1. PRIORITIZATION

2. Instructional Objectives
Describe the objectives of a multi-year prioritization analysis
Understand the differences between other multi-year analysis techniques
Describe the components of a multi-year prioritization analysis
Understand the use of a multi-year prioritization analysis as part of an agency’s project selection process

3. Economics Analyses

4. Sophistication Optimization Prioritization Ranking Increasing Level of

5. ANALYSES ECONOMIC ANALYSES RANKING - SINGLE YEAR COST SUMMARY
MULTI-YEAR PRIORITIZATIONS
OPTIMIZATION
LIFE CYCLE COST ANALYSIS
P&E, CONST, ANNUAL MAINT, REHAB, SALVAGE
NET PRESENT WORTH OR EQUIVALENT UNIFORM ANNUAL COSTS
DISCOUNT RATE = INTEREST - INFLATION RATE - - - -

6. Ranking - SINGLE YEAR COST SUMMARY
ECONOMIC ANALYSES
Ranking - SINGLE YEAR COST SUMMARY
pavements are ranked in accordance with the ranking guidelines until the amount of money available for maintenance and rehabilitation projects is used up.
Easiest to Understand
Based on a single year’s needs
Determines a single year’s budget
Repeated each year
Ranked by:
Condition
Initial Cost
Cost and Timing
Life Cycle Cost
Benefit/Cost Ratio

7. Ranking Identify Pavement Needs Current Condition
Select Treatment and Estimated Cost from Rules
Match Ranked List
to Budget
Apply Rank by Criteria and Sort

8. Ranking Example

9. Results for $7 Million Budget
Sort by
Sort

10. Limitations To Ranking
Long-term impacts on network are not considered
Rate of deterioration is not considered
Economic analysis for alternative strategies not considered

11. Multi-Year Prioritization (MYP)
ECONOMIC ANALYSES
Multi-Year Prioritization (MYP)
A method of allocating limited resources in an efficient and cost-effective way over a multi-year period (2-10 year’s needs), through an evaluation of long-term impacts.
A PMS process or tool used to objectively identify the best combination of treatments and projects over a multi-year program.

12. MYP Analysis Requirements
Condition/ inventory information
Performance models
Treatment types, triggers, resets, costs, strategies/ conditions
Analysis tools

13. ECONOMIC ANALYSES
Multi-Year Prioritization (MYP)
Prioritization techniques use mathematical modeling tools to achieve the best combination of projects over the specified analysis period:
Pavement performance Models predict future condition and suggest timing of needed rehab
Projects are identified with need for Pavement Preservation, Minor Rehab, Major Rehab or Reconstruction
The most effective timing for the applying the appropriate treatment are identified
The predicted impact on the network over time for each combination of projects over a given analysis period.

14. Multi-Year Prioritization (MYP)
Current or
Predicted Condition
Select
Treatment and Timing
for Each Segment
Conduct
Analysis
Match Prioritized
List to Budget
Estimate Costs

15. Benefit/Effectiveness Calculation
Existing Pavement Performance
Apply Treatment
Benefit
Pavement Condition Index
Predicted Pavement
Performance
Trigger Limit
Age or Traffic Loads

16. Benefits Provided By MYP
ECONOMIC ANALYSES
Benefits Provided By MYP
Forecast future conditions
Analyze treatment timing options
Evaluate effectiveness of alternative strategy
Perform economic analyses
Use of objective measures for prioritizing needs
Project future budgets
Predict the impact of each combination of treatments and projects on the network over the given analysis period
Projects that provide the greatest benefit to the agency will have a higher priority in the program development process.

17. Effect of Treatment Timing on Costs
Typical Variation of Pavement Condition as a Function of Time

18. You never have enough fish!

19. Decision Benefits Provided By MYP
ECONOMIC ANALYSES
Decision Benefits Provided By MYP
Provide answers for the questions:
What Average Network condition will be reached for a given level of funding?
What budget is needed to reach or maintained a given level of condition?

