Investing in transport infrastructure under uncertainty

Transport infrastructure investment is characterised by long lead times and increasingly large upfront capital costs. With evidence of both the overestimation of benefits and underestimation of costs of transport projects, decision-makers require greater certainty over the investments they make. Economic appraisals form the basis of investment decisions for transport infrastructure, however inputs to models and appraisal guidelines often use a range of single-point assumptions, which do not account for uncertainty in demographic forecasts or allow for changing trends, and which may affect the economic viability of projects. This paper details probabilistic methods that can be applied to account for uncertainties within the appraisal process. Illustrated by case studies, it discusses how rather than using averaged assumptions or best/worst case scenarios, Monte Carlo simulation can be used to simulate many combinations of assumptions and scenarios, understand project drivers, and generate probabilistic distributions of costs and benefits.

Language

  • English

Media Info

  • Pagination: 15p
  • Monograph Title: AITPM National Traffic and Transport Conference, Perth, Western Australia, 30 July to 2 August 2013

Subject/Index Terms

Filing Info

  • Accession Number: 01492954
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ITRD, ATRI
  • Created Date: Sep 16 2013 9:33AM