Maximizing the value for money of PPP arrangements through flexibility: An application to airports

•Investing according to traffic demand development generates higher economic values.•In an economic crisis environment it is advantageous to think of flexible alternatives to plan and build airports.•Real options provide a good evaluation model for assessing flexibility.

The economic crisis in most developed countries is fostering the search for new models for infrastructure planning and management. There is great uncertainty surrounding these investments and, therefore, it is necessary to capture the latent value from infrastructure projects. The principle is that the project should have the necessary flexibility to adapt to future changes, i.e., at the design stage it is necessary to incorporate flexible options that would allow the infrastructure and/or the service to be adapted to changes.This paper focuses on contextualizing this concept as well as characterizing real options and identifying different areas of application to showcase the broad range of the different fields that make use of this tool. Moreover, the case study which regards a large infrastructure – an airport – will allow quantifying the economic value of some options supported in real options theory.