1. Lecture(4) 2013-2014

2. Measurement of System performance Infrastructure performance measurement Infrastructure performance measurement must be multidimensional, reflecting the full range of social objectives set for infrastructure system. The performance of infrastructure could be measured by effectiveness, reliability, and cost.

3. Measurement of System performance Infrastructure performance measurement Cost Reliability Effectiveness

4. Capacity and delivery of servicesQuality of services delivered The system’s compliance with regulatory concern The system’s broad impact on the community

5. Reliability A recognition of various uncertainties inherent in infrastructure’s services, is the likelihood that infrastructure effectiveness will be maintained over an extended of time or the probability that service will be available at least at specified levels through the design life Cost The costs are incurred and paid at different times and places, by different agencies and groups(e.g., users, neighbors, taxpayers), and in monetary and nonmonetary terms. When the cost is acceptable and low, this gives indication that the performance is well.

6. Examples of Measures of System Reliability Examples MeasuresType of Indicator, Measure Engineering safety factorsDeterministic Percentage contingency allowance Risk class rating Statistical, probabilistic Confidence limit Confidence probabilities Risk functions Demand peak indicatorComposite(typically deterministic indicator of statistical variation) Peak-to-capacity ratio Return frequency (flood) Fault-tree analysis

7. Examples of Measures of System Cost Planning and design cost Investment, replacement, capital, or initial cost Construction cost Equity Debt Operation cost Recurrent or O&M cost Maintenance cost Repair and replacement cost Depreciation cost Depletion cost Timing of expenditure Timing and source Discount and interest rate Exchange rate and restrictions Sources of fund Service life

8. Losses of Value of Infrastructure Facilitates Due to change in demand or change in amount and type of services requirement. Functional Occurring when better approaches (e.g, better equipment) are available to carry out the functions of the facility. Technological Due to ordinary wear and tear, corrosion from age or use Physical Due to change in the buying power of money Monetary Arising from fires, explosions, earthquakes, etc Casualty-related Resulting from changes in legal requirements related to the serviceability or outputs of machines and structures Legal

9. Losses of Value of Infrastructure Facilitates  Condition of being antiquated, old- fashioned, or out-of-date  No longer meets current needs or expectation levels  Aging, technology, standard change  2-yr old computers good example  Inability to meet changing performance requirements

10. Obsolescence & Service Life  “Always remember that someone, somewhere is making a product that will make your product obsolete”  -Georges Doriot  “Planned obsolescence” by Vince Packard’s The Waste Makers  Practice of deliberately designing products to last for a shorter period of time  Systemically doing this leads to inferior products

11. Obsolescence & Service Life, What Causes It?  Technological change  Regulatory change  SDWA forced upgrades  Economic / social changes  Value / behavior changes

12. Service vs. Physical Lives  Physical Lives: time it takes for infrastructure to wear out/fail  Predicting this may be irrelevant  Service life: time actually used  In general these 2 are different  Power plants become obsolete because of technology/policy changes  In some cases, tax code drives expectations

13. Service Lives, Connections  “Design service life” only meaningful if defined in terms of obsolescence  Assumptions about lifetime will likely change over time  Infrastructure seldom abandoned before replacement in place  Expectations will increase  Need to consider expectations and deterioration functions

14. Service Lives, Rates of Change  Information economy is making older transport modes obsolete  E.g., ground -> air shipping  How long should infrastructure last?  Physical or service?  “How long do you want to use it?”  Where will it go when we’re done?  What could we do with Roman roads now?

15. Service Lives, Strategies to Mitigate  Plan and design for flexibility  Build to assure optimum performance level is achieved  Monitor change to defer obsolescence  Refurbish and retrofit early

16. Cost-Effectiveness Measures for Projects of Routine Nature 1.Minimize the amount of resources required TO Achieve a given level of service Meet other requirements demanded of the particular situation 2.Maximize the level of services Aims of Cost-Effectiveness Measures

17. Methods for comparing and Prioritizing :Infrastructure Alternatives 1 Simple Cost Basis 2 Simple Cost Basis Plus Consideration of Other Specified Engineering Factors 3 Life-Cycle Cost Basis (usually made on a present value basis 4 Cost Basis Including Adjustments Made for Additional Screening Criteria

18. 5 Additional Primarily Cost-Driven Methodologies for State and Local Infrastructure Systems 6 Full Financial Analyses 7 Economic Analyses (or Benefit-Cost Analyses( 8 Multi-Dimensional Analyses 9 Special Studies

19. Parameters commonly used for formulas involving an interest rate Interest rate per interest period. i Number of interest period. n Present sum of money. P Future sum of money at the end of n period (equivalent to P with interest rate i). F Amount of each end-of-period payment or receipt in uniform series of n period. A

20. F P n P A AAAA A AAAA F (F/P, i, n) (P/F, i, n) (P/A, i, n) (A/P, i, n) (F/A, i, n) (A/F, i, n) Sample Cash Flow Diagram

21. Common formulas for equivalency Calculations Single amount

22. Uniform series

23. Examples A project costs $40,000,000 and takes five years to construct. If all of this money is borrowed at the beginning of construction, how much money is owed by the sponsor when the project is ready to operate? If the money is borrowed in five equal installments, how much is owed? In each case, assume 7 percent interest for money borrowed. 40M$ F=?? 8M$ F=F1+F2=38,005,912+11,220,413 =49,226,325M$