Uncertainty is pervasive when it comes to transport investment decisions. While it is natural to improve the traffic forecasts that inform such decisions, it is also important to acknowledge fundamental uncertainty exists about the future. Consequently, a process is required that acknowledges and addresses these uncertainties as part of improving investment decisions.
This paper explores the uncertainties within transport modelling and the ways flexibility in the face of uncertainty can add value to a transport project. Insight into value is revealed by way of examples of real options. Likewise examples of adaptive management are explored.
A process is recommended that explores the nature of the key uncertainties pertaining to a transport investment and actively searches for robust solutions in the face of uncertainties. This process transparently sets the trade-offs inherent in alternative solutions in front of decision makers.
Keywords: adaptive management, real options, uncertainty