Evaluating flexibility in railroad construction projects
Name
61186123-MIT.pdf
Description
Full printable version
Size
7.59 MB
Format
Adobe PDF
Checksum (MD5)
df413bc47c47e041dea033efc0dc3ad1
Author(s)
Oh, Choong Ryun, 1972-
Advisor(s)
Fred Moavenzadeh.
Date Issued
2005
Publisher
Massachusetts Institute of Technology
Abstract
This thesis aims to valuate flexibilities in a large-scale railroad construction project. In general, a railroad construction project involves a large amount of flexibilities due to its long construction period and conflicts among various participants. Therefore, railroad construction projects require investors to examine the feasibility of the project, taking into account managers' ability to make strategic decisions to deal with flexibilities during the construction. However. this important value is not considered in conventional valuation methods, such as Net Present Value (NPV) or Internal Rate of Return (IRR) analysis. This study introduces methods to identify and valuate the flexibilities involved in a project. Decision Tree Analysis (DTA) and Real Option Analysis (ROA) are mainly discussed as primary methods to avoid pitfalls of the conventional valuation methods. DTA helps managers to make future decisions in an effective way by providing graphical diagrams of decision opportunities. ROA appraises the value of mitigating risks by allowing managers to defer investing decisions until a situation that affects a project's success seriously becomes obvious. As a case study, the additional station construction projects in Incheon International Airport Railroad (IIAR) are analyzed to apply the methodologies to valuate the flexibilities. The case study shows that the use of DTA and ROA enables us to visualize the risks, and to quantify the value of flexibilities in the project.
Description
Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Civil and Environmental Engineering, 2005.
Includes bibliographical references (p. 103-104).
Subjects
Civil and Environmental Engineering.
MIT Department
Massachusetts Institute of Technology. Department of Civil and Environmental Engineering
Terms of Use
M.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.
Persistent DSpace Link
