Decisions on whether to modify the seismic performance of an existing building may depend on the comparative economic consequences of the approaches under consideration. The measures of economic consequences assessed include bene®t±cost ratio, probable maximum loss, and insurance payments with different deductibles. These measures are applied to a three building complex of welded steel moment frames. Fourteen different repair schemes for the damaged buildings were evaluated for a typical Los Angeles site. The repair and retro®t approaches include: repair to former condition; modify the connections; modify the structural system with braces or shear walls; and, add dampers. The evaluation indicates that for the speci®c buildings some repair and modi®cation approaches are cost±bene®cial, depending on the time period and interest rate assumptions. The preferred options were then examined for PML and insurance indicators of economic impact. Many ®nancial institutions require the probable maximum loss to be less than a threshold number andaor that insurance be purchased to be considered for ®nancing. A PML analysis indicates that only some of the options should be considered further. The best of the near cost±bene®cial options reduced the PML by a factor of two. If insurance was bought for a 5-year term, then repairing the buildings to their former condition yields a 19Á5% probability of an insurance loss (damage less the amount deductible) being paid in the 5-year period, with a median payment of 6%, and a 10% probability of a payment more than 17%. Modifying the structural system in the most costeffective manner yields a 5Á2% probability of an insurance loss being paid in the 5-year period, with a median payment of 5%, and a 10% probability of a payment more than 15%. The analysis indicates that the key question in making such assessments is whether earthquake insurance is purchased or not. If insurance costs are included in the economic analysis, then more of the approaches to repair are cost effective than if not. # 1998 John Wiley & Sons, Ltd.
(1) Bene®t±cost analysis that re¯ects the discounted present value. It is an expected value approach that treats all losses equivalently, and could be characterized as a balanced criterion. (2) Probable maximum loss analysis. It is a minimize your maximum regret type criterion.
(3) An insurance analysis that includes both the bene®t±cost analysis of discounted present value costs and PML limitation on losses.