Black & Veatch has developed a decision-making process that consistently and
transparently evaluates a wide variety of projects and issues that confront utilities. The
analysis uses a probabilistic approach utilizing Monte Carlo simulations and is quantified
through Net Present Value tornado diagrams and probability distributions. The evaluations are accomplished by assessing the condition and failure probability of
components; identifying and evaluating rehabilitation, repair, and replacement needs;
developing cost estimates of necessary improvements; and producing a capital
improvement program that is prioritized using a defendable and statistically-based
process.
This paper examines the detailed cost, probability, and timing estimates within a
customized financial evaluation model in order to analyze the value and risk mitigation
effectiveness of proposed capital projects. In particular, this paper discusses:
in-depth definition of issues, possible outcomes, and probabilities;
fully quantified value-at-risk specification of the inter-relationships among
projects and issues; and,
identification of innovative capital action programs with improved expected
outcomes and reduced exposures.
This capital prioritization process provides water and wastewater utilities with the ability
to obtain a strategic direction in very uncertain environments and to develop proactive
capital plans and investments that are evaluated on a consistent basis. In addition, this
process provides an easy-to-understand framework that facilitates "buy-in" and support across all organizational units. Includes 2 references, table, figures.
| Edition : | Vol. - No. |
| File Size : | 1
file
, 1 MB |
| Note : | This product is unavailable in Ukraine, Russia, Belarus |
| Number of Pages : | 12 |
| Published : | 06/17/2005 |
