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

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)

Cost ConsiderationsCost Considerations

Maintenance and Inspection

Cost

Initial Cost

Costs

Present Worth

Years

Rehabilitation Cost

Salvage Value

Salvage Costs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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)

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

Questions?Questions?

Thank you for your Attention!Thank you for your Attention!