APPLICATION OF ECONOMIC INDICATORS TO ASSES THE BRIDGES OF REHABLITATION

Vol. 11, Issue 1/2015, 69-75 DOI: 10.1515/cee-2015-0009 APPLICATION OF ECONOMIC INDICATORS TO ASSES THE BRIDGES OF REHABLITATION Marin PITOŇÁK 1,*, Milan VALUCH 2 1 Cenre of Excellence in Transpor Engineering, Faculy of Civil Engineering, Universiy of Žilina, Univerziná 8215/1, 010 26 Žilina. 2 Research Cenre, Universiy of Žilina, Univerziná 8215/1, 010 26 Žilina. * corresponding auhor: marin.pionak@fsav.uniza.sk, +421-4-1513 5898. Absrac The aim of his paper is o poin ou he advanage of Cos Benefi Analysis (CBA) and is economic indicaors o assess a rehabiliaion of bridges. The paper includes shor example of assessmen of he projec economic efficiency in which economic indicaors are applied in order o evaluae of wo echnology projec varians of bridge objec rehabiliaion. I quanifies and compares he economic resuls of alernaive 1 wih he monolihic presress consrucion and alernaive 2, wih he composie seel - concree bridge. The conribuion reflecs he curren pracice of economic analysis recommended by he Minisry of Transpor, Consrucion and Regional Developmen. Keywords: Economic indicaor; Technological opions; Projec price; Social benefis; Generaing revenues; Qualiy. 1. Inroducion A he beginning, i should be noed ha only he applicaion of economic indicaors CBA mehod is he bes possible for a comprehensive assessmen of he reconsrucion projec effeciveness, namely he rehabiliaion of bridge objecs (RBO). Many echnicians argue ha he effeciveness of he projec can be found also by is echnical soluion, respecively by is echnical characerisics. Such an argumen canno be pracically demonsraed. Moreover, i is non-complex, because i works only wih echnical parameers wihou key economic parameers, such as he acquisiion cos of he projec, operaing coss and social benefis of he projec. 2. Pariculariy of assessed echnological varians Economic evaluaion is always based on a echnical soluion. Acquisiion coss essenially reflec he cos of he echnical complexiy of he projec and, in addiion, in civil engineering also consrucion sie condiions. The echnical soluion is also refleced in social benefis of he projec. Before considering he economic efficiency of he before menioned wo varians of he RBO projec, i is briefly presened he reasons for rehabiliaion, which are: very bad or breakdown sae condiion of he exising bridge objec suppored by exensive diagnosics, dynamic and saic load es of he bridge. The presen bridge srucure performs services over he railway, resor of ČOV and river Kysuca. The projec deals wih he reconsrucion of he bridge. The echnical soluion is designed in wo varians; he varian 1 is characerized as a monolihic consrucion of presressed concree and varian 2 is characerized as a composie seel-concree consrucion. The lengh of upperbridge is 263.400 m, lengh of he bridge is 306.590 meers, he bridge span fields: 30.0 + 5 x 41.0 + 30.0 m, heigh of he bridge max. 11.92 m (in he field no. 6), he bridge area: 3.911.55 m 2. Alernaive 1 is a cheaper o compare wih alernaive 2. A he same ime, he alernaive 1 needs more ime for he realizaion han alernaive 2. In he long erm, i can be assumed ha he oal operaing and mainenance coss of he varian 1 will be higher abou 10% compared o varian 2. This assumpion goes ou from he experience of counries ha have rich hisory in consrucion of composie seelconcree bridges. An economic analysis of he projec for boh alernaives needs o be work ou in order o make invesor s decision easy which ype of consrucion is he mos suiable for him. Unauhenicaed Download Dae 11/12/15 4:40 PM

