New Ulm Public Utility Commission: Using Capital Investment Decision Models to Justify a Well Water Alarm System

The New Ulm Public Utility Commission (“the Commission”) observed significant and costly failures in its well water radio-based alarm system (“radio system”). After meeting with key employees, the team consisting of Kris, the Utility Director, George, the Water Supervisor, and Beth, the Financial Manager, decided to investigate replacing the system with a cellular-based alarm system (“cellular system”). The team had collected all the necessary cost, savings, and required rates of return. Their task was to determine the cost feasibility of the project using various capital investment decision models, consider other qualitative factors and make a recommendation to the board of commissioners. The case provided a description of the organization and information revealing the nature of the project’s costs, savings, and required rates of return.