Transport project evaluation: feasibility risk assessment and scenario forecasting

AbstractThis 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 s...