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  • Writer's pictureMayank Chadha, Ph.D.

An Alternative Approach to Quantify the Value of Information

Updated: Mar 15, 2023

Keyword: Optimal Sensor Design, Bayes Risk, Bayesian Inference, Uncertainty Quantification, Bayesian Optimization, Surrogate Modeling

Analogous to an experiment, a structural health monitoring (SHM) system may be thought of as an information-gathering mechanism. Gathering the information that is representative of the structural state and correctly inferring its meaning helps engineers (decision-makers) mitigate possible losses by taking appropriate actions (risk-informed decision-making). However, the design, research, development, installation, maintenance, and operation of an SHM system are an expensive endeavor. Therefore, the decision to invest in new information is rationally justified if the reduction in the expected losses by utilizing newly acquired information is more than the intrinsic cost of the information acquiring mechanism incurred over the lifespan of the structure. This article investigates the economic advantage of installing an SHM system for inference of the structural state, risk, and lifecycle management by using the value of information (VoI) analysis. Among many possible choices of SHM system designs (different information-gathering mechanisms), pre-posterior decision analysis can be used to select the most feasible design. Traditionally, the cost–benefit analysis of an SHM system is carried out through pre-posterior decision analysis that helps one evaluate the benefit of an experiment or an information gathering mechanism using the expected value of information metric. This study proposes an alternate normalized metric that evaluates the expected reward ratio (benefit/gain of using an SHM system) relative to the investment risk (cost of SHM over the lifecycle). The analysis of evaluating the relative benefit of various SHM system designs is carried out by considering the concept of the VoI, by performing pre-posterior analysis, and the idea of a perfect experiment is discussed.

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