Technical University of Denmark
Centre for Traffic and Transport - CTT
COSIMA-ROAD
- Modelling Decision
Support and Uncertainty
using @RISK
© Copyright DTU-CTT 2006
Technical University of Denmark
2
Centre for Traffic and Transport - CTT
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
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Technical University of Denmark
3
Centre for Traffic and Transport - CTT
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
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End
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Technical University of Denmark
4
Centre for Traffic and Transport - CTT
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 socioeconomic rate of return is high – but it may not lead to implementation.
(The Danish Ministry of Transport, 2003)
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End
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Technical University of Denmark
5
Centre for Traffic and Transport - CTT
The Danish Manual
 The Danish Ministry of Transport and Energy has conducted 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 socioeconomic analysis
Identical measures and procedures for evaluating
transport projects
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End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Danish Manual (1)
[1] Definition of Problem/description of idea
[2] Relevant alternatives/aktivities is chosen for further evaluation
[3] Relevant impacts are assessed and implemented
[4] The construction/investment cost, period and start is determined
[5] The basis alternative is stated/calculated on basis of [3] & [4]
[6] The in [2] chosen alternatives is arranged/set up for further use
[8] ”What if” Scenarios is defined:
- Operation proposals towards rail
projects are stated
- Various Traffic and Impact models is
performed
- First year impacts are quantified
[7] The unit price settings is found and
discounted to the correct year of
evaluation
Socio economic impacts is evaluated
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Danish Manual (2)
[9] Evaluation parameters are
determined such as forecast factors (f),
BNP/Growth in economy (g), discount
rate (d), Scenario factors (S & s) etc.
[10] Evaluation criteria: NPV, B/C-rate, IRR etc. is calculated
[11] Sensitivity Analysis or Risk
Analysis is performed on chosen First
Year Impacts
[12] Non quantifiable (MCA) impacts
are determined on basis of stakeholder
preferences
[13] Final results are illustrated schematically
[14] Presentation of the final results
[15] Follow-up and after calculation
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End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Evaluation Criteria
B/C-rate
k

B/C 
t 0
k

t 0
Bt
1  r t
Ct
The ratio indicates the present
value of the benefits that will result
per present value invested.
Development of costs and benefits over the years
1  r t
Net Present Value
Time
k
B  C t k Bt
Ct
NPV  




t
t
t






1

r
1

r
1

r
t 0
t 0
t 0
k
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Case example – The Alleroed Case
Alleroed
23.000 Inhabitants
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End
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Centre for Traffic and Transport - CTT
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
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End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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 socioeconomic performance does not necessarily lead to
implementation
 Decision
Start
Support System - DSS
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Implementation in COSIMA-ROAD
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End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
COSIMA-ROAD
 COSIMA - COmpoSIte Model for Assessment
Deterministic calculation
(point estimate)
CBA-Module
Input data
(Data entry)
Taxation
(Calculation of the various time
and km. dependent taxation rules)
Impact Calculation
(Entry of unit price settings &
calculation of trip purposes)
Prognosis/Forecast
(Forecast situation applied for the
First Year Impacts)
Prognosis/Forecast 2
(Forecast situation applied for the
Unit Prices)
Base Calculation
(Overview of all impact calculations
with the implied evaluation criteria)
Front Sheet / ”Quick and Dirty”
(Entry of data)
Results – expanded
(Resultsheet containing all first
year impacts)
Results – overview
(Containing the most important
results with criteria)
Start
Stochastic calculation (interval estimate)
Risk Analysis Module
Probability Distributions
(Definition of the various uncertain
impacts)
Results – Uncertainty
(Resulting Probability Distribution
of the B/C-rate)
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Entry Data Sheet – COSIMA-ROAD
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Main Data Input
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End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Forecast sheet - Impacts
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End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Key Figures
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End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Trip Purposes
Start
End
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Centre for Traffic and Transport - CTT
Results - Overview
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Results of all 4 alternatives
B/C-ratio
2,5
B/C-ratios
2
1,5
B/C-ratio
1
0,5
0
Alternativ 1
Start
Alternativ 2
Alternativ 3
Alternativ 4
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Results of all 4 alternatives
Net Values in mio kr.
400
Net Value in mio DKK
300
200
Total Benefits
100
Total Costs
NPV
0
Alternativ 1
Alternativ 2
Alternativ 3
Alternativ 4
-100
-200
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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 decisionmakers 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
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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:
The relative level of knowledge
High level of knowledge:
Erlang distribution
High level of knowledge:
Normal distribution
Medium level of knowledge:
Triangular distribution
Low level of knowledge:
Uniform distribution
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Risk Analysis Sheet in COSIMA-ROAD
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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:

k
 The mean is calculated by the socalled Lichtenberg’s Principle:

min .  2.9  ML  max .
4.9
 This type of distributions is
reasonable as the Construction Cost
most often is exceed
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
Distribution of Maintenance Cost
 It has been found that a 10% lower bound and 50% higher
bound is reasonable
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
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
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Centre for Traffic and Transport - CTT
Risk Analysis Sheet with applied distributions
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End
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Centre for Traffic and Transport - CTT
Results of the Risk Analysis
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Centre for Traffic and Transport - CTT
Results of the Risk Analysis
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Centre for Traffic and Transport - CTT
Results all four alternatives
The Alleroed Case: All four Scenarios
Probability that total rate will be equalled or
exceeded
1
0,9
0,8
0,7
Alt. 4
Alt. 2
Alt. 3
Alt. 1
0,6
0,5
0,4
0,3
0,2
0,1
0
0,1
0,3
0,5
0,7
1,0
1,3
1,6
2,0
2,4
2,9
Total rate based on discounted benefits and costs
Start
End
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Centre for Traffic and Transport - CTT
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 COSIMAROAD 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
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Technical University of Denmark
38
Centre for Traffic and Transport - CTT
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
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Centre for Traffic and Transport - CTT
”The Monster Sheet” – Basic calculations
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
”The Monster Sheet” – Basic calculations
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
”The Monster Sheet” – Basic calculations
Start
End
© Copyright DTU-CTT 2006
Technical University of Denmark
42
Centre for Traffic and Transport - CTT
”The Monster Sheet” – Basic calculations
Start
End
© Copyright DTU-CTT 2006
Technical University of Denmark
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Centre for Traffic and Transport - CTT
”The Monster Sheet” – Basic calculations
Start
End
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Technical University of Denmark
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Centre for Traffic and Transport - CTT
”The Monster Sheet” – Basic calculations
Start
End
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