1. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT COSIMA-ROAD - Modelling Decision Support and Uncertainty using @RISK

2. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

3. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

4. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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) StartEnd

5. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

6. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 6 Danish Manual (1) StartEnd

7. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 7 Danish Manual (2) StartEnd

8. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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. StartEnd

9. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 9 Case example – The Alleroed Case Alleroed 23.000 Inhabitants StartEnd

10. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

11. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 11 Basic & Alternative Scenarios  To perform any sort of appraisal study you need a basic scenario BUT  Do-Nothing Scenario BUT with the new generated traffic etc.  In the Alleroed Case - 4 different Alternative Scenarios are suggested COSIMA-ROAD  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 DSS  Decision Support System - DSS StartEnd

12. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

13. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

14. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

15. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

16. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 16 Implementation in COSIMA-ROAD StartEnd

17. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 17 COSIMA-ROAD  COSIMA - COmpoSIte Model for Assessment StartEnd

18. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 18 Entry Data Sheet – COSIMA-ROAD StartEnd

19. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 19 Main Data Input StartEnd

20. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 20 Forecast sheet - Impacts StartEnd

21. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 21 Key Figures StartEnd

22. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 22 Trip Purposes StartEnd

23. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 23 Results - Overview StartEnd

24. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 24 Results of all 4 alternatives StartEnd

25. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 25 Results of all 4 alternatives StartEnd

26. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

27. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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: StartEnd

28. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 28 Risk Analysis Sheet in COSIMA-ROAD StartEnd

29. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

30. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

31. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 31 Distribution of Maintenance Cost  It has been found that a 10% lower bound and 50% higher bound is reasonable StartEnd

32. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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) StartEnd

33. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 33 Risk Analysis Sheet with applied distributions StartEnd

34. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 34 Results of the Risk Analysis StartEnd

35. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 35 Results of the Risk Analysis StartEnd

36. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 36 Results all four alternatives StartEnd

37. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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 StartEnd

38. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 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

39. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 39 ”The Monster Sheet” – Basic calculations StartEnd

40. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 40 ”The Monster Sheet” – Basic calculations StartEnd

41. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 41 ”The Monster Sheet” – Basic calculations StartEnd

42. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 42 ”The Monster Sheet” – Basic calculations StartEnd

43. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 43 ”The Monster Sheet” – Basic calculations StartEnd

44. © Copyright DTU-CTT 2006 Technical University of Denmark Centre for Traffic and Transport - CTT 44 ”The Monster Sheet” – Basic calculations StartEnd