DEVELOPING FINANCIAL DECISION SUPPORT
FOR HIGHWAY INFRASTRUCTURE
SUSTAINABILITY
By
Kai Chen Goh B.Sc Construction (Hons), M.Sc Construction Management (UTM)
A thesis submitted in partial fulfillment of the requirements for the
degree of
Doctor of Philosophy
SCHOOL OF URBAN DEVELOPMENT
FACULTY OF BUILT ENVIRONMENT AND ENGINEERING
QUEENSLAND UNIVERSITY OF TECHNOLOGY
2011
II
STATEMENT OF ORIGINAL AUTHORSHIP
DECLARATION
The work contained in this thesis has not been previously submitted for a degree or
diploma at any other higher education institution. To the best of my knowledge and
belief, the thesis contains no material previously published or written by another
person except where due reference is made.
Signed : _____________________
Date : _____________________
III
ACKNOWLEDGEMENTS
I wish to express my sincerest appreciation and gratitude to Professor Jay Yang for
his wisdom, patients, calmness in my PhD journey. Without his persistent support,
this thesis may never have been completed on time nor would I have survived it.
Professor Jay Yang through his mentoring enabled me with passionate and self
possessed that this journey was indeed possible to complete.
My deepest appreciation also to Dr. Johnny Wong for his invaluable help in
developing ideas, checking sources and for his great and precise attention to detail
and for willingly sharing his expertise and in-depth knowledge.
I wish to also thank my fellow PhD student colleagues Melissa Chan, Mei Yuan, Mei
Li, Hu Yuan Luo and Riduan Yunus, who have helped to make this journey
somewhat easier through their friendship, continuous encouragement, sharing of
ideas and constructive feedback. Special thanks also to my first best mates in this
journey Asrul Masrom, Tien Choon Toh, Anna Wiewiora, Zhengyu Yang and Soon
Kam Lim for their support and friendship.
I would also like to make special mention to those individuals and organisations that
benevolently contribute their support, guidance, encouragement and contribution to
this research project. My appreciation and thanks to all. Finally, I wish to
acknowledge the support and encouragement received from my wife, Nyuk Sang
Kiew, my brothers, my parents and friends throughout this course of study.
IV
ABSTRACT
The development of highway infrastructure typically requires major capital input
over a long period. This often causes serious financial constraints for investors. The
push for sustainability has added new dimensions to the complexity in the evaluation
of highway projects, particularly on the cost front. This makes the determination of
long-term viability even more a precarious exercise. Life-cycle costing analysis
(LCCA) is generally recognised as a valuable tool for the assessment of financial
decisions on construction works. However to date, existing LCCA models are
deficient in dealing with sustainability factors, particularly for infrastructure projects
due to their inherent focus on the economic issues alone.
This research probed into the major challenges of implementing sustainability in
highway infrastructure development in terms of financial concerns and obligations.
Using results of research through literature review, questionnaire survey of industry
stakeholders and semi-structured interview of senior practitioners involved in
highway infrastructure development, the research identified the relative importance
of cost components relating to sustainability measures and on such basis, developed
ways of improving existing LCCA models to incorporate sustainability commitments
into long-term financial management. On such a platform, a decision support model
incorporated Fuzzy Analytical Hierarchy Process and LCCA for the evaluation of the
specific cost components most concerned by infrastructure stakeholders. Two real
highway infrastructure projects in Australia were then used for testing, application
and validation, before the decision support model was finalised. Improved industry
understanding and tools such as the developed model will lead to positive
sustainability deliverables while ensuring financial viability over the lifecycle of
highway infrastructure projects.
Keywords: sustainability, highway, infrastructure, life-cycle costing analysis, decision support.
V
TABLE OF CONTENTS
STATEMENT OF ORIGINAL AUTHORSHIP ................................................... II
ACKNOWLEDGEMENTS ..................................................................................... III
ABSTRACT .............................................................................................................. IV
TABLE OF CONTENTS .......................................................................................... V
LIST OF ABBREVIATIONS ................................................................................. XI
DEFINITION OF TERMS ..................................................................................... XII
LIST OF FIGURES .............................................................................................. XIII
LIST OF TABLES ................................................................................................. XV
CHAPTER 1: INTRODUCTION .......................................................................... 1
1.1 Research Background .................................................................................... 11.2 Research Questions ....................................................................................... 41.3 Research Objectives ...................................................................................... 51.4 Significance of the Research ......................................................................... 61.5 Scope and Delimitation ................................................................................. 71.6 Research Framework ..................................................................................... 9
1.6.1 Stage 1 - Developing a preliminary model ............................................ 91.6.2 Stage 2 - Developing the survey .......................................................... 101.6.3 Stage 3 - Developing a decision support model ................................... 11
1.7 Thesis Organisation ..................................................................................... 141.8 Chapter Summary ........................................................................................ 15
CHAPTER 2: LITERATURE REVIEW ............................................................. 17
2.1 Introduction ................................................................................................. 172.2 Sustainability and Transport ........................................................................ 17
2.2.1 Sustainable development principles and evolution .............................. 202.2.2 Highway infrastructure development in Australia ............................... 23
2.3 Long-Term Financial Prospects in Highway Development ........................ 252.3.1 Principle of engineering economics ..................................................... 25
2.3.1.1 Benefit cost analysis ..................................................................... 25
VI
2.3.1.2 Life-cycle costing analysis (LCCA) ............................................. 262.3.1.3 Differences between BCA and LCCA .......................................... 282.3.1.4 Decision support ........................................................................... 29
2.3.2 Life-cycle costing analysis and its application in highway infrastructure ………………………………………………………………………...30
2.3.2.1 Current LCCA models and programs in highway infrastructure .. 312.3.2.2 Limitations of existing LCCA studies in adopting sustainable measures …………………………………………………………………...36
2.3.3 Significance of incorporating sustainability-related cost components in LCCA ………………………………………………………………………...38
2.4 Cost Implications in Highway Infrastructure .............................................. 402.4.1. Sustainability-related cost components in highway projects ............... 40
2.4.1.1 Agency category ........................................................................... 422.4.1.2 Social category .............................................................................. 452.4.1.3 Environmental category ................................................................ 47
2.5 Research Gap ............................................................................................... 512.5.1 Challenges to improve long-term financial decisions .......................... 512.5.2 Critical cost components in Australian highway investments ............. 52
2.6 Chapter Summary ........................................................................................ 53
CHAPTER 3: RESEARCH METHODOLOGY AND DEVELOPMENT ......... 55
3.1 Introduction ................................................................................................. 553.2 Selection of Research Methods ................................................................... 56
3.2.1. Survey ................................................................................................... 583.2.2. Case study ............................................................................................ 59
3.3 Research Process ......................................................................................... 613.3.1. Literature review .................................................................................. 63
3.3.1.1. Literature review purposes ............................................................ 633.3.1.2. Literature review development ..................................................... 64
3.3.2. Questionnaire ....................................................................................... 653.3.2.1. Purposes of questionnaire ............................................................. 663.3.2.2. Selection of questionnaire respondents ......................................... 673.3.2.3. Questionnaire development .......................................................... 683.3.2.4. Data analysis ................................................................................. 70
3.3.3. Semi-structured interview .................................................................... 733.3.3.1. Semi-structured interview purposes .............................................. 753.3.3.2. Selection of interview respondents ............................................... 75
VII
3.3.3.3. Interview development ................................................................. 763.3.3.4. Data analysis ................................................................................. 78
3.3.4. Model Development ............................................................................. 793.3.5. Case Study ............................................................................................ 81
3.3.5.1. Case study purposes ...................................................................... 823.3.5.2. Selection of case projects .............................................................. 823.3.5.3. Case study development ............................................................... 843.3.5.4. Data analysis ................................................................................. 86
3.4 Ethical Considerations ................................................................................. 873.5 Chapter Summary ........................................................................................ 87
CHAPTER 4: COST IMPLICATIONS FOR HIGHWAY SUSTAINABILITY –
SURVEY STUDIES .................................................................................................. 89
4.1 Introduction ................................................................................................. 894.2 Profile of Respondents ................................................................................ 91
4.2.1 Respondents’ profiles - questionnaire survey ...................................... 914.2.2 Respondent’s profiles - semi-structured interview .............................. 94
4.3 Results and Findings ................................................................................... 954.3.1 Questionnaire survey results and findings ........................................... 95
4.3.1.1 Sustainability-related cost components: perspective of consultants …………………………………………………………………...96
4.3.1.2 Sustainability-related cost components: perspective of contractors …………………………………………………………………...98
4.3.1.3 Sustainability-related cost components: perspective of government agencies and local authorities ...................................................................... 1004.3.1.4 Integration of sustainability-related cost components in LCCA studies ………………………………………………………………….102
a. Agency category .......................................................................................... 104
b. Social category ............................................................................................. 105
c. Environmental category ............................................................................... 106
4.3.2 Summary of the questionnaire survey results and suggestions .......... 1074.3.3 Semi-structured interview results and findings .................................. 109
4.3.3.1. Current industry practice of LCCA application .......................... 1094.3.3.2. Ways to quantify cost related to sustainable measures ............... 1174.3.3.3. Challenges in integrating costs related to sustainable measures into LCCA practice ............................................................................................. 1204.3.3.4. Suggestions for enhancing sustainability in LCCA practice ...... 121
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4.3.4 Summary of semi-structured interview results and suggestions ........ 1234.4 Chapter Summary ...................................................................................... 124
CHAPTER 5: A DECISION SUPPORT MODEL FOR EVALUATING
HIGHWAY INVESTMENT .................................................................................... 127
5.1 Introduction ............................................................................................... 1275.2 The Model Structure and Application ....................................................... 130
5.2.1. The model structure and development: stage 1 .................................. 1305.2.2. The model structure and development: stage 2 .................................. 132
5.3 The Fuzzy Analytical Hierarchy Process .................................................. 1335.3.1. Fundamentals of Fuzzy AHP ............................................................. 1355.3.2. Fuzzy AHP assessment procedure ..................................................... 136
5.4 Life-Cycle Cost Analysis ........................................................................... 1445.4.1. Life-cycle cost analysis in highway infrastructure ............................. 1445.4.2. LCCA calculation procedure .............................................................. 146
5.5 Final Decision Making Process ................................................................. 1495.6 Sensitivity Analysis ................................................................................... 1515.7 Chapter Summary ...................................................................................... 152
CHAPTER 6: MODEL APPLICATION THROUGH CASE STUDIES .......... 155
6.1 Introduction ............................................................................................... 1556.2 Selection of the Case Study Projects ......................................................... 157
6.2.1 Case study A: Wallaville bridge ..................................................... 1576.2.2 Case study B: Northam bypass ....................................................... 159
6.3 Significance of the Case Projects .............................................................. 1616.4 Model Application in Case Study A - Wallaville Bridge .......................... 162
6.4.1 Project alternatives ......................................................................... 1626.4.2 Fuzzy AHP for qualitative indicators ............................................. 163
6.4.2.1 Evaluation of criteria weight ................................................................ 163
6.4.2.2 Evaluation of alternatives ..................................................................... 166
6.4.2.3 Final scores of alternatives ................................................................... 169
6.4.3 LCCA calculation for quantitative indicators ................................. 1716.4.4 Final decision making ..................................................................... 1746.4.5 Sensitivity analysis ......................................................................... 175
6.4.5.1 Sensitivity analysis for Fuzzy AHP ...................................................... 175
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6.4.5.2 Sensitivity analysis for LCCA ............................................................. 176
6.5 Model Application in Case Study B - Northam Bypass ............................ 1786.5.1 Project alternatives ......................................................................... 1796.5.2 Fuzzy AHP for qualitative indicators ............................................. 180
6.5.2.1 Evaluation of criteria weight ................................................................ 180
6.5.2.2 Evaluation of alternatives ..................................................................... 183
6.5.2.3 Final scores of alternatives ................................................................... 186
6.5.3 LCCA calculation for quantitative indicators ................................. 1876.5.4 Final decision making .................................................................... 1906.5.5 Sensitivity analysis ......................................................................... 191
6.5.5.1 Sensitivity analysis for Fuzzy AHP ..................................................... 192
6.5.5.2 Sensitivity analysis for LCCA ............................................................. 193
6.6 Summary of Model Application ................................................................ 1956.7 Validation of the Model ............................................................................ 1966.8 Chapter Summary ...................................................................................... 197
CHAPTER 7: FINDINGS AND MODEL FINALISATION ............................ 201
7.1 Introduction ............................................................................................... 2017.2 Synthesising Phases 1 to 4 for Interpretation and Discussion ................... 2027.3 Critical Sustainability-Related Cost Components ..................................... 203
7.3.1. Agency dimension of sustainability ................................................... 2047.3.2. Social dimension of sustainability ..................................................... 2057.3.3. Environmental dimension of sustainability ........................................ 205
7.4 Enhancement of LCCA for Sustainability Measures ................................ 2067.4.1. Industry practice of LCCA ................................................................. 2087.4.2. Challenges of incorporating sustainability into LCCA ...................... 210
7.5 Model Finalisation ..................................................................................... 2127.6 Chapter Summary ...................................................................................... 217
CHAPTER 8: CONCLUSION ........................................................................... 219
8.1 Introduction ............................................................................................... 2198.2 Review of Research Objectives and Development Processes ................... 2198.3 Research Objectives and Conclusions ....................................................... 220
8.3.1. Research objective 1 .......................................................................... 2208.3.2. Research objective 2 .......................................................................... 222
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8.3.3. Research objective 3 ........................................................................... 2238.4 Research Contributions .............................................................................. 224
8.4.1. Contribution to academic knowledge ................................................. 2248.4.2. Contribution to the industry ............................................................... 225
8.5 Study Limitations ...................................................................................... 2258.6 Recommendations for Future Research ..................................................... 2268.7 Summary .................................................................................................... 227
REFERENCES ....................................................................................................... 229
APPENDIX A1: INVITATION LETTER-QUESTIONNAIRE ........................ 246
APPENDIX A2: SAMPLE OF QUESTIONNAIRE ........................................... 248
APPENDIX B1: INVITATION LETTER- SEMI-STRUCTURED INTERVIEW
.................................................................................................................................. 255
APPENDIX B2: SAMPLE OF CONSENT FORM ............................................ 257
APPENDIX B3: SAMPLE OF INTERVIEW ..................................................... 258
APPENDIX C1: INVITATION LETTER- FUZZY AHP QUESTIONNAIRE
.................................................................................................................................. 260
APPENDIX C2: SAMPLE OF FUZZY AHP QUESTIONNAIRE ................... 262
APPENDIX D: LIST OF PUBLICATIONS ........................................................ 266
XI
LIST OF ABBREVIATIONS
Austroads =
BCA
Association of Australian and New Zealand road transport and traffic authorities
= Benefit Cost Analysis BCR = Benefit Cost Ratio BTCE = BTRE
Bureau of Transport and Communications Economics = Bureau of Infrastructure, Transport and Regional Economics
Cal B/C = California Life-Cycle Benefit/ Cost CCP-PLUS = Cities for Climate Protection, Australia CCPTM = Cities for Climate ProtectionDEA
TM = Data envelopment analysis
FHWA
= Fuzzy AHP
Federal Highway Administration = Fuzzy Analytic Hierarchy Process
GEH = Great Eastern Highway HDM-4 = Highway Design and Maintenance Standards Model Version 4 HDM-III = Highway Design and Maintenance Standards Model Version III ISOHDM = International Study of Highway Development and Management IUCN = International Union for Conservation of Nature LCCA = Life-cycle cost analysis LCCOST = Pavement Life Cycle Cost Analysis Package LCCP = Life-cycle cost analysis program-Flexible Pavement LCCPR = Life-cycle cost analysis program-Rigid Pavement MCDM = Multi-Criteria Decision-Making PRLEAM = Pavement Rehabilitation Life-Cycle Economic Analysis QUT = Queensland University of Technology, Australia RTA = Road and Transport Authority, Australia UN = United Nations US = United States WCED = World Commission on Environment and Development WSM = Weighted Sum Model
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DEFINITION OF TERMS
For clearer understanding of the terms used in this research, the meanings are
extrapolates as follows:
Sustainable development – Sustainable development refers to a pattern of resource
use that aims to meet human needs while preserving the environment so that these
needs can be met not only in the present, but also for generations to come.
Life-cycle costing analysis (LCCA) - LCCA involves the analysis of the costs of a
highway infrastructure over its entire life span.
Long-term financial management – Long-term financial management means a long
term financial planning for entities providing services from infrastructure assets,
especially long lived (> 10 years) assets to assist these entities in managing service
delivery from infrastructure assets.
Cost component – Cost component involves sustainability-related cost elements
(quantifiable) and issues (qualitative), yet causing impacts to the environment,
society and economics.
Stakeholder – A stakeholder refers to a person, group, organisation, or system that
affects or can be affected by an organisation's actions.
