One of the most basic services provided by municipal governments is the delivery of a safe, reliable water supply. As cities grow and extend their boundaries to outlying areas, they often inherit water systems that were not constructed according to city codes. The upgrading of these systems is sometimes more expensive than installing one correctly in the first place. To avoid these problems, city officials sometimes install water systems beyond the existing city limits in anticipation of future growth. This case study was extracted from such a countywide water and wastewater management plan and is limited to only some of the water supply alternatives.

1. If the environmental considerations factor is to have a weighting of twice as much as any of the other five factors, what is its percentage weighting?

2. If the ability to supply area and relative cost factors were each weighted 20% and the other four factors 15% each, which alternatives would be ranked in the top three?

3. By how much would the capital investment of alternative 4 have to decrease to make it more attractive than alternative 3?

4. If alternative 1A served 100% of the households instead of 95%, by how much would the monthly household cost decrease?

5. (a) Perform a sensitivity analysis on the two parameters of M&O costs and number of households to determine if alternative 3 remains the best economic choice. Three estimates are made for each parameter in Table.

Pessimistic, Most Likely, and Optimistic

Estimates for Two Parameters

M&O costs may vary up (Pessimistic) or down (optimistic) from the most likely estimates presented in the case statement. The estimated number of households (4980) is determined to be the pessimistic estimate. Growth of 2% up to 5% (optimistic) will tend to lower the monthly cost per household.

(b) Consider the monthly cost per household for alternative 4, the optimistic estimate. The number of households is 5% above 4980, or 5230. What is the number of households that would have to be available in order for this option to have exactly the same monthly household cost as that for alternative 3 at the optimistic estimate of 5230households?

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Annual M&0 Costs Number of Households Alternative 1A Pessimistic Most likely Optimistic Alternative 3 Pessimistic Most likely Optimistic Alternative 4 Pessimistic Most likely Optimistic 4980 +2% + 5% $1,060,419 +5% $867.,119 0% 4980 +2% +5% +2% $1,063.449 -10% 4980 + 2% + 5%