Real Options for port infrastructure investments

Ports are a vital part of the maritime transportation system. The urgent need for redevelopment of older ports and investments in port expansions, and the dilemma of a long payback time etched with uncertainty calls for new strategies. Flexibilities in a (real) system, that enable it to change according to the future that unfolds, are known as real options. An evaluation technique, commonly known as Real Options Analysis, can be applied to value flexibility during project appraisal. This can improve decision-making related to port investments and asset management.