1. Life-Cycle Costing for Innovative Pavement Preservation Treatments
How to Know if the Investment is Worth It
David Hein, P.Eng.
Principal Engineer
Vice-President, Transportation
Pavement Preservation and Maintenance

2. Why Pavement Preservation?
Critical component of system preservation
Preserves the public’s Investment
Extends pavement service life
Saves $$$$
Pavement preservation is aimed at preserving the investment in our highway system, extending pavement life, and meeting user needs.
It can be better described as applying carefully selected surface treatments to maintain or extend the service life of the pavement
Pavement preservation does not include new or reconstructed pavements or any activity that significantly increases the structurally capacity of the pavement.
Pavement Preservation and Maintenance

3. Traditional Approach Allows deterioration to fair to poor conditions
Ride quality and structural
Rehabilitation strategy repairs damage
Clearly reactive, time consuming and costly
The traditional approach allows pavements to deteriorate to a point where it becomes fair to poor conditions. We measure these conditions typically using ride criteria and noting structural distress. At this point any rehabilitation strategy is time consuming and costly.
Pavement Preservation and Maintenance

4. Proactive Approach Applies low-cost preventive treatments
5 to 7 year life
Timing is critical
Good Condition
NO structural damage
A true preservation approach involves the application of a series of successful low cost preventive maintenance treatments that individually will last for several years.
The key is to apply the right treatment at the right time. This means applying it to the candidate pavement when it is still in good condition and there is no structural damage.
One structural damage has occurred then preventive maintenance treatments are of little value.
Applying PM treatments to unsuitable pavements has been its biggest barrier to gaining widespread acceptance for the PM concept.
Pavement Preservation and Maintenance

5. How to Select the Appropriate Treatment and Timing?
Evaluate the cost-benefit of including preventive maintenance treatments in the life-cycle of pavements in Ohio. This slide is just to show that there is a process in place.
Pavement Preservation and Maintenance

6. Better Informed Decisions
What is the condition of the existing pavement
What is the expected performance of the pavement
How will different treatments affect this performance
Right treatment for the Right pavement at the Right time
Pavement Preservation and Maintenance

7. Life-Cycle Cost Analysis Method
Analysis Period
Performance
Period
Remaining
Life
Condition
Cost
Remaining
Value
Time
Pavement Preservation and Maintenance

8. LCCA Framework Input variables and factors Analysis period
Treatment performance
Which costs to include (user costs?)
Discount rate
Residual or salvage value
Analysis methods
Economic analysis or formula
Computational approach (deterministic vs. probabilistic)
Pavement Preservation and Maintenance

9. Analysis Period
Time period used for comparing the costs of alternative design strategies
In general, analysis period
Should be long enough to reflect long-term cost differences of alternative designs
Should be long enough to incorporate at least one rehabilitation
Pavement Preservation and Maintenance

10. Conventional Performance
With additional data in 2006 and 2007, these costs will be reevaluated.
Pavement Preservation and Maintenance

11. Performance – 1 PM Treatment
With additional data in 2006 and 2007, these costs will be reevaluated.
Pavement Preservation and Maintenance

12. Establishing Service Life
For each design alternative, establish initial service life and subsequent M&R activities covering analysis period
Based on historical performance (survival analysis)
Engineering judgment for project-specific factors:
Environment/subgrade
Traffic loadings
Use of new materials/technologies
Pavement Preservation and Maintenance

13. Treatment Performance
Looking at the impact of a pavement preservation program only, this slide illustrates the impact of the pavement preservation program on the life-cycle of the pavement.
Pavement Preservation and Maintenance

14. Goal of Prediction Modeling
Pavement Preservation and Maintenance

15. Pavement Condition Needs
Pavement surface condition prior to PM treatment
Condition ratings immediately before treatment and since treatment
Other information that may affect PM treatment performance:
Pavement type
Age
Traffic
Subgrade
Pavement Preservation and Maintenance

16. Thin Overlay Flexible
The sections with PCR substantially below 70 in the year prior to the treatment were not used in the performance modeling
Pavement Preservation and Maintenance

17. Microsurfacing – Urban/Flex
Pavement Preservation and Maintenance

18. Ultra Thin Bonded Wearing Course– Composite
Long-term PCR for many sections not available because most were constructed since Ohio stated its PM program in 2001.
Pavement Preservation and Maintenance

19. Chip Seal Flexible Pavement
Because of the small number of sections in Tier 1, Tier 1 and Tier 2 projects were combined to develop the performance models. These models are preliminary and will be refined with additional data obtained over the next two years (may be even a change in functional form of the model).
Pavement Preservation and Maintenance

20. Thin Overlay Repairs/Flex
The high variability in data is a result of several factors including: materials, climate, traffic, support conditions, distress types of existing pavement, thickness of overlay, etc.
Pavement Preservation and Maintenance

21. Microsurfacing - Composite
In some cases very little PCR data was available to develop the models. With additional long-term data, these models can be developed over the next two years.
Pavement Preservation and Maintenance

