Life Cycle Cost Analysis - Virginia Department of Transportation
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Transcript Life Cycle Cost Analysis - Virginia Department of Transportation
Life Cycle Cost Analysis
Virginia Concrete Conference
March 6-7, 2014
Luis Rodriguez, P.E.
Federal Highway Administration
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Presentation Outline
Life Cycle Cost Analysis Definition
LCCA Five Steps Process
Current Issues
Resources / Reference
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Life-Cycle Cost Analysis 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.
Source: Transportation Equity Act for the 21st Century
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Transportation Performance Management
LCCA Overview
An analytical tool
to provide a cost comparison
between two or more competing design alternatives
producing equivalent benefits
for the project being analyzed.
The LCCA Process
Step 1: Establish alternatives
Step 2: Determine timing of required activities
Step 3: Estimate agency and user costs
Step 4: Compute life-cycle costs
Step 5: Analyze the results
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Step 1: Establish Alternatives
Activities to ensure performance
Initial construction or rehabilitation activity
Future rehabilitation and preservation activities
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Serviceability
Step 2: Determine Activity Timing
Service
Life
Terminal Serviceability Index
Time
Initial
Activity
Activity One
Activity Two
Analysis Period
Long enough to capture differences between alternatives
When will the future preservation and
countermeasure costs be incurred?
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Step 3: Estimate Agency and
User Costs
Include cost elements that are different
between alternatives
Exclude cost elements that are the same
between alternatives
Agency overhead costs
Real estate acquisitions
Normal operations user costs
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Step 3: Estimate Agency and
User Costs
Approach fundamentals
Compare demand and capacity under
normal operations and work zone
conditions
Determine how traffic is impacted
Convert traffic impacts into costs
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Cash Flow Diagram
Initial
Activity
$
Agency
Costs
Initial Activity
Work Zone
$
User
Costs
Preservation
Activities
Preservation
Work Zones
Rehab 1
Rehab 1
Work Zone
Salvage or
Remaining
Value
Time
Time
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Step 4: Calculate NPV of
Life-cycle Costs
N
Σ
Net Present Value =
(Costk) x
of Costs
k=0
Costk
N
d
nk
= cost of activity
= length of analysis period
= discount rate
= year of expenditure
1
nk
(1 + d)
Present Value
Factor
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Step 5: Analyze the Results
How do agency costs compare?
How do user costs compare?
Can trade-offs be made?
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Current Issues
• MAP 21 and LCCA
• GAO Report: LCCA – Pavement Selection
• LCCA and Alternative Bidding
Transportation Performance Management
MAP-21 and LCCA
Transportation Performance Management
MAP-21 to asset management?
Each State is required to develop a risk-based
asset management plan for the National
Highway System (NHS) to improve or preserve
the condition of the assets and the performance
of the system. (23 U.S.C. 119(e)(1), MAP-21 §
1106)
Transportation Performance Management
Highway Asset Management Plan
Plan Contents
– pavement and bridge inventory and conditions
on the NHS
– objectives and measures
– performance gap identification
– lifecycle cost and risk management analysis
– a financial plan
– investment strategies
Transportation Performance Management
GAO and Next Steps
Transportation Performance Management
GAO and Next Steps
Define Program Characteristics
Obtain Data
Verify what was used was correct
Document the Estimate
Present Estimate for approval
Update the Estimate
Alternate Bidding
What is the FHWA position on alternate
bidding for pavement type selection? FHWA
considers alternate pavement type bidding a
suitable approach for determining pavement
type when engineering and economic analysis
does not indicate a clear choice between
different pavement designs.
FHWA Program Performance
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Transportation Performance Management
Consideration of Challenges
LCCA
LCCA Resources
LCCA Case
Study
User Manual
LCCA Primer
LCCA Technical
Bulletin
http://www.fhwa.dot.gov/infrastructure/asstmgmt/lcca.htm
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RealCost LCCA Software
• Microsoft Excel based application –
existing user expertise and user
customizable
• User interface – separates inputs
from analysis methodology
• Offers both Deterministic and
Probabilistic Analysis
• Available free of charge, regular
enhancements and technical
assistance from FHWA
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Reference
FHWA LCCA Internet Site:
http://www.fhwa.dot.gov/infrastructure/asstmgmt
/lcca.cfm
GAO Report : LCCA-Pavement Selection
http://www.gao.gov/products/GAO-13-544
FHWA TA on Use of Alternative Bidding for
Pavement Type Selection:
http://www.fhwa.dot.gov/pavement/t504039.cfm
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Thank You
Luis Rodriguez, P.E.
Federal Highway Administration
[email protected]
404-562-3681
http://www.fhwa.dot.gov/resourcecenter/
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