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<br />,) <br />I <br /> <br />::>EC'l'ION IV <br /> <br />BENEFIT/COST ANALYSIS <br /> <br />The Benefit/Cost Analysis approach to determining the justi- <br />fication for Public Works projects has long been used by public <br />agencies. The basic approach to the Benefit/Cost Analysis <br />is that the benefits derived from a particular project must <br />be greater than the cost of the project to justify its con- <br />struction. Likewise, projects with a greater benefit/cost <br />ratio are more advantageous to the public than projects with <br />a smaller benefit/cost ratio. Unfortunately, the parameters <br />for establishing benefit/cost ratios are such that results <br />may be easily manipulated by the person computing the benefits <br />to prove whatever point he desires. <br /> <br />The approach taken in this study is to realistically establish <br />the actual benefits derived by the public due to reduction in <br />flood damages. The calculation procedures outlined in the <br />following sections and utili~ed for the study are such that <br />all damage potentials calculated and all benefits claimed <br />are well within the actual values. <br /> <br />THEORETICAL BASIS <br /> <br />The theory behind the Benefit/Ccst Analysis procedure and its <br />application to urban storm drainage projects is well covered <br />in the text Economics of Resources Plannin by L. Douglas James <br />and Robert L. Lee, pu l-she y Mc raw-Hl in 1971. Chapter 8, <br />dealing with the basic Benefit/Cost Analysis theory, and Chapter <br />10, dealing with its application to flood control projects, <br />would be of oreat benefit to anyone involved in drainage project <br />analysis. Chapter 10 deals not only with Benefit/Cost approach, <br />but also with many aspects of flood control including structural <br />and nonstructural measures and their application to the overall <br />field of flood control. <br /> <br />The first step toward establishing the benefits derived from <br />a project is to determine the damage potential prior to con- <br />struction of any improvements. The damage potential must again <br />be determined after the improvements have been constructed. <br />The diff~rence betwpen thp damaae Dotential orior to con- <br />struction and after-~onstruction becomes the-benefits derived from <br />the facility. <br /> <br />-:,H- <br /> <br />Damage potential for a flood control project is determined <br />by developing the damage potential for various storm return <br />frequencies and mathematically reducing this to an average <br />annual damage potential. Figure IV-l illustrates the <br />graphical procedure for determining average annual damage <br />potential. The damage potential for a particular storm, <br />for example a 10 year return frequency, is developed for <br />a reach of channel. This damage potential in dollars is <br />plotted against the return frequency, as a percentage, on <br />a damage versus return probability graph. The same process <br />is continued for other storm frequencies. A curve is then <br />drawn between the plotted points representing the damage <br />potential for all storms within the time frame being analyzed. <br />The area beneath this curve becomes the average annual damage <br />potential. <br /> <br />The average annual damage potential may also be determined <br />through mathematical calculations, although far more diffi- <br />cult and time consuming. The graphical method illustrated <br />in Figure IV-l is certainly as accurate as the input data <br />available. <br /> <br />The same procedure must be followed to determine the damage <br />potential after construction of a particular improvement. <br />The difference in average annual damage potential between <br />existing conditions and conditions after the improvements <br />are in place becomes the average annual benefit to the <br />project. To determine the benefit/cost ratio, it is necessary <br />to compare the average annual benefit to the cost of the <br />project. This may be done by reducing the cost of the <br />project into annual payments or by converting the average <br />annual benefit into a present worth of benefits. <br /> <br />The benefit/cost ratio for various ~lternatives are then <br />compared to determine the alternative most attractive. <br />The comparison will show that facilities should be designed <br />for a particular storm recurrence interval and utilizing a <br />specific type of construction. <br /> <br />CALCULATlON METHODS USED FOR. DAMAGE POTENTIAL ANALYSIS <br /> <br />The first step toward actual determination of damage potential <br />in this study was the establishment of design flows for six <br />tr"'1uencies, 2, 5, 10, 25, 50 and 100 year. <br /> <br />Next the area of inundation and depth of inundation were <br />determined for each storm frequency along the channel. <br />This necessitated the development of rating curves for each <br />street crossing and for critical reaches of channel under <br />eXlsting conditions of improvement. <br /> <br />-59- <br />