20. Example Network Performance
Illustrates Policy Decisions
What are the average projected condition for the given Budget Levels?
Budget Scenarios

21. Example Network Performance
Illustrates Policy Decisions
What will it cost to maintain the current Condition Level?
Budget Scenarios

22. Pavement Preservation Strategies and Treatments
 Decision trees, featuring a series of branches that are selected based on overall condition, types of distress present, functional classifications, or other factors. Each branch eventually leads to the preferred treatment or family for a given set of conditions.
 Matrices, featuring tables that describe certain characteristics and the allowable ranges for particular levels of rehabilitation. The matrix may identify the preferred treatment or list a series of feasible alternatives that are considered further in terms of their effectiveness.
Rules, including a set of rules (equations) that specify particular treatments for certain conditions.

23. Considerations in Developing Decision Trees/ Matrices
Decision factors
Availability of data
Ability to predict conditions
Flexibility

24. Considerations in Developing Decision Trees/ Matrices
Decision trees lead to one or two possible treatments, although other treatments may be viable alternatives.
Consideration is not given to the effectiveness of one treatment over another or the benefit of one treatment over another.

25. Treatment Selection Decision Trees Treatment Family Preventive
Pavement Condition Index
Preventive
Maintenance
>4
Structural
Overlay
Asphalt
Pavement
Present
Condition
Load-Associated
Structural Deterioration
= 4 or below
Functional
Overlay
Not Present

26. Treatment Selection

27. Treatment Selection
Decision Matrix

28. Programmed Rules Outline criteria for selection of preferred treatment
Set treatment for condition range
Could be transferred into decision matrices or decision trees

29.  Programmed Rules (Pavement_Type = 'BC' or = 'CO') and
( (PCI >= 50 And PCI <= 70
And
OCI >= 60) or
(Skid_Value <= Skid_Trigger) or
(Avg_Rut>= 0.5 And Avg_Rut <= 1.0))
and OCI >= 55
Treatment Selection based on complex rules

30. Requirements for Developing a Treatment Strategy
A pavement strategy is a plan of action comprised of the application of one or more maintenance or rehabilitation treatments designed to improve or maintain the condition of a pavement segment above some predetermined minimum requirement.

31. Requirements for Developing a Strategy
List of strategy guidelines and treatment options
Treatment Costs
Pavement performance models for treatment

32. Single Treatment Strategy
Options in Strategy Development
Single Treatment Strategy
Most common approach
Several feasible alternatives may be identified for each section
Each treatment considered independently
Most cost-effective treatment generally selected
Multiple Treatment Strategy
Combination of treatments considered for each section
Effectiveness of all treatments is representative of effectiveness of entire strategy
Subsequent treatments affect selection of strategy
Repeated treatments

33. }Simple grouping Detailed Choices Specific Treatments
Preventive Maintenance
Rehabilitation/Resurfacing
Reconstruction
Detailed Choices
Asphalt
Routine Maintenance
Surface Seal Coats
Milling and Inlays
Thin Overlay
Thick Overlay
Mill and Overlay
Reconstruction
Concrete
Slab Grinding
Full- and Partial-Depth Repairs
Crack and Seat
Thin-Bonded Overlay
Unbonded Overlay
Slab Replacement

34. Treatment Options in MYP
Age or Traffic Loads
Pavement Condition Index
Performance Prediction Model
Benefit or Effectiveness
(Area under the curve)
Treatment Reset
Predicted Performance
Condition
Increase
Trigger Limit
Life
Extension
Marginal Cost Effectiveness
Incremental Benefit/Cost Ratio

35. Performance Models Current Time 100 Condition Index
Treatment Condition reset
Benefit=area x traffic level 80
Trigger
Zero Treatment
Condition reset
Associated Cost adjusted for inflation PM
Time or Age
Life Extension

36. Performance Models Current Time 100 Condition Index
Treatment Condition reset
Benefit=area x traffic level
For PM treatment that do not improve condition just extend life 80
Trigger
Zero Treatment
Condition reset
Associated Cost adjusted for inflation PM
Time or Age
Life Extension

