Bring On The Sensitivity Analysis For Lansdowne: READER

This is an email from a long-time Bulldog reader who would prefer his name not be placed on the post:

I’m an engineer, but because I took a bunch of accounting courses almost 50 years ago, I ended up doing economic evaluations on projects that I understood because of my background.

While working in that group, I saw a bunch of funny financial proposals – often from MBAs who sort of
looked down their noses at me because I wasn’t one. I came away with
the strong belief that if I didn’t understand the proposal being put
before me, it was probably sketchy.

To the Lansdowne waterfall, I don’t understand it. Need I say more?

Sensitivity analysis as proposed for Lansdowne 2.0 is a pretty standard process that frankly isn’t
done enough. Say you have a bunch of assumptions for a project, the
smart thing to do is change those assumptions and see what happens to
the result. Some results fluctuate  wildly with very small changes
in input data. A scary thing you want to know.

Some cases where sensitivity analysis might have helped occurred during
the pandemic. Like depending on a supply chain for PPE that was very
economical no doubt before COVID, but when push came to shove, we had trouble getting PPE, and I have no idea what we had to do to buy vaccines that we weren’t being produced domestically.

The Ottawa Writing That Fun Forgot

In another example, we have a supply chain to the U.S. between Windsor and Detroit that depends entirely on one bridge. That was blocked during the trucker protest and there were enormous
business costs, and who knows what damage to our reputation in the international business world.

Now we have the Gordie Howe Bridge opening soon across the Detroit River. The bridge cost a lot, but what
were the costs to business of that shut down?

Sensitivity analysis should show these potential problems – and often isn’t well done.

Back to Lansdowne, I’m not sure at all city staff isn’t being disingenuous talking about sensitivity analysis.

But sensitivity analysis is a pretty normal part of a process if it is done well.

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