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Investment Valuation Model for Retrofit of Infrastructure under Uncertainty

Asghari, Vahid | 2018

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 51058 (09)
  4. University: Sharif University of Technology
  5. Department: Civil Engineering
  6. Advisor(s): Haj Kazem Kashani, Hamed
  7. Abstract:
  8. Infrastructure systems play a critical role in the economic and social activities of a community. Effective and continuous performance of these infrastructure systems is essential to the welfare and prosperity of the communities. Infrastructure systems comprise networks of interdependent assets that are built through a long and costly process. These assets are subject to a variety of factors that reduce the performance and reliability over time. These factors also increase the vulnerability of infrastructure assets in face of future probable hazards. In order to ensure the continuous and uninterrupted performance of infrastructure assets in post-hazard situations, asset managers should plan appropriate retrofit actions that are aimed at enhancing the robustness and performance of their assets in the face of hazards. They should also plan appropriate recovery actions in case the magnitude of future hazards are beyond expectation or the retrofit actions are not adequate. The economic and social consequences of failure of infrastructure in the face of hazards are significant. In order to make the best use of limited available resources and enhance the resilience of their communities, asset managers need an appropriate model to evaluate the plans aimed at improving the performance of their assets. This model should take into account the diverse uncertainties associated with the performance of infrastructure assets. This study puts forward an investment valuation framework that facilitates the valuation investments in infrastructure retrofits under uncertainty. At the core of this framework is a real options model that facilitate the evaluation of flexible strategies designed to enhance the value of investments under uncertainty. This study contributes to the body of knowledge by proposing the use of real options analysis in order to enhance the value of investment in resilience enhancement plans. Practitioners can use the proposed framework in order to identify the most appropriate investment approach and enhance the resilience of their communities
  9. Keywords:
  10. Deterioration ; Hazards ; Real Option Method ; Interdependent Infrastructure Systems ; Life Cycle Cost (LCC) ; Probabilistic Assessment ; Economic Evaluation ; Retrofit Planning

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