Risk Analysis for Major Risk Analysis for Major RehabilitationRehabilitation
Major Rehabilitation Major Rehabilitation BackgroundBackground
Prior to FY 1992 Funded under Operation and Maintenance,
General, Appropriation FY 1992 and subsequent
Study funded in O&M Construction funded under Construction
General Appropriation Compete with New Starts
Major Rehabilitation Major Rehabilitation BackgroundBackground
Objectives of program Reliability
improve reliability of a feature thereby extending its physical life and deferring capital expenditures to replace the structure
Efficiency Improvement enhance operational efficiency increasing outputs
beyond the original project design
Major Rehabilitation Major Rehabilitation BackgroundBackground
Cost Threshold for Inclusion in Program: Reliability
Inland Navigation--$10.4 mil. All Other--$6.5 mil.
Efficiency Improvement All--$1.28 mil.
Provided each year in Budget EC
Major Rehabilitation Major Rehabilitation BackgroundBackground
Analytical Requirements
Equivalent framework to planning studies
Major Rehabilitation GuidanceMajor Rehabilitation Guidance
Major Points Objective of the Analysis Base Condition Analysis of Alternatives
Objective of the AnalysisObjective of the Analysis
Determine the Economically Efficient Rehabilitation Strategy
Commensurate values that differ in terms of risk, monetary values, and timing
Analysis Must AnswerAnalysis Must Answer
1. Why are we doing this now?
2. What are the consequences of not doing this now?
3. Which project or component is in the most critical condition?
4. Which alternative rehabilitation strategy is the best?
Steps in the AnalysisSteps in the Analysis1. Establish the overall engineering
condition and reliability identifying problems associated with critical project features.
2. Identify and define existing and potential reliability problems and opportunities for efficiency improvements.
3. Identify alternative methods to resolve or manage the problem
Steps in the Analysis (cont.)Steps in the Analysis (cont.)4. Develop cost estimates for proposed
solutions
5. Determine if proposed project is eligible for funding under major rehabilitation
6. Estimate economic benefits and costs of the base condition and alternatives.
7. Identify cost sharing requirements
8. Identify all environmental concerns
Steps in the Analysis (cont.)Steps in the Analysis (cont.) 9. Identify the recommended plan
10. Develop M-CACES cost estimate for the recommended plan
11. Prepare draft Project Cooperation Agreement (PCA) if required
12. Prepare Project Management Plan (PMP) for recommended alternative
Engineering and Economic Engineering and Economic Evaluation ConsiderationsEvaluation Considerations
Required information Project outputs and costs
Normal conditions Unplanned outage conditions
Current and future reliabilities of project operation
Base Condition Any Rehabilitation Strategy
The Base ConditionThe Base Condition
The condition used as the baseline against which all rehabilitation alternatives are measured conceptually equivalent to the "without"
condition in new project evaluation assumes that the existing O&M practices will
continue in the absence of rehabilitation emergency repairs of feature components as
they occur
The Base ConditionThe Base Condition
Describe using event tree Probabilistic Scenario Analysis
To
T1
Tn-1Tn
Unit 1Subfeature Level
Performance
GeneratorCondition
Beginning of Year
Turbine Condition
Beginning of Year
GeneratorPerformance
TurbinePerformance
GeneratorCondition
Beginning of Year
Turbine Condition
Beginning of Year
GeneratorPerformance
TurbinePerformance
GeneratorCondition
Beginning of Year
Turbine Condition
Beginning of Year
GeneratorPerformance
TurbinePerformance
Feature Level PerformanceNumber Units Out
Unit 2Subfeature Level
Performance
Unit 3Subfeature Level
Performance
Opportunity Costs
PUP FunctionsPUP Functions