Civil and Environmenal Engineering Vol. 11, Issue 1/2015, 69-75 3. Inpus for decision-making process The decision-making process on he effeciveness of each RBO alernaives requires acquisiion coss based on budges of he wo varians of bridge objecs. In he nex sep, i is imporan o quanify social coss using of relevan compuaional model (user and environmenal coss and acciden rae coss). This serves in case if he reconsrucion is no realized or opposie (reduced social coss). Their difference corresponds o he socieal benefis of he bridge reconsrucion. These benefis are reducing each year by he operaing coss of reconsrucion echnology. For he decisionmaking process regarding he effeciveness of reconsrucion, i is sill necessary o know is lifeime, he erms of he projec realizaion and he discoun for he projec. 4. Applicaion of economic indicaors A comprehensive assessmen of he economic efficiency of bridges rehabiliaion projecs, as i was already saed, is only possible by applying various mehods of economic CBA indicaors. Cosbenefi analysis of he projec can be carried ou as an economic (if he projec realizaion will never serve public purposes) or financial (if he building generaes revenues). In our case, i is a projec ha will generae revenue, so we use economic analysis and he following economic indicaors: Economic Payback Period, Economic Ne Presen Value, Economic Inernal Rae of Reurn, Economic Benefi- Cos Raio. 4.1 Theoreical quesions of projec economic analysis The economic Cos Benefi Analysis is, as already menioned, economic mehod, which has he economic indicaors ha allow assessing he economic effecs of he consrucion projec, is rae respecively. In he nex secion of his chaper, here are summarized in he general shape he economic indicaors applied o he needs of he bridges rehabiliaion projecs. 4.1.1 Economic Payback Period The Economic Payback Period acquisiion coss for RBO can be expressed as he year in which social benefis achieved acquisiion coss of RBO: 0 T RS Tzzc P,( a b) ON (1 0,01. u) PN, (1) where: T ZZC - sar of he year life cycle of echnology RBO, [year], T RS - year of repaymen RBO, [year], = T ZZC o T RS, [years], P,(a-b) - benefis from he implemenaion of he RBO, as he difference beween he higher social coss of sae wihou implemenaion of RBO (a) and lower social coss in sae of realizaion RBO (b), in a year, [ ], ON - RBO acquisiion coss in years, [ ], PN - RBO operaing coss echnology in years [ ], u - discoun [%]. Economic Payback period can be expressed as a ime of repaymen. Thus, as a proporion of he cos of he RBO average annual socieal benefis: T RS ON, (2) P,( a b), YEARaverage Unauhenicaed Download Dae 11/12/15 4:40 PM

Savebné a Environmenálne Inžiniersvo Vol. 11, Issue 1/2015, 69-75 where: P (a-b),year average - average annual benefis of implemening an RBO, as he difference beween he higher social coss in he sae wihou he implemenaion of he RBO (a) and lower coss in he sae where he RBO is implemened (b), beween [ ] 4.1.2 Economic Ne Presen Value Economic Ne Presen Value has an economical resul in financial erms, as difference of social benefis and coss in his form: ENPV TUZC P( a b) ON PN, (3) T (1 0,01. u) ZZC where: ENPV Economic Ne Presen Value, [ ], T SYLC sar year life cycle RBO, [year], T EYLC he year of end lifecycle RBO, [year]. I applies ha he effecive ENPV projec RBO mus be non-negaive. 4.1.3 Economic Inernal Rae of Reurn zero: Economic Inernal Rae of Reurn is he rae in which an economic ne presen value is equal o Tuzc Tzzc P,( a b) ON (1 x) PN 0, (4) EIRR x.100, (5) where: EIRR Economic Inernal Rae of Reurn, [%], x ineres rae, he search value [%]. The basic benchmark in evaluaing his economic indicaor is he economic discoun rae, which is usually se for he consrucion projecs (e.g. for highway consrucion is currenly a 5.5%). 4.1.4 Economic Benefi Cos Raio (EBCR) This economic indicaor compares he economic ne presen value of all he social benefis and coss of he projec life cycle and is cos of acquisiion: ON ENPV EBCR. (6) ON 4.2 Pracical calculaion of economic indicaors The following ables show he real financial flows, pracical examples RMO, social and cos savings in financial erms, economic mehods: Economic Payback Period EPP, Economic Ne Presen Value of Invesmen ENPV and Economic Inernal Rae of Reurn - EIRR. Economic efficiency calculaions give an answer he quesion, o which exen is he projec of he bridge s Nr. 208 rehabiliaion in Čadca, according o echnical and economic evaluaion preferred. For he calculaion akes ino accoun all he relevan echnical and economic parameers of he curren and proposed echnical soluions and is economic effecs. Unauhenicaed Download Dae 11/12/15 4:40 PM

