Optimal Investment Management in a Port Project

This paper proposes a new method for valuing a major public investment project. The method allows also the study and determination of the optimal time to begin the investment. Such a project needs long-term investment, requires tools of analysis able to collect and systematize the future uncertainty, which is present in the evolution of the problem variables. Valuation is difficult and must take into account the large number of traffic variables, the cash flows function characteristics and the implicit real options in the investment decisions. We propose a new method based on an algorithm, which adds stochastic processes simulation and discrete scenario space generation. The algorithm not only allows us to approach the given problem but also it can be applied to another problems with similar characteristics.