Engineering Options: a proactive planning approach for aging water resource infrastructure under uncertainty

Abstract

This dissertation presents an innovative, value-enhancing approach for proactive replacement planning for aging water resource infrastructure given uncertain future conditions. This work addresses two shortcomings in the existing literature on long-term water infrastructure planning. First, existing approaches do not incorporate different drivers of investment within a single unified framework: they typically focus on infrastructural alterations driven either by changes in external operating conditions or by internal structural factors. Second, the majority of approaches developed to incorporate uncertainty within long-term planning are reactive towards uncertainty. The approach developed here advances the current state of research by accounting for different drivers of reinvestment, both changes in external conditions and structure-specific processes, and by taking a proactive rather than reactive stance toward uncertainty. It draws upon two existing methodologies to develop an integrated long-term infrastructural planning framework. It uses Adaptation Tipping Points to generate a long-term planning timeline that incorporates diverse drivers of investment. It subsequently applies Engineering Options thinking to explore different courses of action taken at key moments in this timeline. Contrasting to the traditionally static approach to infrastructure design, designing the next generation of infrastructure so managers can update it incrementally is a promising method to safeguard the efficacy of current investments given uncertain future developments. Furthermore, the up-front inclusion of structural options within the physical system actively facilitates future adaptation, transforming the management of uncertainty in infrastructure planning from reactive to more proactive. A two-part quantitative model underpins this conceptual approach. First, a simulation model generates future conditions consistent with diverse changes to the operating environment, allowing the development of a timeline of key intervention moments in the life of a structure. This feeds into an economic model, evaluating the lifetime performance of different possible infrastructural replacement strategies, making explicit the value of options and the flexibility they provide. A proof of concept study demonstrates this approach: replacement planning for the multi-functional pumping station IJmuiden on the North Sea Canal in the Netherlands. The analysis models flexibility in design decisions, varying the size and specific options included in the proposed replacement structure. Results indicate that incremental adaptive designs and the incorporation of options can improve life-time economic performance, as compared to more traditional, “build it once and build it big” designs. However, the benefit from incorporating flexibility varies with structural functionality, future conditions considered, and the specific options examined. The approach demonstrated here is able to identify for which structural functions and under which conditions different replacement strategies are desirable.