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Assessment of large transport infrastructure projects: The CBA-DK model

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  • Salling, Kim Bang
  • Banister, David
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    Abstract

    This paper presents a newly developed decision support model to assess transport infrastructure projects: CBA-DK. The model combines use of conventional cost-benefit analysis to produce aggregated single point estimates, with quantitative risk analysis using Monte Carlo simulation to produce interval results. The embedded uncertainties within traditional CBA such as ex-ante based investment costs and travel time savings are of particular concern. The paper investigates these two impacts in terms of the Optimism Bias principle which is used to take account of the underestimation of construction costs and the overestimation of travel time savings. The CBA-DK methodological approach has been used to apply suitable probability distribution functions on the uncertain parameters, thus resulting in feasibility risk assessment moving from point to interval results. The proposed assessment model makes use of both deterministic and stochastic based information. Decision support as illustrated in this paper aims to provide assistance in the development and ultimately the choice of action, while accounting for the uncertainties surrounding transport appraisal schemes. The modelling framework is illustrated by the use of a case study appraising airport and runway alternatives in the capital of Greenland - Nuuk. The case study has been conducted in cooperation with the Home Rule Authorities of Greenland.

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    Bibliographic Info

    Article provided by Elsevier in its journal Transportation Research Part A: Policy and Practice.

    Volume (Year): 43 (2009)
    Issue (Month): 9-10 (November)
    Pages: 800-813

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    Handle: RePEc:eee:transa:v:43:y:2009:i:9-10:p:800-813

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    Related research

    Keywords: Decision support system Cost-benefit analysis Transport project appraisal Risk analysis Optimism Bias;

    References

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    1. Mackie, Peter & Preston, John, 1998. "Twenty-one sources of error and bias in transport project appraisal," Transport Policy, Elsevier, vol. 5(1), pages 1-7, January.
    2. Flyvbjerg, Bent, 2005. "Measuring inaccuracy in travel demand forecasting: methodological considerations regarding ramp up and sampling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 39(6), pages 522-530, July.
    3. Wardman, Mark, 2004. "Public transport values of time," Transport Policy, Elsevier, vol. 11(4), pages 363-377, October.
    4. Bent Flyvbjerg & Mette K. Skamris holm & S�ren L. Buhl, 2003. "How common and how large are cost overruns in transport infrastructure projects?," Transport Reviews, Taylor & Francis Journals, vol. 23(1), pages 71-88, January.
    5. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
    6. Fosgerau, Mogens, 2007. "Using nonparametrics to specify a model to measure the value of travel time," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(9), pages 842-856, November.
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    Citations

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    Cited by:
    1. Chow, Joseph Y.J. & Regan, Amelia C. & Ranaiefar, Fatemeh & Arkhipov, Dmitri I., 2011. "A network option portfolio management framework for adaptive transportation planning," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(8), pages 765-778, October.
    2. Galit Cohen-Blankshtain & Eran Feitelson, 2011. "Light rail routing: do goals matter?," Transportation, Springer, vol. 38(2), pages 343-361, March.
    3. Salling, Kim Bang & Leleur, Steen, 2011. "Transport appraisal and Monte Carlo simulation by use of the CBA-DK model," Transport Policy, Elsevier, vol. 18(1), pages 236-245, January.
    4. Sevcíková, Hana & Raftery, Adrian E. & Waddell, Paul A., 2011. "Uncertain benefits: Application of Bayesian melding to the Alaskan Way Viaduct in Seattle," Transportation Research Part A: Policy and Practice, Elsevier, vol. 45(6), pages 540-553, July.
    5. Welde, Morten, 2011. "Demand and operating cost forecasting accuracy for toll road projects," Transport Policy, Elsevier, vol. 18(5), pages 765-771, September.
    6. Mouter, Niek & Annema, Jan Anne & van Wee, Bert, 2013. "Ranking the substantive problems in the Dutch Cost–Benefit Analysis practice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 241-255.
    7. Mouter, Niek & Annema, Jan Anne & Wee, Bert van, 2013. "Attitudes towards the role of Cost–Benefit Analysis in the decision-making process for spatial-infrastructure projects: A Dutch case study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 58(C), pages 1-14.

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