Probability of Unsatisfactory Performance Instantaneous probability of component not
performing as designed Typically related to age or number of
operations Unsatisfactory performance must have
measurable consequences
Example PUP FunctionExample PUP Function
0 10 20 30 40 50 60 70
Age
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
PU
P
Rehabilitation AlternativesRehabilitation Alternatives
Advanced Maintenance Strategy schedule repair or replace of component to
avoid emergency repair Planned Repair Strategy
stockpile replacement parts and develop emergency repair procedures to reduce service disruption
Rehabilitation AlternativesRehabilitation Alternatives
Scheduled Rehabilitation Strategy determine "optimum" timing for rehabilitation
based on reliability, service degradation, and economic costs
Immediate Rehabilitation Strategy Rehabilitation with Efficiency
Improvement
Impact of AlternativesImpact of Alternatives
Changes the life-cycle cost time path of the project
NED Cost TimelineNED Cost Timeline
1 50
1 50
Base condition:
fix-as-fail
Alternative: Rehabilitate then fix-as-fail
Analysis of AlternativesAnalysis of Alternatives
Calculate the Expected Present Value of Benefits and Costs for Each Alternative Each alternative modifies some part of Base
Condition event tree Typically reduces PUP value resulting in reduced
repairs and downtime losses Makes the component “younger”
Base Condition PVBase Condition PV
E[C] = [(1-pf,0) Cnf + pf,0 Cf ]/ (1+r)0
+ [(1-pf,1) Cnf + pf,1 Cf] / (1+r)1
pf,0 = 0.1
pf,1 = 0.11
Cnf = $100
Cf = $10,000r = 5.625%
E[C] = $ 2,216
Rehab Condition PVRehab Condition PV
E[C] = [(1-pf,0) Cnf + pf,0 Cf ]/ (1+r)0
+ [(1-pf,1) Cnf + pf,1 Cf]/ (1+r)1
pf,0 = 0.01
pf,1 = 0.011
Cnf = $100
Cf = $10,000r = 5.625%
E[C] = $ 303
Analysis of AlternativesAnalysis of Alternatives
Benefits Avoided loss in project benefits compared to
Base Condition Avoided increase in project O&M and repair
costs compared to Base Condition Reduced project O&M costs
Analysis of AlternativesAnalysis of Alternatives
Costs Rehabilitation costs Foregone project outputs during rehabilitation
Display of ResultsDisplay of Results
Statistics of estimated benefits and costs (mean, variance, skew)
Tabular display of mean, standard error, and 90% confidence interval for net benefits of all alternatives
Graphic display of effect of alternatives on project benefits, costs, O&M costs, etc.
Example Results TableExample Results TableScenario Simulation Comparison
Scenario Life Cycle Cost Rehab Cost Benefits Net Benefits B/C Ratio
Base Condition Average $90,856,459 $0 0 0 - Minimum $21,389,787 Maximum $215,455,610 Standard Deviation 29,305,078 Downstream Gate Only
Average $67,977,715 $11,394,508 $22,878,744 $11,484,236 2.01 Minimum $23,850,371 $11,394,508 (2,053,164) (13,447,672) -0.18 Maximum $177,015,737 $11,394,508 49,663,144 38,268,636 4.36 Standard Deviation 20,918,678 $0 8,546,212 8,546,212 0.75 Rehabilitate All Average $28,236,914 $23,138,034 $62,619,545 $39,481,511 2.71 Minimum $3,666,129 $23,138,034 18,347,296 (4,790,738) 0.79 Maximum $143,227,713 $23,138,034 92,617,952 69,479,920 4.00 Standard Deviation 19,752,740 $0 12,142,037 12,142,037 0.52
Example Graphical ResultsExample Graphical Results
0.0
0.2
0.4
0.6
0.8
1.0
-20 0 20 40 60 80
PV Net Benefits ($millions)
Cu
mu
lativ
e F
req
ue
ncy
DownstreamGate OnlyRehabilitateAll
Example Graphical ResultsExample Graphical ResultsDistribution of B/C
0
0.05
0.1
0.15
0.2
0.25
-10.00 -5.00 0.00 5.00 10.00 15.00
B/C
Fre
quency
Rehab AlllComponents
RehabDownstreamGate
Decision CriteriaDecision Criteria
Rank alternatives based on expected present value of net benefits choose alternative with largest expected present
value Supplement with risk considerations
probability that net benefit is positive sensitivity analysis
DiscussionDiscussion
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