Browsing by Autor "Carlos A. Arboleda"

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Geological Risk Assessment and Its Impact on Tunnel Construction
(2016) Juan-Manuel Bravo-Paez; Carlos A. Arboleda
There are three major risks associated with tunnel construction projects: limited information on site conditions, selection of the appropriate construction method, and the occurrence of unpredictable events. Firstly, underground conditions cannot accurately be predicted, since geotechnical investigation merely provides a forecast of underground characteristics. Secondly, unforeseen ground conditions may drastically affect the selection of the construction method. Thirdly, seismic activity may threat the project´s feasibility without warning. Therefore, tunneling projects are inherently risky and uncertain with significant consequences in the project´s financial viability. Consequently, this paper attempts to assess and valuate the risks inherent to tunneling projects so as to consider their impact on project´s free cash flow estimation and the return on invested capital. The methodology employed to assess risks included Monte Carlo simulations and statistical methods. The results were obtained using data from an actual project currently under construction in Colombia. The findings suggest cost uncertainty is primarily determined by quantity variations during construction. Furthermore, the degree to which quantities vary is dependent upon previous field sampling thoroughness and the extent of geotechnical investigation during the project´s initial stages.
The Cost of Capital for Road Concession Projects in Colombia: A Case Study Based on the Fourth Generation Concession Program (4G)
(2016) José F. Bravo; Carlos A. Arboleda
This paper develops a methodology to calculate the appropriate discount rate for road concession projects under the public private partnership (PPP) model in Colombia. This methodology is applied to the government’s fourth generation concession program (4G) as a case study. The paper includes an analysis and description of the infrastructure sector in Colombia and explains an ambitious program for road development called 4G, which involves investments for more than US$20 billion in the next decade. Then, the discount rate is estimated using different scenarios and an expected value of the variable is constructed from a range with a confidence level of 95%. A theoretical and empirical analysis is performed in order to validate the appropriate discount rate according to industry standards. This value will be supported by different analysis and various experiments conducted throughout the paper. Finally, it is possible to compare this discount rate with the yield the government is currently offering to the investors, and the result will suggest that the government is underestimating the risks associated to the projects.