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LIST OF FIGURES
Figure 1.1: Variances leading to a sustainability-based life-cycle cost analysis model ...................................................................................................................................... 4
Figure 1.2: Structured infrastructure investment review process (DTF 2011) ............ 8Figure 1.3: Stage 1 - Developing a preliminary model .............................................. 10Figure 1.4: Stage 2 - Surveys development ............................................................... 11Figure 1.5: Stage 3 - Developing a decision support model ...................................... 12Figure 1.6: Research plan chart .................................................................................. 13Figure 2.1: Sustainability criteria for the transport sector (Basler and Partner 1998) 18Figure 2.2: UK sustainable development indicators (Bickel et al. 2003) .................. 19Figure 2.3: The three pillars of sustainable development (Koo 2007) ....................... 21Figure 2.4: Life-cycle costing procedure ................................................................... 27Figure 2.5: Typical life cycle of a road asset (Rouse and Chiu 2008) ....................... 43Figure 3.1: Spectrum of interview types (Fellows and Liu 2008) ............................. 57Figure 3.2: Breadth vs. depth in ‘question-based’ studies (Fellows and Liu 2008) ... 57Figure 3.3: Research process ..................................................................................... 62Figure 3.4: Questionnaire research flow chart (Statpac 1997) ................................... 66Figure 3.5: Case study process ................................................................................... 85Figure 4.1: Purpose of survey in overall research aim ............................................... 90Figure 4.2: Categories of respondent in questionnaire survey ................................... 92Figure 4.3: Respondents’ utilisation of LCCA in highway projects ........................ 110Figure 4.4: Types of data utilised by respondents in highway treatments ............... 115Figure 5.1: Integration of survey findings with model development ....................... 128Figure 5.2: Development of model based on research objectives and questions ..... 129Figure 5.3: Decision support model development process ...................................... 130Figure 5.4: Proposed assessment methods for the decision support model ............. 133Figure 5.5: Proposed application of the Fuzzy AHP ............................................... 134Figure 5.6: Hierarchy map of sustainability-related cost component assessment ... 137Figure 5.7: The linguistic scale of triangular numbers for relative importance ....... 138Figure 5.8: The intersection between C1 and C2 ..................................................... 142Figure 5.9: Timing of maintenance and rehabilitation ............................................. 144Figure 5.10: Agency costs associated with construction activities .......................... 145Figure 5.11: Social and environmental costs added to agency costs associated with construction activities ............................................................................................... 146Figure 6.1: Approach to model application and overall research aim ..................... 156Figure 6.2: Wallaville Bridge in flood (BTRE 2007a) ............................................ 158Figure 6.3: Tim Fischer Bridge (BTRE 2007a) ....................................................... 159Figure 6.4: Northam Bypass (BTRE 2007b) ............................................................ 161Figure 6.5: Final decision making by WSM ............................................................ 175Figure 6.6: Sensitivity analysis for Fuzzy AHP weight factor changes ................... 176Figure 6.7: Sensitivity analysis for LCCA weight factor changes ........................... 178Figure 6.8: Alternative alignment options of Northam Bypass (EPA 1993) ........... 179Figure 6.9: Final decision making by WSM ............................................................ 191Figure 6.10: Sensitivity analysis for Fuzzy AHP weight changes ........................... 193Figure 6.11: Sensitivity analysis for LCCA weight factor changes ......................... 194Figure 7.1: Critical sustainability-related cost components in Australian highway infrastructure projects ............................................................................................... 204
XIV
Figure 7.2: Platform for developing financial decision support model in highway infrastructure sustainability ...................................................................................... 213Figure 7.3: The finalised financial decision support model for highway infrastructure sustainability ............................................................................................................. 215
XV
LIST OF TABLES
Table 2.1: Differences between BCA and LCCA ...................................................... 28Table 2.2: Existing LCCA models and programs ...................................................... 33Table 2.3: Agency impacts and costs in highway projects ........................................ 43Table 2.4: Social impacts and costs in highway projects ........................................... 46Table 2.5: Environmental impacts and costs in highway projects ............................. 48Table 2.6: Sustainability-related cost components for highway infrastructure .......... 52Table 3.1: Characteristics of questions ...................................................................... 65Table 3.2: Stages and steps in model building (Richardson and Pugh, 1981) ........... 80Table 3.3: Case projects’ fulfillment of selection criteria .......................................... 83Table 4.1: Respondents’ roles in highway projects ................................................... 93Table 4.2: Respondents’ construction industry experience ....................................... 93Table 4.3: Consultants’ rating of sustainability-related cost components ................. 97Table 4.4: Contractors’ rating of sustainability-related cost components .................. 99Table 4.5: Government agencies and local authorities’ rating of sustainability-related cost components ....................................................................................................... 101Table 4.6: Perceptions of ‘importance level’ of cost components related to sustainable measures by industry stakeholders ........................................................ 103Table 4.7: Industry validated sustainability-related cost components in highway infrastructure ............................................................................................................ 108Table 4.8: Questions to identify current industry practice of LCCA ....................... 110Table 4.9: Relevant analysis period of LCCA ......................................................... 112Table 4.10: Maintenance treatments of highway infrastructure ............................... 113Table 4.11: Ways to quantify cost related to sustainable measures ......................... 118Table 4.12: Challenges to integrating costs related to sustainable measures into LCCA ....................................................................................................................... 120Table 4.13: Stakeholders’ suggestions for enhancing sustainability in LCCA ........ 122Table 4.14: Comparison of the survey results with literature findings .................... 125Table 5.1: Sustainability-related cost components for highway infrastructure ........ 131Table 5.2: Triangular fuzzy conversion scale .......................................................... 138Table 5.3: Assessment approach of critical sustainability cost components ........... 143Table 5.4: WSM calculation table for final decision making .................................. 150Table 6.1: The fuzzy evaluation matrix with respect to the goal ............................. 165Table 6.2: The relative importance of agency cost components .............................. 165Table 6.3: The relative importance of social cost components ................................ 165Table 6.4: The relative importance of environmental cost components .................. 165Table 6.5: Composite priority weights for sustainability-related cost components evaluation criteria ..................................................................................................... 167Table 6.6: Evaluation of the alternatives with respect to material costs .................. 167Table 6.7: Evaluation of the alternatives with respect to plant and equipment costs
.................................................................................................................................. 167Table 6.8: Evaluation of the alternatives with respect to major maintenance costs 167Table 6.9: Evaluation of the alternatives with respect to rehabilitation costs .......... 168Table 6.10: Evaluation of the alternatives with respect to road accident- internal costs
.................................................................................................................................. 168Table 6.11: Evaluation of the alternatives with respect to road accident- economic value of damage ....................................................................................................... 168Table 6.12: Evaluation of the alternatives with respect to hydrological impacts .... 168
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Table 6.13: Evaluation of the alternatives with respect to loss of wetland .............. 168Table 6.14: Evaluation of the alternatives with respect to cost of barriers .............. 169Table 6.15: Evaluation of the alternatives with respect to disposal of material costs
.................................................................................................................................. 169Table 6.16: Priority weights of the alternatives with respect to agency aspects ...... 169Table 6.17: Priority weights of the alternatives with respect to social aspects ........ 170Table 6.18: Priority weights of the alternatives with respect to environmental aspects
.................................................................................................................................. 170Table 6.19: Final scores of the alternatives .............................................................. 170Table 6.20: Determination of activity timing ........................................................... 171Table 6.21: Estimated expenditures to keep old bridge open .................................. 172Table 6.22: Costs of agency and social category ..................................................... 173Table 6.23: Computation of expenditure by years ................................................... 173Table 6.24: Computation of life-cycle cost analysis ................................................ 173Table 6.25: Summary of sustainability assessment results ...................................... 174Table 6.26: Summary of normalised sustainability assessment result ..................... 174Table 6.27: Weight factors for normalised sustainability assessment results and final prioritisation ............................................................................................................. 174Table 6.28: Changes in prioritisation value by changing the Fuzzy AHP weight factors ....................................................................................................................... 176Table 6.29: Changes in prioritisation value by changing the LCC weight factors .. 177Table 6.30: The fuzzy evaluation matrix with respect to the goal ........................... 182Table 6.31: The relative importance of agency cost components ............................ 182Table 6.32: The relative importance of social cost components .............................. 182Table 6.33: The relative importance of environmental cost components ................ 182Table 6.34: Composite priority weights for sustainability-related cost components evaluation criteria ..................................................................................................... 183Table 6.35: Evaluation of the alternatives with respect to material costs ................ 184Table 6.36: Evaluation of the alternatives with respect to plant and equipment costs
.................................................................................................................................. 184Table 6.37: Evaluation of the alternatives with respect to major maintenance costs
.................................................................................................................................. 184Table 6.38: Evaluation of the alternatives with respect to rehabilitation costs ........ 184Table 6.39: Evaluation of the alternatives with respect to road accident- internal costs
.................................................................................................................................. 184Table 6.40: Evaluation of the alternatives with respect to road accident- economic value of damage ....................................................................................................... 185Table 6.41: Evaluation of the alternatives with respect to hydrological impacts .... 185Table 6.42: Evaluation of the alternatives with respect to loss of wetland .............. 185Table 6.43: Evaluation of the alternatives with respect to cost of barrier ................ 185Table 6.44: Evaluation of the alternatives with respect to disposal of material costs
.................................................................................................................................. 185Table 6.45: Priority weights of the alternatives with respect to agency aspects ...... 186Table 6.46: Priority weights of the alternatives with respect to social aspects ........ 186Table 6.47: Priority weights of the alternatives with respect to environmental aspects
.................................................................................................................................. 186Table 6.48: Final scores of the alternatives .............................................................. 187Table 6.49: Determination of activity timing ........................................................... 188Table 6.50: Costs of agency and social category ..................................................... 189Table 6.51: Computation of expenditure by years ................................................... 189
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Table 6.52: Computation of life-cycle costs ............................................................ 189Table 6.53: Summary of weighted sum assessment results ..................................... 190Table 6.54: Summary of normalised weighted sum assessment results .................. 191Table 6.55: Weight factors for normalised weighted sum assessment results and final prioritisation ............................................................................................................. 191Table 6.56: Changes in prioritisation value by changing the Fuzzy AHP weight factors ....................................................................................................................... 192Table 6.57: Changes in prioritisation value by changing the Fuzzy AHP weight factors ....................................................................................................................... 194Table 6.58: Comparison of the case study results with literature and survey findings
.................................................................................................................................. 199
Chapter 1: Introduction 1
CHAPTER 1: INTRODUCTION
1.1 Research Background
Sustainable development has gained prominence over the last few decades across
various sectors including the construction industry (WCED 1987). In the
construction industry, the practice of sustainability has faced ongoing opportunities
and challenges in this period due to the globalisation of the business environment and
climate change, new materials and technologies, information and communication
technologies, and governance and regulation (Hampson and Brandon 2004).
For the business sector to embrace sustainable development, there is a need to create
increasing economic values while using natural resources sustainably and making a
broader contribution to the community’s social aims and objectives (Bourdeau 1999).
This change extends beyond the traditional concern of business, which is about
profitability and increasing shareholder value. Consequently, there is also a great of
need for tools to enable business to monitor, manage and report performance.
Sustainable development is about making societal investments that are sensitive to
the natural environment and at the same time financially viable in the long term. In
the construction industry, the development of a project from the client perspective
needs to be consistent with the benefits produced. Over a facility lifetime, there are
many opportunities to minimise the impacts of operations on natural environment.
Therefore, it is important to examine the sustainable approaches in its design,
construction, operation, maintenance and replacement or retirement. This study aims
to investigate the financial implication of sustainability measures in infrastructure
development, with a particular focus on highway construction.
Infrastructure development plays an important role in supporting society, the
economy and the environment. In Australia, the distribution of essential public
2 Chapter 1: Introduction
services for maintaining human life, especially in dense urban environments, is
heavily dependent on infrastructure systems. According to the Northern Economic
Triangle Infrastructure Plan 2007-2012, the Queensland State Government will
invest over 82 billion Australian dollars in the next 20 years, to fund transportation,
gas delivery and water recycling projects. Some of these projects are quite large,
requiring over a billion dollars each, and will make up almost 20 billion dollars of
the $82 billion as a whole (Queensland Government 2007). Such significant
investment warrants an examination of how infrastructure can become more
sustainable. For this purpose, numerous researchers and industry professionals have
put great effort into the development of criteria, tools, concepts and assessment
systems to improve infrastructure sustainability (Dasgupta and Tam 2005; Sahely,
Kennedy and Adams 2005; Ugwu et al. 2006a, 2006b).
Recently, a significant number of research projects were initiated to investigate
sustainability issues and the built environment in general. At the broader
international level, the issues discussed include environment and industrial ecology,
group decision-making (Seager and Theis 2004; Seager 2004), sustainability
assessment (Ugwu and Haupt 2007), multi-attribute decision analysis (Rogers,
Seager and Gardner 2004; Linkov et al. 2005; Anex and Focht 2002) and
environmental management systems (Gluch and Baumann 2004). Researchers have
investigated social dimensions and partnership (Fisher 2003) and risk analysis in
environmental decision-making (Rogers, Seager and Gardner 2004; Linkov et al.
2005).
Although the application of sustainability in built assets is beneficial, it often
involves major capital investment. Costs always become the impeding factor for
stakeholders when they contemplate sustainability initiatives. Thus, it is crucial to
balance the financial benefits with sustainability deliverables in highway
infrastructure development. The determination of costs is an important aspect of
decision-making and an essential part of the development process. Life-cycle cost
analysis (LCCA) is an economic assessment approach that can predict the costs of a
facility throughout its life span. It takes into account the time, the value of money
and reduces the flow of running costs over a period to a single current value or
present worth. Life-cycle costing is a management tool to be used periodically
Chapter 1: Introduction 3
throughout the economic life of the asset. It is based on the different options
available to determine the alternative with the lowest costs. According to List (2007),
life-cycle cost analysis helps to ensure that these objectives are achieved. Using
LCCA, decision-makers can evaluate competing initiatives and identify the most
sustainable growth path for common infrastructure. LCCA make it possible to deal
with the challenges of competing needs in selecting relevant allocations to spend on
health care, environmental impact mitigation, national defense, transportation, and a
wealth of other programs.
Most of research on life-cycle costing methods on buildings and infrastructure focus
on the economics of a construction project (Aye et al. 2000; List 2007). Little
attention has been paid to the application of the life-cycle costing methods in
evaluating the economic aspects of sustainability in construction projects (List 2007;
Madanu, Li and Abbas 2009; Swaffield and McDonald 2008). LCCA can become a
useful approach to managing the financial aspects of the asset while emphasising
sustainability in its service life. To achieve such a balance, the construction industry
needs to predict financial, social and environmental costs and benefits in the long-
term.
Hence, ideally, the principles of sustainability should be integrated into the LCCA
concept. This is, however, complicated by the difficulties of measuring cost
components related to sustainability and the inconsistencies in measurement
approaches. Previous studies have shown unclear boundaries and ambiguities in
identifying sustainability costs and impacts of highway development (Wilde,
Waalkes and Harrison 2001; List 2007; Kendall, Keoleian and Helfand 2008; Zhang,
Keoleian and Lepech 2008). Understandably, existing LCCA approaches tend to
omit social and environmental costs given that such costs are usually difficult to
measure and the values are often disputed. Worse still, these approaches also show a
large degree of variance in the estimation methods, which has resulted in a lack of
sustainable measures in current LCCA. Figure 1.1 illustrates the variances in
traditional LCCA estimation methods, pointing to the need for a sustainability-based
LCCA model.
4 Chapter 1: Introduction
Figure 1.1: Variances leading to a sustainability-based life-cycle cost analysis model
This phenomenon calls for a new decision support model capable of dealing with
sustainability-related cost components and assessing long-term financial
implications. Highway stakeholders need to appreciate such a level of decision
support and act upon sustainability challenges as well as opportunities.
1.2 Research Questions
Based on the background and impetus of the research, the following questions are
posed:
RQ 1. What are the sustainability measures that have cost implications for highway
projects?
It has been argued that the growing problems of monetary turnover among highway
infrastructure investors have become the main hindrance to pursuing sustainability.
To achieve long-term financial viability for highway projects, it is essential to
understand the development of life-cycle cost analysis and how this relates to the
principle of sustainability. Identification of sustainability-related cost components in
a highway project can help to promote critical thinking to fill the gap as shown above
in Figure 1.1.
Traditional LCCA model
Sustainability-based LCCA
model Research Gap
Inconsistent estimation methods in environmental and social costs calculation
Unclear boundaries in considering sustainability impacts
Difficult to quantify sustainability related cost components
Ambiguity in identifying relevant costs for LCCA in highway projects
Chapter 1: Introduction 5
RQ 2. What are the specific cost components relating to sustainability measures
about which highway project stakeholders feel most concerned?
It is recognised that the complex nature of sustainability and highway infrastructure
development often causes challenges in the pursuit of long-term financial viability.
To understand this complex nature, it is important to first understand current
highway industry practice and the development of life-cycle cost analysis. Suitable
actions are needed to cope with these challenges. Identification of cost components
related to sustainable measures provides the basis to assess tangible cost components
in long-term financial decisions at the project level. In this way also, the
understanding of the sustainability foci and the realisation in long-term financial
management for the highway project can be enhanced.
RQ 3. How can long-term financial viability of sustainability measures in highway
projects be assessed?
To facilitate a smooth and practical implementation of sustainability objectives at the
project level, the critical cost components need to be thoroughly dealt with
concerning real-life projects. The solutions to measure these components provide
project stakeholders with concrete actions they can apply in their efforts to pursue
and enhance the sustainability deliverables and financial practicality in highway
infrastructure projects.
1.3 Research Objectives
The aim of this research is to develop a decision support model for evaluating long-
term financial decisions relating to sustainability for highway projects. To achieve
the research aim, the three questions presented in Section 1.2 need to be answered by
the following objectives:
1. To understand the cost implications of pursuing sustainability in highway
projects. This involves:
• Understanding global initiatives on sustainable infrastructure development,
6 Chapter 1: Introduction
• Understanding the context of highway infrastructure development in Australia,
• Reviewing the current LCCA model and programs on highway infrastructure,
and
• Identifying the sustainability-related cost components in highway infrastructure
projects.
2. To identify the critical cost components related to sustainable measures in
highway infrastructure investments. This involves:
• Exploring the different perceptions and expectations of various stakeholders
regardless of the current practice of life-cycle cost analysis in Australian
highway infrastructure,
• Identifying the cost components that are significant in highway infrastructure
investments, and
• Integrating the expectations of the various stakeholders that are suitable for
long-term financial management.
3. To develop a decision support model for the evaluation of long-term financial
decisions regarding sustainability for highway projects. This involves:
• Compiling the industry verified cost components into existing LCCA models
for further development,
• Developing financial decision support model for highway infrastructure
sustainability, and
• Testing and evaluating the decision support model based on the real-life
projects.
1.4 Significance of the Research
As highway infrastructure projects involve large resources and mechanisms,
financial stress is a significant challenge for investors. The concept of sustainability
is gaining popularity in the construction industry and this means achieving
sustainability not only on environmental and social scales, but also through economic
Chapter 1: Introduction 7
responsibility. While the sustainability concept is being emphasised in highway
infrastructure, effective financial management is crucial as highway funding at all
levels of government continues to fall short of infrastructure needs. As a result,
investors’ decisions based on experience are not performing as well, as promised
while managers are under great obligation to optimise society investments as well as
sustainability deliverables at the project level.
This study seeks to add to the existing body of knowledge by filling the gap between
sustainable development and long-term financial management in the context of
highway infrastructure. The data collected is an asset to knowledge in this area. The
research findings serve as the guidelines to encourage sustainability and long-term
financial management strategies for stakeholders. This result may directly or
indirectly contribute to measurable benefits in the form of cost efficiency, better
product quality and utility.
This study also seeks to develop a decision support model for evaluating long-term
financial management in Australian highway infrastructure. The expected model
aims to serve as a decision-making tool to aid in highway infrastructure investments.
It is also anticipated that the model may assist the stakeholders through increased
understanding of the importance of sustainability concepts and long-term financial
management in highway infrastructure. This understanding can lead to improve
competitiveness in construction markets.
1.5 Scope and Delimitation
This study was delimited to the development of a decision support model aimed at
improving long-term financial decisions in highway investment. “Delimitations” are
within the control of the researcher. The identified delimitations are discussed as
follows:
• The attention of this study is directed at public-sector evaluation in general,
and more especially with respect to highway infrastructure. The data are
collected from industry stakeholders involved in highway infrastructure
projects. The result could be generalised for the highway infrastructure
8 Chapter 1: Introduction
industry, but some of the identified factors may vary and not be relevant for
other infrastructures. Further improvements are necessary for application on
specific types of infrastructure.
• Research data was collected from the Australian highway infrastructure
industry, and the results are applicable to Australia only.
• This study is focused on the highway investment decisions in a financial
perspective. Due to the infrastructure investment involved several stages of
reviewing, this study is concentrating on the business case and budget
committee consideration (Point 3 and 4) as shown in Figure 1.2. The highway
investment decisions need to appropriately meet the needs of the community,
have been appropriately planned and are based on reliable cost estimates.
• The strategic assessment and options analysis as shown in Figure 1.2 includes
several criteria such as risk and sustainability benefits are part of key issues in
strategic assessment. Even though both issues are crucial in considering
project investment decisions, this study focuses purely on the financial
implication for highway infrastructure sustainability. This study aims to
provide the decision makers with a systematic project proposal and identify
the preferred selection for highway investment decisions.
