ENERGY 722, 2017 ASSIGNMENT TRANSPORT & DECISION MAKING Due Monday 22 May by 4pm. Submit in electronic form via Canvas. NOTE: Work on Task 1 now, wait until the end of Andrea’s lectures with Tasks 2 & 3. Task 1 – Benefit Cost Analysis < 17 marks > A road realignment project aims to identify a new route for an existing road that currently leads through two towns. The existing road causes traffic congestion in the towns, which a new route would alleviate. Five different alternative routes have been proposed. The alternative routes were each assessed under the following five criteria:  Traffic benefits (in million $) made up of monetized travel time benefits, vehicle operating cost savings and monetized accident savings.  Costs (in million $) are the construction costs and ongoing costs.  Noise level (in dBA), this is the maximum noise at least one resident adjacent to a proposed route might experience. The noise level for residents adjacent to any of the proposed new routes currently is no more than 40 dBA.  Effect on landscape is assessed on a categorical scale and ranges between insignificant, minor, moderate, significant and severe.  Effect on ecology is assessed on a categorical scale and ranges between insignificant, minor, moderate, significant and severe. The different alternatives (proposed new routes for the road) were assessed resulting in the following performance matrix, which shows alternatives in the columns and criteria in rows: A B C D E Traffic Benefits Costs Noise 50 55 60 55 65 Number of households affected by noise 50 100 60 80 40 Landscape Severe Minor Moderate Insignificant Moderate Ecology Moderate Moderate Severe Minor Minor 1. Estimates of benefits and cost over a 10 year analysis period1 are provided in the accompanying Excel spreadsheet. Derive the missing present value entries for both benefits and costs for each alternative, and derive net present value (based on benefits and cost) for the projects above. Assume a discount rate of 􀝎 􀵌 6%. <5> 2. The NZ Economic Evaluation Manual provides a standard monetary value for noise. Costs of road noise are estimated to be 1 Note that the NZ Economic Evaluation Manual normally requires a 40 year analysis period. $350 􀝌􀝁􀝎 􀝕􀝁􀜽􀝎 􀵈 􀝀􀜤 change 􀵈 number of households affected. Determine the cost associated with the dis‐benefit of road noise, assuming for simplicity the given formula already estimates the present value of noise dis‐benefit. Derive net present value for projects A to E again, now also taking into account the disbenefit of noise. <3> 3. Determine the benefit cost ratio of the different options here for all monetized criteria (including noise). What are the three top‐ranked alternatives according to your analysis? <3> 4. Would you recommend making special note of the other non‐monetised criteria alongside your benefit‐cost analysis? Explain why or why not. <2> 5. Also compute the BCR of alternatives A to E now assuming benefits and costs are discounted over a 7 year analysis period. Compare the results to those obtained with a 10 year analysis period, and explain what happens. <4> For Task 1, submit a spreadsheet used for the calculations above together with a write‐up of your analysis. Task 2 – Value Functions in SMART Analysis < 18 marks > Emma wants to buy a new e‐bike for her commute to work. Emma does not worry about the cost of the bike. Her only criteria in this decision are how the bike looks, its battery capacity and its weight. Battery capacity will be measured in Watt hours (Wh): the higher this figure, the further the e‐bike will go ‐ a rough estimate is 􀝀􀝅􀝏􀝐􀜽􀝊􀜿􀝁 􁈺􀝉􀝅􀝈􀝁􀝏􁈻 􀵌 􀯐􀯛 􀬶􀬴 , see 2. Since Emma wants to store her bike in the basement she needs to be able to carry the bike down a few stairs, hence weight (kg) is important. Emma measures the battery capacity of e‐bikes on a global scale between 0Wh and 1000Wh, and weight on a scale from 0kg and 40kg. Bikes with higher capacity batteries are generally heavier. Quality is assessed by direct rating. Emma is considering the following bikes with specifications listed in the table. Emma has rated the “look” of each bike out of 100 (where 100 is best): Look Battery capacity (Wh) Weight (kg) Alpha 420 27 Beta 480 22 Cruiser 620 24 Delta 350 20 a. Do you think Angela chose good limits for her scales? Explain briefly. <2> b. Emma states that her value function for battery capacity is linear. The worst level of attribute values on her scale is assigned a value of 0 and the best level is assigned a value of 100. State the equation for this value function. <2> 2 Source: http://www.treehugger.com/bikes/should‐i‐buy‐electric‐bicycle‐everything‐you‐need‐toknow‐ primer‐faq.html c. Emma derives the value function for weight based on the bisection method. She determines that the midpoint value of weight is 15kg and the quarter points are at 10kg and 25kg. Draw Emma’s value function. You do not need to state the equations. <3> d. Using the swing weights method to derive the weights of the criteria she determines that weight is the most important criterion. The second most important criterion is the look of the bike where a swing in the look from worst to best is 70% as important as a swing for the most important criterion. Battery capacity is the least important with a swing from in battery capacity being 50% as important as a swing in weight. Derive the normalised weights for all criteria. Show your working. <4> e. Emma applies direct rating to assess the look of the bikes. She rates the look of the bikes as Alpha: 75, Beta: 0, Cruiser: 80, Delta 40. Derive the value score of the battery capacity based on the linear value function from part b, and the value score of weight from the value function from part c (read the approximate values off the graph), and list all in a table. <4> f. Derive the overall scores of the bikes. Which one should Emma buy? Show your working. <3> Task 3 –SMART Analysis <37 marks> Problem setup: Assume you are moving to New Zealand from overseas to work in Auckland for 3 years, and then move away from New Zealand. You will be working for