Engineering Risk-Benefit Analysis
Course facts
- Payment: Free, no certificate
- Credits: Non Credit
- Learning style: Self-paced, start anytime
- Resources: Lecture Notes; Problem Sets
MIT OpenCourseWare details
- As taught in: Spring 2007
- Department: Engineering Systems Division, Civil and Environmental Engineering, Mechanical Engineering, Materials Science and Engineering, Electrical Engineering and Computer Science, Chemical Engineering, Aeronautics and Astronautics, Nuclear Science and Engineering
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Reliability and probabilistic risk assessment, decision analysis and cost-benefit analysis for large engineering projects under uncertainty.
Large engineering projects, such as nuclear power reactors, the International Space Station and critical infrastructure, carry risks to safety, the environment and budgets that must be weighed before anyone builds. This course teaches three methods for deciding under that kind of uncertainty: reliability and probabilistic risk assessment, decision analysis, and cost-benefit analysis. Each is taught with its assumptions and practical limits in view, along with how formal analysis is used in public decisions.
What You Will Achieve
- Model component and system reliability with probability distributions and availability
- Carry out a probabilistic risk assessment and use it in risk management
- Build a multistage decision model and compute the value of perfect information
- Compare project alternatives with cost-benefit analysis, including uncertainty and the time value of money
Program Overview
Reliability and Risk
Probability and statistics applied to how systems fail.
- The logic of certainty and elements of probability theory
- Probability distributions and availability
- Data and epistemic uncertainties
- Probabilistic risk assessment and risk management
Deciding Under Uncertainty
Choosing rationally when outcomes are uncertain.
- The multistage decision model
- The value of perfect information
- Axioms of rational behavior, utility and risk aversion
- Multiattribute utility theory
Weighing Costs and Benefits
Weighing alternatives over time, including public projects.
- Background and fundamental premises
- The time value of money and bases for comparison
- Including uncertainty
- Evaluating public activities
Course Completion
Job Outlook
These methods are used in safety and reliability engineering, project appraisal, infrastructure planning and regulatory risk analysis.
Good for: Engineers and system managers who need to weigh safety, cost and uncertainty in one framework.
Keep in mind: A spring 2007 course: the materials are lecture notes and problem sets drawn from the reference texts, while the guest lectures and weekly tutorials were held on campus.
Bottom line: Three decision tools for risky engineering projects, taught with their assumptions and limits on the table.
Frequently Asked Questions
Which books does the course draw on?
There is no single textbook. The problem sets come from reference texts, among them Hoyland and Rausand on system reliability, Clemen's Making Hard Decisions, and Thuesen and Fabrycky's Engineering Economy.
Where do the decision analysis notes come from?
They draw on the 1978 course manual Decision Analysis by Alvin Drake and Ralph Keeney, and the cost-benefit notes come from material first developed by Amedeo Odoni.
Which projects does it use as examples?
The issues it addresses include nuclear power reactors, the International Space Station, critical infrastructure, new product development, processes with environmental externalities and infrastructure renewal.
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