Using Cost Benefit Analysis to Evaluate Water/Wastewater Treatment Capacity

The challenges of cost-benefit analysis (CBA) are often misunderstood as a viable decision-making tool. Forthis Assignment, you examine the value of CBA.Using the Resources provided this week, and after reading the scenario, it is your responsibility to convinceothers of the value of using cost-benefit analysis.To prepare:Read the following scenario:You are the city manager of a municipality of 250,000 citizens located in a county with 250,000 more residentsliving in unincorporated areas surrounding the city. Recently, a large automaker announced its plans to locatean assembly plant in the unincorporated area of the county. The new facility is expected to bring new growth tothe city and county.Through a joint service agreement with the county, the city furnishes water to all county residents and isexpecting to provide service to the new auto plant. Historically, the user rates charged to county residentsresiding outside the city have been substantially higher than those charged to city residents. As a result of thehigher user fees, the provision of water to unincorporated areas has been a source of revenue for the city.The city’s main water treatment plant is over 40 years old and is operating near capacity. Also, themaintenance costs of the plant are starting to increase at an alarming rate. With the anticipated new demand formore water, the city needs to make a decision about expanding its water treatment capacity.The mayor and council are looking for guidance on how to determine the best way to increase the city’s watertreatment capacity. The mayor is a former military officer and is familiar with the U.S. Army’s approach to cost-benefit analysis. The mayor is trying to convince her fellow councilmembers that the city needs to develop acost-benefit analysis to determine the best course of action. You agree with the mayor’s approach to decisionmaking; however, some older members of the council have some doubts about the use of cost-benefit analysisas a decision-making tool. The cost-benefit doubters claim that they are elected to make decisions for the city,and they do not want to relinquish their decision-making responsibilities to some opaque operations researchtechnique that the average citizen could not possibly understand. In order to convince the council of the valueof cost-benefit analysis, the mayor has asked you to:By Day 7Write a 5-page memorandum addressing the first four steps in the U.S. Army Cost-Benefit Analysis Guide asthey relate to the city’s need to increase its water treatment capacity.

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