Investment Concept Outline
Strategic Assessment and Option Analysis
Business Case
Budget Committee
Consideration
Interim Project Review
Post Implementation
review
Point 1 Point 2 Point 3 Point 4 Point 5 Point 6
Reason for
project proposal
Relationship to government’s
policy priorities
Benefits/ outcomes
to be achieved
Delivery Alternatives
Project Management
External conditions and critical success
Risk
Stakeholder analysis
Project proposal
cost
Market research
Timeline
Financial Implication
Figure 1.2: Structured infrastructure investment review process (DTF 2011)
Chapter 1: Introduction 9
1.6 Research Framework
A research framework is a systematic structure that helps to coordinate a research
project and ensures the efficient use of resources and to guide the researcher in the
use of suitable research methods through logical stages. It shows a broad picture to
the researchers to help to refine a clear connection between all the stages (King,
Keohane and Verba 1994). The probability of success in a research project is greatly
enhanced when the “beginning” is correctly defined as an accurate statement of goals
and justification. Having accomplished this, it is easier to identify and organise the
sequential steps necessary for writing a research framework and then successfully
executing a research project. This procedure creates a greater understanding of
problems or hypotheses, and makes practical applications through theories,
questioning and reasoning to achieve the research objectives, with the hope to
produce some new knowledge.
For the purpose of this study, the research framework was based on three stages to
answer the research objectives. Each of the stages is described in the following sub-
sections.
1.6.1 Stage 1 - Developing a preliminary model
This stage involves a literature review to explore the scope and issues in
sustainability-related cost components in highway construction. A preliminary model
is developed according to the sustainability-related cost components identified
through previous research and Australian project reports. Imperative aspects of the
cost components are identified and tabulated according to their significance before
incorporating these into the questionnaire for industry verification.
10 Chapter 1: Introduction
A summary of the Stage 1 is shown in Figure 1.3.
1.6.2 Stage 2 - Developing the survey
The focus of this research is on the stakeholders in highway infrastructure as the
primary respondents in of the surveys. Questionnaire surveys and semi-structured
interviews are conducted with the industry stakeholders. Questionnaire surveys are
administered to identify the cost components related to sustainable measures that are
significant in highway infrastructure investments. Semi-structured interviews are
conducted to have a better understanding of current highway industry practice in
long-term financial management. Both methods reveal the facts for the second
objective, which is to identify the critical cost components related to sustainable
measures in highway infrastructure investments. A summary of Stage 2 is shown in
Figure 1.4.
STAGE 1
Preliminary Model
Reviewing the Literature
Defining the Topic
Identify Source of Information
Keeping Records
Reading and Taking Notes
OBJECTIVE 1
To understand the costs implication of pursuing
sustainability in highway projects
Figure 1.3: Stage 1 - Developing a preliminary model
Chapter 1: Introduction 11
1.6.3 Stage 3 - Developing a decision support model
Finally, the decision support model is developed to evaluate the long-term financial
decision for highway projects by matching methods namely the Fuzzy Analytical
Hierarchy Process (Fuzzy AHP) and life-cycle cost analysis. The case study is
undertaken to apply and test the developed model in real-life projects. Further
analysis and synthesis are applied to validate and prove the model in evaluating and
comparing the highway project alternatives based on the sustainability indicators. A
summary of Stage 3 is shown in Figure 1.5.
STAGE 2
Surveys Development
Define the objective of the survey
Writing the Questionnaire
Interpretation of the Result
Determine the Sampling Group
Administering the Questionnaire
Questionnaires
Face-to-face
Telephone
Semi-structured Interviews
OBJECTIVE 2
To identify the critical cost components related to
sustainable measures in highway infrastructure
investments.
Figure 1.4: Stage 2 - Surveys development
12 Chapter 1: Introduction
Generally, a research framework follows certain structural stages and processes.
Each stage represents different methodologies to achieve the research objectives. In
this research, all possible methods and strategies were carefully considered before
choosing the most appropriate one. The quantitative and qualitative data is processed
and analysed using computer-assisted tools to derive meaningful results. The
implementation of the key research methodologies assists in defining appropriate
processes to answer the research questions as well as the aim. The research
framework shows the overall research design procedure, and is illustrated in Figure
1.6.
STAGE 3
Matching Methods
OBJECTIVE 3
To develop a decision support model for the evaluation of long-term financial decision for highway projects.
Case Study
Decision Support Model
Fuzzy Analytical Hierarchy Process (Fuzzy AHP)
Life-Cycle Cost Analysis (LCCA)
Figure 1.5: Stage 3 - Developing a decision support model
Chapter 1: Introduction 13
Figure 1.6: Research plan chart
Dat
a C
olle
ctio
n A
naly
sis
Res
ult
Lite
ratu
re R
evie
w
Industrial Feedback
Literature Review
Research Problems
Methodological Approach
Consultation with academics
Research Objectives
Industrial Feedback
Conclusions, Recommendations and Further Studies
Survey • Questionnaire-based survey based on the
literature review and preliminary model building
• Identify the cost components in LCCA that emphasise sustainability
• Semi-structured interviews undertaken to identify current industry practice of LCCA in highway infrastructure
Case Study • Apply and test the developed model in real-life
projects • Evaluate and validate the model
Research Analysis and Findings
Literature Review & Preliminary Model Development
• Refine traditional life-cycle cost analysis model.
• Identify sustainability-related cost components
Research Question Hypotheses Statements
Quantitative Method Quantitative Method
Model Development • Develop decision support model that
emphasise the sustainability context.
Stage 1
Stage 2
Stage 3
14 Chapter 1: Introduction
1.7 Thesis Organisation
This dissertation consists of nine chapters. A brief summary of each is outlined as
follows.
Chapter 1 comprises the introductory section that develops the direction of this
investigation. It also states the research background, problems and objectives; and
provides a brief discussion of the methodology and the thesis organisation.
Chapter 2 summarises the current state of knowledge by addressing the relevant
literature. Areas covered in this chapter include sustainable development principles
and the evolution of highway infrastructure development in Australia. The literature
review also covers the long-term financial management in highway development
which includes the principles of long-term financial management, application of
LCCA in highway projects, development of the LCCA models and programs, and the
limitation of existing LCCA studies regarding sustainability. Literature on the
responses to the sustainability challenge and cost implication in highway
infrastructure is also surveyed. Overall, this chapter identifies the research gap,
which justifies the need for this study.
Chapter 3 describes the research methodology in detail including: the research
methodology; data collection methods (namely questionnaire, interview, model
development and case studies); research information; selection of participants and
case projects; research instrumentation; data analysis and validation of results; and,
finally, guideline formulation.
Chapter 4 describes the data analysis and results of the questionnaire and semi-
structured interview. Questionnaire feedback is presented and the results tabulated in
order to answer the research questions. Sustainability-related cost components are
identified and conclusions are drawn. The data analysis and findings of the interview
results illustrate the understanding on the current industry practise of long-term
financial management in highway infrastructure. In addition, potential issues
hindering the integration of sustainability into LCCA are identified. Their conceptual
solutions are also recognised.
Chapter 1: Introduction 15
Chapter 5 discusses the development of a decision support model to aid stakeholders
in highway investment. This section explains the development of the model by using
one of the multi-criteria decision support approaches, Fuzzy analytical hierarchy
process (Fuzzy AHP) and integration with the traditional LCCA concept. The model
will then be tested and evaluated by industry stakeholders in real-life highway
infrastructure projects.
Chapter 6 introduces the case projects, their significance to the research, and the
profile of interviewees, before case studies are undertaken to demonstrate the model
application and justify the specific cost components in long-term financial
management towards sustainable highway infrastructure.
Chapter 7 discusses the results of the questionnaire and the interview. Subsequently,
based on the case studies, the ultimate research findings are presented in the form of
a model.
Chapter 8 reviews the research objectives and development processes; and offers
conclusions with regard to the research outcomes based on the respective research
questions, the contributions to the body of knowledge and its implications for both
the research community and the highway infrastructure industry. Finally,
recommendations for future research are proposed.
1.8 Chapter Summary
This chapter lays the foundation for the thesis. It first introduces the research
background and points to the current crux of the issue in sustainability and long-term
financial management in highway infrastructure development before presenting the
research problems and its objectives. Next, the research significance is identified
before the research scope and delimitation are drawn. Finally, the research
framework is briefly discussed, and the thesis organisation is also outlined. On this
basis, the study proceeds with a detailed description of the research and development
processes.
Chapter 2: Literature Review 17
CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
This chapter presents the current state of knowledge by reviewing the literature
relevant to the research objectives set out in Section 1.3. Apart from establishing the
depth and breadth of the existing body of knowledge in the area of sustainability and
highway infrastructure development, the literature review serves to understand the
cost implications of pursuing sustainability in highway projects, thus paving the way
for questionnaires and interviews in a subsequent stage.
To begin with, the following sections present the sustainable development principles
before discussing the dynamics and application of sustainability in highway
infrastructure development generally. This is followed with an overview of the
current Australian construction industry and highway infrastructure practice. Long-
term financial management in highway infrastructure development is highlighted.
Principle of long-term financial management in highway development and the
application of life-cycle cost analysis (LCCA) in highway projects are specifically
discussed. A thorough review of current life-cycle cost analysis models and
programs in highway development, the limitation of existing LCCA studies in
adopting sustainability and the types of cost components related to sustainability
measures in the project was undertaken. Premised on these discussions, the research
gap in this research is identified, which leads to the formation of the research
questions.
2.2 Sustainability and Transport
There is an increasing demand for transport and mobility in our society. At the same
time, a desire for a clean environment, preservation of nature and concern for the
welfare of future generations is also progressively salient. Policymakers must
18 Chapter 2: Literature Review
accommodate these conflicting desires in order to balance the positive and negative
impacts of transport infrastructure.
Several research projects have been carried out to investigate a variety of topics
related to sustainability and transport. Jonsson (2008) implemented an appraisal
framework in the transportation system where the main elements of sustainability are
taken into account. In Jonsson’s study, an appraisal framework was developed to
analyse and measure the achievement of sustainability in the transport sector.
Gudmundsson (1999) found that sustainability indicators are “selected, targeted, and
compressed variables that reflect public concerns and are of use to decision-makers”.
These indicators are based on a selection of literature on social, environmental,
health and sustainability factors.
A scan of the literature by Basler and Partner (1998) shows that current research is
focusing on the sustainability indicators for the transport sector based on the three
aspects of sustainability: economy, ecology and society. These emphases in current
research are illustrated in Figure 2.1.
Figure 2.1: Sustainability criteria for the transport sector (Basler and Partner 1998)
Natural habitats & landscapes
Air pollution
Noise
Settlements/ areas Society
Individuality
Participation
Ecology
Economy
Solidarity Safety/ security
Price
Social costs
Ozone layer
Climate
Resources
Chapter 2: Literature Review 19
Furthermore, a set of transport indicators developed by Bickel et al. (2003) provides
an overview of key sustainable development issues at the UK level as shown in
Figure 2.2.
Figure 2.2: UK sustainable development indicators (Bickel et al. 2003)
The International Council for Local Environmental Initiatives - Australia/New
Zealand has collaborated with the Australian Greenhouse Office and the Victorian
Health Promotion Foundation to deliver a resource package of tools, case studies and
financial assistance to local governments that are Cities for Climate Protection™
(CCP™) participants around Australia through the Sustainable Transport initiative.
The aim of the initiative is to accelerate the implementation of sustainable transport
systems and to demonstrate the strong and multiple benefits that arise from
implementing these actions (CCP-PLUS 2005). These indicators show that
sustainability plays an important role in the development of a transport project. In the
following sub-sections, the evolution of sustainable development principles and the
practice of highway infrastructure development in Australia are introduced, before
A SUSTAINABLE ECONOMY - Social investment as a percentage of GDP - Consumer expenditure - Energy efficiency of road passenger travel - Average fuel consumption of new cars - Sustainable tourism - Leisure trips by mode of transport - Overseas travel - Freight transport by mode - Heavy goods vehicle mileage intensity BUILDING SUSTAINABLE COMMUNITIES - Road traffic (headline) - Passenger travel by mode - How children get to school - Average journey length by purpose - Traffic congestion - Distance travelled relative to income - People finding access difficult - Access to services in rural areas - Access for disabled people - New retail floor space in town centres and
out of town - Noise levels
MANAGING THE ENVIRONMENT AND RESOURCES - Carbon dioxide emissions by end
user • Transport • Non-transport
- Concentrations of selected air pollutants • NO2, SO2, CC, Particulates • Ozone
- Emissions of selected air pollutants • CO • NOx • Particulates
- Sulphur dioxide and nitrogen oxides emissions
SENDING THE RIGHT SIGNALS - Prices of key resources fuel
• Petrol/diesel • Industrial/domestic
- Real changes in the cost of transport - Public understanding and awareness
Individual action for sustainable development
20 Chapter 2: Literature Review
integrating both to set the scene to show the importance of sustainability in highway
infrastructure development.
2.2.1 Sustainable development principles and evolution
In the construction context, a definition of sustainability is suggested in the following
exposition:
The built environment provides a synthesis of environmental, economic and
social issues. It provides shelter for the individual, physical infrastructure for
communities and is a significant part of the economy. Its design sets the pattern
for resource consumption over its relatively long lifetime. (Prasad and Hall
2004)
Such an approach relates to the concept of sustainability to the concept of sustainable
development. These two terms are often used interchangeably, and it is worthwhile
to clarify the relationship of these two terms.
“Sustainable development is defined as “a development that meets the needs of the
present without compromising the ability of future generations to meet their own
needs” (WCED 1987). According to this definition from the World Commission on
Environment and Development, the underlying philosophy of sustainable
development is restraining the use of natural resources and materials to keep enough
for future generations to fulfill their own ambitions of living standards. In fact, the
main concerns of the contemporary construction industry are ecological impact,
economic development, and societal equity when considering sustainable
development.
Even though this definition leaves much to argue about, it is the basis for most work
on sustainable development. Koo et al. (2007) demonstrate the general concept of
sustainable development in three major aspects, namely, economic, environmental,
and social aspects. These aspects need to be considered, incorporated, and improved
to achieve a desired level of sustainable development. These aspects are illustrated as
the three pillars of sustainable development in Figure 2.3.
Chapter 2: Literature Review 21
On the other hand, the built environment represents one of the main supports
(infrastructure, buildings) of economic development, and its construction has
significant impacts on resources (land, materials, energy, water, human and social
capital) and on the living and working environment.
Hence, the current established concept of sustainable development gives rise to many
issues regarding the physical resources required for human existence and overall
quality of life for both present and future generations. A comprehensive plan of
action, including sustainable development in the construction area, is set out in
Agenda 21, which was an outcome of the 1992 United Nations Conference on
Environment and Development. The Johannesburg Plan of Implementation, agreed at
the Earth Summit 2002, affirmed UN commitment to ‘full implementation’ of
Agenda 21. It functions as a fundamental guideline to define sustainability in many
areas, including the construction industry.
To appropriately define sustainability in the construction industry, the term
`sustainable construction’ was proposed to describe the responsibility of the
construction industry in attaining sustainability. Kibert (1994) explained that a major
FUTURE/ PRESENT GENERATION
ENHANCEMENT OF SUSTAINABILITY BY CONSIDERING THREE PILARS
ECO
NO
MY
ENV
IRO
NM
ENT
SOC
IETY
ENHANCEMENT OF SUSTAINABILITY BY CONSIDERING THREE PILARS
ECO
NO
MY
ENV
IRO
NM
ENT
SOC
IETY
• DEMANDS ON PUBLIC SERVICE • LIMITS OF RESOURCES • QUALITY OF HUMAN ENVIRONMENT, ETC…
Figure 2.3: The three pillars of sustainable development (Koo 2007)
22 Chapter 2: Literature Review
objective of the First International Conference on Sustainable Construction (in the
United States) was to assess progress in a new discipline that might be called
“sustainable construction” or “green construction”. As the conference convener,
Kibert proposed that sustainable construction means “creating a healthy built
environment using resource-efficient, ecologically based principles”.
This very broad definition is a starting point to build a more concrete definition of
the concept of sustainable construction and begin to illustrate the stakes and issues of
sustainable development that relate to the construction sector. For this purpose, an
International Council for Innovation and Research in Building and Construction
project was launched in 1995 (Bourdeau 1999).
It is inevitable that the term “sustainable construction” will initiate a number of
semantic problems. When one considers that the International Union for
Conservation of Nature
1994
described a sustainable activity as one which can continue
forever, it is clear that a construction project cannot satisfy this criterion of
sustainable activities. To compound the problem, the term `sustainable construction’
is generally used to describe a process which starts well before construction per se
(in the planning and design stages) and continues after the construction team has left
the site. Wyatt ( ) has deemed sustainable construction to include `cradle to
grave’ appraisal, which includes managing the serviceability of a building during its
lifetime and eventual deconstruction and recycling of resources to reduce the waste
stream usually associated with demolition.
Miyatake (1996) suggests that everybody has to appreciate that to achieve
sustainable construction, the industry must change the processes of creating the built
environment. This means that the infrastructure industry has to change the way in
which all the construction activities are undertaken. They can act to realise the
sustainable construction by creating built environment, restoring damaged and
polluted environments, and improving arid environments. With this idea, it increases
the industry understanding of the sustainability concepts throughout the lifetime of a
construction project.
Chapter 2: Literature Review 23
2.2.2 Highway infrastructure development in Australia
Although the Australian federal government has been committed to boosting the
economy through national infrastructure projects, sustainability challenges are being
taken into account. Environmental and social sustainability is a matter of
responsibility and operational practice for both industry stakeholders and
governments. Australian state and federal governments have set up various plans to
accelerate road infrastructure improvement such as the South East Queensland
Infrastructure Plan and Program
Over recent years, there has been a growing problem of financial stress confronting
highway infrastructure service providers and indeed the financial sustainability of
industry stakeholders. A significant number of providers have been deemed to be
“not financially sustainable” in the long term when the declining condition of
highway infrastructure is brought to account. This is made worse due to increasing
demand for services, rising costs, cost shifting and restricted revenue raising
capability. Several infrastructure and financial sustainability studies published in
Australia over the last few years support this fact. For example, a report prepared by
the Australian Local Government Association concluded that around 35% of
by the Queensland Government, and the 2005
Strategic Infrastructure Plan for South Australia (BTCE 2009).
Australia’s continuing prosperity is contingent upon appropriate investment in
essential community infrastructure (Laird and Bachels 2001). This includes not just
the new infrastructure development to meet the nation’s growth needs, but
significantly, the maintenance and renewal of existing infrastructure to ensure it
continues to provide optimum service delivery at minimal life-cycle cost. Highway
infrastructure is typically long lived but is expensive to build (Surahyo and El-Diraby
2009; Li and Madanu 2009; Gerbrandt and Berthelot 2007). Unless managed and
maintained, appropriately renewed, replaced and enhanced, it fails to deliver
expected levels of service and economic benefit. It is now widely recognised that
appropriate strategic asset management is fundamental to meeting community
expectations for the delivery of services at an optimal life-cycle cost (Gerbrandt and
Berthelot 2007; Winston and Langer 2006; Ugwu et al. 2005; Alam, Timothy and
Sissel 2005).
24 Chapter 2: Literature Review
Australian councils are not financially sustainable (PriceWaterhouseCoopers 2006).
Recent natural disasters, such as the floods in Queensland and Victoria between
December 2010 and February 2011 have created significant demand for road repairs,
maintenance and upgrading.
Sustainability endeavours in highway infrastructure development often require major
capital input, which may cause concerns for the investors. Stakeholders responsible
for the management of highway infrastructure assets highlighted some significant
considerations:
1. Adequately managing the balance between the maintenance of existing highway
infrastructure and the building of new highway infrastructure is essential to
ensure sustainable outcomes and continued growth of Australia’s economic
prosperity. This should be through the development of long-term financial plans
based on highway infrastructure management plans that cover a forward planning
horizon of at least ten years (Ugwu et al. 2005; Singh and Tiong 2005; Gransberg
and Molenaar 2004; Wilmot and Cheng 2003).
