Application of Shackle’s Model and System Optimization for Highway Investment Decision Making under Uncertainty
Publication: Journal of Transportation Engineering
Volume 135, Issue 3
Abstract
This paper introduces a new methodology for highway investment decision making under uncertainty that uses Shackle’s model for uncertainty-based project benefit analysis and system optimization for project selection. Shackle’s model overcomes limitations of the risk-based life-cycle cost analysis approach by using degree of surprise as a measure of uncertainty associated with possible outcomes of performance measures utilized for project benefit analysis instead of probability distribution. It also employs a priority index that jointly evaluates each possible outcome and degree of surprise pair for a performance measure to establish the standardized focus gain value and focus loss value from the expected outcome. The standardized focus gain-over-loss ratios corresponding to multiple performance measures are synthesized into an overall ratio that is regarded as the overall benefits of a highway project under uncertainty. This ratio is used as the basis of project selection. An optimization model is formulated as the multichoice multidimensional knapsack problem for project selection. A case study reveals significant differences in project selection results between the use of the proposed methodology and the existing risk-based approach.
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Acknowledgments
The writers are grateful to the Joint Transportation Research Program at Purdue University for financial support of this study. The writers are, however, responsible for study results. This paper does not necessarily reflect the views of project sponsors.
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© 2009 ASCE.
History
Received: Dec 5, 2007
Accepted: Jul 2, 2008
Published online: Mar 1, 2009
Published in print: Mar 2009
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