Modelling of Transport Project Uncertainties: Feasibility Risk Assessment and Scenario Analysis

Abstract

This paper proposes a new way of handling the uncertainties present in transport decision making based on infrastructure appraisals. The paper suggests to combine the principle of Optimism Bias, which depicts the historical tendency of overestimating transport related benefits and underestimating investment costs, with a quantitative risk analysis based on Monte Carlo simulation and to make use of a set of exploratory scenarios. The analysis is carried out by using the CBA-DK model representing the Danish standard approach to socio-economic cost-benefit analysis. Specifically, the paper proposes to supplement Optimism Bias and the associated Reference Class Forecasting (RCF) technique with a new technique that makes use of a scenariogrid. We tentatively introduce and refer to this as Reference Scenario Forecasting (RSF). The final RSF output from the CBA-DK model consists of a set of scenario-based graphs which functions as risk-related decision support for the appraised transport infrastructure project. The presentation of RSF is demonstrated by using an appraisal case concerning a new airfield in the capital of Greenland, Nuuk.