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Complex Infrastructure Projects by Anthony Holmes

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Chapter 6: Appraisal and Evaluation

The economics of infrastructure investment are subtly different to conventional capital project appraisal. Most facilities must provide security of supply, which means building surplus capacity to allow for the economic growth infrastructure investment is intended to promote. This is most acutely true in energy projects.

On a national basis there must also be an acceptable amount of redundancy to cope with a reasonable level of risk of individual facility failure. For example, there cannot be widespread power outages because a single plant goes offline or a restriction on movement of air passengers and freight because only one airport is capable of landing modern aircraft.

In conventional economics it is ...

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