IDEAS home Printed from https://ideas.repec.org/a/eee/transa/v43y2009i9-10p800-813.html
   My bibliography  Save this article

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

Author

Listed:
  • Salling, Kim Bang
  • Banister, David

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.

Suggested Citation

  • Salling, Kim Bang & Banister, David, 2009. "Assessment of large transport infrastructure projects: The CBA-DK model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 43(9-10), pages 800-813, November.
    • Handle: RePEc:eee:transa:v:43:y:2009:i:9-10:p:800-813
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0965-8564(09)00094-9
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    4. Bent Flyvbjerg & Mette K. Skamris holm & Søren 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. Wardman, Mark, 2004. "Public transport values of time," Transport Policy, Elsevier, vol. 11(4), pages 363-377, October.
    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.
    7. Flyvbjerg,Bent & Bruzelius,Nils & Rothengatter,Werner, 2003. "Megaprojects and Risk," Cambridge Books, Cambridge University Press, number 9780521009461, October.
    8. Mackie, P.J. & Jara-Díaz, S. & Fowkes, A.S., 0. "The value of travel time savings in evaluation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(2-3), pages 91-106, April.
    9. S. M. Grant-Muller & P. MacKie & J. Nellthorp & A. Pearman, 2001. "Economic appraisal of European transport projects: The state-of-the-art revisited," Transport Reviews, Taylor & Francis Journals, vol. 21(2), pages 237-261.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Khraibani, R. & de Palma, A. & Picard, N. & Kaysi, I., 2016. "A new evaluation and decision making framework investigating the elimination-by-aspects model in the context of transportation projects' investment choices," Transport Policy, Elsevier, vol. 48(C), pages 67-81.
    2. 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.
    3. Miller, Michael & Szimba, Eckhard, 2015. "How to avoid unrealistic appraisal results? A concept to reflect the occurrence of risk in the appraisal of transport infrastructure projects," Research in Transportation Economics, Elsevier, vol. 49(C), pages 65-75.
    4. Galit Cohen-Blankshtain & Eran Feitelson, 2011. "Light rail routing: do goals matter?," Transportation, Springer, vol. 38(2), pages 343-361, March.
    5. Turró, Mateu & Penyalver, Domingo, 2019. "Hunting white elephants on the road. A practical procedure to detect harmful projects of transport infrastructure," Research in Transportation Economics, Elsevier, vol. 75(C), pages 3-20.
    6. 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.
    7. 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.
    8. Munday, Max & Reynolds, Laura & Roberts, Annette, 2023. "Re-appraising ‘in-process’ benefits of strategic infrastructure improvements: Capturing the unexpected socio-economic impacts for lagging regions," Transport Policy, Elsevier, vol. 134(C), pages 119-127.
    9. 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.
    10. Salling, Kim Bang & Leleur, Steen, 2015. "Accounting for the inaccuracies in demand forecasts and construction cost estimations in transport project evaluation," Transport Policy, Elsevier, vol. 38(C), pages 8-18.
    11. Barfod, Michael Bruhn & Salling, Kim Bang, 2015. "A new composite decision support framework for strategic and sustainable transport appraisals," Transportation Research Part A: Policy and Practice, Elsevier, vol. 72(C), pages 1-15.
    12. Michael Bruhn Barfod & Robin van den Honert & Kim Bang Salling, 2016. "Modeling Group Perceptions Using Stochastic Simulation: Scaling Issues in the Multiplicative AHP," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 15(02), pages 453-474, March.
    13. Banister, David & Thurstain-Goodwin, Mark, 2011. "Quantification of the non-transport benefits resulting from rail investment," Journal of Transport Geography, Elsevier, vol. 19(2), pages 212-223.
    14. 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.
    15. Niek Mouter & Jan Annema & Bert Wee, 2015. "Managing the insolvable limitations of cost-benefit analysis: results of an interview based study," Transportation, Springer, vol. 42(2), pages 277-302, March.
    16. Welde, Morten, 2011. "Demand and operating cost forecasting accuracy for toll road projects," Transport Policy, Elsevier, vol. 18(5), pages 765-771, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Chantal C. Cantarelli & Bent Flybjerg & Eric J. E. Molin & Bert van Wee, 2013. "Cost overruns in Large-Scale Transportation Infrastructure Projects: Explanations and Their Theoretical Embeddedness," Papers 1307.2176, arXiv.org.
