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CDT-SIS-115: Real Options Analysis to Manage Financial and Environmental Risks in Major Transport Infrastructure Projects (Oxera)


Project Description

The risks of cost over-runs in major transport infrastructure projects are well documented, whilst poor environmental performance, particularly with respect to carbon emissions, has become a concern in recent years. The current approach to financial risk is to make an appraisal optimism adjustment to cost estimates, although this has the danger of institutionalising high cost levels. A more proactive approach to risk management is provided by real options analysis, which originated with options in financial markets being extended to physical assets and has been applied to engineering projects (e.g. Crossrail). The basic idea is that a project contractor will pay a premium to the project sponsor to have the options to grow, contract or defer a project. Such an approach could be used to jointly examine the achievement of cost and environmental targets. It is proposed that this work would involve consideration of both discrete time steps (through the use of multi-period binomial lattices) and continuous time steps (through the use of the Black-Scholes model). A case study will be provided by HS2, the proposed high speed rail line between London, Birmingham and Leeds/Manchester, although it is expected that some of the results will have generic applicability throughout the infrastructure project life-cycle, including design, construction, operation and maintenance.

Applications for this PhD research project are accepted on a rolling basis and we therefore advise you to apply early if you are interested. To make your application please go to: http://www.southampton.ac.uk/engineering/postgraduate/research_degrees/apply.page

If you wish to discuss any details of the project informally, please contact John Preston, Transportation Research Group, Email: , Tel: +44 (0) 2380 59 4660.


Start Date: 25 September 2017

To be eligible students need to have UK status or be a European Union (EU) national who has been ’ordinarily resident’ in the UK for three years prior to the commencement of studies.

Enquiries:

Funding Notes

This iPhD project will be funded through the Center for Doctoral Training in Sustainable Infrastructure Systems http://cdt-sis.soton.ac.uk/. The studentship comprises support from both EPRSC View Website and an industrial sponsor.

The CDT-SIS projects are allocated once a suitable student has been found. If you are interested in a project then we advise you to apply early in order to avoid disappointment.

How good is research at University of Southampton in General Engineering?

FTE Category A staff submitted: 192.23

Research output data provided by the Research Excellence Framework (REF)

Click here to see the results for all UK universities

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