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dc.contributor.advisorRichard de Neufville.en_US
dc.contributor.authorRamirez, Natalia, 1973-en_US
dc.contributor.otherMassachusetts Institute of Technology. Technology and Policy Program.en_US
dc.date.accessioned2005-08-24T20:15:32Z
dc.date.available2005-08-24T20:15:32Z
dc.date.copyright2002en_US
dc.date.issued2002en_US
dc.identifier.urihttp://hdl.handle.net/1721.1/8091
dc.descriptionThesis (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division, Technology and Policy Program, 2002.en_US
dc.descriptionIncludes bibliographical references (p. 159-164).en_US
dc.description.abstractThis thesis aims to aid in the understanding of capital budgeting techniques for infrastructure developments. In particular, it analyzes: Net Present Value (NPV), Decision Analysis (DA) and Real Options Analysis (ROA), and compares these approaches in terms of their treatment of uncertainty, their acknowledgement of flexibility, and their usefulness for strategic decisionmaking. The comparison of these alternative methodologies is based on a literature review highlighting the advantages and disadvantages of each approach, complemented by a system study of the expansion of the water supply system for Bogota, Colombia. This study illustrates the application of each methodology and identifies the policy challenges relevant to infrastructure investment evaluation in Colombia and other emerging economies. The study confirms the hypothesis that NPV is inadequate for the evaluation of projects in uncertain environments, mainly because it does not account for the value generated by flexibility. The study also recognizes that although the ROA approach is theoretically superior in the pricing of flexibility, its implementation requires information usually not available for infrastructure assets. This rends the results of the analyses imprecise and complicates the process of identifying an optimal strategy. The study finds the Decision Analysis approach preferable for the evaluation of Bogota's water supply expansion projects, based on its practicality and ease of communication. The thesis also sets forth a framework for choosing the most appropriate capital budgeting technique for other infrastructure developments. This framework is based on data quality and availability and the objective function of the analysis to be conducted.en_US
dc.format.extent226 p.en_US
dc.format.extent17921152 bytes
dc.format.extent17920910 bytes
dc.format.mimetypeapplication/pdf
dc.format.mimetypeapplication/pdf
dc.language.isoengen_US
dc.publisherMassachusetts Institute of Technologyen_US
dc.rightsM.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.en_US
dc.rights.urihttp://dspace.mit.edu/handle/1721.1/7582
dc.subjectTechnology and Policy Program.en_US
dc.titleValuing flexibility in infrastructure developments : the Bogota water supply expansion plan.en_US
dc.typeThesisen_US
dc.description.degreeS.M.en_US
dc.contributor.departmentMassachusetts Institute of Technology. Engineering Systems Division
dc.contributor.departmentTechnology and Policy Program
dc.identifier.oclc51238471en_US


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