This topic covers all elements of Deterioration Modelling in JunoViewer Web
Calculating the Benefit of Treatments: BCA Models
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Fritz Jooste Administrator Posts: 81
4/28/2020
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Fritz JoosteAdministrator Posts: 81
All of the Benefit Cost Analysis (BCA) models in JunoViewer require the calculation of a BENEFIT of treatment. For example, when you are using a Net Present Value (NPV) Optimised model, different treatment strategies on each segment will be compared in terms of NPV, where NPV is defined as the total discounted benefit minus the total treatment cost. Similarly, benefits need to be calculated if you use an Incremental Benefit Cost Ratio (IBCR) or a Maximum Benefit Cost Ratio (MaxBCR) Model.
Thus for any of these models, it if critical to calculate a "Benefit of Treatment". This help post explains how JunoViewer calculates the benefit of treatment.
The first step to calculating benefits of treatment is to specify the parameter that holds your "Cost of Use" (CoU). This would be a model parameter (defined by you in your DMS) that holds the estimated maintenance cost with or without some form of Vehicle Operating Cost (VOC). [The Cost of Use parameter is specified on the General Sheet of your DMS file].
With your "Cost of Use" parameter defined, the benefit for a treatment is calculated as follows: (a) the model first calculates the total discounted Cost of Use (CoU) over the modelling period for the Do-Nothing scenario (case where no treatments, or only committed treatments are applied); (b) next the model calculates the total discounted CoU over the modelling period for each treatment strategy. The Benefit of each strategy is then calculated as the difference between the CoU for the Do-Nothing scenario and the CoU of each strategy.
The example below show a case where the discounted CoU for the Do-Nothing scenario adds up to $120,000. Under Treatment Option/Strategy A, the model applies a treatment in year 5 at a discounted cost of $60,000. In this example, as a result of the treatment, the CoU under Option A is reduced to zero from year 5 onward until year 9 when a CoU of $1,000 is again registered.
The resulting Benefit is calculated as shown below by subtracting to CoU under option A from the CoU under the Do-Nothing scenario. This yields a Benefit of $120,000 - $20,000 = $100,000. This benefit can now be used in conjunction with the discounted treatment cost to calculate the Incremental Benefit Cost Ratio, the NPV and the Benefit Cost Ratio for Option A. It is also used to identify the sub-set of strategies that lie on the Pareto frontier.
It should be noted that the above example assumes all costs are already discounted. In JunoViewer, discounted costs are automatically calculated using the Discount Rate provided on the General sheet of your DMS.
edited by admin on 5/19/2020
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