Life Cycle Cost Analysis for Bridges In Search of Better Investment and Engineering Decisions

What is Life Cycle Cost? An economic analysis procedure that uses engineering inputs Compares competing alternatives considering all significant costs Expresses results in equivalent dollars (present worth) An economic analysis procedure that uses engineering inputs Compares competing alternatives considering all significant costs Expresses results in equivalent dollars (present worth)

Cost Considerations Maintenance and Inspection Cost Initial Cost Costs Present Worth Years Rehabilitation Cost Salvage Value Salvage Costs

Present Worth Analysis Discounts all future costs and benefits to the present: t=n PW = FC +  pwf [MC+IC+FRC+UC] + pwf [S] t=0 Discounts all future costs and benefits to the present: t=n PW = FC +  pwf [MC+IC+FRC+UC] + pwf [S] t=0 FC = First (Initial) Cost t= Time Period of Analysis MC = Maintenance Costs IC = Inspection Costs FRC = Future Rehabilitation Costs UC= Users Costs S= Salvage Values or Costs pwf = Present Worth Factor FC = First (Initial) Cost t= Time Period of Analysis MC = Maintenance Costs IC = Inspection Costs FRC = Future Rehabilitation Costs UC= Users Costs S= Salvage Values or Costs pwf = Present Worth Factor

First (Initial) Cost Initial cost of structure Incentive/disincentive payments should not be included since they would reflect user benefits or costs prior to structure going into service Initial cost of structure Incentive/disincentive payments should not be included since they would reflect user benefits or costs prior to structure going into service

Time Period of Analysis Normally equal for all alternatives Should include at least one major rehabilitation –Needed to capture the true economic benefit of each alternative Bridge design today is based on a probabilistic model of 100 years Normally equal for all alternatives Should include at least one major rehabilitation –Needed to capture the true economic benefit of each alternative Bridge design today is based on a probabilistic model of 100 years

Maintenance Costs Annual cost associated with the upkeep of the structure Information is difficult to obtain for a given project Cost varies on the basis of size of the structure (sqft) Best Guess Values –Frequency - Annual –Concrete0.05 % of Initial Cost –Structural Steel0.05 % of Initial Cost Annual cost associated with the upkeep of the structure Information is difficult to obtain for a given project Cost varies on the basis of size of the structure (sqft) Best Guess Values –Frequency - Annual –Concrete0.05 % of Initial Cost –Structural Steel0.05 % of Initial Cost

Inspection Costs Requirements set forth in the National Bridge Inspection Standards (23 CFR 650.3) Occurs for all alternatives every two years Cost varies on the basis of size of the structure (sqft) and by construction material Best Guess Values –Frequency - Biannual –Concrete0.15 % of Initial Cost –Structural Steel0.20 % of Initial Cost Requirements set forth in the National Bridge Inspection Standards (23 CFR 650.3) Occurs for all alternatives every two years Cost varies on the basis of size of the structure (sqft) and by construction material Best Guess Values –Frequency - Biannual –Concrete0.15 % of Initial Cost –Structural Steel0.20 % of Initial Cost

Future Painting Costs Only applies to structural steel structures but excludes weathering steel Should occur every 20 years Cost varies on the basis of size of the structure (sqft) Best Guess Values –Frequency – every 20 years –Concrete0.0 % of Initial Cost –Structural Steel7.0 % of Initial Cost Only applies to structural steel structures but excludes weathering steel Should occur every 20 years Cost varies on the basis of size of the structure (sqft) Best Guess Values –Frequency – every 20 years –Concrete0.0 % of Initial Cost –Structural Steel7.0 % of Initial Cost

Future Rehabilitation Costs The frequency is not only a function of time but also the growing traffic volume and the structural beam system Cost varies on the basis of size of the structure (sqft) and structural beam system Best Guess Values –Frequency First occurrence – Concrete 40 years First occurrence – Structural Steel 35 years Annual traffic growth rate.75 % (shortens rehab cycles) –Concrete20.0 % of Initial Cost –Structural Steel22.0 % of Initial Cost The frequency is not only a function of time but also the growing traffic volume and the structural beam system Cost varies on the basis of size of the structure (sqft) and structural beam system Best Guess Values –Frequency First occurrence – Concrete 40 years First occurrence – Structural Steel 35 years Annual traffic growth rate.75 % (shortens rehab cycles) –Concrete20.0 % of Initial Cost –Structural Steel22.0 % of Initial Cost

