A Contract Period Optimization Model for Water Saving Management Contract Project Based on Equipment Replacement

Wei Li, Xiaosheng Wang () and Qian Zhang
Additional contact information
Wei Li: Hebei University of Engineering
Xiaosheng Wang: Hebei University of Engineering
Qian Zhang: Universiti Sains Malaysia

Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), 2023, vol. 37, issue 14, No 16, 5725-5741

Abstract: Abstract Water saving management contract (WSMC) is a new water-saving strategy based on market mechanism. As a period for the water saving service company (WSSC) to provide funds and technology to water user, contract period is one of the key elements in WSMC projects. This paper attempted to establish a model to determine the optimal contract period based on equipment replacement. First, the performance degradation simulation of water-saving equipment was constructed based on degradation path model. Second, water-saving process simulation under equipment replacement was established based on measured renewal cycle of water-saving equipment. Third, a contract period optimization model for WSMC projects was built with the objective of maximizing WSSC profit net present value (NPV) and with constraints of water user incentive constraint, WSSC rational constraint, and minimal cooperation duration. Finally, a WSMC project case in China was studied and the solutions were compared with traditional model. The results showed that the optimal contract period in this paper was 3 years longer than the one in traditional model. Meanwhile, the measured equipment renewal cycle was 7 years and it was less than the estimated economic lifetime. Based on the 9-year contract, the water user’s revenue was higher with 55.8% than original contract, while WSSC’s profit loss was lower with 60.8% than the traditional results. The findings reveal that the implementation of an equipment replacement plan considerably boost the revenue of participants and assist WSSC in obtaining more profit.

Keywords: WSMC; Contract period; Equipment replacement; Optimization (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11269-023-03626-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:waterr:v:37:y:2023:i:14:d:10.1007_s11269-023-03626-6

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/11269

DOI: 10.1007/s11269-023-03626-6

Access Statistics for this article

Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA) is currently edited by G. Tsakiris

More articles in Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA) from Springer, European Water Resources Association (EWRA)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().