    3. Petter Osmundsen & Kristin Helen Roll, 2016. "Rig Rates and Drilling Speed: Reinforcing Effects," CESifo Working Paper Series 5895, CESifo.
    4. Øglend, Atle & Osmundsen, Petter & Lorentzen, Sindre, 2016. "Cost Overrun at the Norwegian Continental Shelf: The element of surprise," UiS Working Papers in Economics and Finance 2016/3, University of Stavanger.
    5. Holz-Rau, Christian & Scheiner, Joachim, 2011. "Safety and travel time in cost-benefit analysis: A sensitivity analysis for North Rhine-Westphalia," Transport Policy, Elsevier, vol. 18(2), pages 336-346, March.
    6. Cantarelli, C.C. & Molin, E.J.E. & van Wee, B. & Flyvbjerg, B., 2012. "Characteristics of cost overruns for Dutch transport infrastructure projects and the importance of the decision to build and project phases," Transport Policy, Elsevier, vol. 22(C), pages 49-56.
    7. Hjorth, Katrine & Fosgerau, Mogens, 2012. "Using prospect theory to investigate the low marginal value of travel time for small time changes," Transportation Research Part B: Methodological, Elsevier, vol. 46(8), pages 917-932.
    8. Thomopoulos, N. & Grant-Muller, S. & Tight, M.R., 2009. "Incorporating equity considerations in transport infrastructure evaluation: Current practice and a proposed methodology," Evaluation and Program Planning, Elsevier, vol. 32(4), pages 351-359, November.
    9. Barfod, Michael Bruhn & Salling, Kim Bang, 2015. "A new composite decision support framework for strategic and sustainable transport appraisals," Transportation Research Part A: Policy and Practice, Elsevier, vol. 72(C), pages 1-15.
    10. Dimitriou, Harry T. & Ward, E. John & Dean, Marco, 2016. "Presenting the case for the application of multi-criteria analysis to mega transport infrastructure project appraisal," Research in Transportation Economics, Elsevier, vol. 58(C), pages 7-20.
    11. Salling, Kim Bang & Leleur, Steen, 2015. "Accounting for the inaccuracies in demand forecasts and construction cost estimations in transport project evaluation," Transport Policy, Elsevier, vol. 38(C), pages 8-18.
    12. Bent Flyvbjerg & Eamonn Molloy, 2011. "Delusion, Deception and Corruption in Major Infrastructure Projects: Causes, Consequences and Cures," Chapters, in: Susan Rose-Ackerman & Tina Søreide (ed.), International Handbook on the Economics of Corruption, Volume Two, chapter 3, Edward Elgar Publishing.
    13. Steininger, Bertram & Groth, Martin & Weber, Birgitte, 2020. "Cost overruns and delays in infrastructure projects: the case of Stuttgart 21," Working Paper Series 20/11, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    14. Cantarelli, C.C. & van Wee, B. & Molin, E.J.E. & Flyvbjerg, B., 2012. "Different cost performance: different determinants?," Transport Policy, Elsevier, vol. 22(C), pages 88-95.
    15. Bent Flyvbjerg, 2006. "Cost Overruns and Demand Shortfalls in Urban Rail and Other Infrastructure," Transportation Planning and Technology, Taylor & Francis Journals, vol. 30(1), pages 9-30, February.
    16. Stefano Moroni, 2014. "Grandi e piccole opere Per un?azione pubblica responsabile," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2014(3), pages 103-112.
    17. Cantarelli, C.C. & Flyvbjerg, B. & Buhl, S.L., 2012. "Geographical variation in project cost performance: the Netherlands versus worldwide," Journal of Transport Geography, Elsevier, vol. 24(C), pages 324-331.
    18. Zhou, Yuyang & Wang, Peiyu & Zheng, Shuyan & Zhao, Minhe & Lam, William H.K. & Chen, Anthony & Sze, N.N. & Chen, Yanyan, 2024. "Modeling dynamic travel mode choices using cumulative prospect theory," Transportation Research Part A: Policy and Practice, Elsevier, vol. 179(C).
    19. Maria Börjesson & Jonas Eliasson & Mattias Lundberg, 2014. "Is CBA Ranking of Transport Investments Robust?," Journal of Transport Economics and Policy, University of Bath, vol. 48(2), pages 189-204, May.
    20. Love, Peter E.D. & Ika, Lavagnon A. & Ahiaga-Dagbui, Dominic D., 2019. "On de-bunking ‘fake news’ in a post truth era: Why does the Planning Fallacy explanation for cost overruns fall short?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 126(C), pages 397-408.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transa:v:43:y:2009:i:9-10:p:800-813. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/547/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.