Salvage Value/Costs Occurs once at end of life of structure Difference between –Removal cost –Salvage value Best Guess Values –Removal cost 10 % of Initial Cost –Salvage Value – Concrete - 0 % of Initial Cost –Salvage Value – Structural Steel - 2 % of Initial Cost Occurs once at end of life of structure Difference between –Removal cost –Salvage value Best Guess Values –Removal cost 10 % of Initial Cost –Salvage Value – Concrete - 0 % of Initial Cost –Salvage Value – Structural Steel - 2 % of Initial Cost

Users Costs For early construction completion, maintenance and rehabilitations only Delay-of-use Time delay Fuel consumption Driver discomfort Vehicle operating costs Accidents For early construction completion, maintenance and rehabilitations only Delay-of-use Time delay Fuel consumption Driver discomfort Vehicle operating costs Accidents

Users Costs Pros –Users pay for transportation system –Drives the results Cons –Owner can not recoup costs –Not in my budget –Drives the results Pros –Users pay for transportation system –Drives the results Cons –Owner can not recoup costs –Not in my budget –Drives the results

Users Costs Driver Delay Costs: DDC = (L/S a -L/S n ) x ADT x N x w L = Length of affected road way S a = Traffic speed during maintenance activity S n = Normal traffic speed ADT= Average daily traffic (vehicles per day) N = number of days of maintenance activity w= Hourly time value of drivers Driver Delay Costs: DDC = (L/S a -L/S n ) x ADT x N x w L = Length of affected road way S a = Traffic speed during maintenance activity S n = Normal traffic speed ADT= Average daily traffic (vehicles per day) N = number of days of maintenance activity w= Hourly time value of drivers

Users Costs Vehicle Operating Costs: VOC = (L/S a -L/S n ) x ADT x N x r L = Length of affected road way S a = Traffic speed during maintenance activity S n = Normal traffic speed ADT= Average daily traffic (vehicles per day) N = number of days of maintenance activity r= weighted-average vehicle cost Vehicle Operating Costs: VOC = (L/S a -L/S n ) x ADT x N x r L = Length of affected road way S a = Traffic speed during maintenance activity S n = Normal traffic speed ADT= Average daily traffic (vehicles per day) N = number of days of maintenance activity r= weighted-average vehicle cost

Users Costs Accident Costs: AC = L x ADT x N x (A a -A n ) x c a L = Length of affected road way ADT= Average daily traffic (vehicles per day) N = number of days of maintenance activity A a = Accident rate during maintenance activity A n = Normal accident rate c a = Cost per accident Accident Costs: AC = L x ADT x N x (A a -A n ) x c a L = Length of affected road way ADT= Average daily traffic (vehicles per day) N = number of days of maintenance activity A a = Accident rate during maintenance activity A n = Normal accident rate c a = Cost per accident

Present Worth Factor 1 pwf = (1 + i) n 1 pwf = (1 + i) n pwf= Present Worth Factor for discount rate i and year n i= Discount rate n= Number of years when cost (benefit) will occur pwf= Present Worth Factor for discount rate i and year n i= Discount rate n= Number of years when cost (benefit) will occur

Discount Rate Interest - Inflation i = 1 + Inflation Interest - Inflation i = 1 + Inflation Interest – The return of an investment that raises the future value of an invested dollar Inflation – The erosion of a dollar’s value that raises any future expenses Use of a discount rate allows for the use of constant dollars in the analysis Interest – The return of an investment that raises the future value of an invested dollar Inflation – The erosion of a dollar’s value that raises any future expenses Use of a discount rate allows for the use of constant dollars in the analysis

Process And Approach Limits Government does not invest money to gain cash benefits (interest) Government money is generally invested only in depreciating assets Anything not bought this year costs more next year (inflation) Government does not invest money to gain cash benefits (interest) Government money is generally invested only in depreciating assets Anything not bought this year costs more next year (inflation)

A Spreadsheet Tool The following Microsoft Excel Spreadsheet allows for the manipulation of Life Cycle Cost data LCC Analysis-ver4.xls The following Microsoft Excel Spreadsheet allows for the manipulation of Life Cycle Cost data LCC Analysis-ver4.xls

Questions? Thank you for your Attention!