Assignment (4–6 pages, not including reference and title pages)
Write a memorandum in which you address the first four steps described in the U.S. Army Cost Benefit Analysis Guide as they relate to the city’s need to increase its water treatment capacity.
Note: For Step 4, you do not need to actually develop cost estimates. Instead, please provide guidance on how you might go about deriving estimates.
• Review the first four steps described in the U.S. Army Cost Benefit Guide from this week’s Learning Resources.
• Read the scenario provided and consider the value of applying cost benefit analysis to address the scenario.
You are the city manager of a municipality of 250,000 citizens located in a county with 250,000 more residents living in unincorporated areas surrounding the city. Recently, a large automaker announced its plans to locate an assembly plant in the unincorporated area of the county. The new facility is expected to bring new growth to the city and county.
Through a joint service agreement with the county, the city furnishes water to all county residents and is expecting to provide service to the new auto plant. Historically, the user rates charged to county residents residing outside the city have been substantially higher than those charged to city residents. As a result of the higher user fees, providing water to unincorporated areas has been a source of revenue for the city.
The city’s main water treatment plant is more than 40 years old and is operating near capacity. Also, the maintenance costs of the plant are starting to increase at an alarming rate. With the anticipated new demand of more 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 water treatment capacity. The mayor is a former military officer and is familiar with the U.S. Army’s approach to . The mayor is trying to convince her fellow councilmembers that the city needs to develop a cost benefit analysis to determine the best course of action. You agree with the mayor’s approach to decision-making; however, some older members of the council have some doubts about the use of cost benefit analysis as 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 research technique that the average citizen could not possibly understand. In order to convince the council of the value of cost benefit analysis, the mayor has asked you to write a memorandum addressing the first four steps in the U.S. Army Cost Benefit Analysis Guide.