Risk variables in evaluation of transport projects

Depending on the constantly increasing demands on assessment of investment projects, especially assessment of large-scale projects in transport and important European projects with wide impacts, there is constantly increasing focus on risk management, whether to find mitigations, creating corrective measures or their implementation in assessment, especially in the context of Cost-Benefit analysis. To project assessment is often used implementation of certain risk variables, which can generate negative impacts of project outputs in framework of assess. Especially in case of transportation infrastructure projects is taken much emphasis on the influence of risk variables. However, currently in case of assessment of transportation projects is in Czech Republic used a few risk variables, which occur in the most projects. This leads to certain limitation in framework of impact assessment of risk variables. This papers aims to specify a new risk variables and process of applying them to already executed project assessment. Based on changes generated by new risk variables will be evaluated differences between original and adapted assessment.


Introduction
Transportation has always been very important part of the economy. Its importance is rooted in our society since ancient times. The trade starts on local level, gradually regional, national and transnational level, and couldn´t be so profitable and feasible without possibilities that transportation allows us. Equally transportation is important for people themselves. Only a few of us can imagine living in isolated place, without larger possibility to travel to work, to the family, or entertainment. Only just transportation, modern means of transportation and gradually development of transportation infrastructure allows this for all of us.
Investment directed to the transportation infrastructure reaching enormous amounts of financial sources. For this great emphasis the comprehensive evaluation of these investments in relation to expected effects in the context of benefits is important.
We actually know and use predominantly four types of transportation: by vehicle (road), by plane (air), by ship (water) and by train (railway). Road transportation has its own transportation network, which includes roads, highways, speedways etc. Air transportation uses point infrastructure of airports all around the world. Water transportation uses natural and artificial water surfaces, which are rivers, canals, dams, seas etc. And at last railway transportation uses its network of different types of rails, which includes local railways, major corridors etc.
For assessment of investment in transportation and for road transportation a lot of assessment methodologies exist. Some of them are the same, but some methodologies for roads have its specifics and differences. Actually there are tendencies to improve the methodologies of assessment with

Methodology
In the assessment of investment projects of transportation infrastructure is used the methodology of Directorate of Roads and Motorways of the Czech Republic, consequential from Guide to Cost-Benefit Analysis of Investment projects, as stated above. In one of the most important chapter, risk analysis, ongoing sensitivity analysis, quantitative and qualitative analysis are defined.
Risks for detailed analysing and their choice are misleading. In feasibility studies it is not often explained, how the choice of risks was carried out. We can assume that the choice is based on subjectivity and business as usual. The most often risks are related to extension of construction time or increase of total costs of projects. This is proved by searches of realised project assessments.
Especially for projects in transportation we should take into the consideration the environmental risk, because transportation construction can severely disrupt ecosystem, the integrity of landscape, bio corridors etc. The aim of this paper is to refer on threats connected with environment and their impact on results of project assessment and project realisation itself.
Exactly in case of project assessment the environmental impacts are implemented in external costs. This paper applies methodology Monte Carlo connected to one part of total costs. Total costs are except external costs consisted from investment and operation costs, costs of travel time and costs from car accidents.
For thus chosen risk variable the appropriate setting of Monte Carlo Methodology (distribution, deviation etc.) is chosen. Following simulation shows relations of economic indicators.
All of this will be done on the case study, which is developed for one real project and its most effective variant (based on conducted feasibility study and verified variants).

Results and discussion
For this paper the most important part of Cost-Benefit Analysis is the economic analysis. Inputs for economic analysis are costs/benefits from basic and design variant of the technical-economic study, used as case study, of project "I/13 Děčín -Nový Bor." [9] This paper works with summary of discounted financial cash flow.
In original case study as risk variables for the analysis were used change in construction costs and change of total benefits (and costs) of project. In detail, new risk variables are sought among external costs, otherwise the external costs are new risk variable. External costs consist of several parts: valuation of air impacts, valuation of noise impacts and valuation of CO 2 pollution. In the case study several design variants were solved: • option S1: transfer of the road Folknáře junction and bypass of village called Markvartice, Considering to construction and assessment was selected variant S2a (transfer of road Děčín -Manušice), which includes the carrying out of transportation infrastructure through Central Bohemian Uplands. Central Bohemian Uplands is nature reserve, and it is the reason, why it could be really risky option. There are threatens of disruption of local ecosystem, there could be impact on bio corridors and biotopes, which weren´t included in external costs.
With regard on new risk variables we take into account a possibility of change in external costs/benefits. This change means the possible impact on environment. We can consider this paper like an appropriate adjustment for assessment of transportation infrastructure, especially in places with preserved nature and ecosystem.

