Managing Technological and Economic Uncertainties in Design of Long-term Infrastructure Projects: An Info-gap Approach

Abstract

Infrastructure for water distribution must operate reliably for many decades. Planners face technological and economic uncertainties. The Net Present Worth (NPW) of a long-term infrastructure project is highly uncertain because of these uncertain variables. We use info-gap decision theory for infrastructure planning to manage these uncertainties. We study the robustness question: how much can our estimates of the uncertain variables err, and the NPW will still be acceptable? The answer is expressed by the info-gap robustness function. Large robustness implies great immunity to uncertainty, while low robustness implies high vulnerability to uncertainty. A plan whose robustness is large is preferred over a plan with low robustness. In other words, the info-gap robustness function prioritizes the alternative plans. We illustrate the planning procedure with long-term planning-analysis for maintenance and replacement of Asbestos Cement (AC) pipes owned by the East Bay Municipal Utility District (EBMUD) in Oakland, California. Our example illustrates the evaluation of alternatives based on robustness against uncertainty in both technological and economic variables.