Optimal seismic upgrade timing in seaports with increasing throughput demand via real options

A real options (RO) formulation is proposed for decision-making on the timing to upgrade the seismic performance of existing seaports with increasing throughput demand in earthquake prone areas. The pay-off of the seismic upgrade investment option is estimated based on projected net earnings, repair cost, and downtime for a damaging reference seismic event having a pre-specified annual probability of occurrence. These projections inform a discrete-time RO binomial tree, following the American option valuation framework, which propagates the probability of the reference seismic event assuming Poisson temporal distribution of earthquake occurrence. The net present value of the expected annual payoff of the considered investment is used as an index supporting risk-informed decision-making discounted by the weighted average cost of capital (WACC). Numerical examples pertaining to decision makers with different capital cost, namely port authorities and terminal operators, operating in different economic environments typical of developed and developing countries are furnished to illustrate the applicability of the proposed RO formulation. It is found that high WACC and/or low throughput growth bring the optimal seismic upgrade timing forward, while earthquake consequences and upgrade cost have almost no influence on this timing

Dealing with Major Technological Risks

This article is concerned with the management of major hazards stemming from technology and entailing potentially dreadful consequences. It proposes a brief survey of the0501n difficulties and policy issues arising both in public and private decision making when dealing with major technological risks. Three themes are considered: risk assessment, risk sharing and risk control. Issues related to evaluation methods, to risk perception and to the acceptable level of risk are first examined. The article then goes on to explore the problem of optimal risk sharing between the different stakeholders. The firm's liability and extended liability to the firm's partners are considered. Insurance issues are also discussed. Lastly, the survey addresses the control of risks both from a prevention and from a damage mitigation point of view. The various instruments available to the State to reduce risks are reviewed and several issues are also raised with respect to the measures firms can take to reduce risks. Investment in safety, human error, organisational design and information disclosure are addressed in this section. The topics of siting and urban planning are analysed as mitigation strategies, and the important aspect of emergency planning ends the survey. Cet article d'intérêt général porte sur la gestion des risques d'origine technologique aux conséquences potentiellement catastrophiques. Il s'agit d'un document de synthèse destiné à cerner les problèmes fondamentaux en matière de gestion publique et privée des risques technologiques majeurs. Trois thèmes y sont traités: l'évaluation, la distribution et le contrôle des risques. Les questions se rapportant aux méthodes d'évaluation, à la perception des risques et aux difficultés liées à l'établissement d'un seuil de tolérance sont d'abord passées en revue. La seconde partie du document met en lumière les difficultés que présente le partage optimal du risque entre les différents agents. La responsabilité civile de la firme et de ses partenaires est alors examinée. Les problèmes liés à l'assurance contre ce type de risque sont aussi brièvement décrits. Cet article traite enfin du contrôle des risques en couvrant à la fois les approches préventives et les stratégies d'atténuation des dommages. On y aborde premièrement les instruments de contrôle dont dispose l'État pour réduire les risques. Du côté des firmes, les sujets tels que l'investissement en sécurité, l'erreur humaine, le design organisationnel et la divulgation de l'information sont passés en revue. L'aménagement du territoire et la gestion des urgences sont ensuite abordés de façon succincte dans la dernière partie de l'article.Safety, major risks, risk assessment, risk sharing, risk control, prevention, mitigation, Sécurité, risques majeurs, évaluation des risques, distribution des risques, contrôle des risques, prévention, atténuation

Probabilistic optimal decision making and life-cycle management considering risk, sustainability, and utility: applications to bridges and ships

