Appraisal of airport alternatives in greenland by the use of risk analysis and monte carlo simulation

Abstract

This paper presents an appraisal study of three different airport proposals in Greenland by the use of an adapted version of the Danish CBA-DK model. The assessment model is based on both a deterministic calculation by the use of conventional cost-benefit analysis and a stochastic calculation, where risk analysis is carried out using Monte Carlo simulation. The feasibility risk adopted in the model is based on assigning probability distributions to the uncertain model parameters. Two probability distributions are presented, the Erlang and normal distribution respectively assigned to the construction cost and the travel time savings. The obtained model results aim to provide an input to informed decision-making based on an account of the level of desired risk as concerns feasibility risks. This level is presented as the probability of obtaining at least a benefit- cost ratio of a specified value. Finally, some conclusions and a perspective are presented.