Decision Support and Strategic Assessment

• Understand the economic foundations of a cost-benefit analysis
• Assess a project’s intertemporal impacts through discounting and the social cost of carbon
• Implement and perform a cost-benefit analysis from a societal perspective on a large investment project
• Implement and perform a feasibility risk assessment using Monte Carlo simulation
• Identify supplementing criteria to include in a strategic analysis from the perspective of decision-makers and stakeholders
• Identify, organize, and assess accessible data material in the context of both a quantitative and a qualitative approach
• Apply principles of multi-criteria decision analysis to assess the strategic impacts of a decision problem
• Implement and account for the methodology behind a composite analysis based on cost-benefit analysis, feasibility risk assessment, and multi-criteria decision analysis
• Design and apply a comprehensive decision support model for a large investment problem
• Communicate the chosen solution methods and performed analyses for a given problem area through a technical report

The course treats basic and advanced theory and methodology in the assessment/appraisal/evaluation of major investment projects. An assessment of transport infrastructure projects forms the assignment of the course. However, the methods applied are universal and can be used for other types of projects as well. Knowledge about transport infrastructure projects is not a prerequisite to participating in the course.

The course’s overall objective is to provide the best possible decision support by applying cost-benefit analysis (CBA), feasibility risk analysis, and strategic analysis using multi-criteria decision analysis (MCDA) and to combine them into a composite analysis for a pool of investment projects. The following topics will be treated in lectures and exercises, where it is assumed that the student holds some basic knowledge of economics:

Socio-economic analysis: The theoretical foundations of the CBA, including social choice mechanisms, market (in)efficiency, social welfare, and the justification of public action. The students will become familiar with the theoretical elements of a CBA both in a static setting and in an intertemporal framework.

Risk analysis and uncertainty: Theory and methodology concerning uncertainty and the concept of Optimism Bias. The topic is concerned with determining various uncertain elements in the CBA and treating these using reference class forecasting and Monte Carlo simulation.

Strategic analysis: Theory and methodology concerning measuring non-quantifiable impacts, which often are strategic and hold the potential to improve the decision support. The students will get acquainted with different MCDA assessment techniques and how to combine these with the CBA and feasibility risk assessment results. The aim is to include several stakeholder perspectives in the final recommendations.

The course participants work in groups to apply and achieve practical knowledge about the analysis methods and concepts. It is expected that the students can clarify/account/argue for the chosen impacts/criteria and the model solutions in connection with the report work and the written examination.

The main course content consists of lectures and group exercises with plenary discussions.

42016/12772/42178/42576

Lectures, exercises, and a final group report.