Analysis and Design: Economics, Risk, and Design Criteria
Core ideas
Design decisions combine technical performance with cost, risk, and standards. Engineering economy compares alternatives using present worth, annual worth, future worth, or benefit-cost ratio. Present worth of a uniform annual series uses P/A = [(1+i)^n − 1]/[i(1+i)^n]. Alternatives with unequal lives must be compared over a common study period or by annual worth - comparing present worths of unequal-lived options is invalid.
Design criteria include the design storm or return period, freeboard, redundancy, and reliability. Flood frequency often uses lognormal or Gumbel distributions. Risk and uncertainty are handled with sensitivity analysis, Monte Carlo simulation, and conservative assumptions. Codes and standards set minimum requirements, but professional judgment and ethics govern beyond them.
Project delivery choices (design-bid-build, design-build, CM at risk) affect cost, schedule, and risk allocation. Value engineering and life-cycle costing help identify the best overall option rather than the lowest bid.
Traps
Comparing unequal-life alternatives by present worth; mixing nominal and real discount rates with inflated costs; ignoring escalating O&M; treating benefit-cost ratio as a decision rule without checking net benefits; and assuming a design storm guarantees no failure - risk over the structure's life is 1 − (1 − 1/T)^n.
Worked example
A pump station costs $2.0M initially with $80,000/year O&M over 20 years at i = 6%. P/A = 11.47. PW = 2,000,000 + 80,000(11.47) = $2.92M. Compare this with a lower-capital, higher-O&M alternative using the same 20-year period.