COSIMA-ROAD - Modelling Decision Support and Uncertainty using @RISK

1. COSIMA-ROAD- Modelling Decision Support and Uncertainty using @RISK

2. About me • Ph.d. Student, M.Sc. from the Technical University of Denmark – finishes in 2008 • Half way through my Ph.d. study entitled: • Optimization of Decision Support concerning Large Scale Infrastructure Projects • 2nd phase concerns risk analysis and sensitivity analysis upon uncertain variables and parameters • Implemeting @RISK as part of an overall software package for appraisal in the Danish Road Sector • Partly financed by a Danish Centre for Logistics and Freight Transport – CLG Start End

3. Outline of Presentation • Why do we need a model for appraising road infrastructure projects? – A Danish Manual for Appraisal Studies • Brief overview of the modelling structure of COSIMA-ROAD • Presentation of Case Example • The Deterministic Calculation • Cost-Benefit Analysis • Single value point of return • The Stochastic Calculation • Risk Analysis • Interval point of return in terms of probability distributions • Conclusion & Perspective Start End

4. The Socio-Economic Analysis • Prioritising between the different project proposals is necessary • Decision-makers has to choose the optimal combination of investments in a long-term planning perspective • Decision between several project alternatives • Decision of the actual design of the given/chosen projects • Assessment of each projects socio-economic rentability • ….it is of course easier to achive political accept of a project if the socio-economic rate of return is high – but it may not lead to implementation. (The Danish Ministry of Transport, 2003) Start End

5. The Danish Manual • The Danish Ministry of Transport and Energy has conduc-ted CBA for a long time, however, it has been unsystematic • A tool for socio-economic analysis • Acceptance of methodology by transparency • Systematic method of determining various impact • Narrowing possible solution to a few alternatives • A practical toolbox for the analysts performing the socio-economic analysis • Identical measures and procedures for evaluating transport projects Start End

6. Danish Manual (1) Start End

7. Danish Manual (2) Start End

8. Evaluation Criteria • B/C-rate • Net Present Value The ratio indicates the present value of the benefits that will result per present value invested. Start End

9. Case example – The Alleroed Case Alleroed 23.000 Inhabitants Start End

10. The Case • The main goal is to find a Ring Road that can connect the New Residential Area to the main Road Network • The second goal is to relieve the town centre of Alleroed for through traffic and congestion Start End

11. Basic & Alternative Scenarios • To perform any sort of appraisal study you need a basic scenario • Do-Nothing Scenario BUT with the new generated traffic etc. • In the Alleroed Case - 4 different Alternative Scenarios are suggested • Comparison of these scenarios are the main objective for implementing COSIMA-ROAD • It is, however, important to remember that a good socio-economic performance does not necessarily lead to implementation • Decision Support System - DSS Start End

12. Basic Scenario • The Do-Nothing Scenario • Traffic is supposed to arrive at the new residential area as always • Problems in the future with congestions • Capacity • Pollution • Noise • …. • COST = 0 Billion DKK Start End

13. Alternative 1 • An upgrade of the existing road network and a 1 km extension • The cheapest sollution • Problems in the future with congestion • Noise, emission etc. is still influencing the residential areas around the existing road • COST = 19.2 Billion DKK Start End

14. Alternative 2 & 3 • Both alternatives are bypass- and new constructed roads • Externalities are moved away from residential areas • COST Alternative 2 = 54.9 Bill. DKK • COST Alternative 3 = 48.6 Bill. DKK Start End

15. Alternative 4 • A large scale upgrade of the entire road network in the Alleroed Region • The most expensive • Creates a substantial time benefit for travellers in the region • Removes externalities from all of the residential areas • Adapted for future requirements • COST = 194.5 Billion DKK Start End

16. Implementation in COSIMA-ROAD Start End

17. COSIMA-ROAD • COSIMA - COmpoSIte Model for Assessment Start End

18. Entry Data Sheet – COSIMA-ROAD Start End

19. Main Data Input Start End

20. Forecast sheet - Impacts Start End

21. Key Figures Start End

22. Trip Purposes Start End

23. Results - Overview Start End

24. Results of all 4 alternatives Start End

25. Results of all 4 alternatives Start End

26. Risk Analysis • COSIMA-ROAD is designed to give a deterministic single value result, in this case as a benefit/cost ratio • However, several uncertainties are involved when interpreting models • The basis of Risk Analysis is then to give the decision-makers the ability to consider a ”complete set of possible future outcomes” • Assigning probability distributions on the uncertain first year effects – NOT Unit prices • Outcome is Interval results in terms of probability distributions Start End

27. Stochastic calculation – Risk Analysis module • Applying @RISK as add-on to Excel • The different levels of knowledge is divided into 3 groups where the actual distribution parameters are assessed: Start End

28. Risk Analysis Sheet in COSIMA-ROAD Start End

29. Distribution of the Construction Cost • It has been found suitable to use an Erlang Distribution with a Scale parameter k = 5. • The Shape parameter is found by the following relationship: • The mean is calculated by the so-called Lichtenberg’s Principle: • This type of distributions is reasonable as the Construction Cost most often is exceed Start End

30. Distribution of the Travel Time Savings • Recent Master Thesis from DTU has shown that a std. deviation between 10% - 20% is a reasonable error corresponding to the Traffic Models Start End

31. Distribution of Maintenance Cost • It has been found that a 10% lower bound and 50% higher bound is reasonable Start End

32. Distribution of The Safety Effect (number of Accidents) • This impact is found by impact models. These models, like the traffic models have embedded errors – a study has shown that these vary quiet extensively (+/- 10% in our case) Start End

33. Risk Analysis Sheet with applied distributions Start End

34. Results of the Risk Analysis Start End

35. Results of the Risk Analysis Start End

36. Results all four alternatives Start End

37. Conclusion & Perspective • The COSIMA-ROAD Evaluation System has been used in real case studies in the Danish Road Directorate • The model has proven highly applicable within transport infrastructure planning – at the moment it is used in a large-scale study in Greenland • To address some of the uncertainties embedded in the model result a Monte-Carlo simulation is conducted making use of various probability distributions • The various probability distributions applied within the COSIMA-ROAD model is to be revised and further investigated • Especially, the two main impacts; Construction Costs and Travel Time Savings are to be further investigated Start End

38. PhD Student, M.Sc. in Engineering Kim Bang Salling Technical University of Denmark Centre for Traffic and Transport Decision Modelling Group Phone: +45 4525 1548 Email: kbs@ctt.dtu.dk www.ctt.dtu.dk Thank you for your attention!

39. ”The Monster Sheet” – Basic calculations Start End

40. ”The Monster Sheet” – Basic calculations Start End

41. ”The Monster Sheet” – Basic calculations Start End

42. ”The Monster Sheet” – Basic calculations Start End

43. ”The Monster Sheet” – Basic calculations Start End

44. ”The Monster Sheet” – Basic calculations Start End