2. Highway infrastructures are financially sustainable in the long term, through
appropriate annual reporting on key performance indicators (Ugwu et al. 2005).
It is important that long-term asset and financial plans are not produced for mere
compliance, but to form an essential part of management for an organisation.
3. Adequate funding levels must be assured for local government to sustainably
manage essential community infrastructure on behalf of the nation (Winston and
Langer 2006).
This local community infrastructure underpins the nation’s economy and provides
significant support for state and national infrastructure. Thus, early consideration of
long-term financial viability for highway infrastructure has become an essential
strategy for astute investors.
Chapter 2: Literature Review 25
2.3 Long-Term Financial Prospects in Highway Development
Highway infrastructures are classified as long-lived assets. To effectively and
equitably manage the service level, a good strategy plan should set out the capital
expenditure requirements for the next 20 years. Service levels for highways need to
be based on long-term affordability. Highway maintenance and rehabilitation
decisions should be resolved through a long-term financial prospect. As a result,
there is a need for tools to assist decision-makers in preparing better long-term
financial decisions for highway investments.
2.3.1 Principle of engineering economics
Engineering economics involves benefit-cost analysis (BCA) and life-cycle cost
analysis (Lee 2002b). Both approaches are used to deal with public-sector investment
evaluation. To ensure sufficient funds are spent on highway infrastructure
development so that related services are delivered economically, these methods have
become significant methods in an attempt to meet the needs of the community into
the future. Meanwhile, these methods also help the stakeholders to achieve a balance
between competing demands with consideration towards long-term requirements and
objectives (Gluch and Baumann 2004; Lee 2002b). The demand for capital works in
many instances outstrips the funding capacity available. It is, therefore, important to
adopt robust and transparent methods to evaluate and rank projects to ensure that
new projects are prioritised objectively.
2.3.1.1 Benefit cost analysis
Benefits and costs are often articulated in money terms, and are in sync with the time
value of money, so that all flows of benefits and project costs over time are
expressed on a common basis in terms of their “present value” (Lee 2002b). Benefit
cost analysis has been widely recognised as a useful framework for assessing the
positive and negative aspects of prospective actions and policies, and for making the
economic implications' alternatives an explicit part of the decision-making process
(Jang and Skibniewski 2009; Carter and Keeler 2008). According to Carter and
Keeler (2008), benefit cost analysis compares alternatives over time as well as space,
26 Chapter 2: Literature Review
and uses discounting to summarise its findings into a measure of net present value
(NPV). The test of NPV is a standard method for assessing the present value of
competing projects over time (Rahman and Vanier 2004). Discounting is typically
carried out using the applicable interest rate, or a target rate of return.
Benefit cost analysis is often used by governments to evaluate the desirability of a
given involvement (Lee 2002b).
2.3.1.2 Life-cycle costing analysis (LCCA)
Cost effectiveness is frequently included, and
consumer surplus is occasionally treated (Li and Madanu 2009). BCA emphasises
consequences in the form of a financial tool, whereas government sector investment
evaluation could be called a social tool (Loomis 2011; Yuan et al. 2010). The
evaluation criterion for BCA is the maximisation of net benefits, whereas the
criterion for LCCA is the minimisation of costs. All costs are assumed to be stated in
constant base year dollars, and a real (net of inflation) discount rate is used.
It is increasingly recognised that the selection of the lowest initial cost option may
not guarantee the economical advantage over other options. LCCA is a well
established economic evaluation method. LCCA seeks to optimise the cost of
acquiring, owning and operating physical assets over their useful lives by attempting
to identify and quantify all the significant costs involved in that life, using the present
value technique (Garcia Marquez et al. 2008).
Several definitions of life-cycle costing exist, as useful as any and shorter than most,
is the one by Lee (2002b) that the life-cycle cost of an item “is the sum of all funds
expended in support of the item from its conception and fabrication through its
operation to the end of its useful life”. In order to make the procedure of the life-
cycle costing to be more structured and easy to understand, a typical structure and
process flow of LCC was illustrated in Figure 2.4. Based on this systematic flow,
LCCA is applicable as investment calculus to evaluate investment decisions (Sterner
2002).
Chapter 2: Literature Review 27
Figure 2.4: Life-cycle costing procedure
There are some literatures that focus on life-cycle costing in construction
management research, yet few researchers and practitioners give a clear definition on
it. For instance, Assaf et al. (2002) used life-cycle cost methodology to identify the
total discounted dollar cost of owning, operating, maintaining and disposing of a
building or a building system over a period of time. Furthermore, they found LCCA
as an economic evaluation technique that determines the total cost of owning and
operating a facility over its assumed life.
According to Pasquire and Swaffield (2002) the Royal Institution of Chartered
Surveyors defines the life-cycle cost of an asset as the present value of the total cost
of that asset over its operating life (including initial capital cost, occupation costs,
operating costs and the cost or benefit of the eventual disposal of the asset at the end
of its life). Additionally, it defines LCCA as a set of techniques for evaluating all
relevant costs of acquiring and operating a project, asset or product over time.
The New South Wales Department of Public Works and Services defines the life-
cycle cost of an asset as the total cost throughout its life including, planning,
designing, acquisition and support costs and any other costs directly attributed to
owning and using that asset (NSW 2001). Further, El-Diraby and Rasic (2004)
28 Chapter 2: Literature Review
believe that, life-cycle cost is an economic assessment of an item, area, system, or
facility, considering all the significant costs of ownership over its economic life
expressed in terms of equivalent dollars. Correspondingly, Rahman and Vanier
(2004) define the life-cycle cost as the economic assessment of alternative designs,
construction or other investments considering all major costs and running over the
lifetime of each alternative expressed in equivalent economic units. In summary,
LCCA is a cost-centric approach used to select the most cost-effective alternative
that is equal to a specific level of benefits in a construction project.
2.3.1.3 Differences between BCA and LCCA
Table 2.1: Differences between BCA and LCCA
Even though both the benefit cost analysis and life-cycle cost analysis methods are
suitable for long-term financial management, studies have found that there are still
differences and limitations. Lee (2002b) explains that the idea behind LCCA is that
capital investment decisions should be based on costs over the lifetime of the
investment, while BCA is used to evaluate the desirability of transportation capital
and maintenance investments. It is concluded that LCCA typically includes related
expenditure in the overall stages in the highway infrastructure life span while BCA is
used for the denominator of a benefit cost ratio. The differences between BCA and
LCCA are summarised in Table 2.1.
Benefit cost analysis (BCA) Life-cycle cost analysis (LCCA)
Benefit over project cost with net present
value evaluation
Investment decision based on investment
lifetime
Compare benefit based on desire results
of a project
Compare project implementation
alternatives
Assessing present value of competing
projects over time
Evaluate budgets over project life span
Benefits oriented approach Cost Centric approach
Both methods have their advantages and disadvantages. However, industry has
realised the important of long-term economic advantage in highway infrastructure.
Chapter 2: Literature Review 29
Some of these organisations have referred to LCCA as decision support tool for long-
term economic evaluation of the project scenarios they have to face.
2.3.1.4 Decision support
Decision Support is used often in different contexts related to decision making. It is a
part of decision making processes. The term Decision Support contains the word
‘support’, which refers to supporting people in making decisions. Thus, DS is
concerned with human decision making. Turskis et al. (2007) proposed the decision-
making process comprises of three main stages:
• Intelligence: Facts finding, problems analysis, and exploration.
• Design: Formulation of solutions, generation of alternatives, modeling and
simulation.
• Choice: Goal maximisation, alternative selection, decision making, and
implementation.
Decision support has been widely used in different disciplines include construction
industry (Gluch and Baumann 2004; Rahman and Vanier 2004; Šelih et al. 2008).
The decision-making process in construction industry is increasing complex due to a
high degree of inherent uncertainty. This increasing complexity illustrated the need
of decision support model, tools and system to aid the process. This need also
applied to the highway infrastructure investment. It is not possible to know exactly
how accurate a particular investment decision is, so decision support tools can help
in improving decision-making process.
According to Rahman and Vanier (2004) life-cycle cost analysis can be used as a
decision support tool to aid decision makers to propose, compare, and select the most
cost effective, alternatives for maintenance, renewal, and capital investment
programs for highway investments. Chung et al. (2006) note that life-cycle costing
studies show that the cost of owning and operating a system (ownership cost) can be
quite significant and may often exceed acquisition costs. Thus, decisions based solely
on the acquisition cost may not turn out to be the best selection in the long term, and
30 Chapter 2: Literature Review
this method can be effectively utilised to realise the benefits of long-term cost
implications of sustainable development in infrastructure projects.
2.3.2 Life-cycle costing analysis and its application in highway
infrastructure
Since the 1960s, several studies dealing with life-cycle cost evaluation in the road
infrastructure area have been conducted. The concept of LCCA was, firstly, applied
in highway development by AASHTO “Red Book” in 1960s (Wilde, Waalkes and
Harrison 2001). Since this conception, it was not applied widely until the early 1990s
when the Federal Highway Administration (FWHA) started promoting the use of
life-cycle costs in the design and use of highway infrastructure.
The FHWA has issued guidelines about how the life-cycle cost analysis should be
conducted, especially with regard to feasibility studies on pavements. The FHWA
also requires the application of the LCCA concept in its major highway projects. The
FWHA believes that life-cycle cost analysis can help transport agency officials to
answer and exhibit their administration of taxpayer investments in highway
infrastructure. This approach was further supported by the US government’s
imposition of a new requirement making LCCA compulsory in National Highway
System projects that cost over $25 million (Chan, Keoleian and Gabler 2008). This
signified that the applications of life-cycle cost in highway infrastructure in practice
was taking shape as the stakeholders realised the importance of long-term investment
for highway infrastructure.
A few research studies have been carried out in the last decade addressing topics
related to life-cycle cost analysis in highway projects (Hawk 2003; Hegazy, Elbeltagi
and El-Behairy 2004; Persad and Bansal 2004). There are also studies that focus on
comparisons between benefit cost analysis and life-cycle cost analysis (Lee 2002a),
assessments of the current practice in the use of these tools (Ozbay et al. 2004a) and
ideas about how uncertainty should be introduced (Tighe 2001). However, these
efforts have not focused on sustainability in considering the economic benefits for
the stakeholders in highway development.
Chapter 2: Literature Review 31
2.3.2.1 Current LCCA models and programs in highway infrastructure
A review of the literature is undertaken in this study to gain a broader understanding
of prominent life-cycle cost models in highway infrastructure. This review analyses
the elemental features of the existing models and the cost components concerned
with current LCCA practice. This review is important because, although existing
studies follow the life-cycle costing concept, they differ in their approaches and
applications to different types of projects.
Several state governments in the United States also considered the development of
LCCA model and methodologies to minimise expenditure for road infrastructure
development throughout the lifecycle. In California, the state government developed
a California Life-Cycle Benefit/Cost (Cal-B/C) Analysis Model that offers a simple
and practical method for preparing economic evaluations on prospective highway
and transit improvement projects within the State of California. The model is capable
Over the past few decades, various agencies and institutions have developed
methodologies for life-cycle cost analysis, particularly on road pavement projects.
Some of these organisations have taken a step further to develop computer programs
for their LCCA methodologies to facilitate the analysis. Organisations that have
supported the development of LCCA for pavement design and management include
institutions, state governments, construction organisations and some universities.
Table 2.2 discussed the current available LCCA models and programs in highway
infrastructure.
In early 90s, the Pavement Life-Cycle Cost Analysis Package (LCCOST) was
developed by the Asphalt Institute. It calculates pavement life-cycle costs incurred
over a selected analysis period of up to 50 years. Over two decades, The
International Study of Highway Development and Management (ISOHDM) has
extended the scope of the HDM-III model, to improve the system approach to road
management with adaptable and user friendly software tools known as (HDM-4).
This tool includes technical and economic appraisals of road projects, to prepare road
investment programmes and to analyse road network strategies (Ihs and Sjögren
2003).
32 Chapter 2: Literature Review
of handling several general highway construction types, such as lane additions, and
more specific projects, such as high occupancy vehicle lanes, passing/truck climbing
lanes or intersections. In addition, the Pavement Rehabilitation Life-Cycle Economic
Analysis (PRLEAM) was developed by the Ministry of Transportation of Ontario
and the University of Waterloo in 1991. The immediate objective of this software
was to meet the needs of the Ministry for evaluating life-cycle costs for pavement
rehabilitation and maintenance. It can evaluate up to three rehabilitation alternatives,
each having up to six treatment cycles.
In academia, several research efforts should be noted. Since early 1990s, the
University of Maryland developed a set of life-cycle cost analysis programs that
analyse flexible and rigid pavements (Witczak and Mirza 1992b). These programs
incorporate user operating costs associated with pavement roughness among others.
These programs were also intended for project-level analysis but are considered
better suited for use in pavement management on a network level. Besides, the
University of Texas also developed a new life-cycle cost analysis methodology for
Portland cement concrete pavements that considers all aspects of pavement design,
construction, maintenance, and user impacts throughout the analysis period (Wilde,
Waalkes and Harrison 2001). This research predicts pavement performance using
state-of-the-art performance models and reliability concepts, from which it
determines maintenance and rehabilitation needs. Besides, it presents a standardised
method for considering the agency and user costs associated with pavement
performance.
Other life-cycle cost analysis models and programs from Australia (Ockwell 1990),
Canada (Rahman and Vanier 2004) and Hong Kong (Ugwu et al. 2005). However,
these methodologies and programs have not been kept up-to-date with the dynamic
changes in the construction sectors. Although an extensive literature review was
carried out regarding life-cycle cost application in highway infrastructure, no
previous research exclusively covers the life-cycle costing from a sustainability
perspective.
Chapter 2: Literature Review 33
Table 2.2: Existing LCCA models and programs
Organisations Years Models and Programs Functions and Descriptions
Institutions
LCCOST– Asphalt Institute
1990s
•
The Asphalt Institute developed the Pavement Life-Cycle Cost Analysis Package (LCCOST) in 1991.
• It calculates pavement life-cycle costs incurred over a selected analysis period of up to 50 years.
• Five alternative pavement strategies can be considered at any one time.
•
This program considers the initial cost of construction, multiple rehabilitation actions throughout the design life, and user delay at work zones during initial construction and subsequent rehabilitation activities. In addition to these considerations, the program considers routine maintenance (optional) that will be applied each year between rehabilitation activities. Traditionally, routine maintenance has been excluded from life-cycle cost methodologies because many departments of transport do not maintain easily accessible routine maintenance records for individual highway segments. The LCCOST model also considers salvage value of the pavement and of the individual materials that make up the layers. However, the program does not consider social and environmental issues in calculating the pavement life-cycle costs. Yet both cost elements should be considered important due to the increased emphasis on sustainability by society. Therefore, the LCCOST model does not meet the need for a model that emphasises sustainability in the life-cycle cost analysis.
HDM 4– World Bank
2000s •
The Highway Design and Maintenance Standards Model (HDM-4) computer program was developed by the World Bank for evaluating highway projects, standards and programs in developing countries (Ihs and Sjögren 2003).
•
HDM-4 is designed to make comparative cost estimates and economic evaluations of alternative construction and maintenance scenarios (including alternative time-staged strategies) either for a given road section or for an entire road network. The HDM program assumes that construction costs, maintenance costs and vehicle operating costs are a
34 Chapter 2: Literature Review
Organisations Years Models and Programs Functions and Descriptions
function of the vertical alignment, horizontal alignment and road surface conditions. Different types of costs are calculated by estimating quantities and using unit costs to estimate total costs.
• A major disadvantage of this model with respect to the current project is that it focus on specific costs related to social and environmental issues. This model focuses on the evaluation of the alternative construction and maintenance scenarios in detail but little consideration has been done on sustainability-related costs that are of high priority for society and governments.
State Government
Cal B/C – California Department of
Transport
1990s
The California Life-Cycle Benefit/Cost (Cal-B/C) Analysis Model offers a simple and practical method for preparing economic evaluations on prospective highway and transit improvement projects within the State of California.
• The model is capable of handling general highway projects, such as lane additions, and more specific projects, such as high occupancy vehicle lanes, passing/truck climbing lanes, or intersections.
• The model can also handle several transit modes, including passenger rail, light rail and bus. Cal-B/C was developed in a spreadsheet format (MS Excel) and is designed to measure, in real dollar terms, the four primary categories of benefits that result from highway and transit projects: travel time savings, vehicle operating cost savings, accident cost savings and emission reductions.
• Users have the option of including the valuation of vehicle emission impacts and induced demand in the analysis. In the model, the results of the analysis are summarised on a project-by-project basis using several measures: life-cycle costs, life-cycle benefits, net present value, the benefit-cost ratio (benefits/costs), rate of return on the investment, and project payback period (in years). These results are calculated over the life of the project, which is assumed to be twenty years. In addition, the model calculates and displays first year benefits.
Universities LCCP/LCCPR Maryland
1990s The University of Maryland developed a set of life-cycle cost analysis programs that analyse flexible and rigid pavements (Witczak and Mirza 1992a).
Chapter 2: Literature Review 35
Organisations Years Models and Programs Functions and Descriptions
• •
This program incorporates user operating costs associated with pavement roughness, among others.
•
These programs were also intended for project-level analysis, but are considered better suited for use in pavement management on a network level. There are some limitations with this program, since it is not used to compare alternative pavement designs. It would thus require much modification and updating to develop a new model for life-cycle cost analysis.
LCCA of Portland Cement Concrete Pavement - Texas
2000s
The University of Texas developed a new life-cycle cost analysis methodology for Portland cement concrete pavements that considers all aspects of pavement design, construction, maintenance and user impacts throughout the analysis period (Wilde, Waalkes and Harrison 2001).
• This research predicts pavement performance using state-of-the-art performance models and reliability concepts, from which it determines maintenance and rehabilitation needs. It also presents a standardised method for considering the agency and user costs associated with pavement performance.
• The proposed model for the Portland cement life-cycle cost analysis represents an attempt to capture all the costs incurred by the transportation agency, by users of the facility, or by others affected by its presence. According to Wilde, Waalkes and Harrison (2001), in capturing the full impact of a highway project, the total life-cycle cost can be estimated and compared with other alternate pavement designs and configurations. In this way, the best alternative, from both the agency and user point of view, can be evaluated and selected. However, there are some limitations in this model including that it does not place a value on each of the external costs. In addition, the actual incorporation of external consequences in the Portland cement LCCA model is not sufficiently clarified.
• Although this life-cycle cost framework can predict both agency and user costs over the expected life of a project and can provide the user with an informative way of comparing the results, the final decision regarding selection of a preferred alternative must be made using engineering judgment. The framework is simply a tool with which engineers and planners can view the relative differences and similarities between alternate designs.
36 Chapter 2: Literature Review
2.3.2.2 Limitations of existing LCCA studies in adopting sustainable
measures
Research on sustainable development in the area of highway infrastructure
development is becoming increasingly popular. A large number of research studies
have been undertaken all over the world to investigate a variety of aspects in
highway infrastructure. Specifically, a growing body of literature is found in the area
of life-cycle cost analysis in the highway infrastructure industry (Chan, Keoleian and
Gabler 2008; Garcia Marquez et al. 2008; Gerbrandt and Berthelot 2007; Hawk
2003; Hegazy, Elbeltagi and El-Behairy 2004; Hong and Hastak 2007; Lagaros
2007; Lee, Cho and Cha 2006; List 2007; Singh and Tiong 2005; Tysseland 2008;
Ugwu et al. 2005; Wilde, Waalkes and Harrison 2001).
