AirCost LCCA Software An overview of AAPTP Paul M. Dalbey, P.E.

Transcription

1 AirCost LCCA Software An overview of AAPTP Paul M. Dalbey, P.E. American Concrete Pavement Association, Southeast Chapter Concrete Airport Pavement Workshop Atlanta, GA Otb October 28, 2010

2 Overview Life Cycle Cost Analysis What is a LCCA? Why is an LCCA important to your project? What do we get as a result of our LCCA? Origins of AAPTP AirCost Software ARA Proprietary 2010 Applied Research Associates, Inc. 2

3 What is a Life Cycle Cost Analysis? Analysis technique that helps managers, engineers, planners, and other decision makers determine the most cost effective pavement alternative over a given period of time Multiple options can be subjectively evaluated Initial construction or rehabilitation Major vs minor rehabilitation vs preventive maintenance Concretevs Asphalt 20 year design vs 40 year design Should be completed as early as possible in the project development phase Identifies total costs of different plans over the course of the analysis period LCCA IS A TOOL, NOT AN ANSWER!!!! 3

4 Possible Life CycleAlternativesofPavement Image courtesy of FHWA 4

5 Typical Life Cycle Cost Diagram Initial Construction B Initial Construction A Rehab 1B ($) Rehab 1A Rehab 2A Rehab 3A Cost ( End-of-Analysis Salvage Value Time 5

6 Alternatives Overall pavement cycle strategy Initial Construction Rehabilitation strategies LCCA Ingredients Variables Discount Rate Service Life Unit Costs Analysis Period 6

7 Discount Rate Variable that represents real value of money over time Allows analyst to convert costs of future rehabilitations into present day dollars. As general rule of thumb, discount rate = interest inflation Use a single discount rate for entire analysis Higher discount rate favor alternatives with higher future spending Lower discount rate favor alternatives with higher up front costs Typical value is 4%, values between 3 5% are acceptable OMB Circular No. A 94, Appendix C updated annually BasedonTreasury NotesandBonds 10 year 2.2%, 20 year 2.7%, 30 year 2.7% 7

8 Service Life Amount of time between construction activities Measured from completion of construction to the time when the pavement is structurally inadequate. Service life is typicallya a little longer than Design life Service life is typically the time associated with 50% reliability Design life generally has 85 95% reliability Each construction activity has its own service life Typically derived from historical performance data If performance dt data is unavailable, use expert opinion i 8

9 Unit Cost price per unit Unit Costs Typically, each pavement type and thickness is a separate line item. Concretevs Asphalt 14 vs 18, etc. May even include separate items for each layer Material ilcosts would generally include total construction cost Area of line item required to determine subtotal line cost To reduce bias, unit costs should be based on reliable historical values in project area. 9

10 Analysis Period MUST be long enough to include at least one future rehabilitation event for each alternative State highway agencies commonly use 40 years for new/ reconstruction projects State highway agencies commonly use 30 years for rehabilitation projects Using longer analysis periods may reduce reliability of performance models and unit cost projections One analysis period is to be used for all alternatives being considered. 10

11 Steps in Analysis Typically done with Excel or other software to expedite process. Start with Alternative 1 Start with Event #1 (initial construction) Get subtotal for each line item in event Sum each line to get event cost in base year dollars Use discount rate to determine required investment in base year dollars Repeat for each event/rehabilitation Sum costs for each event in Alternative Calculate Salvage value of pavement at end of analysis period Repeat for each Alternative Evaluate cost for each alternative 11

12 Net Present Worth/Value Results Sum of all costs for all events in a given alternative Represents the entire investment required, in base year dollars, to execute alternative Equivalent Uniform Annualized Cost Represents cost of an annuity to cover NPW based on discount rate If analysis period of different alternatives is equal, NPV and EUAC will yield equivalent results Useful when looking at budgets established tblihdon an annual basis 12

13 Net Present Value NET PRESENT VALUE $) ost ($ Co Time 13

14 Equivalent Uniform AnnualizedCost $) ost ($ Co Time 14

15 Agency (Direct) Costs Physical Costs of Maintenance Activities Cost of materials Cost of construction Cost of maintenance Supplemental Costs Administrative Costs Engineering i Costs Maintenance of Traffic (MoT) Often, these are percentages of Physical Costs (~5% typical) Salvage Value 15

