Assessing Uncertainty and Risk in Public Sector Investment Projects英文文献资料.docVIP

Technology and Investment, 2011, 2, 105-123 doi:10.4236/ti.2011.22011 Published Online May 2011 (http://www.SciRP.org/journal/ti) Assessing Uncertainty and Risk in Public Sector Investment Projects Katrin Bock, Stefan Trück Macquarie University, Sydney, Australia E-mail: stefan.trueck@.au Received March 4, 2011; revised April 13, 2011; accepted April 16, 2011 Abstract The feasibility and profitability of large investment projects are frequently subject to a partially or even fully undeterminable future, encompassing uncertainty and various types of risk. We investigate significant issues in the field of project appraisal techniques, including risks and uncertainties, appropriate risk analysis, pro- ject duration as well as the dependencies between (sub-) projects. The most common project appraisal tech- niques are examined addressing benefits and weaknesses of each technique. Furthermore, the practical use of the different techniques for the public sector is examined, exemplifying this with a small-scale analysis of the risk analysis procedures of the World Bank. Our findings suggest that in particular for the public sector, practical implementation of quantitative techniques like Monte Carlo simulation in the appraisal procedure of investment projects has not fully occurred to date. We strongly recommend further application of these ap- proaches to the evaluation of processes and financial or economic risk factors in project appraisal of public sector institutions. Keywords: Risk Analysis Techniques, Monte Carlo Simulation, International Financing Institutions 1. Introduction (NPV) or internal rate of return (IRR) [1]. There are many methods for analysing the effects changes in fac- tors have on the NPV (or any other output variable of interest). Well known and widely applied techniques include break-even analysis, sensitivity analysis, scenario analysis, risk analysis, decision trees and uncertainty analysis [2]. A