• Starting from 2001-2002, the study of LCCA is mainly focused on pavement
(Wilde, Waalkes and Harrison 2001; Lee 2002b);
Based on the literature review, it can be concluded that current studies of LCCA are
focusing on different elements in highway infrastructure. These studies are divided
into three main categories:
• In the period 2003-2006, the studies focus mainly on highway bridges (Hawk
2003; Hegazy, Elbeltagi and El-Behairy 2004; Singh and Tiong 2005; Ugwu et
al. 2005; Lee, Cho and Cha 2006);
• From 2007 onwards, the studies shifted to the area of highway management
(List 2007; Lagaros 2007; Hong and Hastak 2007; Gerbrandt and Berthelot
2007; Tysseland 2008; Garcia Marquez et al. 2008; Chan, Keoleian and Gabler
2008)
LCCA provides a basis for contrasting initial investments with future costs over a
specific period. The future costs are discounted back in time to make economic
comparisons between different alternative strategies possible (Woodward 1997). This
method is popularly used in the mainstream construction industry and a substantial
amount of research has been carried out in recent years. However, there are limited
research projects covering the economics of the highway industry from the
sustainability point of view.
Chapter 2: Literature Review 37
The concept of sustainability has added a new dimension to the evaluation of
highway investments. Sustainability means analysing the entire life of a facility, from
an environmental as well as economic perspective (List 2007). Keoleian et al. (2005)
developed an integrated life-cycle assessment and cost model to evaluate
infrastructure sustainability, and compared alternative materials and designs using
environmental, economic and social indicators.
Despite an increasing enthusiasm for the life-cycle cost approach in the sustainability
context, the adoption and application of LCCA in the highway infrastructure sector
still remain limited (Zhang, Keoleian and Lepech 2008; Wilde, Waalkes and
Harrison 2001; List 2007; Chan, Keoleian and Gabler 2008). Cole and Sterner (2000)
indicate that an ‘imperfect understanding’ of the merits of LCCA among
practitioners is the main cause for its limited adoption. However, there is still a gap
between theory and practice as neither of them sufficiently explains the underlying
reasons for incorporating social and environmental costs into LCCA. Moreover, the
actual incorporation of costs incurred in pursuing social and environmental matters in
the life-cycle cost approach is not sufficiently clarified. The following briefly
describe the limitations of current LCCA models are briefly described as follows:
• Focus on direct market costs: Most existing LCCA studies emphasise on the
cost allocation and investment evaluation of highway projects. These studies
are primarily concerned with direct market costs, such as road construction and
maintenance costs and crash damages and how these vary depending on
roadway conditions. They assume that the roadway conditions and
requirements do not change in a highway lifetime and so are unconcerned with
the upgrade and end-of-life costs (Quinet 2004).
• Designation of environmental impacts as external costs: Existing studies
incorporate costs incurred from environmental impacts, primarily air pollution,
noise and water pollution and various categories of land use impacts. Some
studies have only considered them as the external costs. Their results often
differ significantly, but can usually be explained by differences in their
methodology and scope (Quinet 2004).
• Unclear Boundaries: Existing studies also show unclear boundaries in
identifying costs incurred in pursuing sustainability matters in highway
38 Chapter 2: Literature Review
infrastructure. Some models consider the global impacts of sustainability while
others only consider micro impacts (List 2007; Wilde, Waalkes and Harrison
2001; Zhang, Keoleian and Lepech 2008).
• Inconsistent estimation methods: Surahyo and El-Diraby (2009) highlighted
that the inconsistent estimation methods in current models in estimating
sustainability-related costs for highways. Some use socioeconomic approaches,
while others use technical/ engineering approaches. Due to the subjectivity of
sustainability and the soft factors of the related cost elements, it is a challenge
for current models to create consistent estimation methods.
• Different environments and problems: Highway infrastructure projects also
take place in different physical, legal and political environments, and studies
assessing and mitigating costs incurred in pursuing sustainability matters are
still evolving. Therefore, it is difficult to develop a universal standard of
estimation methods to address and forecast sustainability-related cost
components (Surahyo and El-Diraby 2009).
These limitations show the significance and necessity of incorporating costs incurred
in pursuing sustainability measures into life-cycle costing practice.
2.3.3 Significance of incorporating sustainability-related cost
components in LCCA
Realising the advantages of pursuing sustainability, a number of research projects
have attempted to investigate topics that bridge the gap between sustainability and
highway infrastructure. For example, Huang and Yeh (2008) have implemented an
assessment rating framework for green highway projects. In the study, the framework
has been developed to analyse and measure the achievement of sustainability in the
highway infrastructure by using several indicators. Ugwu et.al (2006b, 2006a) found
that there is a need for methods and techniques that would facilitate sustainability
assessment and decision-making at the various project level interfaces during the
development phases of a project.
Although the sustainability concept is essential for current Australian highway
infrastructure development, stakeholders also realise the importance of long-term
Chapter 2: Literature Review 39
cost implications for the investments. As decisions based solely on an acquisition
cost may not turn out to be the best selection in the long run, Surahyo and El-Diraby
(2009) highlighted the need to assess both environmental and social costs in highway
construction, rehabilitation and operations phases. There is a consensus among
stakeholders that sustainability endeavours will have an impact on the developmental
costs of highway infrastructure.
While the sustainability concept is being emphasised in highway infrastructure,
effective management of highway investment has became crucial issue as highway
funding at all levels of government continues to fall short of infrastructure needs
(PriceWaterhouseCoopers 2006). In this regards, life-cycle cost analysis is applied in
highway development to explore the more efficient investments for the stakeholders.
It evaluates not only the initial construction cost of the highway infrastructure, but
also all the associated maintenance costs during its service life.
The use of LCCA in highway infrastructure seems established, but limitations in the
current LCCA models and programs still remain as these programs are not well-
established and do not cover some critical issues in highway development. Wilde et
al. (2001) reported that the consideration of social impacts of road construction,
including health impacts of pollution emission and noise was conversely independent
of other costs and the incorporation of these elements into LCCA has not been
undertaken.
The existing life-cycle costing methodologies tend to omit costs incurred for
pursuing sustainability matters in the life-cycle cost analysis calculation in highway
infrastructure projects. These sustainability-related cost components include agency,
social and environmental costs caused by the activities in highway construction and
maintenance. As stated by Singh and Tiong (2005), user costs are social costs
incurred by the highway user, and include accident costs, delay costs and vehicle
operating costs (such as fuel, tires, engine oil and vehicle maintenance). These costs
are increasingly important given that they will indirectly influence the financial
budget for a long-term investment.
40 Chapter 2: Literature Review
This study is motivated by the realisation of the need and potential to incorporate
sustainability-related cost components into LCCA in order to capture the full costs of
highway development, under the increased pressure to achieve sustainability. The
identification of these cost components in the life-cycle financial decisions for
highway infrastructure is crucial. The detail of the cost components are discussed in
the next sections.
2.4 Cost Implications in Highway Infrastructure
Studies on sustainability-related cost components in highway infrastructure
development are evolving (Surahyo and El-Diraby 2009; List 2007). While studies
on life-cycle costing perspectives still remain limited, they at least make the
methodological issues more visible and practical rather than just a general
discussion. In this study, the existing LCCA cost allocation is studied and integrated
with the sustainability-related cost components in three main categories:
• Agency costs such as initial construction, maintenance, pavement upgrade and
end-of-life costs;
• Social costs such as vehicle operating, travel delay, social impact and road
accident cost; and
• Environmental costs such as noise, air quality, water quality, resource
consumption and pollution damage from agency activities and solid waste
generation.
2.4.1. Sustainability-related cost components in highway projects
Traditionally, life-cycle costing is used to estimate the total cost of a built system
throughout its entire life (Flanagan, Jewell and Norman 2005). In order for this type
of cost analysis to project an accurate value, the various cost components related to
planning, construction and operation should be taken into account.
In simple terms, for the purposes of this study, life-cycle costing for sustainability is
the total estimated expense of a highway through its life-cycle or until there is an
Chapter 2: Literature Review 41
anticipated major reconstruction using materials and methods reducing the overall
environmental impact. Conducting a life-cycle cost analysis can point out economic
and financial costs. These costs account for environmental and social costs and
benefits as well as site operation, maintenance and indirect costs such as construction
equipment (Flanagan, Jewell and Norman 2005). With sustainable design the
financial cost is no longer the only factor in consideration during design and
construction. Environmental factors are now heavily weighted and taken into
consideration during the design of structures. Highway designers are beginning to
make an effort to reduce the overall impact on the surrounding environment and
communities.
Unlike the ownership of a building, most highways are owned indefinitely by
federal, state or county authorities. For buildings, life is defined as the length of time
in which the building satisfies specific requirements. The design life for highways is
viewed differently than buildings because of their basic function and nature. For the
ease of calculations the overall design life of a roadway will be assumed to be twenty
years. However, the elements that make up the roadway, such as resurfacing and
property acquisitions, may have varying life spans.
Flanagan points out that in order to conduct an accurate life cost assessment, several
different options must be researched for each aspect (Flanagan, Jewell and Norman
2005). The main points for consideration relating to costing are: the decision to
acquire land, short-term running costs, performance characteristics, reduction of
operational costs and the reliability of the costing data collected. Furthermore, an
evaluation should be done for all energy conservation investments to determine if the
added cost will be outweighed by the environmental benefits. According to Flanagan
and Jewell (2005), sustainable design includes innovative new products and
technologies where it is difficult to predict their longevity.
Based on the review of the literature on Australian road projects, a set of key LCCA
cost components related to sustainable measures is identified. These cost components
can be divided into three main cost categories of agency, social and environmental
category.
42 Chapter 2: Literature Review
2.4.1.1 Agency category
A number of general categories that should be considered when tabulating an
estimate for initial construction, rehabilitation and annual maintenance costs. All the
cost items are viable options for construction and rehabilitation activities and should,
accordingly, be considered as agency costs in the analysis of life-cycle costs for a
highway pavement project. The initial construction items can be assigned quantities
by the engineer to represent a particular design alternative, while unit costs can be
provided for the other aspects of maintenance and rehabilitation activities.
The quantification of costs can be determined using the data available from previous
construction and maintenance projects. The initial construction, major maintenance
and rehabilitation costs are most frequently included in the life-cycle cost analysis
(Bradbury et al. 2000). Maintenance costs can be categorised as routine maintenance
and major maintenance.
Routine maintenance includes relatively inexpensive activities such as filling
potholes and performing drainage improvements. These treatments have a service
life of 1 to 4 years (Haas and Kazmierowski 1997). Major maintenance is more
substantial and is usually associated with a structure or surface improvement such as
patching or micro-surfacing. These treatments have an expected service life of 5 to
10 years (Haas and Kazmierowski 1997). Rouse and Chiu (2008) identify that the
life-cycle pattern of a highway has a limited correspondence from a pavement quality
perspective, as shown in Figure 2.5, as the quality in terms of serviceability of the
highway declines under continuous traffic, climate and geology stress. It is
recommended that only major maintenance be included in the LCCA because routine
activities tend to be consistent across pavement design types.
Chapter 2: Literature Review 43
Rehabilitation cost can be determined from pavement performance predictions. The
initial pavement design and the maintenance activities will have a large influence on
the rehabilitation activities that are required in the future and when they will be
required (Tighe 2001). Agency cost components that are considered essential in
highway investment are categorised as initial construction costs, maintenance costs,
pavement upgrade costs and pavement end-of-life costs, as summarised in Table 2.3
Table 2.3: Agency impacts and costs in highway projects
AGENCY COST CATEGORY
FACTORS THAT LEAD TO IMPACTS AND COSTS
Initial Construction Costs
• Initial construction: As highlighted by Ugwu, Kumaraswamy, Wong, & Ng (2006a), initial construction as a sustainability indicator encapsulates sub-elements such as direct/indirect costs (which further subsumes construction/ operation costs), and other life-cycle cost elements. Direct costs during initial construction stage such as material, labour, and plant and equipment costs in the whole of life cost analysis have been derived directly from the respective unit rates data.
Maintenance Costs • Routine Maintenance: Some routine maintenance can be designed for a specific time period or number of traffic loadings. The best estimate of the life of the technique must come from field performance observations or empirical models developed from field performance data. According to Hall et al. (2003) the period of time for rehabilitation treatment is often called the performance period.
• Major Maintenance: Major maintenance activities are needed a few times throughout the life-cycle of a pavement (Wilde, Waalkes and
Figure 2.5: Typical life cycle of a road asset (Rouse and Chiu 2008)
44 Chapter 2: Literature Review
AGENCY COST CATEGORY
FACTORS THAT LEAD TO IMPACTS AND COSTS
Harrison 2001). Assuming good design and quality construction, a concrete pavement may require a concrete overlay in the second half of its design life to maintain ride quality and another asphalt overlay may be needed towards the end of its life. The strategy aims to perform the suitable maintenance activities at the right time on the road so as to optimise the total benefit and cost of a road over its lifetime.
Pavement Upgrade Costs
• Upgrade costs: Upgrade costs consist of cost such as rehabilitation cost, pavement strengthening cost and cost of road pavement widening.
• Rehabilitation: Rehabilitation is part of the pavement upgrading process that involves structural enhancements that extend the service life of an existing pavement and/or improve its load carrying capacity. For example, rehabilitation techniques include restoration treatments and structural overlays (Gransberg 2009).
• Pavement life-cycle: The life-cycle pattern of a road has a more limited correspondence from a pavement quality perspective, as the quality of serviceability of the road declines under continuous traffic, climate and geology stresses (Rouse and Chiu 2008).
Pavement End-of-Life Costs
• End of life costs: At the end of the life of infrastructure such as pavement, there would be certain costs involved demolish and recycle of the pavement.
• Economical and Environmental Friendliness: Pavement recycling has become more important and popular due to its resource saving and economical operation (Widyatmoko 2008; Brown and Cross 1989). Asphalt pavement recycling may be highly desirable, because it can save materials and is environmentally acceptable (Shoenberger, Vollor and LAB 1990; Aravind and Das 2007). It is based on sustainable development, by reusing materials reclaimed from the pavements and reducing the disposal of asphalt materials.
• Pavement performance: Aravind and Das (2007) found that the performance of the recycled materials was as good as that of equivalent conventional materials.
• Benefits of Recycling Pavement: Oliveira et al. (2005) identified the benefits of including recycled materials in pavement design, showing that the costs of applying a recycled mixture (with up to 50% reclaimed material) as a base or binder course were reduced by more than half, when compared with the costs of applying a new bituminous mixture, for the same expected life.
Chapter 2: Literature Review 45
2.4.1.2 Social category
There has been a great deal of interest in the issue of the social costs in highway
infrastructure development (Levinson, Gillen and Kanafani 1998; Delucchi 1997;
Winston and Langer 2006; Gorman 2008). The passions surrounding social costs
have evoked far more shadow than light. At the centre of this debate is the question
of whether various modes of transportation are implicitly subsidised because they
generate unpriced externalities, and to what extent this biases investment and usage
decisions. On the other hand, the real social costs are typically not recovered when
financing projects and are rarely used in charging for their use.
For example, road space is a scarce resource. Apart from a few new toll roads and
some on-road parking, users are not charged a price for its use. Demand for the use
of roads is therefore rationed only by the generalised cost of travel: vehicle operating
costs and travel time. In many metropolitan areas, traffic congestion is the inevitable
result. Road users considering whether to join a congested traffic stream would
normally take account of the generalised travel cost that they would expect to incur.
These are the private costs against which they would weigh the benefits of travel.
However, road users do not take account of the fact that their decisions to travel
increase congestion and impose additional (public) costs on other road users.
However, social cost can be reduced to economically efficient levels by making road
users take into account the costs that they impose on other road users when
undertaking a trip.
Social cost components that are considered essential in highway investment can be
categorised as vehicle operating costs, travel delay costs, social impact influence and
accident cost. A brief outline of each category is given in Table 2.4.
46 Chapter 2: Literature Review
Table 2.4: Social impacts and costs in highway projects
SOCIAL CATEGORY
FACTORS THAT LEAD TO IMPACTS AND COSTS
Vehicle Operating Costs
• Vehicle Operating Costs include direct user expenses to own and use vehicles (plus incremental equipment costs for mobility substitutes such as telework). These indicate the savings that result when vehicle ownership and use are reduced. These can be divided into fixed (also called ownership) and variable (also called operating, marginal or incremental) costs, as indicated below. Variable costs increase with vehicle mileage, while fixed costs do not. Some costs that are considered fixed are actually partly variable. Variable costs increase with vehicle use, and decline when vehicle travel is reduced.
Travel Delay Costs • The Value of Travel Time refers to the cost of time spent on transport, including waiting as well as actual travel. It includes costs to consumers of personal (unpaid) time spent on travel, and costs to businesses of paid employee time spent in travel. The Value of Travel Time Savings refers to the benefits from reduced travel time. Travel time is one of the largest categories of transport costs, and time savings are often the greatest benefit of transport projects such as new and expanded roadways, and public transit improvements. Factors such as traveller comfort and travel reliability can be quantified by adjusting travel time cost values.
Social Impact Influence
• Community Cohesion: Automobile-oriented transport tends to result in development patterns that are suboptimal for many social goals. Wide roads and heavy traffic tend to degrade the public realm (public spaces where people naturally interact) and in other ways reduce community cohesion (Litman 2007).
• Economic vulnerability: Dependence on imported petroleum makes a region vulnerable to economically harmful price shocks (sudden price increases) and supply disruptions. For example, the last three major oil price shocks were followed by an economic recession.
• Higher world oil prices: High US demand increases international oil prices (the elasticity of world oil price with respect to US demand is estimated at 0.3 to 1.1), imposing a financial cost on all oil consumers (Smith 2009).
Accident Cost • Crash Costs are the economic value of damages caused by vehicle crashes (also called accidents or incidents). Injuries and fatalities refer to the extent of damage caused by a crash. Typical road users include pedestrians, cyclists and motorcyclists.
• Types of Crash Cost Costs: Internal costs are injuries and hazards to the individual who travel by vehicle mode. While for external cost, it refers to the uncountable damages and dangers caused by an
Chapter 2: Literature Review 47
SOCIAL CATEGORY
FACTORS THAT LEAD TO IMPACTS AND COSTS
individual on other people.
• Crash costs include internal costs (damages caused by an individual), external (risks caused by other road users) and insurance compensation (accident damages compensated by insurance companies).
• External Costs: Elvik (1994) clarifies three types of costs implies to crash activities such as accident damage costs impose on society, cost of injuries contributed by larger vehicles to smaller vehicles and the changes in traffic density that contribute to the marginal changes in crash risk.
Jansson (1994) emphasises external costs crashes imposed on “unprotected road users” (pedestrians, cyclists and motorcyclists), and damage costs borne by society. Some existing studies also emphasise the costs motor vehicle risk may also be contributed by pedestrians and cyclists (Davis 1992). The results also supported by James (1991) indicate that such accidents are undervalued because of those incidents are not recorded.
2.4.1.3 Environmental category
Environmental issues in the current construction industry lead to an unforeseen
capital investment for built assets. One problem is the complexity of these issues,
which leads to unpredictable investment decisions among the investors.
