1. Nina Manig Leibniz Universität Hannover Training financed by GIZ - BMZ
Exercise: Calculations on Economic Efficiency of DWWM and Water Reuse Systems
Nina Manig
Leibniz Universität Hannover
Training financed by GIZ - BMZ

2. Program today 9:15 – 10:45 Economic Efficiency of Water Reuse
Nina Manig (Leibniz Universität Hannover)
 Presentation of basics of engineering economics
11:15 – 12:00 Case Study: Reuse in Agriculture of the Northern Jordan Valley
Horst Reinhardt (GITEC Consult GmbH)
 Presentation of results from a case study
13:00 – 14:30 Exercise: Calculations on Economic Efficiency of DWWM and Water Reuse Systems
 Exercises in small groups

3. Project (example): Decentralized or centralized wastewater management in a rural area (DWWM or CWWM)
Question: Of the decision-relevant alternatives available, which would you recommend from an economic point of view?
Project example is based on DWA (2012): Leitlinien zur Durchführung dynamischer Kostenvergleichsrechnungen (KVR-Leitlinien), 8. überarbeitete Auflage
Note: The project example do not imply universal validity or across-the-board applicability. Purely mechanistic transfer of the sample calculation is not recommended.

4. 1. Project definition
In a rural area with 45 houses a wastewater management system is to be planned and designed.
With an assumed number of inhabitants per house of 3 inhabitants, the rural area has 135 PE.
A significant increase of the population is not expected.
There is a receiving water.
There are no special requirements regarding the treatment performance.

5. 2. Description of project alternatives
There are three decision-relevant alternatives under discussion:
Alternative 1:
Decentralized system with the
use of septic tanks Septic tanks (biological treatment) will
be build close to each house with a
minimum design capacity of 4 PE/housing
unit greater than 50 m² resulting in a
treatment capacity of 180 PE.
Additionally, connecting pipes
(average length = 25 m) have to be
build but no further transport sewers
have to be build.

6. 2. Description of project alternatives
There are three decision-relevant alternatives under discussion:
Alternative 2:
Centralized system with a pond system A sewer system will be build to transport the
wastewater into a pond system
(with aeration) outside the village.
The pond will be build with
a capacity of 150 PE.
Aerated pond system

7. 2. Description of project alternatives
There are three decision-relevant alternatives under discussion:
Alternative 3:
Connection to an existing WWTP A sewer system and a connecting
gravity pipe (ca. 50 km) will be build
to transport the wastewater to an
existing WWTP (45,000 PE).
There is no upgrade of the WWTP
necessary, but parts of the
reinvestment costs (for 135 PE) will be incurred.
ca. 50 km
Existing WWTP

8. 2. Description of project alternatives
A1: Decentralized system with septic tanks
A2: Centralized system with a pond system
A3: Connection to an existing WWTP
ca. 50 km
Existing WWTP
Aerated pond system

9. 3. Applicability of the cost comparison method
The three alternatives A1, A2, A3 ensure the wastewater treatment of the small village.
All alternatives have different cost structures:
A1 has low investment costs, but high operational costs.
Compared to A1, A2 and A3 have low operational costs but significant higher investment costs.
The treatment facilities of the three alternatives have different lifetimes resulting in different reinvestments.
Dynamic cost comparison method can be used to determine the most advantageous solution in relation to costs out of the three decision-relevant alternatives having the same use!
Here: Calculation and comparison of project cost present values

10. 4. Cost finding
Investment costs of all alternatives are determined on the basis of already completed and comparable constructions and specific costs (divided in structural/construction engineering and mechanical/electro-engineering)
Operational costs are mainly personnel, maintenance, energy and sludge disposal costs.

11. Alternative 1 Septic tanks Alternative 3 Existing WWTP
4. Cost finding
Cost category
Alternative 1 Septic tanks
Alternative 2
Pond system
Alternative 3 Existing WWTP
Investment costs
Sewer system -
302,250 EUR
947,750 EUR
Treatment facilities (construction)
244,500 EUR
150,000 EUR
later additional reinvestments
(40,500 EUR)
Mechanical/electro engineering
90,000 EUR
Sum investment costs
334,500 EUR
602,250 EUR
Running costs
Operational costs
27,000 EUR/a
9,100 EUR/a
6,550 EUR/a
Sum running costs

12. 5.1 Calculation parameters
Average lifetimes of different plant components have been set to:
50 years for gravity sewers and connecting transport pipe
25 years for septic tanks, pond system, existing WWTP (part of reinvestment costs will be incurred)
12.5 years for mechanical and electro technical equipment
The period of analysis spans 50 years.
Investment period is one year; reference point for the determination of present values is the commissioning date of the plants at the end of the investment year.
Interest rate:
Group 1: i = 2.0 % (0.02) in p.a.
Group 2: i = 3.0 % (0.03) in p.a.
Group 3: i = 5.0 % (0.05) in p.a.

