Transport Project Evaluation: Feasibility Risk Assessment and Scenario Forecasting

Abstract

This paper presents a new approach to transport project assessment in terms of feasibility risk assessment and reference class forecasting. Conventionally, transport project assessment is based upon a Cost-Benefit Analysis (CBA) where evaluation criteria such as Benefit Cost Ratios (BCR) are obtained. Recent research has however proved that substantial inaccuracies are present when obtaining the monetary input to the CBA, particularly as concerns the construction costs and demand forecasts. This paper proposes a new approach in order to address these inaccuracies in a so-called Reference Scenario Forecasting (RSF) frame. The RSF is anchored in the cost-benefit analysis; thus, it provides decision-makers with a quantitative mean of assessing the transport infrastructure project. First, the RSF method introduces uncertainties within the CBA by applying Optimism Bias uplifts on the preliminary construction cost estimates. Hereafter, a quantitative risk analysis is provided making use of Monte Carlo simulation. This approach facilitates random input parameters based upon reference class forecasting, hence, a parameter data fit has been performed in order to obtain validated probability distribution functions. The latter have been placed and ultimately simulated on the inaccuracies of determining demand forecasts, i.e. leading to travel time savings and ticket revenues of the project. Finally, RSF makes use of scenario forecasting where trend scenarios such as economic growth and level of cross-border integration are investigated. The latter is highly relevant as RSF is demonstrated by a case example concerning the fixed link between Elsinore in Denmark and Helsingborg in Sweden.

Two-phase model for multi-criteria project ranking: Serbian Railways case study

“…In addition, multi-criteria evaluation methods are the most frequently used for projects belonging to one area (Salling and Leleur, 2012;Buchanan and Vanderpooten, 2007;Eder et al, 1996;Bristow and Nellthorp, 2000;Macharis et al, 2009;Lee and Kim, 2000;Su et al, 2006;Tudela et al, 2006;Ivanović et al, 2013;Chang et al, 2009;Longo et al 2009), with the majority of studies concerned with selecting the best version of one project (Salling and Leleur, 2012;Buchanan and Vanderpooten, 2007;Lee and Kim, 2000;Chang et al, 2009).…”

How to avoid unrealistic appraisal results? A concept to reflect the occurrence of risk in the appraisal of transport infrastructure projects

“…The method is also known as 'Reference Class Forecasting', which implies establishing "a pool of past projects similar to the one being appraised" in order to learn from experiences of past projects and to avoid 'planning fallacy' for the projects subject to appraisal (Salling & Leleur, 2012).…”

How to Choose and When to Start Best ITS Projects That Enhance Logistic Performance?

“…It is based on the basic premise that the supply and distribution activities being integrated with the manufacturing / logistics activities can result in better profitability for the organization. The local minimum of total cost of the manufacturing operation is getting replaced by the global minimum of total cost of the whole chain, resulting in better profitability for the chain members and hence lower costs for the products (Salling and Leleur, 2015).…”