In identifying environmental costs in highway investment, two situations are of
particular significance for LCCA: one is the estimation of the full life-cycle cost of a
project or decision, and the other is the attempt to increase production efficiency and
focus on cost components related to the environment. In the first case, only
downstream costs are of interest. In the second case, all costs components related to
environmental are of interest. When deciding upon which environment-related costs
to include in the study, there are borders that need to be taken into account.
Environment-related cost components that are considered essential in highway
investment can be categorised into noise pollution, air pollution, resource
consumption, pollution damage from agency activities, solid waste generation cost,
and water pollution and hydrologic impacts, as shown in Table 2.5.
48 Chapter 2: Literature Review
Table 2.5: Environmental impacts and costs in highway projects
ENVIRONMENTAL CATEGORY
FACTORS THAT LEAD TO IMPACTS AND COSTS
Noise Pollution • Type of vehicle: Motorcycles, heavy vehicles (trucks and buses), and vehicles with faulty exhaust systems tend to produce high noise levels.
• Traffic speed, stops and inclines: Lower speeds tend to produce less engine, wind and road noise. Engine noise is greatest when a vehicle is accelerating or climbing an incline. Aggressive driving, with faster acceleration and harder stopping, increases noise.
• Pavement condition and type: Rougher surfaces tend to produce more tire noise, and certain pavement types emit less noise (Ahammed and Tighe 2008).
• Barriers and distance: Walls and other structures such as trees, hills, distance and sound-resistant buildings (e.g., double-paned windows) tend to reduce noise impacts.
Air Pollution
• Mobile Emission: It is difficult to control mobile emission given the reason that motors are numerous and dispersed, and have relatively high damage costs because motor vehicles operate close to people.
• Transportation: Transportation is a major contributor of many air pollutants. These shares are even higher in many areas where people congregate, such as cities, along highways and in tunnels.
Resource Consumption
• Energy Security: Energy security includes economic and military costs associated with protecting access to petroleum resources. For example, US national security costs associated with defending petroleum supplies in the Middle East region are estimated to range from $6 to $60 billion annually (Romm and Curtis 1996).
• Economic vulnerability: Dependence on imported petroleum makes a region vulnerable to economically harmful price shocks (sudden price increases) and supply disruptions. For example, the last three major oil price shocks were followed by an economic recession.
• Higher world oil prices: High US demand increases international oil prices (the elasticity of world oil price with respect to US demand is estimated at 0.3 to 1.1), imposing a financial cost on all oil consumers (Smith 2009).
Pollution Damage from Agency Activities
• Roadkills: Motor vehicles are a major cause of death for many large mammals, including several threatened species.
• Road Aversion and other Behavioural Modifications: Animals behaviour and movement patterns are affected by roads; animals
Chapter 2: Literature Review 49
ENVIRONMENTAL CATEGORY
FACTORS THAT LEAD TO IMPACTS AND COSTS
become accustomed to roads, and are therefore more vulnerable to harmful interactions with humans.
• Population Fragmentation and Isolation: By forming a barrier to species movement, roads prevent interaction and cross breeding between population groups of the same species. This reduces population health and genetic viability.
• Exotic Species Introduction: Roads spread exotic species of plants and animals that compete with native species. Some introduced plants thrive in disturbed habitats along new roads, and spread into native habitat. Preventing this spreading is expensive.
• Pollution: Road construction and use introduce noise, air and water pollutants.
• Impacts on Terrestrial Habitats: Road construction can cause habitat disruption and loss.
• Impacts on Hydrology and Aquatic Habitats: Road construction changes water quality and water quantity, stream channels, and groundwater.
• Access to Humans: Roads increase the access of humans including hunters, poachers, and irresponsible visitors.
• Sprawl: Increased road accessibility stimulates development, which stimulates demand for urban services, which in turn stimulates more development, leading to a cycle of urbanisation.
Solid Waste Generation Cost
• Damage costs: Damagin solid waste is created by the inappropriate disposal of used tires, batteries, junked cars, oil and other harmful materials resulting from motor vehicle production and maintenance.
• Construction and Demolition Wastes: Damaging solid waste is created by surplus materials arising from land excavation or formation, civil construction, roadwork, pavement maintenance or demolition activities.
• Waste from Motor Vehicles: Motor vehicles produce various harmful waste products that can impose externalities. Motor vehicle wastes are the major source of moderate-risk wastes produced in typical jurisdictions (Giannouli et al. 2007).
• Waste Management: Planning for waste management is process that involves many complex interactions such as transportation systems, land use, public health considerations and interdependencies in the system such as disposal and collection methods.
50 Chapter 2: Literature Review
ENVIRONMENTAL CATEGORY
FACTORS THAT LEAD TO IMPACTS AND COSTS
Water Pollution and Hydrologic Impacts
• Impacts from motor vehicles, roads and parking facilities: These impacts impose various costs including polluted surface and groundwater, contaminated drinking water, increased flooding and flood control costs, wildlife habitat damage, reduced fish stocks, loss of unique natural features, and aesthetic losses.
• Hydrologic Impacts: Roads concentrate stormwater, causing increased flooding, scouring and siltation, reduced surface and groundwater recharge which lowers dry season flows, and creates physical barriers to fish.
• Improper vehicles leak hazardous fluids: Lubricating oils used in automobiles are burned in the engine or lost in drips and leaks onto the ground or into sewers, leading to the destruction of many aquatic species.
Chapter 2: Literature Review 51
2.5 Research Gap
The literature review reported in the previous sections suggests that industry
stakeholders need to pay attention to two key issues in order to incorporate the
sustainability concept into the life-cycle cost analysis. First, they need to understand
the evolving needs and challenges to improve long-term financial decisions. Second,
there is a need for clearer understanding of critical cost components related to
sustainable measures in Australian highway investments. As such, the complexity of
incorporating sustainability into LCCA must be addressed. These two issues are
interrelated and are further discussed in the following sub-sections.
2.5.1 Challenges to improve long-term financial decisions
Sustainability has become one of the prime issues that the current construction
industry needs to respond to. Although the application of sustainability in built assets
is beneficial, it often involves major capital investment. Costs always become the
impeding factor for stakeholders when they contemplate sustainability initiatives in
highway projects. While profit is still the main concern in highway investment, there
is increasing social awareness of concerns relating to global warming and climate
change. Thus, highway industry stakeholders are responsible for ensuring the balance
between the financial benefits and sustainability deliverables in highway
investments.
This study has identified that LCCA is an effective economic assessment approach
that is able to evaluate financial benefits in the long-term. However, the review of the
literature has found that there are many limitations in current LCCA models
concerning sustainability (as discussed in section 2.3.2.2). To overcome these
limitations, it is important to understand the Australian industry practice of LCCA
and the expectations of various stakeholders in improving long-term financial
decisions while considering sustainability in highway projects. This is one of the
gaps that the current research aims to bridge.
52 Chapter 2: Literature Review
2.5.2 Critical cost components in Australian highway investments
There is an increasing number of studies on sustainability-related cost components in
highway development (Surahyo and El-Diraby 2009; List 2007). A review of the
literature has managed to identify 42 cost components related to sustainable
measures (Table 2.6). However, the literature shows that highway projects often take
place in different physical, legal and political environments; therefore, it is a
challenge to apply these cost component suites for all highway projects.
Table 2.6: Sustainability-related cost components for highway infrastructure
Sustainability Criteria
Sustainable Cost Components (Main Factors)
Sustainable Cost Components (Sub Factors)
Agency Category
Initial Construction Costs Labour Cost Materials Cost Plants and Equipments Cost
Maintenance Costs Major Maintenance Cost Routine Maintenance Cost
Pavement Upgrading Costs Rehabilitation Cost Pavement Extension Cost
Pavement End of Life Costs Demolition Cost Disposal Cost Recycle and Reuse Cost
Social Category
Vehicle Operating Costs Vehicle Elements Cost Road Tax and Insurance Cost
Travel Delay Costs Speed Changing Cost Traffic Congestion Cost
Social Impact Influence
Cost of Resettling People Property Devaluation Reduction of Culture Heritages and Healthy Landscapes Community Cohesion Negative Visual Impact
Accident Costs Economy Value of Damages Internal Cost External Cost
Environmental Category
Solid Waste Generation Costs Cost of Dredge/Excavate Material Waste Management Cost Materials Disposal Cost
Pollution Damage by Agency Activities
Land Use Cost Distraction to Soil Extent of Tree Felling Habitat Disruption and Loss Ecology Damage Environmental Degradation
Resource Consumption Fuel Consumption Cost Energy Consumption Cost
Chapter 2: Literature Review 53
Sustainability Criteria
Sustainable Cost Components (Main Factors)
Sustainable Cost Components (Sub Factors)
Noise Pollution
Cost of Barriers Tire Noise Engine Noise Drivers’ Attitude
Air Pollution Effects to Human Health Dust Emission CO2 Emission
Water Pollution Loss of Wetland Hydrological Impacts
In order to fit the Australian context, these cost components need to be examined and
verified by industry stakeholders involved in highway development. This is another
gap that the current study aims to bridge, by identifying the critical cost components
related to sustainable measures with which highway project stakeholders are most
concerned.
2.6 Chapter Summary
This chapter highlighted findings from the literature review conducted as part of the
first stage of the research framework (as discussed in section 1.6.1. Specifically, it
answered the first research question, that is, What are the sustainability measures
that can have the cost implications in highway projects? The findings supported the
view of the global initiatives on sustainable infrastructure development and the
context of highway infrastructure development in Australia. The push towards
sustainability has added new dimensions to the complexity of financial evaluation in
highway projects. Life-cycle costing analysis is generally recognised as a valuable
tool in dealing with this evaluation.
However, to date, existing LCCA models appear to be deficient in dealing with
sustainability-related cost components due to their inherent focus on the economic
issues alone. The two main barriers preventing the advancement of the sustainability
concept in the life-cycle costing analysis in Australian highway investments are the
need for stakeholders to understand the industry challenges and improve long-term
financial decisions, and the need for clearer understanding of critical cost
components related to sustainable measures, as discussed in section 2.5.
54 Chapter 2: Literature Review
To overcome these barriers, there is a need to identify the substantial cost
components in long-term financial decision at the project level. This allows the
industry stakeholders to appreciate the cost components are significant in highway
infrastructure investments. In addition, this study examines the different perceptions
and expectations of the industry stakeholders regarding the current practice of life-
cycle cost analysis in Australian highway infrastructure. This will allow all parties
involved to understand the industry needs in achieving the goal of maximising
sustainability deliverables while ensuring financial viability over highway
investment. The following chapter will further discuss the suitable methodology
options to investigate the key research questions of this study.
Chapter 3: Research Methodology and Development 55
CHAPTER 3: RESEARCH METHODOLOGY AND
DEVELOPMENT
3.1 Introduction
According to Creswell (2003), methodology is necessary to ensure that a research
project compressively addresses the research questions. To meet these objectives, a
research study should have a detailed research design that can be used as a blueprint
for collecting observations and data that are connected to the research questions.
According to Simister (1995), the research design should:
• Make explicit the questions the researcher should answer
• Provide hypotheses or propositions about these questions
• Develop a data collection methodology, and
• Discuss the data in relation to the initial research questions and hypotheses or
propositions.
This chapter outlines the methodologies used to guide this research, which aims to
develop a decision support model for evaluating long-term financial decisions for
highway projects. With consideration of these objectives, the research is positioned
as mixed methods research that uses complementary quantitative and qualitative
paradigms. The inquiry is based on the assumption that collecting different types of
data best provides an understanding of a research problem and the necessary
ingredients of the final product.
The research began with a quantitative phase (questionnaire survey) with both open
and closed questions. A review of the literature was undertaken to help establish a
rationale for the research questions and to establish the extent and depth of existing
knowledge on cost components related to sustainable measures in highway projects
and the development of existing life-cycle cost analysis models. The literature was
56 Chapter 3: Research Methodology and Development
used as a basis for advancing the research questions (Creswell and Clark 2007). The
qualitative phase then followed, which involved the conduct of explanatory in-depth
semi-structured interviews and case studies.
This chapter is organised as follows. The specific mixed methods employed in this
study are outlined in Section 3.2. This section describes the specific research
methodologies for this study. Section 3.3 presents the overall stages and the
involvement of the methodologies within the study. In Section 3.4, the ethical
considerations for this study are explained. Finally, Section 3.5 summarises the
important points discussed in the chapter.
3.2 Selection of Research Methods
According to Fellow and Liu (2003), data collection is a communication process. It
involves the transaction of data between the providers (respondents) to the collectors
(researchers). In this research, several research methods were involved to aid the
researcher to create this communication link with the respondent. This chain of
communication helps the researcher to understand the current practice of the industry
stakeholders as well as the needs of industry towards improvement of highway asset
management.
Methods of collecting data, generally, can be categorised as either one-way or two-
way communications. In this research, one-way methods require either acceptance of
the data provided or their rejection. Clarification or checking are possible only rarely.
One-way communication methods include questionnaires. Two-way methods such as
semi-structured interviews, permit feedback and the gathering of further data via
probing. One-way communication methods may be regarded as linear data collection
methods while two-way communication methods are non-linear. Based on Fellow
and Liu (2008), the spectrum of interview types related to the nature of the questions
are shown in Figure 3.1.
Chapter 3: Research Methodology and Development 57
Given that there is a restricted amount of resources and time available for carrying
out the field work, choosing the most suitable research method is necessary. The
choice is affected by consideration of the scope and depth required. The choice is
between a broad but shallow study at one extreme, and a narrow and deep study at
the other, or an intermediate position – as shown in Figure 3.2.
Figure 3.1: Spectrum of interview types (Fellows and Liu 2008)
Figure 3.2: Breadth vs. depth in ‘question-based’ studies (Fellows and Liu 2008)
58 Chapter 3: Research Methodology and Development
This study employs the research methods that provide breadth to depth to generate
holistic and meaningful findings and results. Therefore, the data collected needs to be
maximised to ensure its accuracy and the usability in the research. Fellow and Liu
(2003) suggest that the methods employed in research need to be pre-determined in
order to identify what data is critical, and to ensure the validity of respondents
selection and the right sampling number to bring a good representation of the
population to the study. This research selects several research methods that are
suitable for the research purposes, such as survey and case study. Each method is
further discussed and justified in the following sections.
3.2.1. Survey
A survey is "gathering information about the characteristics, actions, or opinions of a
large group of people, referred to as a population" (Dillman 2007). It consists of
cross sectional and longitudinal methods to collect data. The data collection and
measurement processes include surveys; questionnaire-based surveys, marketing
surveys, opinion surveys and political polls are some of the most common.
This method produces observations that are constructed in a specific manner.
Surveys have advantages that they do not require as much effort from the questioner
as verbal or telephone surveys, and often have standardised answers that make it
simple to compile data. However, this method is quite difficult to develop fresh
perspectives or to come up with new ways of interpreting the researched phenomena.
Usually, standardisation answers may cause frustration to the users. Surveys are also
limited in that respondents must be able to read the questions and respond to them.
Thus, the researchers must have a reasonably clear idea of the hypotheses they want
to test and the preset responses they will set out before the surveys are even started
(Alasuutari 2004).
Surveys are conducted to produce quantitative descriptions of some characteristics of
the study population. Survey analysis is mainly concerned on the relationships
between variables, or with projecting findings descriptively to a predefined
population (Fowler 2009). Survey research can be conducted by quantitative and
qualitative methods. This requires standardised information from the subjects being
Chapter 3: Research Methodology and Development 59
studied. The subjects studied might be individuals, groups, organisations or
communities. There are several ways to conduct a survey such as collecting
information by asking people with structured and semi-structured questions. Their
answers are referring to themselves or some other unit of analysis, which constitute
the data to be analysed. The sample of a survey needs to be large enough to allow
extensive statistical analyses.
To achieve the second objective of this research, information relevant to
sustainability-related cost components in highway projects is collected through
surveys (quantitative method). The literature findings have demonstrated the lack of
effective ways to quantify cost components related to sustainable measures as well as
the limitations of current LCCA models in handling these costs in highway
investment. Thus, understanding the needs and overall situation of the current LCCA
practice in the Australian highway industry would require a realistic survey
(qualitative method).
In light of the small body of literatures relating to the research context, a survey of
industry practice is essential to identify and develop effective approaches. The
survey can provide both information as facts about the practice and opinions from the
professional experience. The information can be the initial source for the further
knowledge base formulation along with the decision support model development to
achieve the goals of this study. To gain an understanding of the status of the current
Australian highway industry in handling highway investment, the industry
stakeholders are the major subjects. The industry survey is carried out in the major
capital cities of Australia.
3.2.2. Case study
Case study is a research methodology that explores a single entity (the case) by using
a variety of data collection methods during a sustained period of time. Case study
method excels at bringing researchers to an understanding of a complex issue or
object and can extend experience or add strength to what is already known through
previous research. Case study emphasises detailed contextual analysis of a limited
number of events or conditions and their relationships.
60 Chapter 3: Research Methodology and Development
Researcher Robert K. Yin defines the case study method as an empirical inquiry that
investigates a contemporary phenomenon within its real-life context; when the
boundaries between phenomenon and context are not clearly evident; and in which
multiple sources of evidence are used (Yin 1989). Critics of the case study method
believe that the study of a small number of cases can offer no grounds for
establishing reliability or generality of findings. Some dismiss case study method as
useful only as an exploratory tool. Yet researchers continue to use the case study
research method with success in carefully planned and crafted studies of real-life
situations, issues, and problems. Reports on case studies from many disciplines are
widely available in literature.
To fulfill the research objectives proposed by this study, a descriptive case study was
employed. Case study uses a variety of data collection methods during a specific
period an effort to study each single case. Case study is used widely in social science
as well as the practice-oriented fields in construction engineering, science
management and education. According to Yin (1989), case study is the preferred
strategy when "how" and "why" questions being posed, when there is little control
over events, and when the focus is on contemporary phenomenon within real-life
context.
The objective of applying the case study method was first, the developed model
needs to be applied to cases so it picks up real-life problems solving and decision-
making routines. This will help complete the model development by embedding
realistic and practical procedures to test and evaluate the decision support model
based on the real-life projects. More specifically, this study seeks to answer specific
research question of how can long-term financial viability of sustainability measures
in highway projects be assessed. Given the "how" nature of this study's research
question, a case study approach provides a useful methodology for answering them.
Yin cites several advantages to the case study approach. Case study is useful when an
'investigator' has an opportunity to observe and analyse a phenomenon previously in
accessible to scientific investigation (Yin 1989). Given the limited real-life projects
that are available, two case projects are selected for the researcher to develop insight
into the application of an emerging of decision support model.
Chapter 3: Research Methodology and Development 61
However, Yin notes, "The case study has long been stereotyped as a weak sibling
among social science methods. Investigators who do case study are regarded as
having deviated from their academic disciplines; their investigations, as having
insufficient precision (that is quantification), objectivity and rigor". Summarising the
work of others, he concludes that the strength of a case study is dependent upon the
development of an explicit research design, and the use of several methods for data
collection (Yin 2003).
3.3 Research Process
This section seeks to integrate the preceding discussion into a research
methodological framework to illustrate how the different research elements are
developed in this research. There are four distinct phases in conducting this research
which includes (1) literature review (2) survey development (3) decision support
model development (4) case study. The research process is illustrated in Figure 3.3.
62 Chapter 3: Research Methodology and Development
• What is a semi-structured interview?
• Why a semi-structured interview?
• What is the sample? • How to conduct a
semi-structured interview?
• How to analyse the data?
• What is a questionnaire Survey?
• Why a questionnaire Survey?
