life cycle cost analysis for bridges in search of better investment and engineering decisions
TRANSCRIPT
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Life Cycle Cost Analysis for Bridges
Life Cycle Cost Analysis for Bridges
In Search of Better Investment and
Engineering Decisions
In Search of Better Investment and
Engineering Decisions
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What is Life Cycle Cost?
What is Life Cycle Cost?
• An economic analysis procedure that uses engineering inputs
• Compares competing alternatives considering all significant costs
• Expresses results in equivalent dollars (present worth)
• An economic analysis procedure that uses engineering inputs
• Compares competing alternatives considering all significant costs
• Expresses results in equivalent dollars (present worth)
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Cost ConsiderationsCost Considerations
Maintenance and Inspection
Cost
Initial Cost
Costs
Present Worth
Years
Rehabilitation Cost
Salvage Value
Salvage Costs
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Present Worth AnalysisPresent Worth Analysis
• Discounts all future costs and benefits to the present:
t=n
PW = FC + pwf [MC+IC+FRC+UC] + pwf [S] t=0
• Discounts all future costs and benefits to the present:
t=n
PW = FC + pwf [MC+IC+FRC+UC] + pwf [S] t=0
FC = First (Initial) Costt = Time Period of AnalysisMC = Maintenance CostsIC = Inspection CostsFRC = Future Rehabilitation CostsUC = Users CostsS = Salvage Values or Costspwf = Present Worth Factor
FC = First (Initial) Costt = Time Period of AnalysisMC = Maintenance CostsIC = Inspection CostsFRC = Future Rehabilitation CostsUC = Users CostsS = Salvage Values or Costspwf = Present Worth Factor
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First (Initial) CostFirst (Initial) Cost
• Initial cost of structure
• Incentive/disincentive payments should not be included since they would reflect user benefits or costs prior to structure going into service
• Initial cost of structure
• Incentive/disincentive payments should not be included since they would reflect user benefits or costs prior to structure going into service
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Time Period of AnalysisTime Period of Analysis
• Normally equal for all alternatives
• Should include at least one major rehabilitation– Needed to capture the true economic benefit
of each alternative
• Bridge design today is based on a probabilistic model of 100 years
• Normally equal for all alternatives
• Should include at least one major rehabilitation– Needed to capture the true economic benefit
of each alternative
• Bridge design today is based on a probabilistic model of 100 years
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Maintenance CostsMaintenance Costs
• Annual cost associated with the upkeep of the structure
• Information is difficult to obtain for a given project
• Cost varies on the basis of size of the structure (sqft)
• Best Guess Values– Frequency - Annual– Concrete 0.05 % of Initial Cost– Structural Steel 0.05 % of Initial Cost
• Annual cost associated with the upkeep of the structure
• Information is difficult to obtain for a given project
• Cost varies on the basis of size of the structure (sqft)
• Best Guess Values– Frequency - Annual– Concrete 0.05 % of Initial Cost– Structural Steel 0.05 % of Initial Cost
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Inspection CostsInspection Costs
• Requirements set forth in the National Bridge Inspection Standards (23 CFR 650.3)
• Occurs for all alternatives every two years• Cost varies on the basis of size of the
structure (sqft) and by construction material• Best Guess Values
– Frequency - Biannual– Concrete 0.15 % of Initial Cost– Structural Steel 0.20 % of Initial Cost
• Requirements set forth in the National Bridge Inspection Standards (23 CFR 650.3)
• Occurs for all alternatives every two years• Cost varies on the basis of size of the
structure (sqft) and by construction material• Best Guess Values
– Frequency - Biannual– Concrete 0.15 % of Initial Cost– Structural Steel 0.20 % of Initial Cost
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Future Painting CostsFuture Painting Costs
• Only applies to structural steel structures but excludes weathering steel
• Should occur every 20 years• Cost varies on the basis of size of the
structure (sqft)• Best Guess Values
– Frequency – every 20 years– Concrete 0.0 % of Initial Cost– Structural Steel 7.0 % of Initial Cost
• Only applies to structural steel structures but excludes weathering steel
• Should occur every 20 years• Cost varies on the basis of size of the
structure (sqft)• Best Guess Values
– Frequency – every 20 years– Concrete 0.0 % of Initial Cost– Structural Steel 7.0 % of Initial Cost
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Future Rehabilitation Costs
Future Rehabilitation Costs
• The frequency is not only a function of time but also the growing traffic volume and the structural beam system
• Cost varies on the basis of size of the structure (sqft) and structural beam system
• Best Guess Values– Frequency
• First occurrence – Concrete 40 years• First occurrence – Structural Steel 35 years• Annual traffic growth rate .75 % (shortens rehab
cycles)– Concrete 20.0 % of Initial Cost– Structural Steel 22.0 % of Initial Cost
• The frequency is not only a function of time but also the growing traffic volume and the structural beam system
• Cost varies on the basis of size of the structure (sqft) and structural beam system