Civil and Environmenal Engineering Vol. 11, Issue 1/2015, 69-75 Table 1: Flows and cos savings in financial erms, var. 1: monolihic prescripion consrucion. Qualificaion of economic indicaors EPP, ENPV, EIRR and EBCR The name of consrucion: I / 11 Čadca bridge Nr. 208 varian 1: monolihic presressed consrucion Bruo and Neo flow of savings and coss in financial erms, for he enire lifecycle housand. Bruo flow and cos savings Neo cumulaive flow of savings and coss NR. Year CASH FLOW CASH FLOW Purchase coss Social. benefis EIRR ENPV 1 2 3 4 5 6 1 2015-5,281,080.00-4,552,563.76-5,005,763.03 2 2016-5,281,080.00-8,477,108.88-9,750,562.12 3 2017 965,050.12-7,858,879.36-8,928,712.25 4 2018 1,059,929.40-7,273,536.80-8,073,119.49 5 2019 1,172,649.60-6,715,279.12-7,175,885.00 6 2020 1,301,592.27-6,181,115.01-6,231,910.63 7 2021 1,445,138.95-5,669,854.04-5,238,468.92 8 2022 1,601,671.22-5,181,382.02-4,194,821.76 9 2023 1,769,570.61-4,716,152.24-3,101,883.17 10 2024 1,947,218.70-4,274,838.31-1,961,921.80 11 2025 2,132,997.02-3,858,106.70-778,299.35 12 2026 2,325,287.13-3,466,476.60 444,758.70 13 2027 2,522,470.59-3,100,242.41 1,702,363.36 14 2028 2,722,928.96-2,759,440.22 2,989,136.17 15 2029 2,925,043.77-2,443,844.05 4,299,359.94 16 2030 3,127,196.60-2,152,981.48 5,627,108.48 17 2031 3,327,769.00-1,886,161.04 6,966,357.56 18 2032 3,525,142.51-1,642,505.71 8,311,079.24 19 2033 3,717,698.70-1,420,988.90 9,655,321.22 20 2034 3,903,819.11-1,220,469.92 10,993,273.10 21 2035 4,081,885.30-1,039,727.58 12,319,320.79 22 2036 4,250,278.83-877,490.62 13,628,090.73 23 2037 4,407,381.25-732,464.47 14,914,484.86 24 2038 4,551,574.11-603,354.26 16,173,707.68 25 2039 4,681,238.97-488,883.90 17,401,286.31 26 2040 4,794,757.38-387,811.59 18,593,084.41 27 2041 4,890,510.90-298,942.02 19,745,310.80 28 2042 4,966,881.07-221,135.52 20,854,523.65 29 2043 5,022,249.47-153,314.60 21,917,630.59 30 2044 5,054,997.63-94,468.23 22,931,885.61 31 2045 5,063,507.11-43,654.23 23,894,883.15 32 2046 5,046,159.47-0.00 24,804,549.78 33 Toal: - 10,562,160.00 98,304,595.75 Economic Payback period, [year] 2026 Economic Ne Presen Value of Invesmen, [ ] 24,804,549.78 Economic Inernal Rae of Reurn, % 16.00 Economic Benefi- Cos Raio 3,348 Discoun: 5.5% Year of calculaion: 2014 8 Unauhenicaed Download Dae 11/12/15 4:40 PM

Savebné a Environmenálne Inžiniersvo Vol. 11, Issue 1/2015, 69-75 Table 2: Flows and cos savings in financial erms, var. 2: composie seel and concree bridge. Qualificaion of economic indicaors EPP, ENPV, EIRR and EBCR The name of consrucion: I / 11 Čadca bridge Nr. 208 varian 1: composie seel and concree bridge Bruo and Neo flow of savings and coss in financial erms, for he enire lifecycle housand. Bruo flow and cos savings Neo cumulaive flow of savings and coss NR. Year CASH FLOW CASH FLOW Purchase coss Social. benefis IRR NPV 1 2 3 4 5 6 1 2015-2,872,835.00-2,473,609.61-2,723,066.35 2 2016-8,223,315.00-8,570,212.12-10,111,323.58 3 2017 1,009,390.56-7,925,863.85-9,251,712.78 4 2018 1,104,610.60-7,318,720.68-8,360,052.61 5 2019 1,217,701.52-6,742,427.83-7,428,347.35 6 2020 1,347,041.75-6,193,514.32-6,451,410.93 7 2021 1,491,009.74-5,670,367.22-5,426,435.95 8 2022 1,647,983.92-5,172,496.27-4,352,611.49 9 2023 1,816,342.72-4,700,017.73-3,230,785.08 10 2024 1,994,464.59-4,253,302.15-2,063,164.52 11 2025 2,180,727.95-3,832,743.34-853,055.68 12 2026 2,373,511.25-3,438,615.58 395,367.37 13 2027 2,571,192.92-3,070,994.12 1,677,263.06 14 2028 2,772,151.39-2,729,719.79 2,987,296.89 15 2029 2,974,765.11-2,414,393.75 4,319,792.49 16 2030 3,177,412.51-2,124,391.59 5,668,861.75 17 2031 3,378,472.02-1,858,889.20 7,028,516.09 18 2032 3,576,322.08-1,616,894.86 8,392,761.03 19 2033 3,769,341.13-1,397,283.65 9,755,675.84 20 2034 3,955,907.60-1,198,831.55 11,111,479.95 21 2035 4,134,399.94-1,020,247.57 12,454,587.63 22 2036 4,303,196.57-860,202.73 13,779,652.30 23 2037 4,460,675.93-717,355.56 15,081,601.68 24 2038 4,605,216.47-590,373.75 16,355,665.02 25 2039 4,735,196.60-477,952.11 17,597,393.16 26 2040 4,848,994.78-378,826.90 18,802,672.65 27 2041 4,944,989.44-291,787.03 19,967,734.44 28 2042 5,021,559.01-215,682.25 21,089,158.06 29 2043 5,077,081.93-149,428.87 22,163,871.90 30 2044 5,109,936.63-92,013.28 23,189,150.11 31 2045 5,118,501.56-42,493.63 24,162,606.70 32 2046 5,101,155.15-0.00 25,082,187.35 33 Toal: - 11,096,150.00 99,819,253.37 Economic Payback period, [year] 2026 Economic Ne Presen Value of Invesmen, [ ] 25,082,187.35 Economic Inernal Rae of Reurn, % 16.13 Economic Benefi- Cos Raio 3,260 Discoun: 5.5% Year of calculaion: 2014 8 5. Financial resuls To compare economical resuls varians of projec RRMO, I submi recap economic indexes of individual economic indicaors. Unauhenicaed Download Dae 11/12/15 4:40 PM

