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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
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!