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THE ECONOMIC RISK ANALYSIS TECHNIQUE APPLIED TO DIFFERENT SCENARIOS OF CONSTRUCTION AND DEMOLITION WASTE RECYCLING PLANTS



Author(s): Renato Petter; Carlos Hoffmann Sampaio; Regis Paranhos; Raul Oliveira Neto; Carlos Petter
Book Title: III Progress of Recycling in the Built Environment
Editor: I. Martins, C. Ulsen and S. C. Angulo
e-ISBN: 978-2-35158-158-2
Publisher: RILEM Publications SARL
Publication year: 2015
Pages: 43-50
Total Pages: 8
Language: English


Abstract: The economic risk analysis technique through Monte Carlo simulation is a fundamental tool in economic studies of investment alternatives. The decision maker will have as a parameter the probability of success (and consequently the risk of failure) on the recovery of invested capital. The technique proposed in this paper will work against the most commonly used economic analysis that is deterministic, in which the input variables that feed the discounted cash flow are fix numbers. No room for uncertainty in the result, the numbers obtained in response, such as rate of return (IRR) and net present value (NPV) are also fix numbers used in decisions to invest or not, to move forward in a study preliminary or abandon the study, give preference to equipment A over B, and so on. Regarding the issue of reuse of construction and demolition waste (CDW), the risk analysis is very timely, because besides the uncertainty due to imperfect knowledge of the limits of contamination of recyclable raw material, the parameters involved in preparing the cash flow are, at most, variables. In this sense, a number of factors such as the variability of the raw material source of the recycled product, transport distances variations, due to arrangement of raw material collection and discharges points, or the quality obtained according to the proposed separation technique leads to multitude possibilities of variation. These contour conditions enhance the usefulness of probabilistic economic analysis. The decision maker will have not a single value result, but a probability distribution of values and, consequently, the likelihood of success or failure. The manager will have also a clear indication of which variables deserves more care and have more impact on the success (or failure) of the economic fortune.


Online publication: 2015
Publication Type: full_text
Public price (Euros): 0.00


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