Cost-benefit analysis challenges

The use of cost-benefit analysis plays an important role in the decision-making process for fire protection systems. A cost-benefit analysis sums the expected benefits and is divided by the sum of the expected costs. A challenge often lies in determining what "expected" means and estimating the value of money over the time period the fire protection is in use. In fire protection, the expected benefits can be defined as the difference between the cost of a loss without protection and the cost of a loss with protection. The exported costs include the initial costs of the fire protection as well as any annual testing and maintenance costs. The likelihood of an incident is factored in to obtain residual risk. This residual risk is compared to the benefit to determine what benefit is available each year versus the annualized cost. 

The cost benefit analysis, techno-commercial feasibility, and the challenges for sisal fiber exploitation for various engineering applications are as follows ... 

ALARP concept basically comes from the British health and safety system (Act 1974)- It is not in true sense a quantitative method, although cost—benefit analysis is often used to get ALARP. It is a challenging subjective method, as it requires duty holders and others to exercise their judgment very carefully. In risk analysis, three factors play important role, viz. trouble, time, and cost. The breakeven point in... 

The UK Health and Safety at Work Act 1974 defined the concept of as low as reasonable practicable (ALARP). The ALARP principle is based on reasonable practicability, which simply means that hazard controls are implemented to reduce residual risk to a reasonable level of practicality. For a risk to be considered ALARP, it must be demonstrated that the cost in reducing the residual risk further would be grossly disproportionate to the benefit gained. Therefore, a risk assessment is conducted, and a cost-benefit analysis performed to determine how far to carry the hazard control. Of course, the challenge is deciding what is practical (e.g., cost, effort, time) balanced with how much benefit of lower residual risk the hazard control brings. Unfortunately, there is no standard method to demonstrate that the hazard control trade-off will meet ALARP. However, some of the following have been successfully used ... 

From review of the costs of each of the potential design improvements, it is apparent that there is only one candidate whose estimated cost is below the benefit threshold derived above, and thus requires an individual cost-benefit analysis self-actuating containment isolation valves would cost 22,000. However, the next three cheapest options have also been subjected to an individual cost-benefit analysis, in order to provide confidence that the ALARP case is robust and not susceptible to challenge that the cost estimates on which it is based are inaccurate or that the gross disproportion factor is still too small. 

However, generally speaking cost-benefit analysis used in law enforcement and crime prevention policies is still rather simple and usually takes only some of the outcomes into account (European Commission, 2004). Moreover, after the terrorist attack of 9/11 there has been much focus on preventing or mitigating damage and causalities caused by terrorist activities. A key issue is whether the investment in counter-terrorism devices is well spent in a manner that optimizes public safety in a cost-effective manner. However, to compare costs and benefits requires the quantification of threat probability. Threat prob-abflity is the likelihood that a threat will occur. The formulas mentioned above do not include the issue of risk assessment or address the quantification of security risks (e.g., Stewart et al. 2006 Stewart and Netherton 2008 Dillon et al. 2009 Cox 2009). This is a challenging task, but necessary for probabilistic terrorism risk assessment. In next section, we will discuss the detail formulation of the net benefit of a security measure. 

An in-depth assessment from first principles and a cost-benefit analysis are not needed for every job. The extent of consideration should match the nature of the hazard and the extent and uncertainty of the risk and the measures necessary to avert it. In many cases it will be sufficient to identify and comply with the appropriate regulations. However, with hindsight (e.g. after an event) others may challenge actions/ decisions, and an engineer may have to establish the facts in the face of a hostile situation. Ultimately, a decision may have to be defended on judgement and so, particularly where decisions or recommendations are finely balanced, the consideration should be documented and, if possible, corroborated. 

Ergonomic projects that performed economic analysis, explaining also, why these are usually of poor quality. One reason is that there are few practical guides about costs and benefits of interventions other is the shortage of available information in the organizations. These hindrances represent major technical challenges that result in serious difficulties to obtain useful and reliable information. 

---