Value of information and value of decisions

This paper introduces an extended formulation of decision analyses, which provides an enhanced basis for the definition of the value of information, the value of actions and the value of actions and information analyses. The formulation of decision analyses is (1) extended by introducing an action implementation uncertainty and - following the reasoning of Raiffa and Schlaifer (1961) - (2) by considering both the information acquirement state and the action implementation state jointly and separately for the definition of the types of decision analyses. Decision value analyses are derived by explicitly distinguishing and addressing the cause of the expected utility gain namely by information, by actions or by both action and information. It is shown how different optimal sets of information and actions and their acquirement or implementations states, respectively, lead to different decision value classifications. Published studies and applied decision and decision value analyses are analyzed showing a diversity beyond the original definitions by Raiffa and Schlaifer (1961), however, also being less diverse in comparison to the introduced classification in this paper

Value of information and value of decisions

This paper introduces an extended formulation of decision analyses, which provides an enhanced basis for the definition of the value of information, the value of actions and the value of actions and information analyses. The formulation of decision analyses is (1) extended by introducing an action implementation uncertainty and - following the reasoning of Raiffa and Schlaifer (1961) - (2) by considering both the information acquirement state and the action implementation state jointly and separately for the definition of the types of decision analyses. Decision value analyses are derived by explicitly distinguishing and addressing the cause of the expected utility gain namely by information, by actions or by both action and information. It is shown how different optimal sets of information and actions and their acquirement or implementations states, respectively, lead to different decision value classifications. Published studies and applied decision and decision value analyses are analyzed showing a diversity beyond the original definitions by Raiffa and Schlaifer (1961), however, also being less diverse in comparison to the introduced classification in this paper

Value of information (VoI) for the chloride content in reinforced concrete bridges

The corrosion of reinforcement caused by chloride ingress significantly reduces the length of the service life of reinforced concrete bridges. Therefore, the condition of bridges is periodically inspected by specially trained engineers regarding the possible occurrence of reinforcement corrosion. Their main goal is to ensure that the structure can resist mechanical and environmental loads and offer a satisfactory level of safety and serviceability. In the course of assessment, measuring the chloride content, through which corrosion could be anticipated and prevented, presents a possible alternative to visual inspections and corrosion tests that can only indicate already existing corrosion. It is hard to determine the cost-effectiveness and actual value of chloride content measurements in a simple and straightforward way. Thus, the main aim of the paper was to study the value of newly gained information, which is obtained when a chloride content in reinforced concrete bridges is measured. This value was here analyzed through the pre-posterior analysis of the cost of measurement and repair, taking into account different types of exposure and material properties for a general case. The research focus was set on the initiation phase in which there are no visible damages. A relative comparison of costs is presented, where the cost of possible reactive/proactive repair was compared with the maximum cost of measurement, while the measurement is still cost effective. The analysis showed a high influence of the initial probability of depassivation on the maximum cost of the cost-effective measurement, as well as a nonreciprocal relation of the minimum cost of cost-effective reactive repair with the measurement accuracy.The author would like to acknowledge the financial and educational support from the COST TU 1402 Action (www.cost-tu1402.eu), received through the Training School grant

KRI DESIGN AND MITIGATION STRATEGY ON WATER DISTRIBUTION OF PERUMDA AIR MINUM MAKASSAR REGIONAL IV: A Case Study

Municipal Waterworks Corporation (PERUMDA AIR MINUM) of Makassar city currently finds many common risks in water distribution process. The risks cause a lot of damage to the piping network system, so that the quantity of distributed water to customers is not optimal. Consequently, it is necessary to handle the risks. This study aims to determine the risks that occur in water distribution process by using Delphi method to identify potential risks. Then, House of Risk (HOR) is used at the risk analysis and evaluation stage to determine mitigation strategies and Key Risk Indicators (KRI) is designed to determine the Early Warning System (EWS). Based on the results known that there are 16 identified risk events and 24 risk agents. Furthermore, a mitigation strategy is carried out on the risk agent by using 18 preventive actions. Based on the selected risk, coded as A24 with the indicator value is Information (Field Team) has lower threshold of 5 hours and upper threshold of 8.19 hours. Water loss has lower threshold of 3,118,047 m3 and upper threshold of 3,283,688 m3. A1 as Expired indicator value has lower threshold of 20 years and upper threshold of 26 years and leaking pipes replacement has lower threshold of 15 years and upper threshold of 16 years 3 months 2 weeks. Further research is expected to be able to design KRI for the risks that do not have EWS yet

A framework for assessing the value of information for health monitoring of scoured bridges

