LCCA Design and Maintenance

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Cornelia Morton
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1 LCCA Design and Maintenance John Cunningham Iowa Concrete Paving Association ASCE Conference November 6,

2 Life Cycle Cost Analysis Life cycle cost analysis (LCCA) is an economic procedure to compare competing design alternates

3 Simple Terms Initial Cost(IC) Construction cost Maintenance Cost(MC) Costs to keep pavement in use through service life Life-Cycle Cost= IC+(MC*DR) Discount Rate (DR) Allows conversion of future costs to today s dollars

Engineering Bulletin - FREE Estimate maintenance and rehab costs Estimate user costs (optional and

4 Life Cycle Cost Analysis Design equivalent pavement sections Estimate initial construction costs Determine the initial life of each alternate Determine maintenance and rehabilitation ACPA Engineering Bulletin - FREE Estimate maintenance and rehab costs Estimate user costs (optional and separate) Compute Net Present Value (NPV) Analyze and re-evaluate strategies as needed

5 Life Cycle Cost Analysis Design Maintenance Analysis Engineering factors It s important to remember the context of the process as a comparison Economic factors

6 Appropriate analysis period Equivalent designs Realistic maintenance activities Accurate cost estimates Correct discount rate Bear Traps

7 Design Full-depth or overlay? Equivalent design life Sets the LCCA term or analysis period AASHTO design guides Darwin ME MEPDG AASHTO 93 ACPA StreetPave WinPAS Both have LCCA components Both available free from ICPA

8 Equivalent Design Life Design for the same structural capacity Same traffic loading Same number of years Same subgrade Same terminal condition Initial costs typically account for 75% to 90% of Life Cycle Costs

9 Same traffic loading Same number of years Equivalent Design Life Same and reasonable subgrade support value Vast variability in Iowa soils Research is suggesting lower than estimated values Caution if K > 200 CBR > 3 MR > 3,100

10 Maintenance List maintenance activities for each pavement type Based on agency s historical data Maintenance activities Traffic counts What activities does the agency typically perform? And WHEN are they typically performed? Historical data Reliable Unbiased

11 30 Year Analysis Concrete Asphalt Year 0 (construction) (construction) Year 10 Joint rehab -- Year Patching Overlay Example of LCCA Base clean & prep (Iowa DOT) Binder Surface Year 20 Joint rehab -- Asphalt cement Shoulders Traffic control Mobilization Samples Lab Year 30 Joint rehab Patching Structural overlay Shouldering Milling Patching Structural overlay Shouldering

12 30 Year Analysis Concrete Asphalt Year 0 (construction) (construction) Year 10 Joint rehab -- Year Patching Overlay Year 20 Joint rehab -- Base clean & prep Binder Surface Asphalt cement Shoulders Traffic control Mobilization Samples Lab Year 30 Joint rehab Patching Structural overlay Shouldering Milling Patching Structural overlay Shouldering

13 Analysis Estimate initial costs Estimate maintenance costs Convert costs to present value Estimating how economic factors of inflation and interest might impact our comparison After all, it is an economic comparison

14 Calculate in today s dollars Cost Estimates Based on actual cost data Bid tabulations From similar projects ICPA retains files of bid tabs Iowa DOT s Price Trend Index Report Concrete is reported by the square yard for 9 dowelled Asphalt is reported by the ton Indicator of trends

15 Cost Estimates Account for differential inflation rates Each material has experienced different rates LCCA is a comparison The different rates must be accounted for In order to get an accurate comparison of future costs Mechanism for this is escalation

16 Escalation To account for differences in material specific inflation rates, good economic practices say that we should use a process known as escalation.

17 1995 Reconstruction Project Cedar Falls LCCA Estimated the cost of major rehab activities Concrete $89, (1995 costs) 3% inflation $143, Actual inf. $140, (DOT PTI Report) Asphalt $256, (1995 costs) 3% inflation $399, Actual inf. $686, (DOT PTI Report)

18 Cedar Falls LCCA

19 Escalation Gather actual rates of inflation for each material Bureau of Labor Statistics Producer Price Index Iowa DOT Price Trend Index Report % asphalt 3.04% concrete Subtract general rate of inflation Consumer price index 2.9%

Escalation Apply the difference to estimated costs Concrete Costs X 1.0014 ^time to rehab Asphalt Costs X 1.

20 Escalation Apply the difference to estimated costs Concrete Costs X ^time to rehab Asphalt Costs X ^time to rehab Cedar Falls example Concrete $39, X ^10 = $39, $49, X ^20 = $51, Asphalt $256, X ^15 = $306,013.97

21 Present Value Converting future costs to their present value allows us to take general inflation and interest into account Time value of money Select a discount rate FHWA and ACPA recommend OMB Office of Management and Budget Release recommended rates every year for use in economic analysis for government projects OMB Circular A-94 Appendix C of annual memorandum

22 Discount Rate Current OMB Discount Rates include 10 year = year = year = 1.1 Cedar Falls example Concrete $39, X ( ) ^ 10 = $35, Concrete $51, X ( ) ^ 20 = $41, Asphalt $306, X ( ) ^ 15 = $259,230.22

23 Cedar Falls LCCA

24 Questions?

Concrete Pavement Workshop

Fundamentals of Life Cycle Cost Analysis Concrete Pavement Workshop Madison Marriott West Middleton, Wisconsin February 11, 2016 Leif G. Wathne, P.E. American Concrete Pavement Association Fundamentals