22. Conventional Overlay
Pavement Preservation and Maintenance

23. Control - New Flexible
The high variability in data is a result of several factors including: materials, climate, traffic, support conditions, pavement structure, etc.
Pavement Preservation and Maintenance

24. The high variability in data is a result of several factors including: materials, climate, traffic, support conditions, pavement structure, etc.
Pavement Preservation and Maintenance

25. The high variability in data is a result of several factors including: materials, climate, traffic, support conditions, pavement structure, etc.
Pavement Preservation and Maintenance

26. Agency Costs Initial costs All upkeep costs
Residual or salvage value (negative cost)
When comparing alternatives, only cost items that differ need to be included
Examples of similar costs:
Shoulder construction
Routine maintenance
Subgrade preparation
Engineering and administrative costs
Pavement Preservation and Maintenance

27. User Costs (Not currently considered in Indiana)
Vehicle operating costs (VOC)
Depreciation
Fuel, oil
Maintenance and repair
Roadway-related vehicle depreciation
Time delay
Safety costs (property, injury, life)
Environmental cost (emissions, noise)
Discomfort costs
Pavement Preservation and Maintenance

28. Components of User Costs
User costs include
Delays
Vehicle operating costs (VOC)
Crash costs
Pavement Preservation and Maintenance

29. User Cost Influences User costs are directly related to:
Current and future traffic demand
Facility capacity
Timing, duration, and frequency of work zone restrictions
Detour route
Pavement Preservation and Maintenance

30. Work Zone Capacity When work zone capacity exceeds demand
User costs are manageable
More an inconvenience than cost
When demand exceeds work zone capacity
Conditions become forced flow
Queuing costs can account for 95 percent of user costs
Pavement Preservation and Maintenance

31. User Delay Costs
Crash costs between competing alternatives should not vary considerably
Vehicle operating costs will vary depending on vehicle type
Delay costs (ie, value of time) are extremely controversial
Pavement Preservation and Maintenance

32. $ Value Per Vehicle Hour
Value of Time
FHWA recommended value of time
21 to 24
22.31
Combination Trucks
17 to 20
18.54
Single-Unit Trucks
10 to 13
11.58
Passenger Vehicles
Range
Value
$ Value Per Vehicle Hour
Vehicle Class
Pavement Preservation and Maintenance

33. Discount Rate
Discount rate is a function of interest rate and inflation rate
The use of current dollars and real discount rate eliminates the effect of inflation
Pavement Preservation and Maintenance

34. How to Get Discount Rate?
Analysis of long-term trends in interest rates and associated inflation rates
Office of Economic Policy, is in the position to recommend “social discount rate”
FHWA recommendation is 3% to 5%
Pavement Preservation and Maintenance

35. Salvage value 1. Residual value
Net value from recycling of the pavement
Remaining life
Remaining life of the pavement at the end of the analysis period
Pavement Preservation and Maintenance

36. Remaining Life A B Serviceable life = x % of Treatment cost x % of L
Analysis period
Pavement Preservation and Maintenance

37. Analysis Methods Economic Analysis (Life-Cycle Cost)
Formula Analysis (Benefit/Cost Ratio)
Benefit = Area under Performance Curve (PCR vs. Age)
Cost = NPV
NPV = Net Present Value, $/m2
n = Time of future cost, years
i = Discount rate
Pavement Preservation and Maintenance

38. Example Deterministic LCCA
Without Preventive Maintenance
With Preventive Maintenance
Using crack sealing as an example, this simplified life-cycle cost analysis shows the positive benefit of adopting crack sealing for pavement preservation.
Savings = $ 2,910/km ~ 10 percent
Pavement Preservation and Maintenance

39. Example Deterministic LCCA
Using crack sealing as an example, this simplified life-cycle cost analysis shows the positive benefit of adopting crack sealing for pavement preservation.
Pavement Preservation and Maintenance

40. Cost Streams and Savings
Using crack sealing as an example, this simplified life-cycle cost analysis shows the positive benefit of adopting crack sealing for pavement preservation.
NPW Conventional = $140,523
NPW Preventive Maintenance = $ 131,297
Net Savings per two lane-km = $ 9,226 - (~7 percent)
Pavement Preservation and Maintenance

41. Larger Scale Evaluation
Analysis of the cost of performing various treatments (typical costs and variability)
Cost-effectiveness/cost-benefit of individual PM treatments
Evaluation of applicability of PM treatments, for roadway classes, age and surface condition
Pavement Preservation and Maintenance

42. Pavement Preservation and Maintenance

43. Pavement Preservation and Maintenance

44. Alternative Comparison – Chip Seal, Microsurfacing and NovaChip
Pavement Preservation and Maintenance

45. Alternative Comparison – Various Thin Overlays
Pavement Preservation and Maintenance

46. Probabilistic Methodology
Pre-defined statistical distributions for selected input parameters, based on historical data or assumptions
Hundreds of simulated total LCCs, based on randomly selected values of input parameters
Resulting frequency/cumulative distributions of life-cycle costs for alternative design strategies
Interpretation of results based on probabilities
Pavement Preservation and Maintenance