© 2020, Springer-Verlag GmbH Germany, part of Springer Nature. It is generally accepted that climate change is leading to increased frequency of extreme weather events worldwide, and this is placing heavier demands on an already aging infrastructure-network. Bridges are particularly vulnerable infrastructure assets that are prone to damage or failure from climate-related actions. In particular, bridges over waterways can be adversely affected by flooding, specifically the washing away of foundation soils, a mechanism known as scour erosion. Scour is the leading cause of failure for bridges with foundations in water as it can rapidly compromise foundation stiffness often resulting in unacceptable movements or even collapse. There is growing interest among asset managers in applying health monitoring approaches to assess the real-time performance of bridges under damaging actions, including scour. Sensor-based approaches involve the acquisition of data such as dynamic measurements, which can be used to infer the existence of scour or other damage without the laborious requirements of undertaking visual inspections. In this paper, a framework is proposed to assess the benefit obtained from health monitoring systems as compared to the scenario where no monitoring system is employed on a bridge, to ascertain how useful these systems are at assisting decision-making. Decisions typically relate to the implementation of traffic restrictions or even partial or complete bridge closure in the event of damage being detected, which has associated consequences for a network. A case study is presented to demonstrate the approach postulated in this paper

Valuing adaptation under rapid change

AbstractThe methods used to plan adaptation to climate change have been heavily influenced by scientific narratives of gradual change and economic narratives of marginal adjustments to that change. An investigation of the theoretical aspects of how the climate changes suggests that scientific narratives of climate change are socially constructed, biasing scientific narratives to descriptions of gradual as opposed rapid, non-linear change. Evidence of widespread step changes in recent climate records and in model projections of future climate is being overlooked because of this. Step-wise climate change has the potential to produce rapid increases in extreme events that can cross institutional, geographical and sectoral domains.Likewise, orthodox economics is not well suited to the deep uncertainty faced under climate change, requiring a multi-faceted approach to adaptation. The presence of tangible and intangible values range across five adaptation clusters: goods; services; capital assets and infrastructure; social assets and infrastructure; and natural assets and infrastructure. Standard economic methods have difficulty in giving adequate weight to the different types of values across these clusters. They also do not account well for the inter-connectedness of impacts and subsequent responses between agents in the economy. As a result, many highly-valued aspects of human and environmental capital are being overlooked.Recent extreme events are already pressuring areas of public policy, and national strategies for emergency response and disaster risk reduction are being developed as a consequence. However, the potential for an escalation of total damage costs due to rapid change requires a coordinated approach at the institutional level, involving all levels of government, the private sector and civil society.One of the largest risks of maladaptation is the potential for un-owned risks, as risks propagate across domains and responsibility for their management is poorly allocated between public and private interests, and between the roles of the individual and civil society. Economic strategies developed by the disaster community for disaster response and risk reduction provide a base to work from, but many gaps remain.We have developed a framework for valuing adaptation that has the following aspects: the valuation of impacts thus estimating values at risk, the evaluation of different adaptation options and strategies based on cost, and the valuation of benefits expressed as a combination of the benefits of avoided damages and a range of institutional values such as equity, justice, sustainability and profit.The choice of economic methods and tools used to assess adaptation depends largely on the ability to constrain uncertainty around problems (predictive uncertainty) and solutions (outcome uncertainty). Orthodox methods can be used where both are constrained, portfolio methodologies where problems are constrained and robust methodologies where solutions are constrained. Where both are unconstrained, process-based methods utilising innovation methods and adaptive management are most suitable. All methods should involve stakeholders where possible.Innovative processes methods that enable transformation will be required in some circumstances, to allow institutions, sectors and communities to prepare for anticipated major change.Please cite this report as: Jones, RN, Young, CK, Handmer, J, Keating, A, Mekala, GD, Sheehan, P 2013 Valuing adaptation under rapid change, National Climate Change Adaptation Research Facility, Gold Coast, pp. 192.The methods used to plan adaptation to climate change have been heavily influenced by scientific narratives of gradual change and economic narratives of marginal adjustments to that change. An investigation of the theoretical aspects of how the climate changes suggests that scientific narratives of climate change are socially constructed, biasing scientific narratives to descriptions of gradual as opposed rapid, non-linear change. Evidence of widespread step changes in recent climate records and in model projections of future climate is being overlooked because of this. Step-wise climate change has the potential to produce rapid increases in extreme events that can cross institutional, geographical and sectoral domains.Likewise, orthodox economics is not well suited to the deep uncertainty faced under climate change, requiring a multi-faceted approach to adaptation. The presence of tangible and intangible values range across five adaptation clusters: goods; services; capital assets and infrastructure; social assets and infrastructure; and natural assets and infrastructure. Standard economic methods have difficulty in giving adequate weight to the different types of values across these clusters. They also do not account well for the inter-connectedness of impacts and subsequent responses between agents in the economy. As a result, many highly-valued aspects of human and environmental capital are being overlooked.Recent extreme events are already pressuring areas of public policy, and national strategies for emergency response and disaster risk reduction are being developed as a consequence. However, the potential for an escalation of total damage costs due to rapid change requires a coordinated approach at the institutional level, involving all levels of government, the private sector and civil society.One of the largest risks of maladaptation is the potential for un-owned risks, as risks propagate across domains and responsibility for their management is poorly allocated between public and private interests, and between the roles of the individual and civil society. Economic strategies developed by the disaster community for disaster response and risk reduction provide a base to work from, but many gaps remain.We have developed a framework for valuing adaptation that has the following aspects: the valuation of impacts thus estimating values at risk, the evaluation of different adaptation options and strategies based on cost, and the valuation of benefits expressed as a combination of the benefits of avoided damages and a range of institutional values such as equity, justice, sustainability and profit.The choice of economic methods and tools used to assess adaptation depends largely on the ability to constrain uncertainty around problems (predictive uncertainty) and solutions (outcome uncertainty). Orthodox methods can be used where both are constrained, portfolio methodologies where problems are constrained and robust methodologies where solutions are constrained. Where both are unconstrained, process-based methods utilising innovation methods and adaptive management are most suitable. All methods should involve stakeholders where possible.Innovative processes methods that enable transformation will be required in some circumstances, to allow institutions, sectors and communities to prepare for anticipated major change