• Best Guess Values– Frequency
• First occurrence – Concrete 40 years• First occurrence – Structural Steel 35 years• Annual traffic growth rate .75 % (shortens rehab
cycles)– Concrete 20.0 % of Initial Cost– Structural Steel 22.0 % of Initial Cost
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Salvage Value/CostsSalvage Value/Costs
• Occurs once at end of life of structure
• Difference between– Removal cost– Salvage value
• Best Guess Values– Removal cost 10 % of Initial Cost– Salvage Value – Concrete - 0 % of Initial Cost– Salvage Value – Structural Steel - 2 % of Initial
Cost
• Occurs once at end of life of structure
• Difference between– Removal cost– Salvage value
• Best Guess Values– Removal cost 10 % of Initial Cost– Salvage Value – Concrete - 0 % of Initial Cost– Salvage Value – Structural Steel - 2 % of Initial
Cost
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Users CostsUsers Costs
• For early construction completion, maintenance and rehabilitations only
• Delay-of-use• Time delay• Fuel consumption• Driver discomfort
• Vehicle operating costs
• Accidents
• For early construction completion, maintenance and rehabilitations only
• Delay-of-use• Time delay• Fuel consumption• Driver discomfort
• Vehicle operating costs
• Accidents
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Users CostsUsers Costs
• Pros– Users pay for transportation system– Drives the results
• Cons– Owner can not recoup costs– Not in my budget– Drives the results
• Pros– Users pay for transportation system– Drives the results
• Cons– Owner can not recoup costs– Not in my budget– Drives the results
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Users CostsUsers Costs
• Driver Delay Costs:
DDC = (L/Sa-L/Sn) x ADT x N x w
L = Length of affected road waySa = Traffic speed during maintenance activitySn = Normal traffic speedADT = Average daily traffic (vehicles per day)N = number of days of maintenance activityw = Hourly time value of drivers
• Driver Delay Costs:
DDC = (L/Sa-L/Sn) x ADT x N x w
L = Length of affected road waySa = Traffic speed during maintenance activitySn = Normal traffic speedADT = Average daily traffic (vehicles per day)N = number of days of maintenance activityw = Hourly time value of drivers
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Users CostsUsers Costs
• Vehicle Operating Costs:
VOC = (L/Sa-L/Sn) x ADT x N x r
L = Length of affected road waySa = Traffic speed during maintenance activitySn = Normal traffic speedADT = Average daily traffic (vehicles per day)N = number of days of maintenance activityr = weighted-average vehicle cost
• Vehicle Operating Costs:
VOC = (L/Sa-L/Sn) x ADT x N x r
L = Length of affected road waySa = Traffic speed during maintenance activitySn = Normal traffic speedADT = Average daily traffic (vehicles per day)N = number of days of maintenance activityr = weighted-average vehicle cost
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Users CostsUsers Costs
• Accident Costs:
AC = L x ADT x N x (Aa-An) x ca
L = Length of affected road wayADT = Average daily traffic (vehicles per day)N = number of days of maintenance activityAa = Accident rate during maintenance activityAn = Normal accident rateca = Cost per accident
• Accident Costs:
AC = L x ADT x N x (Aa-An) x ca
L = Length of affected road wayADT = Average daily traffic (vehicles per day)N = number of days of maintenance activityAa = Accident rate during maintenance activityAn = Normal accident rateca = Cost per accident
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Present Worth FactorPresent Worth Factor
1pwf =
(1 + i)n
1pwf =
(1 + i)n
pwf = Present Worth Factor for discount rate i and year n
i = Discount raten = Number of years when cost
(benefit) will occur
pwf = Present Worth Factor for discount rate i and year n
i = Discount raten = Number of years when cost
(benefit) will occur
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Discount RateDiscount Rate
Interest - Inflationi =
1 + Inflation
Interest - Inflationi =
1 + Inflation
Interest – The return of an investment that raises the future value of an invested dollar
Inflation – The erosion of a dollar’s value that raises any future expenses
Use of a discount rate allows for the use of constant dollars in the analysis
Interest – The return of an investment that raises the future value of an invested dollar
Inflation – The erosion of a dollar’s value that raises any future expenses
Use of a discount rate allows for the use of constant dollars in the analysis
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Process And Approach Limits
Process And Approach Limits
• Government does not invest money to gain cash benefits (interest)
• Government money is generally invested only in depreciating assets
• Anything not bought this year costs more next year (inflation)
• Government does not invest money to gain cash benefits (interest)
• Government money is generally invested only in depreciating assets
• Anything not bought this year costs more next year (inflation)
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A Spreadsheet ToolA Spreadsheet Tool
• The following Microsoft Excel Spreadsheet allows for the manipulation of Life Cycle Cost data
• LCC Analysis-ver4.xls
• The following Microsoft Excel Spreadsheet allows for the manipulation of Life Cycle Cost data
• LCC Analysis-ver4.xls
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Questions?Questions?
Thank you for your Attention!Thank you for your Attention!