity increases either thru more MT or advanced signalling will be approved in a capex model.  No doubt there must be an internal rate of return which must be surpassed, but what types of models are used to determine if these projects are completed?ed[/quote]You're asking about what I do for a living, most days.  There are several consultants that provide traffic modeling and capacity studies for the railroad industry.  The process is iterative as one first hypothesizes a given traffic level, train type, hp/ton ratios, priorities, and a given fixed plant layout that includes proposed locations of crossovers, turnout sizes, siding lengths, signal aspect progressions, and other features that affect capacity such as location and type of grade crossings, curvature, and gradients.  Thought is also given to maintenance provisions and the effects of traffic and terrain on maintenance, such as curve rail wear, rail corrugation on ascending grades, accessibility of the main track to maintainers, etc. Then a computer simulation is run and the results studied.  Because freight traffic is irregular and there are events that are unpredictable such as weather, grade-crossing collisions, mechanical failures, etc., the model only shows you the results of each scenario that is posited.  In the real world of railroading no two days are alike.  And the locations of track features you might want to add, such as crossovers and sidings, are highly cost-dependent upon terrain features.  So there is very much less flexibility and choice than you would like. The end result requires experience and judgement to look at the proposed track arrangement and method of operation, and conclude that it will reasonably support the proposed traffic.  The computer model is not a substitute for experience and professional judgement.  In fact, you had better have a very good understanding of what you're doing even to set up the information you feed into the computer model, or the results are garbage. At the end, the cost of building the capital improvements are compared to the projected revenue stream and the project is ranked on the railroad's capital projects list.  But if you're looking for a computer model that will tell you that a new $1.2m 40-mph crossover at Smallsville is more attractive than a $2.2m 10,000' siding at Bigtown, you will look in vain.  Fortunately there's a huge experience base -- about 175 years worth -- of what works and what doesn't, and most of the time we get it reasonably right.  Railroading is an old game and most of the truth was figured out and very closely understood by the 1890s.  And one of the truths is that network operations are extremely complex, extremely vulnerable to small things having big effects, and that it is not reducible to simple nostrums or computer models.S. Hadid
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