Transportudvalget 2014-15 (2. samling)
TRU Alm.del Bilag 50
Offentligt
To be presented at the Palisade Risk Conference
‘Best Practices in Risk and Decision Analysis’,
Oslo, 29 September 2015
Financial uncertainty profiles of the Fehmarn Belt
immersed tunnel project by @RISK analysis
Hans Schjær-Jacobsen
RD&I Consulting
Dyssebakken 19, 2900 Hellerup, Denmark
Abstract
The Fehmarn Belt immersed tunnel project approved by the Danish parliament on 28
April 2015 is supposed to be built, owned (apart from the German land works), and
operated by a Danish state agency Femern A/S, a subsidiary of Sund & Bælt Holding
A/S, and financed by loans guaranteed by the Danish government. The loans are
going to be amortized by incomes from the tunnel users. According to official plans
construction work will start full scale this fall (awaiting clarification of three major
uncertainty issues, though: 1) obtainable subsidies by the EU, 2) total construction
costs, and 3) approval by German authorities) and the tunnel is going to be
inaugurated and opened to public traffic by the beginning of 2022. Since the official
financial model of Femern A/S is publically unavailable the uncertainty profiles
presented in this paper are based on a model developed by the author and validated
in terms of project payback period within an absolute accuracy of ±1 year compared to
published results generated by the official model. Such features as subsidies by EU,
inflation, nominal and real interest rates, depreciation, VAT, and joint taxation with
Sund & Bælt Holding A/S are included. Based on publically available information the
project is critically recalculated with respect to realistic uncertainty analyses not
hitherto presented to the public. Uncertainty is represented and calculated by
probabilistic uncertainty representation and Monte Carlo simulation by @RISK. The
resulting project uncertainty profiles are presented in terms of a traffic light metaphor:
Green light corresponds to a payback period less than 40 years, yellow to 40-50
years, and red to larger than 50 years. It turns out that the likelihood of financial
project failure in terms of the payback period being outside of the green light zone is
substantially larger then acknowledged by the project proponents and presented to
the Danish parliament. This is primarily due to apparently too optimistic base case
assumptions of critical, but uncertain, project variables and methodologically
insufficient partial sensitivity analyses.
Presenter
Hans Schjær-Jacobsen holds a M.Sc. and Ph.D. from the Technical University of
Denmark and a B.Com. degree from Copenhagen Business School. He has held
leading positions in industry as well as academia. His major research interest is now
in uncertainty and risk analysis where he contributed to the understanding,
representation and calculation of aleatory as well as epistemic uncertainty, primarily in
connection with large infrastructure projects. He pursues his scientific interests as a
senior consultant in RD&I Consulting which he founded after recently retiring as a
professor and director at the Technical University of Denmark.