Sensitivity analysis in economic feasibility assessment for investment decision-making in rural transport infrastructure projects: A case study in Vietnam

Abstract

Economic feasibility assessment of rural transport infrastructure projects commonly relies on cost–benefit analysis under a base-case scenario, while assumptions regarding project costs and benefits may vary substantially during project implementation and operation. This study aims to quantify the sensitivity of economic feasibility to changes in input variables and identify the variation thresholds that may alter the investment decision. Based on the economic cost benefit analysis dataset of a rural transport subproject in Thai Nguyen Province, Vietnam, the study applies a one-factor-at-a-time sensitivity analysis, combining the Sensitivity Indicator (|SI|) and Switching Value (SV) to assess both the magnitude of impact and the estimated distance to the switching threshold. The results show that the base case Economic Net Present Value (ENPV) is VND 88.149 billion. Economic benefits are the most sensitive variable, with |SI| = 2.58 and an estimated SV of approximately 38.83%, followed by total investment cost, with |SI| = 1.22 and an estimated SV of approximately 82.16%. Operation and maintenance costs show lower isolated sensitivity, with |SI| = 0.36 and an estimated SV of approximately 279%; however, this value is derived from linear extrapolation and should therefore be interpreted with caution. The findings demonstrate that combining |SI| and SV can transform sensitivity analysis from a test of the stability of economic results into quantitative decision-support information for identifying critical variables, prioritizing control measures, and supporting investment decisions in rural transport infrastructure projects.