Conference Paper

Combining Qualitative and Quantitative Factors in Risk Analysis of Cash Flow Dependent Infrastructure Projects

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Abstract

The evaluation of cash flow dependent infrastructure projects require the involvement of a large set of internal and external factors. Generally, the nature of these factors is both qualitative and quantitative. Usually, the risk analysis process is done with a characterizing methodology and/or mathematical model that requires only numerical variables. This forces the sponsor to separate the analysis of the project in two parts: an analysis of the qualitative information, which often results in a subjective and biased decision, and afterwards, an analysis of the quantitative information. Due to the separation of both analyses, it is possible that the subjective decision performed at the beginning is inaccurate, reducing the importance or eliminating the project as an investment opportunity. This paper examines the risks involved in these types of infrastructure projects and describes the application of a neurofuzzy system as a potential tool that could reduce the separation between decisions. An analysis of both qualitative and quantitative factors in a single tool will contribute to reduce the subjectivity and arbitrariness involved in risk analysis of cash flow dependent projects and provides a better support or framework to the decision-making process.

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