This paper develops a new approach to stochastic modelling of asset renewal timing decisions using net present value derived from attributable revenue and total cost of ownership. This renewal decision model proposed has the advantage of aligning the efforts of asset custodians to the financial needs of the infrastructure management business. Secondly, we identify the option to perform Front End Engineering (FEE) as part of the asset renewal decision process and use the Black Scholes [1] call option formula to calculate the value of an option to perform FEE. The ratio of option value to option cost is suggested as a means of prioritising front end engineering for renewal projects. Click here to read more