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Valuation of risks and opportunities in BwN

Type: Framework

Project Phase: Initiation, Planning and Design

Purpose: Integrating Finance and Design for improved pricing of risks & opportunities; incorporating ecosystem valuation

Requirements: Expertise from both finance and design

Relevant Software: none

About

This tool is a framework that helps to identify important risks and opportunities (e.g. for co-financing) and ways to integrate them in the cost-estimates of a project. Cost-effectiveness and cost-efficiency are important criteria that often govern decision-making. Usually the costs are calculated after the design alternatives have become available. However, costs are also an important design criterion, so interaction between designing and costing is important. Yet, this interaction is often not included in the design-process. This tool contributes to the assessment of the financial implications of different design alternatives, by taking different possible scenarios and related risks into account. This framework requires only limited background knowledge in costing and designing. Essential is that different disciplines (especially finance and design) work together in order to make more integrated assessments.

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How to Use

This framework requires more analysis than standard costing procedures. Quantifying uncertainties and risks is far from trivial, but their absolute quantification is not always necessary. Relative risk assessments may be enough to choose between alternatives, and identifying the most important risks may suffice for further project optimisation. As valuing uncertainties and specific qualities is a complex task, this conceptual framework indicates how to handle and value BwN qualities and related uncertainties. It involves the following steps:

  1. Risks and qualities
  2. Prices and performance
  3. Valuation and costing
  4. Design and communication

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Practical Applications

  1. Case Sand Motor Delfland
  2. Case Long-term nourishment strategy
  3. Conclusion

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References

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