Analysis setting
Analysis method Monte Carlo is used for evaluation of changes in the assessment. For this method triangular distribution of external costs in basic and design variant of project is set. Triangular distribution is selected as best for this type of analysis. Limits of this distribution are set to anticipated minimum -10% and anticipated maximum +30% against likeliest value (based on the basic and design external costs in summary of discounted cash flows in the case study). Triangular distribution represents random variables in basic and design variant of the project. The correlation coefficient is set for these random variables to the value 0.5, which is anticipated as suitable value for this economical issue.  For the Monte Carlo analysis are set 1 000 000 trials, with confidence level 95.00% and there are set two assumptions (external costs), and correlation between them. Then there are three forecasts, which are columns representing Benefit Cost Ratio, Net Present Value of project and Net Present Value of separated External costs.

Analysis outputs
Output values of the Monte Carlo analysis are impacts of risk variables (external costs) to potentially raise/decrease against default values in case study of investment project. The following paragraphs and figures of the output of analysis show us the impact of changes of external costs/benefits caused by triangular distribution on default external costs.

Benefit Cost Ratio (BCR).
Results of indicator BCR show, how can be the default values of this indicator affected by the Monte Carlo analysis. The results aren't alarming, but there is a 10% probability, that the project may not be approved from the perspective of indicator BCR. Minimal and maximal value of the indicator BCR reach sufficient reserve against potential environmental risk.  Value of Net Present Value of external costs/benefits, is seriously impacted by the Monte Carlo analysis and this impact is reflected in total Net Present Value, which is verified in next paragraphs.  Next graph shows total Net Present Value and process of distribution function, which response to normal distribution. Graph also shows distribution of reached values, lower and higher than default value of Net Present Value by analysis Monte Carlo.

Discussion
There is a sufficient information based on the Monte Carlo analysis and from impacts of implementing of triangular distribution on default external costs/benefits in basic and design variant of the case study.
Impact of the risk variables (external costs/benefits) is considerable and this problematic is bearer of many other unknowns. These risk variables may not be directly exhaustively parts used in external costs/benefits, but there could be others, that aren't taken into account in external costs and benefits. Indicator of total Net Present Value and its evaluation shows strong impact of changes in external costs/benefits. This is approved by differences between analysis of outputs and default value of Net Present Value from case study. [9] The threat of whole project assessment and realization of transportation investment project is inconsiderable. Threat arises from risk variables hidden in external costs/benefits. It is alarming, that the main parts of external costs/benefits are only air pollution impact, noise impact and CO 2 impact. Especially in cases as that one represented in case study, is necessary to focus in detailed assessment of environmental risk variables and its impacts.
Ecosystem damage and disruption of corridors in construction process or in process of usage in sensitive locations are examples of neglected external impacts. This is connected with possibility of damage of important biotopes. After construction process is nature able to revitalize any of environmental damages, but not all of them and not at all if people will be unscrupulous.
The most important question is connected with future assessment of this problematics, which can contain more detailed Monte Carlo analysis. Detailed Monte Carlo analysis could be able to specify risk variables in detailed perspective of external costs/benefits. Future assessment could contain evaluation of biotopes, which are neglected in default project assessment in case study. For example: change of quality of biotopes and inspiration for their evaluation could be found in methodology of evaluation of biotopes by AOPK Czech Republic [10].

Conclusion
Finding of new risk variables in assessment of transportation investment projects was aim of this paper. These variables were predicted and identified in one part of financial cash flow of economic assessment. This part is external costs/benefits. In this part is hidden a lot of risk variables bound with ecosystem and ecological impacts. Assessment has to be more focused on impacts to landscape and nature. Permanently marginalization of these impacts could bring important problems to project realisation and natural incalculable consequences.
It´s necessary to be more focused on risk variables bound to environment and on solving of its reasons and impacts (financial, spiritual or material). This paper fulfilled its purpose and pointed to issue which need to be developed and not neglected. Assessment methodologies of investment projects are still developed and it´s important to edit them with regard to environmental risk variables.