Uncertainty

Palisade Risk Conferences 2017: Pharma/Biotech in Mass., plus Bogotá and London

2017ConfLogo_forEmails.png

Join us in a city near you for an intensive conference on best practices in risk and decision analysis!

These events are free to attend and promise to be invaluable opportunities for broadening one’s knowledge of risk modeling, and networking with decision-making professionals in a range of industries.

Benefits of Palisade Risk Conferences:

  • Get more from @RISK and the DecisionTools Suite – get exposure to the latest techniques in risk and decision analysis so you can apply them to your own models.
  • Learn from experts – sessions are taught by Palisade’s consultants and trainers.
  • Networking opportunities – share ideas and speak with presenters, other attendees, and Palisade staff to gain valuable insight from many backgrounds.

Conference Dates:

Cambridge, Mass. – Pharmaceuticals and Biotechnology industry focus
March 7th, 2017
More information

Bogotá
March 9th, 2017
More information

London
April 27th, 2017
More information

See the full conference and workshop schedule.

RD&I Consulting uses @RISK to Model Financial Uncertainty of Fehmarn Belt Fixed Link

The Fehmarn Belt Fixed Link is a planned immersed tunnel that will cross the Fehmarn Strait to connect Denmark and Germany. This large infrastructure project is mainly user funded, with an official projected payback period of less than 40 years.  However, based on the latest research from RD&I Consulting based in Denmark, it is highly unlikely that this projected payback deadline will be met.

Fehmarn Belt Fixed Link

Hans Schjær-Jacobsen, Director of RD&I Consulting and former Professor and Director at the Technical University of Denmark, used Palisade’s @RISK software to create financial models for the Fixed Link to determine the likelihood of project success – or failure – in terms of the payback period.

Uncertainty in the model was calculated by probabilistic uncertainty representation and Monte Carlo simulation, as well as interval analysis. Schjær-Jacobsen leveraged @RISK software’s ability to calculate a genuine uncertainty profile by Monte Carlo simulation in contrast to just partial sensitivity analyses, using uniform and also triangular distributions as they were easily derived from double estimates (i.e. best- and worst-case), and triple estimates (i.e. best-, base- and worst-case), respectively. The simulation generated the probability distribution of the payback period for the Fehmarn Belt Fixed Link over 60 years, providing a project uncertainty profile presented in terms of a traffic light metaphor: a green light corresponds to a payback period of less than 40 years, a yellow light corresponds to a payback period of 40-50 years, and a red light corresponds to a payback period of more than 50 years.

Project uncertainty profile for the Fehmarn Belt Fixed Link payback period.

For the Danish government, the only acceptable outcome of the model for the projected payback period is in the green light zone: less than 40 years. However, based on the model created by Schjær-Jacobsen, the Fehmarn Belt Fixed Link is a high-risk business case and the likelihood of financial project failure in terms of the payback period taking longer than 40 years is equal to 92.5% and substantially larger than acknowledged by the project proponents and presented to the public. This is due to several realistic uncertainties based on readily available facts, including traffic volume and income, construction costs, services and EU subsidies.

“As nobody had done this kind of analysis on the project before, the results were a surprise,” explained Schjær-Jacobsen. “However, now that these results have been presented to Fehmarn A/S and the Commission of Transport, we will see how they impact future development of the Fehmarn Belt Fixed Link.”

» Read the Full Case Study

This Thursday: Free Live Webcast on Life Cycle Cost Analysis with @RISK

Join us on December 18th, 2014 at 11:00 AM EST.

Anthony Sclafani, registered Professional Engineer (California), a Certified Energy Manager, and a Certified Energy Auditor, gives a live webcast that will examine life cycle cost analysis (LLCA) and how best to incorporate uncertainty into the method:

Life Cycle Cost Analysis Using @RISK

Sclafani writes, “The LCCA method requires that estimates be made of costs and benefits associated with investment alternatives over the life of the equipment or program. There is always some uncertainty associated with these projections such as cost escalation.”

Learn how to do life cycle cost analysis using @RISK during this educational podcast.

Register here.