Project selection with sets of mutually exclusive alternatives
The authors study the problem to maximise the net economic benefit of an investment plan by selecting from a portfolio of candidate projects within a given budget constraint. As is well known, with independent projects the economic efficiency of the entire investment plan is maximised if projects are selected according to their benefit-cost ratio until the budget is exhausted. Often, however, the planning of a project involves a stage where a set of alternative concepts or designs are considered. A best alternative is chosen, and the plan is composed from the pool of all such best alternatives. This procedure violates the assumptions underlying the benefit-cost ratio criterion. In this paper, the authors set out the correct criterion to use. A real-life example from Norwegian transport planning is provided to show how the global setting into which the project is going to compete, matters for the selection criterion to be used.
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Availability:
- Find a library where document is available. Order URL: http://worldcat.org/issn/22120122
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Supplemental Notes:
- Abstract reprinted with permission of Elsevier.
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Authors:
- Minken, Harald
- Publication Date: 2016-6
Language
- English
Media Info
- Media Type: Web
- Pagination: pp 11-17
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Serial:
- Economics of Transportation
- Volume: 6
- Publisher: Elsevier Science Publishers BV
- ISSN: 2212-0122
- Serial URL: http://www.sciencedirect.com/science/journal/22120122
Subject/Index Terms
- TRT Terms: Decision making; Economic benefits; Investments; Transportation planning
- Geographic Terms: Norway
- Subject Areas: Economics; Planning and Forecasting; Transportation (General);
Filing Info
- Accession Number: 01608665
- Record Type: Publication
- Files: TRIS
- Created Date: Aug 29 2016 11:10AM