Economic analysis of earthquake retrofit options: an application to welded steel moment frames

Abstract

Decisions on whether to modify the seismic performance of an existing building may depend on the comparative economic consequences of the approaches under consideration. The measures of economic consequences assessed include benefit–cost ratio, probable maximum loss, and insurance payments with different deductibles. These measures are applied to a three building complex of welded steel moment frames. Fourteen different repair schemes for the damaged buildings were evaluated for a typical Los Angeles site. The repair and retrofit approaches include: repair to former condition; modify the connections; modify the structural system with braces or shear walls; and, add dampers. The evaluation indicates that for the specific buildings some repair and modification approaches are cost–beneficial, depending on the time period and interest rate assumptions. The preferred options were then examined for PML and insurance indicators of economic impact. Many financial institutions require the probable maximum loss to be less than a threshold number and/or that insurance be purchased to be considered for financing. A PML analysis indicates that only some of the options should be considered further. The best of the near cost–beneficial options reduced the PML by a factor of two. If insurance was bought for a 5-year term, then repairing the buildings to their former condition yields a 19·5% probability of an insurance loss (damage less the amount deductible) being paid in the 5-year period, with a median payment of 6%, and a 10% probability of a payment more than 17%. Modifying the structural system in the most cost-effective manner yields a 5·2% probability of an insurance loss being paid in the 5-year period, with a median payment of 5%, and a 10% probability of a payment more than 15%. The analysis indicates that the key question in making such assessments is whether earthquake insurance is purchased or not. If insurance costs are included in the economic analysis, then more of the approaches to repair are cost effective than if not. © 1998 John Wiley & Sons, Ltd.