EP 1130-2-500
27 Dec 96
APPENDIX C
CONCEPTUAL APPROACH FOR ANALYZING REHABILITATION
C-1. Background. In thinking about major rehabilitation it is important to remember that the
evaluation considers alternative future streams of project services and costs and the reliabilities of
those services and costs. Any rehabilitation plan results in a different stream of these variables.
The purpose of a risk-based benefit-cost analysis is to determine the economic efficiency of
alternative rehabilitation plans. The evaluation must account for the fact that each plan may differ
in terms of its effects on project future service levels, O&M costs, and/or project reliability.
C-2. The Base Condition. A useful approach to describing the rehabilitation evaluation problem
is to examine the time paths of project services under alternative rehabilitation scenarios. Figure
C-1 shows time paths of the expected value of project services under 4 different scenarios. The
expected value for each year is calculated by weighing the possible service level in each year by its
reliability. As shown in Figure C-2, a frequency distribution is associated with each point on each
path in Figure C-1.
a. Each time path begins at time 0 when the original project service flow begins. The
straight line labeled b indicates the "as built" expected value of service flows. The curved solid
line beginning at time 0 indicates a decline over time in either the level of service flows, their
reliability or both. The straight line labeled a represents the current condition and for purposes of
this discussion it also represents some "reliability" associated with condition a that could be used
as a trigger to consider rehabilitation for reliability. Although the paths all begin at time 0 the
rehabilitation analysis only considers path segments from t to t+n.
b. If a project is not rehabilitated it can still be expected to continue functioning albeit
with possibly reduced service levels and reduced reliability. Under this condition maintenance is
increased as needed (but within limits) and components or sub-features are repaired on an
emergency basis. This essentially represents the current O&M practice. The solid curve in Figure
C-1 labeled I shows the time stream of the expected value of services under this emergency repair
scenario. For the evaluation of rehabilitation alternatives this time path is called the Base
Condition. There is also some corresponding time stream of O&M costs in the Base Condition.
The Base Condition is conceptually equivalent to the "without condition" for new project
evaluation in the sense that the benefits and costs of all alternatives are measured by comparison
with this condition. Notice that Path I indicates that the expected value of the service flow is
permitted to fall and remain below the current condition but that the project continues to function.
It is possible, however, that emergency repairs may restore the expected value of service flow to
level a or it might even result in exceeding level a.
C-3. Rehabilitation Plans. Path II in Figure C-1 shows a rehabilitation alternative that returns
the service flows and reliability to the current level, shown by line a. Notice that Path II does
not return the expected service flows to the original project level but it does improve the
reliability of the flows.
C-1
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