1. Benjamin Krom, PE Michigan Department of Transportation

2.  Presentation is based on Federal Highway Administration guidance for conducting LCCAs  MDOT’s LCCA practice differs, partially to meet Public Act 79 of 1997 (MCL 247.651h) requirements

3.  2012 MAP-21 definition: “…a process for evaluating the total economic worth of a usable project segment by analyzing initial costs and discounted future costs, such as maintenance, user, reconstruction, rehabilitation, restoring, and resurfacing costs, over the life of the project segment.”

4.  Basic parts:  A process to evaluate competing alternatives  Well-founded economic analysis principles  Total costs over the entire life of the asset  AKA:  Total cost of ownership analysis  Whole-life cost analysis  “Cradle to grave” analysis  “Womb to tomb” analysis

5. An analytical tool to provide a cost comparison between 2 or more competing design alternatives producing equivalent benefits for the project being analyzed. Source: National Highway Institute Course No. 131113

6. “It attempts to identify the best value (the lowest long-term cost that satisfies the performance objective being sought) for investment expenditures.” Source: FHWA, Life-Cycle Cost Analysis in Pavement Design

7.  Benefit-cost analysis  Used to compare project alternatives that: ▪ Do not provide identical benefits ▪ Accomplish different objectives ▪ Determine if the project should be done at all

8.  For Pavements:  Initial construction costs  Future rehabilitation/maintenance costs  User delay costs (initial & future)  Salvage value/remaining service life value

9. 1. Establish pavement design alternatives 2. Determine maintenance/rehab timing 3. Estimate agency & user costs 4. Compute life-cycle costs 5. Analyze the results Source: National Highway Institute Course No. 131113

10.  Develop at least 2 mutually exclusive pavement design options

11. HMA Reconstruction Concrete Reconstruction Unbonded Concrete Overlay HMA over Rubblized Concrete

12.  Develop at least 2 mutually exclusive pavement design alternatives  Future maintenance/rehab activities  Forecasted maintenance schedules  Historical practices

13. Source: FHWA, Life-Cycle Cost Analysis in Pavement Design

14.  Develop at least 2 mutually exclusive pavement design alternatives  Future maintenance/rehab activities  Forecasted maintenance schedules  Historical practices  Choose an analysis period  Typically, long enough to capture at least 1 maintenance/rehabilitation activity  Same for all alternatives

15. When will the future maintenance & rehabilitation costs be incurred? Source: FHWA, Life-Cycle Cost Analysis Primer

16.  Include cost elements that are different between alternatives  Exclude cost elements that are the same between alternatives  Agency overhead costs  Normal operations user costs  Planting grass, installing guardrail, etc. Source: National Highway Institute Course No. 131113

17. Salvage Value (if used)

18. Source: MDOT Pavement Design & Selection Manual

19. Source: National Highway Institute Course No. 131113

21.  Compare agency & user costs between the design alternatives  Typically NOT the final decision; consider:  Risk  Available budgets  Politics  Environmental concerns  Others

22. “…the overall benefit of conducting a life-cycle cost analysis is not necessarily the LCCA results themselves, but rather how the designer can use the information resulting from the analysis to modify the proposed alternatives and develop more cost-effective strategies.” Source: FHWA, Life-Cycle Cost Analysis in Pavement Design

23.  Basic:  Life-Cycle Cost Analysis Primer (FHWA Publication; August 2002)  Intermediate:  Life-Cycle Cost Analysis in Pavement Design (FHWA Publication; September 1998)  Advanced:  Guide for Pavement-Type Selection (NCHRP Report 703; 2011)