ABSTRACT
Extreme natural hazards impact infrastructure systems, causing economic losses and environmental problems, affecting well-being and quality of life. During the last decades, the public and private sectors have focused on developing approaches to manage infrastructure capable of accommodating changes in demand and responding efficiently to uncertain damaging events. This paper presents a new strategy to assess the financial value of incorporating flexibility. First, the paper describes infrastructure systems as processes and briefly describes how to incorporate flexibility in design and management. Afterward, the paper reviews traditional approaches for the financial evaluation of infrastructure throughout its lifetime and offers a proposal based on the Decoupled Net Present Value (DNPV). Finally, the proposed method is illustrated by three different infrastructure management approaches. The results indicate that the DNPV is a better indicator of the system’s financial performance. Besides, financial validation strengthens the value of flexible systems over standard design and construction strategies.