• What is the sample? • How to conduct a
questionnaire Survey? • How to analyse the
data?
Survey
Research Problems
Questionnaire Survey
• What is model development? • Why model development? • How to conduct model development? • How to analyse the data?
• What is a case study? • Why a case study? • What is the sample? • How to conduct a case study? • How to analyse the data?
Understand concept of sustainability & LCCA
Identify research
gaps Literature Review
Semi-Structured Interview
Model Development
Case Study
Phase 1
Phase 4
Phase 3
Phase 2
Figure 3.3: Research process
Chapter 3: Research Methodology and Development 63
3.3.1. Literature review
The literature review was conducted to identify how the knowledge developed to
date impacts on the problem. According to the research problem, the literature is
crucial for this research. Literature reviews inform researchers of the background to
their research projects and provide context and ideas for their studies. There are good
reasons for spending time and effort on a review of the literature before embarking
on a research project. These reasons include:
• To identify the gaps in the literature,
• To avoid reinventing the wheel (at the very least this will save time and it can
stop the research from making the same mistakes as others),
• To carry on from the point others have already reached (reviewing the field
allows the research to build on the platform of existing knowledge and ideas),
• To identify other people working in the same fields,
• To identify information and ideas that may be relevant to the research, and
• To identify methods that could be relevant to the research.
3.3.1.1. Literature review purposes
The literature review was to define the initial research questions and to develop a
general understanding for this study. This study carried out several steps to conduct
the review of the literature and highlighted three main topics based on the first
research question (as discussed in Section 1.2):
• The sustainability development principles and evolution of highway
infrastructure development in Australia.
• The principle of engineering economics, LCCA application, current LCCA
models and their limitations in adopting sustainable measures in highway
infrastructure.
• Cost components related to sustainable measures in highway infrastructure.
64 Chapter 3: Research Methodology and Development
The literature reviewed on these three topics provided a theoretical background for
the study. Through the literature review, a clear picture was formed for the researcher
to identify the cost components related to sustainability measures and the limitations
of existing LCCA approaches to adopting sustainability.
3.3.1.2. Literature review development
This study has obtained most of the books and journal articles through libraries and
electronic databases. The published literature can be retrieved through the existence
of computer databases, computerised catalogues and searches on the internet. The
researcher has identified several ways to explore important sources of written
information. One of the most effective ways to obtain the literature is to ask for key
readings from an acknowledged expert. This expert is able to provide guidance to the
‘specialised’ material, the latest findings and journals, and perhaps to unpublished
material and other useful contacts.
This study is also identifying and locating the material for a review. It is necessary
to keep full and accurate bibliographic details, including information on the location
of materials so that they can found again quickly. The researcher in this study
employed a computer-based record system “Endnote”, which is a user-friendly and
powerful application to cross-reference, and to attach fields for notes to the
bibliographic details.
All the written materials have been read fully and reflectively. The review of
literature is focusing on the patterns, arguments, new ideas, methodology, and areas
of further enquiry. The information gathered was systematically transferred into
notes by classifying it under headings. The clearly presented tables were used to
record a large amount of quantitative information, whereas reviews of qualitative
materials were noted in text.
Based on these steps, the preliminary model is developed and cost components
related to sustainability in highway infrastructure were identified. The next
procedures are the re-evaluation and selection of the definitive cost components to be
evaluated by industry stakeholders using survey methods.
Chapter 3: Research Methodology and Development 65
3.3.2. Questionnaire
This study used questionnaire-based surveys as the method to identify the critical
cost components in life-cycle cost analysis that emphasise sustainability in highway
infrastructure. The questionnaire surveys was selected because questionnaire surveys
are effective in gathering information about the characteristics, actions or opinions of
a large group of people (Creswell 2009).
The questions that were designed for this questionnaire occur in two forms- open and
closed. As shown in Table 3.1, open and closed questions have some different
characteristics. According to Fellow and Liu (2008), careful consideration of the type
of questions used in a questionnaire is essential so that researchers can get good
responses. A well-designed questionnaire that is used effectively can gather relevant
information on the sustainability-related cost components and also the comments of
related factors that influence the application of sustainability in LCCA practice.
Table 3.1: Characteristics of questions
Open Question Closed Questions • Easy to ask • Informative • Difficult to answer • Never full / complete
• A set of number of responses - Likert scale
• Less informative • No bias. • Easier and quicker to answer
It is important to remember that a questionnaire should be viewed as a multi-stage
process beginning with a definition of the aspects to be examined and ending with an
interpretation of the results. Every step needs to be designed carefully because the
final results are only as good as the weakest link in the questionnaire process.
Questionnaire research design proceeds in a systematic and precise manner, as
illustrated in Figure 3.4. Each item in the figure needs to be well planned and
organised to conduct a comprehensive questionnaire survey.
66 Chapter 3: Research Methodology and Development
3.3.2.1. Purposes of questionnaire
From the literature findings, an online questionnaire was conducted for the following
research purposes:
• To identify the importance of sustainability-related cost components,
• To explore barriers associated with quantifying cost related to sustainability
measures,
• To identify different perspectives of industry stakeholders towards cost
components related to sustainable measures, and
• To explore the industry stakeholders’ opinions of the future prospects in
integrating sustainability into long-term financial management for highway
projects.
In the questionnaire survey, the stakeholders (namely, local and state government
officers, project managers, engineers, quantity surveyors, planners, civil contractors
and subcontractors) were asked to rate the cost components based on their experience
in highway projects. These cost components are incorporated into the proposed
Prepare Report
Define Goals and Objectives Design Methodology Determine
Feasibility
Select Sample Develop
Instruments Conduct Pilot Test
Revise Instruments
Analyse Data Conduct Research
Figure 3.4: Questionnaire research flow chart (Statpac 1997)
Chapter 3: Research Methodology and Development 67
conceptual model for further development. Semi-structured interviews were
employed to explore the current practice of long-term financial management and the
calculation methods to quantify the costs related to sustainable measures in highway
development.
3.3.2.2. Selection of questionnaire respondents
The questionnaire used in this research was based on the combination of the literature
review on contemporary LCCA models, preliminary model development, and also
the identification of sustainability-related cost components in highway infrastructure.
Unless a study is quite narrowly construed, researchers cannot study all relevant
circumstances, events or people intensively and in-depth; samples must be selected
(Bernard 2006). For this research, three main construction industry players involved
in highway projects, namely, consulting companies, contractors and government
agencies from Australia were included. The respondents include senior practitioners
and stakeholders who have substantial working experience in highway infrastructure
projects. They play an important role in the construction industry because they are the
decision-makers in highway investments. Consequently, these stakeholders also have
more concerns about the economic dimension of highway construction projects.
To ensure that holistic views were collected, targeted stakeholders included government
or client representatives, builders, designers, project managers, quantity surveyors,
planners, contractors and subcontractors involved in highway projects. The questionnaire
respondents were selected from the last updated databases available in:
1. The National Innovative Contractors Database by the Cooperative Research
Centres
2. Directories from the Australian Institute of Quantity Surveyors.
for Construction Innovation.
3. Directories from Association of Consulting Engineers Australia.
Samples chosen from these databases are a good representative of the Australian
construction industry stakeholders. Through the questionnaire, the opinions and
comments by these senior stakeholders represent the current industry’s perceptions of
68 Chapter 3: Research Methodology and Development
the importance of sustainability-related cost components in highway projects in
particular.
3.3.2.3. Questionnaire development
The questions in the questionnaire focus on the level of importance of three groups
of sustainability-related cost components: agency, social, and environmental cost
components. The questions were designed to identify the importance of these three
categories of cost components in long-time financial management as highlighted in
the literature review.
The three sections focus on different aspects of sustainability-related cost
components when selecting a highway infrastructure project and making highway
investment decisions. The agency, social, environmental cost components sections
aim to explore the perspective of industry stakeholders’ regarding the level of
importance of these costs in highway investment. Meanwhile, the open questions
seek to explore the comments and opinions of the stakeholders towards
implementation of sustainability-related cost components in highway long-term
financial management. The supplement at the end of the questionnaire is designed to
gather information about the participants’ background for statistical purposes.
The questionnaire was developed using a multiple-choice format. Some of the
multiple-choice questions include answers to be solicited on a 5-point Likert scale
with 1 representing the “not important” and 5 the “very important”, while others are
designed with several pre-described answers. The questionnaire also includes one
open-ended question to allow the respondents with relevant experience in highway
development to write down the comments and problems they have come across in the
long-term financial management of highway projects. The specific content of the
questionnaire is presented in Appendix A2.
Before the questionnaire was distributed to the respondents, it was initially been
piloted by a small sample of respondents. Fellow and Liu (2003) argue that piloting
will evaluate the questions to ensure they are intelligible, easy to answer and
unambiguous, and to test the structure of the questionnaire design. The feedback
Chapter 3: Research Methodology and Development 69
obtained from the pilot respondents will help the researcher to improve the
questionnaire. This research undertook the pilot questionnaire with academic and
industry experts. This resulted in improving the questionnaire, filling in gaps, and
determining the time required for, and ease of, completing the exercise. In addition,
the ability to achieve the research objectives was a significant consideration in the
piloting process. This process can improve the understanding of the researcher so
that they would be able to analyse the results and findings well.
As mentioned above, the questionnaire aims to explore the issues raised in the
literature review. The design of the questions was based on those issues. The
appropriateness and adequacy of the proposed questions were justified through the
pilot study, which was carried out from April 2009 to June 2009. In the pilot study,
the preliminary version of the designed questionnaire was sent to three academic
staff in this field at the Queensland University of Technology and two industry
practitioners at the Queensland Department of Public Works to test whether the
questions were intelligible, easy to answer and unambiguous, and to seek possible
improvement. A series of discussions were held separately with each of the persons
involved. The results of the discussions proved to be useful and led to minor
refinements of the questionnaire in the following aspects:
• Present an extra choice of “others” in most questions in order to allow
respondents to add any possible answers which are not given in the
questionnaire;
• Shorten the questionnaire length and make it more succinct and clear;
• Revise the rating scales for the importance level of cost components related to
sustainable measures.
Following these suggestions, the questionnaire development was finalised and tested
again with two of the above five participants, making sure that all the issues had been
clarified and resolved. By April 2009, the questionnaire was ready to be
disseminated to the industry stakeholders.
The questionnaire was administered by email with on-line link to the web-based
questionnaire to respondents due to the geographical limitations. A commercial
70 Chapter 3: Research Methodology and Development
survey provider, Survey Monkey (http://www.surveymonkey.com/), administrated
the web-based questionnaires used in this research. Subsequently, the author
approached the participants through emails to seek their consent to participate in this
research. Before participating in the questionnaire survey, participants were given the
following information by email and ordinary mail:
1. Cover letter;
2. Consent form for research project ;
3. Participant information for QUT research projects; and
4. Questionnaire survey sheets.
In order to improve the response rate, the questions were designed to be
unambiguous and easy to answer by the respondents. Fellow and Liu (2003) suggest
that the questions in a questionnaire should not request unnecessary data; questions
need to be clear, concerning one issue only and the questions should be presented in
an ‘unthreatening’ form appropriate to the research. Dillman (2007) also argues that
questionnaires by email or web need to have a user-friendly design because any
complexity will prevent some respondents from receiving and responding to the
questionnaire.
3.3.2.4. Data analysis
All the data collected from the questionnaires was recorded into the Survey Monkey
web survey tool. From the tool, the role data, which is the inputs from the
respondents were retrieved and analysed using a software program. Sekaran and
Bougie (2003) suggested that data analysis should be done with the aid of software
programs. In this research, Microsoft Excel and SPSS were employed to analyse the
data. Microsoft Excel was suitable for conducting statistical analysis to display the
analysis in chart and graph format, while SPSS was used to transform the data into
information such as the t-test analysis as SPSS offers more comprehensive statistical
analysis. Microsoft Excel is also used to store and organise information as well as
reordering records according to a numeric field. Both software programs play an
important role in analysing statistical data gathered from the questionnaire survey.
Chapter 3: Research Methodology and Development 71
This study commenced two methods data analysis to identify the related importance
of cost components related to sustainable measures in highway projects in Australia.
Mean indexing and t-test are widely used in presenting exploratory and descriptive
data analysis and can provide support to the criticality index in this research. Among
many others, Yang and Peng (2008) used the mean index to discuss the importance
of the evaluation factors for customer satisfaction in project management. Ahuja et.al
(2009) used the standard deviation and mean in evaluating the issues of ICT
adoption for building project management in the Indian construction industry. Shehu
and Akintoye (2010) used mean to ‘support criticality index to rate the major
challenges’. This research also used the same approach to support criticality index to
rate the cost components related to sustainable measures.
The level of importance was based on their professional judgment on a given five-
point Likert-scale from 1 to 5 (where 1 is not important at all and 5 is very
important). Higher mean scores reflect responses that indicate the higher importance
of the respective cost components. The critical rating was fixed at scale ‘3.75’ since
ratings above ‘3’ represent ‘moderate important’, ‘4’ represent ‘important’, and ‘5’
represent ‘most important’ according to the scale. Likert scales facilitate the
quantification of responses so that statistical analysis could be taken and observed
the perceptions of differences between participants. This study also employed
descriptive statistics to analyse the survey results on the critical cost components.
The mean scores ratings of all proposed cost components were calculated using (Eq.
1):
a =
1(n1) + 2(n2) + 3(n3) + 4(n4) + 5(n5)(n1 + n2 + n3 + n4 + n5)
(1)
where “a” is the mean importance rating of an attribute and n1, n2, n3, n4, and n5,
represent the number of subjects who rated the cost components as 1, 2, 3, 4 and 5,
respectively. The data from the survey was analysed using mean and standard
72 Chapter 3: Research Methodology and Development
deviation to rate the cost components. The t-test analysis was employed to identify
‘importance’ cost components to be considered in long-term investment for highway
infrastructure. Prior to proceeding with the analysis, a Cronbach α reliability analysis
was conducted. The result of the test proves the reliability of the data is α ≥ 0.7 as
recommended (Chan, Chan et al. 2010; Yip Robin and Poon 2009). Yang and Peng
(2008) suggests that in the early stages of research on predictor tests or hypothesised
measures of a construct, reliability of α ≥ 0.7 or higher will suffice. In this case, α =
0.948.
The t-test analysis has been used by past studies in identifying the relative important
indicators (Ekanayake and Ofori 2004; Wong and Li 2006; Shehu and Akintoye
2010). It can also provide support to the important cost factors in this research. The
rule of t-test of this survey sets out that the cost factors which value larger than 3.75
were considered to be critical. The null hypothesis (H0: μ1<μ0) against the
alternative hypothesis (H1: μ1>
μ0) were tested, where μ1 represents the mean of the
survey sample population, and μ0 represents the critical rating above which the
indicators considered as ‘important’. The value of μ0 was fixed at ‘3.75’because it
represents ‘important’ and ‘most important’ factors. The decision rule was to reject
H0 when the result of the observed t-values (tO) (Eq. (2)) was larger than the critical
t-value (tC) (Eq. (3)) as shown in Eq. (4).
to =x� − μ0SD
√n� (2)
tc = t(n−1,α) (3)
to > 𝑡𝑡𝑡𝑡 (4)
Chapter 3: Research Methodology and Development 73
where �̅�𝑥 is the sample mean, SD/ √𝑛𝑛 is the estimated standard error different mean
score (𝑆𝑆𝑆𝑆 is the sampled standard deviation of difference score in the population, n is
the sample size which was 62 in this study), n-1 represents degree of freedom, and α
represents the significant level which was set at 5% (0.05).
The criticality of cost components in this study was examined using Eqs. (3) and (4).
If the observed t-value is larger than the critical t-value to > tc, 𝑡𝑡(61,0.05)= 1.671 at
95% confidence interval, then H0 that the indicator was ‘moderate important’, ‘less
important’ and ‘not important’ rejected, and only the H1 was accepted. If the
observed t-value of the mean ratings weighted by the respondents was less than the
critical t-values (tO< tC), the H0 that was ‘less important’ and ‘not suitable’ only was
accepted.
3.3.3. Semi-structured interview
In general, there are three types of interview, namely, unstructured, semi-structured
and structured types. Unstructured and semi-structured interviews are often referred
to as qualitative research interviews (King 2004). Unstructured interviews are
informal and are conducted in order to explore some preliminary issues so that the
researcher can determine what variables need further in-depth investigation. Semi-
structured interviews are designed to have a list of themes and questions prepared in
advance; however, such prepared questions are relatively open and flexible in
relation to the research topic. This means that subsequent interviewer questions can
be modified and question wording can be changed, omitted or added based on the
needs of the situation in advance (Robson 2002). However, interview questions must
be improvised in a careful and theorised way (Wengraf 2001). Structured interviews
are based on an identical set of questions. Those questions are designed usually with
pre-coded answers and are also referred to as quantitative research interviews
(Saunders, Lewis and Thornhill 2009). The researcher has a list of predetermined
questions to be asked of the respondents either personally, on the telephone, or
through the medium of a computer (Sekaran and Bougie 2003).
Each interview method has advantages and disadvantages. Semi-structured
interviews can be easily controlled based on what the interviewer expects to enquire
74 Chapter 3: Research Methodology and Development
about, as compared to unstructured interviews. In this case, the semi-structured
interview allows the researcher to ask specific questions that are relevant to the
interviewees’ understanding of and opinions on the current practice of long-term
financial management and cost components related to sustainability measures in
highway infrastructure project. Moreover, the flexibility in semi-structured
interviews enables the researcher to keep the interviewees on track regarding the
topic of discussion, and in the meantime to express their views freely. As for
structured interviews, the questions are focused on a predetermined set. The
interviewer is totally in control over the interviewees who are given a subordinate
role in this context. This does not allow respondents to express their opinions freely
(Saunders, Lewis and Thornhill 2009). Burgess (1988) argued that the structured
interview is defined as a data collection device involving situations where the
interviewer merely poses questions and records answers in a set pattern. The lack of
flexibility in structured interviews is unlikely to bring forth opinions from the
respondents for the purpose of this research.
Based on the above argument, the semi-structured interview approach was adopted
for this research. In order to have a better understanding of the current practice of
long-term financial management and cost components related to sustainable
measures in highway projects, the interview questions were prepared in three main
sections along with a few other sub-questions. This strategy helped to ensure the
questions would be well understood by the interviewees, and simultaneously, helped
the researcher to extract meaningful data. Practically, the researcher was able to ask
and guide the conversation and focus on the relevant questions in order to have a
clearly understanding before the interviewee starts answering. This process guided
the interviewees, and at the same time enabled them to develop their ideas and share
their experiences and perceptions on the current practice of long-term financial
management and the calculation of cost components related to sustainable measures
in highway projects.
Chapter 3: Research Methodology and Development 75
3.3.3.1. Semi-structured interview purposes
The semi-structured interview was aimed to achieve the following three purposes:
• To identify the current industry practice on LCCA applications for highway
infrastructure projects;
• To identify ways to integrate cost components related to sustainability
measures into LCCA practice and the enhancement of the sustainability
concept into LCCA practice in highway projects; and
• To obtain the industry practitioners’ recognition of the challenges of
integration sustainability-related cost components into LCCA practice in
order to clarify the many uncertainties exposed by the earlier questionnaire
survey.
The interview presented all the cost components identified from the questionnaire to
the respondents and asked them to comment on these components. Interviewees were
also encouraged to propose possible solutions and considerations to deal with these
sustainability-related cost components. The data collected was analysed in the same
sequence as the pre-described questions in the interview.
