OPTIMAL DECISION TIMING PROBLEM FOR INFRASTRUCTURE PROJECTS WITH GEOLOGICAL RISKS CONSIDERING UPDATED RISK INFORMATION

Abstract

 This paper proposes an alternative method for tackling geological risks such as cave-ins and ground subsidence. A real option model has been developed to determine the optimal timing of decision making on whether the additional geological surveys should be conducted, while continuously updating the ground risk information based on Bayes’ theorem as the construction strages progress. The model has then been applied to the scenarios and the data concerning the cave-in caused by Fukuoka City Subway Nanakuma Line, and discussed the reasons why sufficient geological surveys had not been carried out at that time.