a startup in the CBD, in shared offices at the “Generator” https://generatornz.com at 22 Customs St E. You have already found a place to live near the corner of Springleigh Ave and Woodward Rd in Mt Albert, Auckland – assume you will be staying there for the whole period: https://goo.gl/maps/XAcocmpLmWw You will have to commute to work on a daily basis. Apply a SMART decision analysis to identify what your preferred approach to travelling to work is. 1. State at least 5 unique alternative ways you will consider for getting to work. Make sure they are well‐defined. Examples: Your alternative could be to drive a car to the city and park it at one of the commercial car parks there. Or your alternative could be to drive a car to somewhere close to the city where you can park for free, but then walk to your office. Avoid ambiguity and instead state clearly what you mean. Don’t forget to consider all costs associated with a trip (including vehicle costs if applicable), and you may want to include the return trip in your analysis. Hand in: write at most ½ page. <5> 2. What are your objectives and criteria? To give you some ideas: objectives / criteria could have to do with travel costs, time spent travelling, environmental impact, comfort, reliability, and others. Describe the objectives / criteria you want to consider in your analysis. Ultimately the (measurable and detailed) criteria should be grouped underneath your major (general) objectives, and structured from general (top) to more specific (bottom), similar to the value trees you have seen in class. Note that your value tree should contain the most important criteria that you want to include in your analysis, but not too many so that the following tasks do not get too complicated. You need to have at least 5 criteria (or leaves) in your value tree. You can use criteria and objectives listed above, and others that you find important. Make sure that you briefly explain your criteria if they are not self‐explanatory. To make sure you are not missing any important criteria think about what is particularly good or bad about an alternative you listed in Task 3.1. Hand in: 1 value tree, at most 1 page. <3> 3. For each criterion at a leaf of your value tree, indicate how you will measure it, and state the units of measurement. Also give the performance matrix for each criterion you can measure. (That means you may omit the criteria that you will assess by direct rating, but an effort has to be made to measure all measurable criteria). Examples: You could measure travel time by estimating daily commute time (in minutes). In the performance matrix you then list your estimates of travel time. Another example is comfort of travel. You may not be able to define a quantitative measure for comfort. In this case you can state that you are assessing a criterion by direct rating, and leave the corresponding entries in the performance matrix empty. Briefly state your approach for obtaining estimates (e.g., for commute time by train I would get an estimate from the Auckland Transport website, and then add an estimate for walking and waiting time. Alternatively, google maps might give you good estimates which also capture congestion at peak times). You need to find your own data here. Some potential resources are listed below. Make sure you reference all data sources. Hand in: Brief description of criteria measures, and approach ½ ‐1 page and performance matrix. <8> 4. Derive the matrix of scores (0 – 100 with 100 being best). For those criteria you can measure (Task 3.3), I suggest using a linear value function for simplicity. You also need to assess the criteria you are scoring by direct rating and list the results in the matrix. Briefly justify your direct ratings for one of your criteria. A sample Excel spread‐sheet is provided on Canvas that should help with this step. Hand in: matrix of scores, justification of direct rating explanation for one criterion. <5> 5. Specify the weights you choose for the different criteria, and briefly explain your choice of weights. Remember the discussion we had in class on weights. Hand in: List of weights for all criteria and brief justification, less than ½ page. <3> 6. Derive the overall SMART scores for each of your alternatives (Task 3.1) for the decision problem given by your value tree in Task 3.2. Derive the scores based on the Excel sheet provided. Briefly discuss whether the preferred alternative is the one you expected, and justify your answer. Hand in: SMART scores for each alternative, and brief discussion (1‐2 sentences). <5> 7. Conduct a brief sensitivity analysis. Describe how you conducted your sensitivity analysis, and what your conclusions are. Also comment on what key uncertainties might affect your decision. Hand in: Brief discussion, less than ½ page. <4> Note that some marks will be awarded for presentation of results <4>. Hand in:  Hand in a summary of your work as outlined for each task above.  Also hand in the Excel sheet you used for your analysis.  Make sure you provide references to resources you use for the assignment.  Note that “the” correct answer doesn’t exist here. You need to justify and explain the choices you make. You might each end up with a different decision model and answer. Useful resources may be:  Google maps (good for travel time estimates, also taking into account traffic congestion if you look at the corresponding time of day; public transport and walking; distance measurement, etc.): https://www.google.co.nz/maps  Openstreemap showing cycling infrastructure: http://www.openstreetmap.org/#map=13/‐36.8879/174.7422&layers=C  Openstreemap showing Public Transport lines: http://www.openstreetmap.org/#map=14/‐36.8870/174.7188&layers=T  Auckland Transport website (has information on public transport – including costs, cycling, walking, parking): https://at.govt.nz/  Cycle route that might be of interest in the area: https://at.govt.nz/cyclingwalking/ auckland‐cycle‐run‐walkway‐maps/northwestern‐cycle‐route/  Parking: http://www.wilsonparking.co.nz/go/regions/auckland‐cbd