SENSITIVITY ANALYSIS OF PUBLIC SECTOR PROJECTS -- WATER SUPPLY PLANS
 FIGURE 1.png)
 figure 2.png)
 figure 3.png)
 FIGURE 4.png)
1. Let x = weighting per factor
Since there are 6 factors and one (environmental considerations) is to have a weighting that is double the others, its weighting is 2x. Thus,
2x + x + x + x + x + x = 100
7x = 100
x = 14.3%
Therefore, the environmental weighting is 2(14.3), or 28.6%
2.
 ANSWER.png)
The top three are the same as before: 1A, 3, and 4
3. For alternative 4 to be as economically attractive as alternative 3, its total annual cost would have to be the same as that of alternative 3, which is $3,881,879. Thus, if P4 is the capital investment,
3,881,879 = P4(A/P, 8%, 20) + 1,063,449
3,881,879 = P4(0.10185) + 1,063,449
P4 = $27,672,361
Decrease = 29,000,000 – 27,672,361
= $1,327,639 or 4.58%
4. Household cost at 100% = 3,952,959(1/12)(1/4980)(1/1)
= $66.15
Decrease = 69.63 – 66.15
= $3.48 or 5%
5. (a) Sensitivity analysis of M&O and number of households.
Conclusion: Alternative 3 - optimistic is the best.
(b) Let x be the number of households. Set alternative 4 - optimistic cost equal to $65.10.
(3,910,754)/12(0.95)(x) = $65.10
x = 5270
This is an increase of only 40 households.
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