The bids-evaluation decision model development and application for PPP transport projects: a project risks modeling framework
Date
2010
Authors
Jang, Guan-wei, author
Duff, William S., advisor
Alciatore, David G., committee member
Labadie, John W., committee member
Puttlitz, Christian Matthew, committee member
Journal Title
Journal ISSN
Volume Title
Abstract
Public-private partnership (PPP) infrastructure projects play a key role in economic growth. Value for money (VFM), a core objective when conducting PPP projects, is defined as the optimal combination of whole life costs and benefits of the project to meet user requirements. The PPP infrastructure projects are generally very complex and have highly dynamic, interdependent risks and uncertainties that occur over the life cycle of a project. By using PPP arrangements, experts transfer and allocate risks to the party who is most capable of managing them in a cost effective manner. This requires the optimization of risk allocation between the public and private sectors in order to achieve the best VFM. Risk assessment is a critical element when selecting a project partner and examining projected VFM performance. Unfortunately, the current contractor selection methods used in the industry do not address interdependently dynamic and non-linear risk interactions. Such methods are unable to address unstructured or even semi-structured real world problems. By using these methods, experts often lack the global perspectives of project life cycles and ignore the uncertainty of project performance outcomes. This researcher developed a theoretical approach which applied hybrid techniques to a bidding proposal selection model from the public perspective. Using System Dynamics modeling and relevant statistical techniques, the dynamic risk interactions and interdependencies over project construction and operation phases were addressed and quantified. By employing Monte Carlo simulation, this researcher estimated the probability distribution of the overall project net present value (NPV) with compounding both downside and beneficial effects over project construction and operation phases. By applying appropriate decision making methods to compare the probability distribution of NPV among the bidding proposals, a capable contractor can be selected.
Description
Rights Access
Subject
system dynamics
Public-private sector cooperation -- Risk assessment
Construction projects -- Management -- Decision making
Multiple criteria decision making -- Construction
Risk management