13. 5.2 Calculation of project cost present values
Exercises:
Plot cost series (cash flow diagram) for each alternative
Use cost conversion factors to:
convert one individual cost item (= investment and re- investment costs) into a cost present value
convert of uniform cost series (= running costs) into a cost present value
Calculate the of overall project cost present value for each alternative and compare the results
 Which alternative would you recommend from an economic point of view?

14. Results: Cost series of all alternatives
A1: Decentralized system with septic tanks
90,000 EUR
244,500 EUR
90,000 EUR
90,000 EUR
90,000 EUR
244,500 EUR
27,000 EUR/a
12.5
Years
37.5 25 50
Reference point

15. Sought: Present value of cost item
Conversion factors
Conversion of one individual cost item into a cost present value
DFACIC - Discounting FACtor for an Individual Cost item
Reference point
Given: Individual cost item
Sought: Present value of cost item 1 n
Years 2
DFACIC (i, n) = 𝟏 𝟏+𝐢 𝐧

16. Sought: Present value of the cost series
Conversion factors
Conversion of uniform cost series into a cost present value
DFACS - Discounting FACtor for uniform Series
Reference point
Sought: Present value of the cost series 1 n
Years 2
n-1
Given: n equal cost items
DFACS (i, n) = 𝟏+𝐢 𝐧 −𝟏 𝒊∙ 𝟏+𝐢 𝐧

17. Results: Cost series of all alternatives
A2: Centralized system with a pond system
150,000 EUR
150,000 EUR
150,000 EUR
150,000 EUR
150,000 EUR
150,000 EUR
302,250 EUR
9,100 EUR/a
12.5
Years
37.5 25 50
Reference point

18. Results: Cost series of all alternatives
A3: Connection to an existing WWTP
947,750 EUR
40,500 EUR
6,550 EUR/a
12.5
Years
37.5 25 50
Reference point

19. Results: Cost present values (rounded)
A1: Decentralized system with septic tanks
Cost category
i = 2 %
i = 3 %
i = 5 %
Conversion factor /Present value
Conversion factor / Present value
Investment costs
334,500 EUR
Reinvestment after 12.5 a
90,000 * DFACIC (i, 12.5)
70,300 EUR
62,200 EUR
48,900 EUR
Reinvestment after 25 a
334,500 * DFACIC (i, 25)
203,900 EUR
159,800 EUR
98,800 EUR
Reinvestment after 37.5 a
90,000 * DFACIC (i, 37.5)
42,800 EUR
29,700 EUR
14,400 EUR
Operational costs
27,000 * DFACS (i, 50)
848,400 EUR
694,700 EUR
492,900 EUR
Project present value
1,499,900 EUR
1,280,900 EUR
989,500 EUR

20. Results: Cost present values (rounded)
A2: Centralized system with a pond system
Cost category
i = 2 %
i = 3 %
i = 5 %
Conversion factor /Present value
Conversion factor / Present value
Investment costs
602,300 EUR
Reinvestment after 12.5 a
*DFACIC (i, 12.5)
117,100 EUR
103,700 EUR
81,500 EUR
Reinvestment after 25 a
300,000 * DFACIC (i, 25)
182,900 EUR
143,300 EUR
88,600 EUR
Reinvestment after 37.5 a
150,000*DFACIC (i, 37.5)
71,400 EUR
49,500 EUR
24,100 EUR
Operational costs
9,100 * DFACS (i, 50)
286,000 EUR
234,100 EUR
166,100 EUR
Project present value
1,259,700 EUR
1,132,900 EUR
962,600 EUR

21. Results: Cost present values (rounded)
A3: Connection to an exiting WWTP
Cost category
i = 2 %
i = 3 %
i = 5 %
Conversion factor /Present value
Conversion factor / Present value
Investment costs
947,800 EUR
Reinvestment after 25 a
40,500 * DFACIC (i, 25)
24,700 EUR
19,300 EUR
12,000 EUR
Operational costs
6,550 * DFACS (i, 50)
205,800 EUR
168,500 EUR
119,600 EUR
Project present value
1,178,300 EUR
1,135,600 EUR
1,079,400 EUR

22. Results: Cost comparison
Interest rate: 2 %
Alternative
Project cost present value
Relation in %
A1: Septic tanks
1,499,900 EUR
127 %
A2: Pond system
1,259,700 EUR
107 %
A3: Existing WWTP
1,178,300 EUR
100 %
Interest rate: 3 %
Alternative
Project cost present value
Relation in %
A1: Septic tanks
1,280,900 EUR
113.1 %
A2: Pond system
1,132,900 EUR
100 %
A3: Existing WWTP
1,135,600 EUR
100.2 %

23. Results: Cost comparison
Interest rate: 5 %
Alternative
Project cost present value
Relation in %
A1: Septic tanks
989,500 EUR
103 %
A2: Pond system
962,600 EUR
100 %
A3: Existing WWTP
1,079,400 EUR
112 %

24. Results Lower interest rate (< 3 %): A3 is more cost-effective.
Higher interest rate (> 3 %): A2 is more cost-effective.

25. Thank you for your attention!
Contact:
Nina Manig
Institute for Sanitary Engineering and Waste Management
Leibniz Universität Hannover