Life-Cycle Cost Analysis

Life-Cycle Cost Analysis Required by National Highway System (NHS) Designation Act of 1995 Removed by Transportation Equity Act of the 21st Century (TEA-21) of 1998 FHWA still encourages LCCA National Highway System Designation Act of 1995 The legislation designates the National Highway System (NHS), developed by the Department of Transportation (DOT) in cooperation with the states, local officials, and metropolitan planning organizations (MPOs). DOT proposed the system to Congress on Dec. 9, 1993, as required by the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). The system approved by Congress reflects modifications agreed upon by DOT and Congress as of Nov. 13, 1995. The total mileage is about 260,000 kilometers (160,955 miles) and includes the Interstate Highway System, as well as other roads important to the nation's economy, defense, and mobility. ISTEA set a deadline of Sept. 30, 1995, for Congress to establish the system. Until the system was designated, the law prevented future NHS and Interstate Maintenance (IM) funds from being released to the states. With the enactment of the NHS legislation, the $5.4 billion of fiscal year (FY) 1996 funds were distributed to the states. (From Public Roads, Spring 1996, v.49, No. 4).

Life-Cycle Cost Analysis Purpose Determine total cost or value of an item over its entire life-cycle Decision support tool Legislatively defined: “. . . a process for evaluating the total economic worth of a usable project segment by analyzing initial costs and discounted future cost, such as maintenance, user, reconstruction, rehabilitation, restoring, and resurfacing costs, over the life of the project segment.” A usable project segment is defined as a portion of a highway that, when completed, could be opened to traffic independent of some larger overall project.

General Procedure Initial strategy & analysis decisions Analysis period (at least 35 years) Alternative pavement design strategies Pavement performance over time Maintenance/rehabilitation timing

General Procedure Agency costs Preliminary engineering Contract administration Initial construction Construction supervision Maintenance Rehabilitation Administrative Salvage value

General Procedure User costs Normal operation Work zone Types of user costs Vehicle operating User delay crash

VOC: The Cost or Roughness Papagiannakis and Delwar (2001)  1 m/km =  $200/yr for maint. & repair =  1.7 cents/mile Barnes and Langworthy (2003) IRI (inches/mile) % VOC Increase 170 + 25% 140 15% 105 5% 80 0% Barnes, G. and Langworthy, P. (2003). The Per-Mile Costs of Operating Automobiles and Trucks. Report No. Mn/DOT 2003-19. Papagiannakis, T. and Delwar, M. (2001). Computer model for life-cycle cost analysis of roadway pavements. Journal of computing in civil engineering, Vol. 15, No. 2, pp. 152-156.

VOC Assuming IRI = 80 inches/mile 56.1 cents/mile 25.2 cents/mile 18.3 cents/mile Data from Barnes and Langworthy (2003)

VOC Assuming IRI = 140 inches/mile 64.5 cents/mile 31.3 cents/mile 24.0 cents/mile Data from Barnes and Langworthy (2003)

VOC Assuming IRI = 170 inches/mile 70.1 cents/mile 34.0 cents/mile 26.1 cents/mile Data from Barnes and Langworthy (2003)

VOC vs. Roughness

General Procedure Alternative comparison Net present value (NPV) Equivalent uniform annual costs (EUAC) i = discount rate n year of expenditure Present value (PV) factor i = discount rate n Analysis period (the number of years into the future over which you wish to compare projects)

General Procedure Analyze results Sensitivity analysis Probability (or “risk”) analysis

What is NOT Considered Environmental impacts Equity impacts Energy use Emissions Waste Equity impacts Connectivity Congestion Community LCA of the CEE 404 Final Project Options (from Weiland 2008) 30-40% waste is typical – most is from manufacturing and end-of-life disposal (assumptions can be debatable)

What is NOT Considered Environmental impacts Equity impacts Energy use Emissions Waste Equity impacts Connectivity Congestion Community LCA of the CEE 404 Final Project Options (from Weiland, 2008) 30-40% waste is typical – most is from manufacturing and end-of-life disposal (assumptions can be debatable)

General Assumptions Both pavements built at same time Same traffic on each pavement Same user costs between construction activities VOC is the same Implies road roughness is the same Maintenance/rehabilitation activities are scheduled such that user costs are the same Implies some unlikely activities must be scheduled Differences will be in… Construction costs User delay costs during construction Salvage value

Be Careful of Assumptions SR 704, Cross-Base Highway Project Estimated Cost $318 million Current Funding $43 million

Be Careful of Assumptions SR 704: HMA Alternative

Be Careful of Assumptions SR 704: PCC Alternative

Other Life-Cycle Cost Study Pitfalls Not accounting for user costs Traffic delay during construction VOC due to differing roughness Differences in salvage value Maintenance/rehabilitation timing See APA synthesis by Villacres (February 2005): Pavement Life-Cycle Cost Studies Using Actual Cost Data These items are often not appropriately accounted for because studies tend to look at actual historical costs. These costs usually don’t involve user costs and almost certainly do not account for maintenance and rehabilitation practices that would result in users incurring comparable VOC between pavement sections .

I-71 in Ohio: Present Worth in 1960 of Total Contract Costs (using a 5% discount rate) Commissioned by Flexible Pavements of Ohio Did not account for user costs From Gibboney. (1995). Flexible and Rigid Pavement Costs on the Ohio Interstate Highway System

I-70 in Kansas: Total Costs per 4-Lane Mile in 2001 Dollars Did not account for user costs Did not account for KDOT maintenance work (negligible) From Cross and Parsons. (2002). Evaluation of Expenditures on Rural Interstate Pavements in Kansas

I-80, Iowa County, Iowa: Total Cumulative (Life-Cycle) Costs Did not account for user costs Did not account for routine maintenance costs Did not account for salvage values From Asphalt Paving Association of Iowa. (1998). Iowa Interstates: A Look at Performance and Costs

40-Year Life-Cycle Cost Analysis Commissioned by the Portland Cement Association Did not account for user costs ? From Waalks. (n.d.). Life Cycle Cost Analysis: A Guide for Comparing Alternative Pavement Designs

Michigan: Average Overall Cost per Lane-km per Year From Waalks. (n.d.). Life Cycle Cost Analysis: A Guide for Comparing Alternative Pavement Designs

WSDOT Interstate Pavements time to first rehabilitation

ODOT Interstate Pavements time to first rehabilitation

WSDOT Interstate Pavements 2004 roughness (IRI)

ODOT Interstate Pavements 2004 roughness (IRI)

WSDOT Pavement Type Selection

Issues to Address Pavement design Life cycle Engineering Will foundation support PCC? Life cycle Is LCCA difference less than 15%? Engineering Is there a preferred alternative?

WSDOT LCCA Sets standard procedure and assumptions Only consider differential factors Uses NPV Gives values for user cost Sets analysis periods 50 years for Interstate or Principal Arterial 20 years for Minor Arterial or Major Collector Formal process for determining pavement type

Primary References Walls, J. and Smith, M.R. (1998). Life-Cycle Cost Analysis in Pavement Design. Report No. FHWA-SA-98-079. FHWA, Washington, D.C. http://www.dot.state.oh.us/gasb34/FHWAAsset_Management+GASB_34/eei team/DP115TechBulletin.pdf WSDOT. (2005). Pavement Type Selection Protocol. http://www.wsdot.wa.gov/biz/mats/pavement/Technotes/PTSP_Jan2005.pdf