Modelling project investment decisions under uncertainty using possibility theory
With the increasing popularity of privately financed and operated construction projects, a systematic evaluation of investment options is needed, especially if they are competing for the same capital resource. Traditional evaluation methods incorporating risk analysis techniques require the input of relative frequencies which are not easily available in construction. This paper proposes a method capable of modelling the effects of both monetary and non-monetary aspects of an investment option, using interval mathematics and possibility theory to handle the inherent uncertainty associated with such aspects. Two numerical examples are presented to demonstrate its application in the assessment and ranking of available investment options.
International Journal of Project Management