The condition and performance of infrastructure systems is continuously deteriorating due to various environmental and mechanical stressors. There is a great need to implement optimal mitigation strategies that maintain structural performance within acceptable levels through the life-cycle of deteriorating civil infrastructure. In order to ensure adequate life-cycle performance, cost-efficient interventions must be implemented. This study presents computational frameworks that serve as decision support tools for bridge and ship managers, which ultimately allow them to make cost-, risk-, and sustainability-informed choices in the context of life-cycle engineering. Reliability, risk, sustainability, and utility-based performance indicators are examined and applied to civil and marine infrastructure systems subjected to a variety of hazards in order to determine optimal life-cycle management plans, balancing structural performance, cost of intervention, and available resources. The final product of the proposed decision support tools, optimal life-cycle management plans, describe which performance enhancing measure(s) should be implemented and when to intervene.Specifically, this study adds to existing probabilistic life-cycle management frameworks by integrating a novel utility-based sustainability metric in the life-cycle maintenance planning of civil and marine infrastructure. The effect of the risk attitude of the decision maker is examined in this study by including utility functions, which in this context, depict the relatively desirability of lifetime management plans to the decision maker. Additionally, lifetime functions such as hazard and availability are included as new performance indicators for bridges. Furthermore, the utility-based decision making framework developed is applied to a ship structure in order to determine optimal structural health monitoring plans under uncertainty. Optimal monitoring plans for the ship are determined by simultaneously maximizing availability and lifetime monitoring costs

Risk, Resilience, and Sustainability-Informed Assessment and Management of Aging Structural Systems

During their service life, structural systems (e.g., civil and marine structures) may be subjected to aggressive deteriorations such as corrosion and fatigue and/or extreme events such as floods, collisions, earthquakes, and fires. These deteriorations may start from the day the structures enter in service and, if not effectively managed, can cause a significant reduction in structural functionality and safety. Maintaining performance and functionality of structural systems under these adverse effects is gaining increased attention. This highlights the necessity of effective assessment and management of civil and marine structures in a life-cycle context.The main objective of this study is to develop a risk, sustainability and resilience-informed approach for the life-cycle management of structural systems with emphasis on highway bridges, bridge networks, buildings, interdependent structural systems, and ship structures. Risk - based performance indicators combining the probability of structural failure with the consequences associated with a particular failure event are investigated in this study. Furthermore, a wide range of performance measures is covered under “sustainability” to reflect three aspects: economic, social, and environmental. Sustainability is described as “meeting the needs of present without altering the needs of future generations” (Adams 2006). Sustainability can serve as a useful tool in decision making and risk mitigation associated with civil and marine structures. In addition to risk and sustainability, resilience is another indicator that accounts for structural functionality and recovery patterns after extreme events. Presidential Policy Directive (PPD 2013) defines resilience as “a structure’s ability to prepare for and adapt to changing conditions while simultaneously being able to withstand and recover rapidly from functionality disruptions”. Overall, risk, sustainability, and resilience assessment considering aging and multi-hazard effects are of vital importance to ensure structural safety and functionality of structural systems during their service life.Risk is assessed for highway bridges under the effects of climate change and multiple hazards, including aging effects, flood-induced scour, and earthquake, whereas the adverse effects associated with aging and earthquake are investigated for bridge networks. The sustainability of highway bridges and bridge networks is assessed considering social, economic, and environmental metrics. The seismic resilience of highway bridges under mainshock (MS) only and mainshock-aftershock (MSAS) sequences is investigated to account for structural performance and recovery patterns under extreme events. Additionally, the seismic performance of buildings and interdependent healthcare - bridge network systems is investigated considering correlation effects and uncertainties. Furthermore, a probabilistic methodology to establish optimum pre-earthquake retrofit plans of bridge networks based on risk and sustainability is developed. For ship structures, a decision support system considering structural deteriorations (i.e., corrosion and fatigue) and extreme events (e.g., collision) is established. Specifically, the probabilistic ship collision risk and sustainability are investigated incorporating the attitude of a decision maker. A novel approach is developed to evaluate the time-variant risk of ship structures under corrosion and fatigue during the investigated time interval. Furthermore, a multi-objective optimization problem, which accounts for structural deteriorations and various uncertainties, is formulated to determine optimum inspection planning that reduces the extent of adverse consequence associated with ship failure while simultaneously minimizing the expected total maintenance cost. Additionally, a probabilistic approach for reliability and risk updating of both inspected and uninspected fatigue-sensitive details at both component and system levels is developed considering uncertainties and correlation effects. Overall, this study provides methodologies for the risk, sustainability, and resilience-informed assessment and management of structural systems under structural deteriorations and extreme events in a life-cycle context. Based on the inspection information, the reliability and risk could be updated for the near real-time decision making of deteriorating structures. The proposed probabilistic frameworks are illustrated on highway bridges, bridge networks, buildings, interdependent structural systems, and ship structures. The proposed methodology can be used to assist decision making regarding risk mitigation activities and, ultimately, improve the sustainability of structural systems in a life-cycle context