16 Prorated (Remaining) Life Salvage Value Straight line depreciation of final pavement event Compliant with GASB 34 Very easy to calculate Does not account for structural use of underlying layers Residual Value Actual value of remaining pavement at end of analysis period if sold or recycled May be negative value if cost to remove material value of material Very difficult to estimate due several project specific factors Differences between alternatives is usually not large, especially when discounted over long periods of time. 16

17 User (Indirect) Costs Disruption of revenue as a result of construction activities Reductions in operations, passengers, and/or cargo Passenger Facility Charge Loss of Daily Operating Revenue Land fees lost for each arriving plane Fuel flowage fee Other fees charged by the airport Frequency AND duration of rehabilitation events play major roles inuser costs 17

18 Analysis Total cost = Agency Cost (incl. salvage value) + User Cost Due to complexities of calculating User Cost, some agencies use only direct costs, esp. in highway LCCA Finaldecisions are rarely madesolely on the results of an LCCA Many other factors play into decision of final alternatives Political Agency experience with construction Confidence in LCCA parameters Funding 18

19 Deterministic vs Probabilistic Analysis Deterministic One time through procedure All variables have exact values Discount Rate is fixed All units costs are fixed All service lives are fixed Result is a single value Comparison between alternatives can be done easily Agency often utilize a buffer to call alternatives economically equivalent. 19

20 Deterministic vs Probabilistic Analysis (cont.) Probabilistic 1,000 s of random iterations Some or all variables are selected based on statistical parameters Normal distribution μ, σ Triangular distribution min, max, mode Uniform distribution min, max For each iteration, software selects one set value of variables and performs a deterministic analysis Simulation typically runs up to 5,000 iterations or until convergence Result is a range of values with a mean and standard deviation May not give a clear cut winning alternative but requires analyst or agency to evaluate some acceptance of risk 20

21 Probabilistic Results 21

22 AAPTP Life Cycle Cost Analysis For Airport Pavement Project to develop comprehensive overview of current airport LCCA practices Identify andprovide guidance on most appropriate procedures for airport LCCA Develop LCCA spreadsheet dh software to handle deterministic and probabilistic analysis Develop training materials for implementation of LCCA methodology 22

23 Current State of Airport LCCA Use of LCCA in airfield pavements far behind usage in highway applications i Most projects are analyzed using in house tools or software adapted from the highway industry Little documentation specifically aimed at airfield pavement FAA Northwest Mountain Region s Design Guide Supplement: PCC Airport Pavements (Scott, 2003) Operational Life of Airport Pavements (Garg, Guo, & McQueen, 2004) Full Cost Approach to Airport Pavement Management (McNerney & Harrison, 1995) 23

24 FAA Guidance Section 910, FAA Order C FAA offices directed to encourage life cycle costing when certain conditions can be met: IFB states LCC will be used in determining low bidder Factors to be considered are specified and quantifiable IFB explains how costs for each factor will be calculated Unit costs Analysis period The item that meets the bidding specification and has the lowest life cycle cost is the successful bid. 24

25 FAAGuidance (cont.) FAA AC 150/5320 6E, Appendix 1 Step by Step procedure for conducting LCCA Recommendations Net Present Worth Discount Rate = 4.0% Analysis Period = 20 years Salvage value as remaining life of final rehabilitation Evaluate the most promising alternatives based on costs, time required, operational constraints, chance for success, etc. 25

26 AirCost Deterministic and probabilistic airport LCCA Built with Microsoft Excel VBA Excel 2000 or newer Someadditional features whenusing Excel2007or Allows 4 alternatives to be evaluated Each alternative can contain up to 7 events (Initial construction + 6 rehabs) hb) Maintenance operations handled separate from rehab events Runway and shoulder maintenance handled separately Maintenance activity service life always deterministic Activities have set frequency and maximum number of applications 26

27 AirCost Home Screen 27

28 AirCost Project Information 28

29 AirCost Project Details 29

30 AirCost LCCA Parameters 30

31 Analysis variables 31

32 Material Library 32

33 Mainline Runway Inputs 33

34 Maintenance Inputs 34

35 LCCA Execution 35

36 Deterministic Results 36

37 Probabilistic Results 37

38 Special Thanks Greg Dean, ACPA SE Airport Programs Director AAPTP Project Technical Panel Mr. Monte Symons, chair Dr. Jim Hall, Ph.D, P.E. Applied Research Associates, Inc. Mr. Kll Kelly Smith Applied dpavement ttechnology, Inc. 38