Eric Ross Federal Highway Administration Proposed Office of Performance Management

Transcription

1 Life-Cycle Cost Analysis a Decision Making Tool Eric Ross Federal Highway Administration Proposed Office of Performance Management

2 FHWA Tools Team Evaluation and Economic Investment Team development and promotion of an array of procedures for inclusion in an engineering economic analysis toolbox, identification and dissemination of alternatives for developing data systems to support asset management, and providing assistance with implementation of relevant standards issued by the Governmental Accounting

3 Overview FHWA Definition LCCA in Pavement Type Selection LCCA and Beyond RealCost Software Resources 3

4 Life-Cycle Cost Analysis Life-Cycle Cost Analysis is 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

5 LCCA Defined Benefit-Cost Analysis Compares costs and benefits Addresses dissimilar benefits

6 LCCA Defined Benefit-Cost Analysis Compares costs and benefits Addresses dissimilar benefits Life-Cycle Cost Analysis Compares only costs Assumes equivalent benefits Subset of BCA

7 When to Apply LCCA Compares only costs(differential) Requires equal benefits Project-level analysis Comparing Designs or materials for a bridge, pavement, roadway marking, etc. Comparing management strategies Comparing work zone effects

8 Sample Project Level Data Specific roadway geometry Number of lanes in each direction lane widths Work zone lengths Traffic data AADT Annual traffic growth Percent trucks Hourly traffic distributions Lane capacities Queue Dissipation capacities Agency Cost Service Life Structural Functional User Cost Data Vehicle Operating Cost rates Added vehicle operating cost and time Value of user time delay (passenger cars, single unit, comb. unit)

9 LCCA Steps Steps

10 LCCA Steps Steps 1. Establish Design Alternatives 2. Determine Activity Timing 3. Estimate Agency and User Costs 4. Compute Life-Cycle Costs 5. Analyze the Results

11 Step 1: Establish Design Alternatives Example Design Alternatives Portland cement concrete pavement vs. Hot mix asphalt Mill and fill vs. overlay Preservation vs. major rehabilitation

12 Step 2: Determine Activity Timing Condition Terminal Serviceability Index Time Service Life Initial Activity Activity One Activity Two Analysis Period When will the future maintenance and rehabilitation costs be incurred?

13 Agency Costs Step 3: Estimate Agency and User Costs Initial Activity Reactive and Preservative Activities Activity 1 User Costs Initial Activity Work Zone Normal Operations and Preservative Activities Activity 1 Work Zone

14 User Cost Components Three components Vehicle Operating Costs (VOC) Delay Costs Crash Costs

15 User Costs User costs are based on capacity flow analysis. a function of workzone impacts for the M&R strategy for maintaining the alternate designs. are directly dependent on the volume and operating characteristics of the traffic on the facility.

16 Cost Flow Diagram. Initial Activity $ Rehab 1 Agency Costs User Costs Initial Activity Work Zone $ Rehab 1 Work Zone Time Time

17 Cost Flow Diagram. Agency Costs Initial Activity $ Preservation Activities Rehab 1 User Costs Initial Activity Work Zone $ Preservation Work Zones Rehab 1 Work Zone Time Time

18 Step 4: Calculate PV of Life-Cycle Costs Present Value = of Costs N Σ k = 0 (Cost k ) x 1 (1 + d) n k N = length of analysis period d = discount rate n k = year of expenditure Present Value Factor

19 LCCA Output Present Value Examples Activity Year Initial 0 Cost $11M PV Factor 1.0 Activity 1 8 $5M 0.73 Activity 2 16 $5M 0.53 Rehab 24 $8M 0.39

20 LCCA Output Present Value Examples Activity Year Cost PV Factor PV Initial 0 $11M 1.0 $11M Activity 1 8 $5M 0.73 $3.7M Activity 2 16 $5M 0.53 $2.7M Rehab Using a 4% discount rate 24 $8M 0.39 Sum of Present Values $3.1M $20.5M

21 Step 5: Analyze the Results How do agency costs compare? How do user costs compare? Can trade-offs be made?

22 Simulation Modeling Inputs Outputs $ M O D E L Present Value %

23 Life-Cycle Cost Analysis RealCost Software

24 What is RealCost? A tool for automating Life Cycle Cost Analysis (LCCA) for Pavement Type Selection (PTS) including Alternate Design / Alternate Bidding (AD/AB). Developed in Microsoft Excel existing user expertise. Uses user forms, customized results and reports for ease of use and efficiency. Freely available downloadable from FHWA website lccasoft.cfm

25 Why RealCost? An easy to use tool for conducting LCCA incorporating processes outlined in the FHWA Technical Bulletin. Incorporates detailed, good practices methodology for computing work-zone induced user costs. Provides a framework for conducting probabilistic LCCA. Infinitely customizable to meet agency specific procedures and requirements. Applicable to more than pavements

26 RealCost Switchboard

27 RealCost Inputs - Analysis Options

28 RealCost Inputs - Pavement Design Alternatives

29 Probabilistic Inputs Name Distribu,on Mean Minimum Maximum Standard Devia,on Ini$al Construc$on Service Life (years) Triangular Ini$al Construc$on Work Zone Dura$on (days) Triangular First Rehab Service Life (years) Triangular Second Rehab Service Life (years) Triangular Third Rehab Service Life (years) Triangular Annual Average Daily Traffic Growth (%) Normal Base Course Bid Cost ($/TON) Truncated Normal Discount Rate (%) Triangular HMA Bid Cost ($/TON) Truncated Normal Planning Bituminous Pavement [ ($/SY) Truncated Normal Queue Dissipa$on Capacity (vhhpl) Normal Roadway Excava$on ($/CY) Truncated Normal Value of Time for Combina$on Trucks ($/hour) Triangular Value of Time for Passenger Cars ($/hour) Triangular Value of Time for SU Trucks ($/hour) Triangular

30 RealCost Outputs - Deterministic Analysis

31 RealCost Outputs - Probabilistic Analysis

32 Use of Probabilistic Analysis - Tornado Charts

33 Use of Probabilistic Analysis -Tornado Charts

34 Resources Training Fundamentals of Life Cycle Cost Analysis Live Instructor Led Distance Learning Course Onsite RealCost Life-Cycle Cost Analysis (LCCA) Software Workshop

35 LCCA Resources LCCA Case Study LCCA Primer LCCA Software LCCA Technical Bulletin

36 Thank You Office of Transportation Performance Management Federal Highway Administration Eric Ross 1200 New Jersey Ave SE Washington, DC Questions or comments?