Aston Corp. Consultant, Mr. Roy Danial, has compiled some benefit-cost analysis estimates for a major study of the 84-inch pipeline delivery completed last year. Two options for building this main drainage system are open trenches (OT) for a total range of 6.8 miles or a combined tunnel of trenches and holes (TT) for shorter 6.3-mile routes. One of the options should be chosen to transport about 300 million gallons per day (gpd) of treated water from the new Water Treatment Facility to the existing ground reservoir on the ground. The General Manager of Water Utilities has stated publicly several times that the combined choice of trench tunnels is chosen through an open trench alternative based on the analysis of both quantitative data.
(a) If the duration of its life cycle is 50 years, using the B/C analysis through the data from Table Q4, provide evidence as to whether the General Manager of Water Utilities' statement is TRUE or FALSE. You may demonstrate the incremental cost and benefit involved in both options. Consider the interest rate is 3% per annum, compounded annually. Open ended, C5 (20 marks) (b) Based on the Q4 (a) answer above, comment on the results. (5 marks)
\begin{tabular}{|l|c|c|} \hline \multicolumn{1}{|c|}{ Table Q4 } \\ \hline Distance, miles & Open Trench (OT) & Trench Tunnel (TT) \\ \hline First cost, RM per foot & 6.8 & 6.3 \\ \hline Time to complete, months & 700 & Trench for 2.0 miles: 700 Tunnel for 4.3 miles: 2100 \\ \hline Construction support costs, & 250,000 & 36 \\ RM per month & & 175,000 \\ \hline Ancillary expenses, Rm per month: & & \\ Environment & 150,000 & 20,000 \\ Safety & 140,000 & 60,000 \\ Community interface & 20,000 & 5,000 \\ \hline \end{tabular}
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