The concept of COSIMA supported bya decision conferencePh.D. student, M.Sc.Michael Bruhn Barfod
Introduction• A conventional CBA provides decision-makers with a monetary assessment• A final decision making will in many cases depend on other aspects besides the monetary ones – A methodology is needed for the assessment of other more “soft” aspects• A methodology is set out based on keeping the economic information intact at all times• The resulting composite model provides a theoretical argument for adding non-monetary MCA-impacts to the monetary CBA-impacts 2 DTU Transport, Technical University of Denmark Presentation 9/1-2008
Principles for composite modeling assessment (I)• Composite model for assessment (COSIMA) – Consists of a CBA-part and a MCA-part – Requires that MCA is additive to CBA TV ( Ak ) = CBA( Ak ) + MCA( Ak ) – In a situation where the investment in alternative Ak equal to the investment cost Ck is not feasible seen from CBA, i.e. gross value CBA(Ak)<Ck, then the investment can be justified by the wider COSIMA examination if TV(Ak)>Ck or, if expressed as a total rate of return, TRR(Ak)>1 3 DTU Transport, Technical University of Denmark Presentation 9/1-2008
Principles for composite modeling assessment (II)• It is convenient to express the feasibility by the total rate of return TRR(Ak) from the investment cost Ck TV ( Ak ) 1 ⎛ I ⎡ J ⎤⎞ ⎜ ∑ Vi ( X ik ) + α ⋅ ⎢∑ w j ⋅ VF j (Y jk )⎥ ⎟ TRR ( Ak ) = = ⋅ Ck C k ⎜ i =1 ⎝ ⎣ j =1 ⎦⎠ ⎟ I ∑w i =1 j =1 and 0 < wj < 1 – Xik is the quantity of impact i for alternative k – Vi(Xik) is the value in monetary units for the CBA impact i for alternative k – α is a indicator that expresses the model set-up’s trade-off between the CBA and the MCA part – wj is a importance weight for criterion j – Yjk is a parameter value for MCA criterion j for alternative k – VFj(Yjk) is a value-function score for MCA criterion j for alternative k 4 DTU Transport, Technical University of Denmark Presentation 9/1-2008
MCA methodologies• The following techniques are proposed for the COSIMA framework: – For criteria assessment (rankings) - wj • Swing weights • ROD weights – For attribute assessment (pair wise comparisons) - VFj • AHP • REMBRANDT• During the decision process arguments for all assessments made should be written down in an protocol for later review5 DTU Transport, Technical University of Denmark Presentation 9/1-2008
The results of COSIMA (illustrative example)6 DTU Transport, Technical University of Denmark Presentation 9/1-2008
Structuring the decision process• An important issue is to structure the decision making process in a way so that all information and all opinions are taken into account• Problem focus as an activity is conducted before the assessment is started (what is the problem?, who own the problem? and what alternative solutions are there?) – Assures a wide understanding of the assignment/problem • Both for the participants and the facilitator(s) • Enables the facilitator(s) to perform the preparatory work7 DTU Transport, Technical University of Denmark Presentation 9/1-2008
The decision conference (I)• The purpose is to enable a group to make an informed decision• Consists of the 3 concepts: decision analysis, group processes and information technology• The decision conference can be seen as a strategic tool that can be used for long-term complex decisions• A group of persons involved in the decision making are brought together under the guidance of a facilitator who – assisted by a decision analyst – collects input for the decision model• The group should be composed in such a way that all perspectives on the issue are covered8 DTU Transport, Technical University of Denmark Presentation 9/1-2008
The decision conference (II) A decision conference can be structured around the following 7 steps: 1. Decision on the basis of CBA 2. Identification of supplementing criteria 3. Ranking of supplementing criteria 4. Scoring of alternatives 5. CBA/MCA trade-off 6. Scenario analysis 7. Sensitivity/risk analysis The steps can differ depending on the assessment task in hand. It is the facilitators responsibility to structure the decision conference in a suitable way.9 DTU Transport, Technical University of Denmark Presentation 9/1-2008
Summary concerning COSIMA• The COSIMA approach – The methodology can include all important impacts determined by the decision-makers – The results are relatively easy to interpret and make use of – The process and findings are transparent when the choices to be made by the decision-makers are well presented and motivated• Different techniques can be applied to the model framework – Dependent of the level of knowledge of the appraisal task – Dependent of who is doing the assessments (specialists or ”basic knowledge” persons) – Dependent of the timeframe available 10 DTU Transport, Technical University of Denmark Presentation 9/1-2008
Summary concerning the decisionconference• Aim – To include and consider all critical aspects of the issue – To assess and implement them in the decision process in a transparent and systematic way• The decision conference – Provides the decision makers with an opportunity to influence the final result – Validates the final decision for the participants – Provides a more thorough and robust result11 DTU Transport, Technical University of Denmark Presentation 9/1-2008
Thank you! Questions and/or comments are very welcome12 Presentation 9/1-2008
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