37. Treatment Options in MYP
Existing Performance
Treatment Strategy 1
in Years X and Z
at $ Cost
Subsequent
Treatment
Pavement Condition Index
Trigger Point for
Treatment 1
Treatment Strategy 2 in
Year Y at $S Cost
Trigger Point for
Treatment 2
Age or Traffic Loads

38. Prioritization Analysis Techniques
Marginal cost-effectiveness analysis
Incremental benefit/cost analysis
Ratio calculation
positive ratio= viable strategy
negative ratio= costly strategy

39. Benefits or Effectiveness
Non-Monetary
Area under the curve for some traffic value
Benefits
Monetary or Non-Monetary
Area under the curve for some traffic value

40. Costs Agency cost User cost Salvage value Maintenance cost
Other relevant costs over the life of the pavement

41. Marginal Cost-Effectiveness (MCE)
Identify feasible treatments for each analysis period based on projected condition and established trigger levels
Calculate effectiveness (E) of each combination of strategies (area traffic)
Calculate cost (C) of each combination in net present value terms

42. Marginal Cost-Effectiveness (cont.)
Calculate cost-effectiveness (CE) of each combination as ratio of E/C, where highest value is best
Select treatment and timing for each section with best CE
Calculate marginal cost-effectiveness (MCE) of all other strategies as follows:
MCE = (Er-Es)/(Cr-Cs)

43. Marginal Cost-Effectiveness Calculations
The following steps are completed in the marginal cost-effectiveness analysis:
Identify the feasible treatments for each analysis period based on the projected condition and established trigger levels;
Calculate the effectiveness (E) of each combination of strategies (effectiveness is generally the area under the performance curve multiplied by some function of traffic);
Calculate the cost (C) of each combination in net present value terms.
Calculate the cost-effectiveness (CE) of each combination as the ratio of E/C, where the highest value is the best.
Select the treatment alternative and time for each section with the best CE.

44. Marginal Cost-Effectiveness Calculations
6. Calculate the marginal cost-effectiveness (MCE) of all other strategies for all sections as follows:
MCE = (Er - Es)/(Cr - Cs)
where:
Es = effectiveness of the strategy selected in step 5
Er = effectiveness of the strategy for comparison
Cs = cost of the strategy selected in step 5
Cr = cost of the strategy for comparison
If the MCE is negative, or if Er is less than Es, the comparative strategy is eliminated from further consideration; if not, it replaces the strategy selected in 5.
This process is repeated until no further selections can be made in any year of the analysis period.

45. Incremental Benefit/Cost (IBC)
The seven dots on the following graph each represent the costs and benefits associated with seven strategies; a do-nothing and six repair strategies labeled 1 through 6.
Each line segment was drawn by starting at the do-nothing point and drawing the segments in such a way that no strategy points exist above the line, and no line segment has a bigger slope than the previous line segment. This segmented line is called the ‘efficiency frontier’

46. Incremental Benefit/Cost (IBC) Efficiency Frontier

47. Incremental Benefit/Cost (IBC)
Equivalent Uniform Annual Benefit (EUAB)
EUAB = PVB [r (1+r)n]
[(1+r)n - 1]
Equivalent Uniform Annual Cost (EUAC)
EUAC = PVC [r (1+r)n ]
[(1+r)n - 1]
where: PVC = Present Value Cost
PVB = Present Value Benefit
r = Discount Rate
n = Number of Years

48. Incremental Benefit/Cost (IBC)
Calculate Incremental Benefit/Cost
IBC j = (EUABj - EUABj-1)
(EUACj - EUACj-1)
Treatment for each section are sorted by increasing EUAC
Negative IBC’s are eliminated
Strategies which fall on the efficiency frontier provide the most benefit per unit cost for the agency
Selects the best strategy for each road section to maximize benefits without exceeding budget levels

49. Incremental Benefit/Cost (IBC)