Modeling Uncertainty During Cost Benefit Analysis of Transportation Projects with the Aid of Fuzzy Set Theory

The rational selection of transport infrastructure projects to implement is critical in ensuring the best allocation of available funding. To this purpose, Cost Benefit Analysis has been employed by national and regional authorities in order to maximize economic and social benefits, and by the European Commission to ensure the appropriate level of grants. Furthermore, a risk assessment is conducted, which is based primarily on a sensitivity analysis and/or a stochastic risk analysis. However, due to the high degree of uncertainty in the current economic environment, there are several shortcomings in this approach. Thus, an alternative application is proposed that models the uncertainty of critical variables with the aid of Fuzzy Set Theory. The application is exemplified in a sample transport project whereby its advantages over traditional approaches are discussed. It is concluded that fuzzy Cost Benefit Analysis is a promising tool for modeling uncertainty. (C) 2012 Published by Elsevier Ltd. Selection and/or peer review under responsibility of the Programme Committee of the Transport Research Arena 2012