Fuzzy real option analysis for highway project based on credibility theory

Because of the uncertainty in the construction project investment, real option analysis (ROA) is favored by people than the traditional discounted cash flow method (DCF). Due to its huge amount of investment, long construction period, Irreversible investment, highway project has much more uncertainty. Taking into account the actual situation, such as the total investment, completion time, operating costs and other variables in the decision-making is not a fixed value, this paper characterizes the project´s cash flow and investment costs as fuzzy variables. A fuzzy real option value analysis model for highway projects is formulated for this problem.