The Long Shadow of Human‐Generated Geohazards: Risks and Crises

The purpose of this chapter is to focus attention on the “damage and risk” side of the geohazard (GHZ) phenomena rather than on their generating processes. Damage evaluations are indeed often neglected and oversimplified in predictive studies. As a result, risks are poorly understood and often considered as the mere expression of the probability or likelihood of an adverse event. In this chapter, we will use numerous real‐life examples and will discuss among other subjects: technical glossary of risk, damages, crises, multidimensional consequences analysis, and definition of risk tolerance. This chapter also focuses on ethical (geo‐ethical) issues linked to GHZs caused by human activities and their mitigation decisions and possible unintended consequences. The discussion includes the sometimes excessive and sometimes lacking (blindness) perception of risks by the public, corporate, and public officers. The root cause of some odd human behaviors when facing risks (biases) like the survivor bias is discussed. GHZs cast a long and often misunderstood shadow on human activities, development, and survival. By understanding how to model consequences and better evaluating risks and crises, we will be able to alleviate human and environmental suffering and foster sustainable development

Public private partnerships - risk management in engineering infrastructure projects

M.Phil.Economic growth and the provision of adequate infrastructure are highly interrelated. Infrastructure- plays a critical role in promoting economic growth through enhancing productivity, improving competitiveness, reducing poverty, linking people and organisations together through telecommunications and contributing to environmental sustainability. Population growth and rapid urbanisation have placed enormous pressure on existing infrastructure, thus presenting a daunting challenge to governments worldwide The scope of global demographic, public health and safety needs, as well as economic development goals, translates into infrastructure requirements far in excess of currently available financing resources. While the degree of this funding backlog differs from country to country, it extends from the poorest to the richest of nations. This is true even in the United States, which enjoys the full benefits of decentralized government responsibility and an extensive domestic debt market. Recognition of this funding gap has resulted in a nearly universal acceptance that the private sector can and should play a larger role in the financing of infrastructure in partnership with the public sector [35]. The 1990s saw a revolution in the provision of infrastructure services as governments worldwide turned to the private sector for financing and management expertise. In developing countries in 1990 —2001, nearly 2,500 infrastructure projects involved private participation, attracting investment commitments of US750 billion [40]. South Africa has an estimated infrastructure backlog of R 170.7 billion [3]. In addition there is increasing demand for much-needed new and improved infrastructure such as water supply and sanitation systems, affordable housing and electricity supply, health care facilities, schools, roads, tourism infrastructure, airports and harbour facilities, to name but a few [4]. With the private sector organisations having a large pool of sources from which they can seek funding from both local and international financial markets and the government having fragmented expertise over different state departments, debilitating red tape and bureaucracy, more pressing needs for funding elsewhere and inability to roll out projects, private sector involvement in infrastructure provision has been widely considered and implemented as a preferred method of financing infrastructure provision. This collaboration between public and private sectors is crucial in order to increase the sources of funding available for infrastructure and reduce the pressure on fiscal budgets. This has resulted in an increased collaboration between the public and private sectors in order to meet a country's infrastructure requirements. Consequently, the Public Private Partnership (PPP) procurement method of undertaking large infrastructure project

Nuclear Energy and its History: Past Consequences, Present Inadequacies and a Perspective for Success

An attempt is made to locate nuclear technology within a logical context considering history, risks, societal catastrophes and perspectives: the need is identified for a new direction in the exploitation in order to restore the role in energy production. We depict the situation coming from a marvelous history of discoveries started at the beginning of the XX century; heroes are recalled who made possible something that is inconceivable today: design, construction and production of electricity in a few years; that history was tainted by intentional nuclear explosions, i.e. the original sin that we are now paying. Then, we attempt to show that the societal risk is an inherent part of the civilization. Restoring the public trust (towards nuclear fission technology) by matching nuclear safety with the current technological status and advancers in risk assessment is the key objective. The “independent assessment”, or a principle for the exploitation of nuclear energy already stated in the 50’s of the previous century, shall then re-appear. This is used to erect the signpost for a “dynamic barricade” to further reduce the risk of operation of nuclear reactors and to match the design with current technological capabilities and with the frontiers of the research