Determination of structural and damage detection system influencing parameters on the value of information

International audienceA method to determine the influencing parameters of a structural and Damage Detection System (DDS) is proposed based on the Value of Information (VoI) analysis. The VoI analysis utilizes the Bayesian pre-posterior decision theory to quantify the value of DDS for the structural integrity management during service life. First the influencing parameters of the structural system, such as deterioration type and rate are introduced for the performance of the prior probabilistic system model. Then the influencing parameters on the DDS performance, including number of sensors, sensor locations, measurement noise and the Type I error are investigated. The pre-posterior probabilistic model is computed utilizing the Bayes' theorem to update the prior system model with the damage indication information. Finally, the value of DDS is quantified as the difference between the maximum utility obtained in pre-posterior and prior analysis based on the decision tree analysis, comprising structural probabilistic models, consequences, as well as benefit and costs analysis associated with and without monitoring. With the developed approach, a case study on a statically determinate Pratt truss bridge girder is carried out to validate the method. The analysis shows that the deterioration rate is the most sensitive parameter on the effect of relative VoI over the whole service life. Furthermore, it shows that more sensors do not necessarily lead to a higher relative VoI; only specific sensor locations near the highest utilized components lead to a high relative VoI; measurement noise and the Type I error should be controlled and be as small as possible. An optimal sensor employment with highest relative VoI is found. Moreover, it is found that the proposed method can be a powerful tool to develop optimal service life maintenance strategies-before implementation-for similar bridges and to optimize the DDS settings and sensor configuration for minimum expected costs and risks

Managing risk in operations : a multi-level study

This research explores the management of risk in operations. It explores the different structures influencing the treatment of risk and the influence on managerial risk taking behaviours. There is limited understanding within the extant literature of the different treatment strategies for risk in operations and what influences selection of treatment strategy. This research employs an abductive approach iterating between the theoretical and empirical. There are four levels of analysis: the firm, the function, the group and the individual. The research was conducted in two European Energy companies. The research found that there is a complex interaction between organizational structures and individual perceptions in managing risk. Corporate risk structures have limited influence on the selection of risk treatments. The specification of business function (service or asset focus) informs the process of risk management and use of systems. Use of systems and valuation techniques underpin the risk prioritization process and specifically the assessment of risk. There is an order of decision influences that reflects the Levers of Control (Simons, 1995; 1998): Risk treatments are prohibited by boundary systems. Secondly, individual’s beliefs influence positive selection of treatment, and third where a treatment has not been selected through beliefs, the performance system is consulted. The performance system is most likely to influence selection of risk acceptance or risk mitigation. It is found that classification of risk has more than a semantic influence on perception and risk treatment; it can prohibit uses of certain treatments and inform priority. Understanding of the decision process matures and increases in complexity in senior managers. It is found that the performance system has influences on manager’s beliefs and in the long term, reflecting vision and mission the implementation of boundary conditions

When Complex is as Simple as it Gets: Guide for Recasting Policy and Management in the Anthropocene

Many readers recognise and understand that complex is about as simple as it gets for major policy and management. This guide is for those unwilling in the Anthropocene to shrink back into the older platitudes about ‘keep it simple’ and ‘not to worry, we’ll scale up the analysis later on’. This guide offers key concepts, methods, counternarratives, and analogies that recast major policy and management issues in ways that do not deny their complexity but help render them more tractable for action.European Research Council, Grant No. 74032US National Science Foundation Grant No. 212152