47. Probabilistic Approach
Identify the structure and logic of the problem
Quantify the uncertainty using probability
Perform simulation
Analyze and interpret results
Make a decision based on assessment of risk
Pavement Preservation and Maintenance

48. Structure and Logic Identify design alternatives
Develop life cycle maintenance plan
Confirm cash flow
Define variability (both certain and uncertain)
Costs
Treatment life
Discount rates, etc.
Pavement Preservation and Maintenance

49. Inputs Output Future M&R Life spans Pavement life span
Initial
Cost
Costs
Pavement
life span
1. Values randomly selected from each input sampling distribution
2. Life-cycle cost computation is performed
3. Process repeated many times
Projected
Life-Cycle Costs
Output
Inputs
Discount
Rate
Pavement Preservation and Maintenance

50. Probabilistic Approach
Deterministic LCCA treats all input values as discrete
However, most inputs have an element of uncertainty
Deterministic methods treat all inputs as means or best guesses
Pavement Preservation and Maintenance

51. Probabilistic Approach
Probabilistic methods allow for the introduction of risk
What can happen?
How likely is it to happen?
What are the consequences?
Pavement Preservation and Maintenance

52. How do we account for uncertainty?
Identify the input variability
ie, mean and standard deviation
Calculate what if scenarios
Monte Carlo simulation
Decisions can be made based on the probability of occurrence
Pavement Preservation and Maintenance

53. Uncertainty and Probability
Need to develop probability distributions
Numerous distributions to evaluate probability
Can be developed based on statistical analysis and goodness of fit of existing data
Can be developed based on expert opinion
Pavement Preservation and Maintenance

54. Probability Distribution Types
Pavement Preservation and Maintenance

55. Probability Distribution
Most commonly used in transportation life-cycle costing applications
Normal Triangular
mean
std dev
Probability
most likely
Pavement Preservation and Maintenance

56. Incorporating the Distribution
Can use existing spreadsheets
Addition of commercially available software, ie
@RISK
Crystal Ball
FHWA RealCost
Software programs add probability distribution functions and simulation techniques
Pavement Preservation and Maintenance

57. Simulation
Rigorous sensitivity analysis based on probability distribution variables
Iterates separate solutions based on random number sampling
Each iteration represents a possible solution
Iterative results are compiled and statistically analyzed
Pavement Preservation and Maintenance

58. Simulation Example
27.1 percent probability that conventional alternative will have lower cost than $131,297 – (value from deterministic)
Pavement Preservation and Maintenance

59. Simulation Example
49.5 percent probability that preventive alternative will have lower cost than $131,297 – (value from deterministic)
Pavement Preservation and Maintenance

60. Alternative Comparison
Preventative maintenance alternative always less expensive than conventional for modeling conditions
Pavement Preservation and Maintenance

61. Alternative Comparison
Preventive
Conventional
Probability that preventive maintenance alternative always less expensive than conventional for modeling conditions
Pavement Preservation and Maintenance

62. Interpretation of Results
Unlike deterministic method, lowest cost is not the only factor
Need to look at the likelihood of a particular outcome occurring
Histograms and cumulative risk profiles are convenient tools
Pavement Preservation and Maintenance

63. Probabilistic Including User Costs
Pavement Preservation and Maintenance

64. An easy-to-use computer program was developed for the Alliance following the FHWA guidelines. It has the ability to perform LCCA in either a probabilistic or deterministic mode for up to four alternatives. For the probabilistic analysis, information is required on the average and distribution of the discount rate, traffic growth and construction duration. When it is not possible to estimate these distributions, the deterministic mode may be used. The deterministic analysis is based upon the average value expected for the input data.
The four categories of information required to perform the LCCA include (mouse click for each)
1) general project information,
2) traffic data,
3) a description of each design alternative, and
4) the rehabilitation and maintenance data for each alternative.
After the analysis is performed, a complete report may be generated in Microsoft Excel and the results may be viewed immediately in a graphical output.
Pavement Preservation and Maintenance

65. One of the most important features of this program is its ability to give instantaneous feedback on user delay costs. Within the Work Zone Information, the program allows the user to specify the time of day for lane closures. Thus, night time operations can be evaluated against 24-hour closure scenarios.
In this example, a 12-hour night time work zone with a 24-day work period results in a user delay cost of about $80,000, while for the same input… (Go to next slide)
Pavement Preservation and Maintenance

66. Additional References
Pavement Preservation and Maintenance

67. Overall Goals and Benefits
Higher user satisfaction
Better informed decisions
Improved treatment performance
Increased safety
Cost saving
Improved pavement condition
Describe the overall goals and benefits of a pavement preservation program.
Pavement Preservation and Maintenance

68. Questions?
Pavement Preservation and Maintenance