Civil and Environmenal Engineering Vol. 11, Issue 1/2015, 69-75 The resuls of he four economic mehods comprehensively and sufficienly demonsrae he economic efficiency exchangeable echnological varians of he invesmen consrucion projec. Varians Toal capial expendiure [housands ] Table 3: Recapiulaion of economic resuls RBO. Economic indicaors Economic ime of repaymen Economic invesmens, inernal rae of PA reurn [%] [year] Economic ne presen value, NPV [housands ] Economic benefi - cos raio, BCR Varian Nr.1 10,562.16 2026 16.00 24,804.55 3.348 Varian Nr.2 11,096.15 2026 16.13 25,082.19 3.260 5. Conclusions The RMO projec significanly conribues in is echnical soluion for boh mehods o increase in qualiy of ranspor, safey and ravel speed of users of a bridge. In view of menioned economic resuls we can recommend boh opions as appropriae for heir nex projec preparaion. Those economic resuls are muually insignifican differen in all economic indicaors. Risks of varian Nr. 1, however, are significanly higher because of climae condiions in he area where he building is quie difficul o implemen, which may increase disproporionaely claims o comply he qualiy deadlines of consrucion and puing he consrucion ino operaion. Conrariwise, Varian Nr. 2 requires in erms of consrucion sie much less power and hus demands o ensure he qualiy and consrucion deadlines and has addiional albei slighly, sill beer economic resul. Acknowledgemen This work was suppored by he Slovak Research and Developmen Agency under he conrac No. APVV-0106-11. This conribuion is he resul of he projec implemenaion: "Suppor of Research and Developmen for Cenre of Excellence in Transpor Engineering" (ITMS: 26220120031) suppored by he Research & Developmen Operaional Programme funded by he European Regional Developmen Fund. References 1 Guide o he cos-benefi analysis of invesmen projecs in he ranspor version 2.1. Minisry DVRR SR, 2011. 2 Working paper 4: Manual mehodology for he developmen of cos-benefi analysis. European Commission, Direcorae - General for Regional Policy, 2007. Available a: hp://www.edis.sk/ekes/wd4_cos_sk.pdf. 3 Ac No.254 / 1998 Coll. public works, as amended by Ac no. 260/2007 Coll. 4 Decree 83/2008 Coll. Minisry DVRR SR implemening Ac. 254/1998 Coll. public works, as amended by Ac no. 26/2007 Coll. 5 Technical Regulaion: Principles for evaluaion of invesmen consrucion projecs. Road and Moorway Direcorae of he Czech Republic, Prague, 2010. 6 VALUCH, M.: The economic effecs of he cos of he clien. Valuaion of consrucion work (In Slovak). ÚSE Braislava, 2012. s. 71-78. ISBN 978-80-970019-0-2. Unauhenicaed Download Dae 11/12/15 4:40 PM

Savebné a Environmenálne Inžiniersvo Vol. 11, Issue 1/2015, 69-75 7 VALUCH, M. REMIŠOVÁ, E. REMEK, Ľ.: The effeciveness of he invesmen consrucion projec (In Slovak). Scienific and echnical journal Civil and Environmenal Engineering. ISSN 1336-5835, 2010, Vol. 6, no. 2, p. 87-93. 8 VALUCH, M. REMIŠOVÁ, E.: Economic repor on he projec: Reconsrucion of he bridge n.208 in Čadca (In Slovak). Universiy of FCE, 2014 h. Unauhenicaed Download Dae 11/12/15 4:40 PM