3.3.3.2. Selection of interview respondents
Sekaran and Bougie (2003) suggest that while choosing the sample for interview,
those interviewed should be representative of the group who are attempting to make
inferences about. The specific target groups should also be the holders of the desired
information and able to answer research questions. For this research, the eligible
participants for the interviews were selected based on their substantial working
experience in highway infrastructure projects. These stakeholders and practitioners
usually have 15 to 20 years of experience and still practise in this industry.
Targeted stakeholders in this interview included government representatives,
environmentalists, engineers, project managers, financial representatives (specifically
in infrastructure management) and academics. From the respondents of the
questionnaire survey, 20 practitioners who fit this criteria were invited to participate
76 Chapter 3: Research Methodology and Development
in this research. As some of the practitioners were retired recently, changed job scope
or unable to cope with their schedule, 15 practitioners agreed to be involved in this
interview. The response rate shows a significant interest from the industry. The
comments from these practitioners represent the perceptions of the current practice of
long-term financial management and deal with the sustainability-related cost
components in highway projects.
3.3.3.3. Interview development
Semi-structured interviews can be conducted in many situations, such as face-to-
face, telephone, internet and intranet mediated interviews (Saunders, Lewis and
Thornhill 2009). The face-to-face and telephone interview approach was employed in
this study. Face-to-face interview was adopted for the interviewees who were
contactable in Brisbane, Queensland. On the other hand, due to the geographical
limitations, telephone interviews were employed for the interviewees outside the
Brisbane, Queensland area. In this case, the interviewer managed to control the pace
of both interview approaches and record any data that was forthcoming.
The face-to-face and telephone interview approaches were employed in this research
in the following contexts and stages:
• After the questionnaire survey stage, the interview was conducted, which
aimed to identify the different perceptions and expectations of various
stakeholders regarding the current practice of long-term financial management
and.
• The interview also served to understand the determination and calculation of
sustainability-related cost components in highway projects in Australia; and
• In relation to case studies at a later stage to elicit information from case study
projects.
The questionnaire survey identified differences in the various stakeholders’
perceptions of cost components related to sustainability measures in highway
projects. Accordingly, the semi-structured interviews that were conducted at the
middle stage of data collection after the questionnaire survey uncovered the in-depth
Chapter 3: Research Methodology and Development 77
understanding and perceptions of the current practice of long-term financial
management of the different interviewees, and enable the researcher to determine
how the sustainability-related cost components are calculated and which un-
quantified variables needed further in-depth investigation. Furthermore, the
interviews adopted in the case study phase helped the researcher to evaluate and
improve the proposed model.
As per the questionnaire findings, the industry stakeholders generally agreed that the
consideration of sustainability-related cost components is essential and must be
integrated into long-term financial management for highway investment decisions.
Based on the questionnaire, many potential issues were identified for the exploration
of the current practice of long-term financial management as well as potential ways
to quantify these cost components in real money figures. Hence, the semi-structured
interviews were employed to: (1) explore the current industry practice regarding
LCCA application in highway projects; (2) identify the ways of integrating cost
components related to sustainable measures into LCCA practice; and (3) explore the
challenges of integrating cost components related to sustainable measures into LCCA
practice.
In response to the interview purposes, the pre-described interview questions
consisted of three sections. Section 1 presented the current industries practice of
Life-cycle costing analysis (LCCA) in determining pavement type for highway
infrastructure. The interviewees were also encouraged to express their comments on
the types of highway maintenance activities, period of maintenance throughout its
lifetime. Before they move into next section, there is a question, which explores their
comments about the importance of integrated sustainability-related costs in your
analysis. Section 2 consisted of three parts namely agency, social and environmental
cost components which further identify the ways of measuring these costs in
highway development. This section was employed to identify various calculation
approaches used by current industry to quantify these components into real costs and
the limitation of quantifying certain components into real costs. Section 3 included
the potential problems that can occur in quantifying sustainability-related cost
components and explored their comments in improving the problems faced by the
78 Chapter 3: Research Methodology and Development
industry in dealing with the problems. Again, the interviewees were encouraged to
propose other issues, which had not been listed in the predefined questions.
Thirteen interviews were conducted between February and April 2010. With the
assistance of the industry contacts, an appointment was made with each participant.
Due to geographical reason, some of the interview sessions were conducted by
telephone. Before the interview, each interviewee was given the following
information, electronically:
1. Cover Letter
2. 'Participant Information for QUT Research Project' and
3. Interview Questions Sheet.
Each interview began with the author explaining to the interviewees the specific
objectives of the interview, and the overall research objective. To ensure that they
understood the intended meanings, any queries were clarified. Each interviewee was
then asked to confirm that they truly understood each of the interview questions and
the interview objectives. Ample time was given to all interviewees to elaborate their
answers to the questions. All of the verbal answers were recorded in a digital voice
recorder.
Considering the time limit and the numbers of questions, the researcher allowed the
interviewees to give their comments in section 2 based on their understanding of
each cost components. Interviewees were also encouraged to present their opinions
on how to solve the cost issues appropriately in the real projects. Each interview was
expected to last 45 minutes to 1.5 hours. The specific content of the semi-structured
interview is presented in Appendix B3.
3.3.3.4. Data analysis
During the interviews, the answers and opinions of the interviewees were recorded.
Subsequently, the responses were transcribed into text documents, with the aid of
software and Microsoft Word. In order to improve the accuracy of the transcriptions,
the comments from the interviews were first transcribed by software called
Chapter 3: Research Methodology and Development 79
Macspeech Scribe Version 1.1. Once the transcription was finished, the researcher
listened to the transcriptions again and filled in the gaps and checked for any
mistakes made by the software. Once finished editing the transcription, the
researcher listened to the recorded interview again, checking on the consistency
between the transcription and the comments and opinions of the interviewees. Next,
the responses were categorised and grouped under different headings. This allowed
systematic and thorough analysis of the respondents’ comments on the current
practice of long-term financial management in highway projects, their perceptions of
integrating and quantifying costs related to sustainable measures into highway
infrastructure investments, and their expectations and suggested improvements for
long-term financial management in highway projects. The results are discussed
accordingly in Chapter 4.
3.3.4. Model Development
Model development is an approach that improves productivity as it is able to transfer
previous modelling experience to the construction of new models. It is a process-
oriented approach to model reusability where the transfer of previous modelling
experience is captured by concept for formation of a model domain as well as the
modelling process (Binbasioglu 1994)
Based on this approach, preliminary model development was carried out to identify
the cost components in traditional life-cycle cost analysis models and in the
sustainability context. In addition, the traditional LCCA models were refined and
transformed into a new model. However, traditional LCCA concepts were used as
the model domain for the new model with an emphasis on the sustainability context.
In order to achieve the research objective, a new model was developed based on the
five stages in model building: problem identification and definition, system
conceptualisation, model formulation, analysis and evaluation of model behaviour,
policy analysis, and model use or implementation (Richardson and Pugh 1997).
Table 3.2 summarises the steps and stages in model building.
80 Chapter 3: Research Methodology and Development
Table 3.2: Stages and steps in model building (Richardson and Pugh, 1981)
Stage Steps Problem Define time horizon
Identify reference modes
Define level of aggregation
Define system boundaries
Conceptualisation Establish relevant variables
Determine important stocks and flows
Map relationships between variables
Identify feedback loops
Generate dynamic hypotheses
Formulation Develop mathematical equations
Quantify model parameters
Analysis/ evaluation Check model for logical values
Conduct sensitivity analyses
Validate model
Policy analysis Conduct policy experiments
Evaluate policy experiments
As can be seen from Table 3.2, the process of model building involves a wide variety
of conceptual activities. These range from 'brainstorming' variables to be included or
excluded from the model's boundary to determining specific parameter values to
identifying the important feedback loops within the model. However, the stages
commonly distinguish between three general types of tasks: eliciting information,
exploring courses of action and evaluating situations (Hackman 1968; Sidowski
1966; Bourne and Battig 1966; Simon 1960). Different phases of the modelling
process emphasise different combinations of these three types of tasks.
The purpose of conducting model development in this research is to develop a
decision support model for the evaluation of long-term financial decisions regarding
sustainability for highway projects. The model presents a series of Fuzzy AHP and
LCCA evaluation methods in dealing with the critical cost components related to
sustainable measures that were identified from the questionnaire. Chapter 6 explains
the overall model development process and highlights the detail of incorporating
Fuzzy AHP and LCCA analysis into the model. The developed model can serve as a
decision support tool for the industry stakeholders to assess the long-term financial
Chapter 3: Research Methodology and Development 81
viability of sustainability measures in the highway projects. This model is tested and
evaluated by case projects, which are further be discussed in Chapter 7.
3.3.5. Case Study
The case study approach is ideal when a holistic, in-depth investigation is needed
(Feagin, Orum and Sjoberg 1991; Guba and Lincoln 1989; Patton 2002). Merriam
(1988) cites qualitative case study research as the preferred choice for those
researchers who are seeking insight, discovery and interpretation (rather than
hypotheses testing) and where there is a desire for holistic description and
explanation. A case study is a detailed examination of an event (or a series of
events). Yin (2003) defines a case study as an objective, in-depth examination of a
contemporary phenomenon where the investigator has little control over events. The
case study also allows an investigation to retain the holistic and meaningful
characteristics of real-life events – such as individual life-cycle, organisational and
managerial processes, neighbourhood change, international relations, and the
maturation of industries (Yin 2003). It is an examination of specific phenomenon
such as a program, an event, a person, a process, an institution, or a social group
(Merriam 1988).
In order to test and validate the proposed decision support model, the case study
approach was used. As highlighted by Stake (2005), the data derived from qualitative
case studies is more concrete, contextual and further developed through the
researcher’s own experiential understanding, combined with the findings. Previously
unknown relationships and variables could be expected to emerge from case studies,
leading to a rethinking of the phenomenon being studied (Stake 2005). This is what
is expected to occur in this research where deep insights and understandings of the
proposed decision support model can be applied in highway projects. In this
research, the case study method is needed for a better understanding of the
stakeholders’ requirements and comments on the model. Meanwhile, several case
studies are used to test and validate the model to ensure that it is able to improve the
decision-making process in highway projects along with the consideration of
sustainability factors. Several approaches were employed in the case study stage.
This included interview and documentary analysis. These different data collection
82 Chapter 3: Research Methodology and Development
techniques help the researcher to ensure validity and create discrete dimensions in
the data collected.
3.3.5.1. Case study purposes
The case study is conducted to achieve the following two purposes:
• To integrate the industry-verified cost components into existing LCCA models
for further development.
• To apply, adapt, then complete the proposed decision support model through
testing and evaluating the model on the real-life projects.
The case study serves to compile all the critical cost components identified from the
questionnaire and integrated these into a decision support model. This study employs
two real-life highway projects to test and evaluate the model. Participants involved in
the projects were encouraged to criticise the model and propose suggestions for its
improvement.
3.3.5.2. Selection of case projects
The selection of case projects is a process that needed attention by the researcher to
maximise the data collected as well as lessons learned in the research period (Tellis
1997). The selection of methods and cases for the case study will significantly affect
the overall result of the research. Yin (2003) suggests that the selection of case
projects needs to relate to the research problem and questions and identify the
attributes that are most likely to yield relevant data. For this reason, this research has
identified certain criteria and considered the suitability of selected case studies. To
have a meaningful result for this research, the case projects were selected based on
the following criteria:
1. The case project must have been completed in a specific timeframe (around 8-
15 years prior to 2010) during which life-cycle costing anaylsis (LCCA) have
been undertaken,
Chapter 3: Research Methodology and Development 83
2. The case project must recently have gone through economic evaluation by the
Australian government, and
3. The case project site should be in Australia and accessible to the researcher.
The criterion that the case project must be gone through economic evaluation by
Australian government is significant because the data of the project can be used by
the researcher to develop and evaluate the proposed model for long-term financial
decision in Australian highway infrastructure projects as the final outcome. The
researcher also consulted with several industry practitioners based on the selection
criteria to select the most suitable case projects. This process helped the researcher to
select the two most relevant case projects namely, the Wallaville Bridge
(Queensland) and the Northam Bypass (Western Australia). The two case projects
fulfill the following criteria as shown in Table 3.3.
Table 3.3: Case projects’ fulfillment of selection criteria
Case Project Criterion Wallaville Bridge Northam Bypass
Located in Australia Queensland Western Australia Completed in 8-15 years ago (from 2010)
15 years ago 8 years ago
Post-Economic Evaluation by Government
Yes Yes
Highway Infrastructure Highway Bridge Highway
The number of case projects was a main concern in this study. There is rarely a
specific number of cases that needs to be used in a case study (Yin 2003). However,
previous studies have recommended that two to four cases are the minimum, and 10-
15 are the maximum (Perry 1998). In this research, the selection of the number of
cases was based on the relevant data in the industry as well as the justification of the
time, funding and resources constraints. Based on the factors highlighted, two
highway infrastructure projects were chosen as the case projects in this study.
The two case projects are considered to be representative of Australian highway
infrastructure projects given the fact that:
84 Chapter 3: Research Methodology and Development
1. They were based on the same Australian economic, social and political
conditions, and way of life. Thus, they have very similar highway infrastructure
development processes, requirements and expectations.
2. They are both funded and approved by the Australian Commonwealth
Government and carried out according to the Commonwealth standards
applicable to all states in Australia and,
3. These two case projects cover the main elements of highway infrastructure as
they include bridges and highway pavements.
As shown in Table 3.4, the case projects were both completed in the range of 8-15
years prior to 2010. The reason for selecting projects of this age is because they have
gone through a certain life span. Both projects were also recently post-economic
evaluated by the Australian government so relevant data and information is available
for use in this study. For example, the cost data for both projects is used to conduct
the life-cycle cost analysis (LCCA). These data is then tested and integrated into the
proposed model for further validation.
3.3.5.3. Case study development
This research used a combination of quantitative and qualitative methods in the case
studies to derive information that is complex or probing. Gable (1994) suggests that
the case studies should include a combination of qualitative and quantitative analyses
to seek in-depth understanding of a certain problem. In this case, the case study
process can be divided into two stages. The first stage involved the application of the
developed decision support model. The Fuzzy AHP and LCCA methods were
employed to test and evaluate highway alternatives based on the data from the real-
life case projects. The second stage included semi-structured interviews with the
participants involved in the highway projects to probe into the validity of the
developed decision support model and any further improvements needed. Both stages
of the case study are outlined in Figure 3.5.
Chapter 3: Research Methodology and Development 85
In Stage 1, the combination of two evaluation methods, Fuzzy AHP and life-cycle
cost analysis are used to test the model. Triangular fuzzy numbers are employed to
represent the respondents’ comparisons by linguistic terms. The comparison of the
importance of main criteria of cost components, sub-criteria of cost components and
alternative t can be done with the help of the questionnaire (Appendix C2). The data
collected from the questionnaires are the input to the Fuzzy AHP and LCCA
Analysis. Fuzzy AHP is employed to analyse the weights of the criteria and
alternatives based on the data from the questionnaire. The weight vectors are
calculated based on this approach. Then, the normalised weight vectors are
determined. As a result, the final set of scores of highway alternatives are obtained
by the evaluation matrices. The detail calculation method of priority weights of the
different highway alternatives by Fuzzy AHP is further explained in Chapter 7.
Simultaneously, document analysis that covers project documents, industry
publications and reports was also used to identify the related cost components that
can be applied for LCCA calculation. These related costs, project activity timing,
discount value and evaluation timeframes were identified and incorporated into the
LCCA calculation. Based on this method, the final sets of costs of highway
alternatives are calculated. Finally, weighted sum model was employed to combine
both results and identify the most suitable alternative based on ion value.
Stage 1
• Model application based on two real-life projects.
• Integration of Fuzzy AHP and LCCA evaluation methods.
• Involvement of data input from questionnaire and document analysis.
Stage 2
• Semi-structured interview – validate and gain suggestions to improve the model.
• Respondents (projects participants) suggest the limitations and improvements for the model.
CASE STUDY
Figure 3.5: Case study process
86 Chapter 3: Research Methodology and Development
In Stage 2, semi-structured interviews were conducted to validate and gain
suggestions to improve the model. Yin (2003) observes that the central tendency of
all types of a case study is to illuminate a decisions by considering why they were
taken, how they were implemented and with what results. Thus, this case study aims
to identify how this developed model can aid stakeholders in dealing with real-life
projects. Their decisions served to clarify the way in which each critical cost
component could be addressed in the model. To validate the model, the interviewees
were requested to answer the following questions based on their project experience
in either the Wallaville Bridge (Case A) or Northam Bypass (Case B) projects:
1. What are the problems arising from the model?
2. How can these problems be addressed?
3. What actions are necessary to improve the model?
Since both case projects were selected for economic evaluation, it is implied that
both cases were rich in data and could provide meaningful data input to the study.
The data collected from the case projects paved the way for the final step of the
research: the development of a decision support model that aids the stakeholders to
improve financial investment decisions for highway infrastructure development.
3.3.5.4. Data analysis
Correspondingly, recorded interviews from the case studies were transcribed into text
documents using the software package as discussed above. Each interviewee gave
their comments and opinions based on the selected projects. They identified the
related important cost components that needed to be considered in long-term
financial management of highway investment. Each input was analysed using Fuzzy
AHP and life-cycle costing calculations. To ensure the meaningful research
outcomes, these results were discussed with a number of industry stakeholders
involved in the case projects. From this process, as the outcome of the research, a
model for achieving long-term financial decision support with consideration of
sustainability could be developed.
Chapter 3: Research Methodology and Development 87
3.4 Ethical Considerations
The ethical considerations of this study involved protecting the rights and welfare of
participants in the questionnaire, semi-structured interview and case study. This
study serves to achieve outcomes that are beneficial to the Australian highway
industry and stakeholders on highway projects in Australia. In doing this, the
research aims to preserve the truthfulness of research, the integrity of the individual
researcher, the reputation of the organisations responsible for research, and the
responsibility of the researcher to both the general community and to specific groups
that have an interest in this research.
This research project followed guidelines provided by the QUT Research Ethics
Committee in line with requirements by the Faculty of Built Environment and
Engineering. This involved the ascertaining of approval and clearance for the
research topic, the data collection methods, the instruments, materials used, the site
and location, the sample population, information required, treatment of data, the
methods of analysis, confidentiality issues, dissemination of information and results,
and intellectual property and copyright issues.
Covering letters were attached to the questionnaires explaining the purpose of the
research, giving assurance of confidentiality, outlining the benefits of the study and
soliciting voluntary participation by the sample population. In addition, optional
consent forms for voluntary participation were provided to the potential interviewees
(see Appendix B2). Each individual and organisation was required to understand and
agree with the terms and conditions before participating in the session. Fulfillment
with other requirements was confirmed in consultation with the individual
participants, and with the guidance and advice of the principal research supervisor.
3.5 Chapter Summary
This chapter presented the relevant methodological issues and described the research
methods employed in this study. Generally, the research procedure followed certain
structural phases. These phases and processes are as shown in Figure 3.3. This study
employs four distinctive data collection methods namely, questionnaires, interviews,
88 Chapter 3: Research Methodology and Development
model development and case studies. Each research method was justified to achieve
the research objective before considering the selection of respondents as well as case
projects. Research development and data analysis processes are also clearly defined
in this chapter. All of these form a comprehensive of the results that derived from
data collected in questionnaires, semi-structured interviews and case studies. These
provided a strong platform for the development of a long-term financial decision
support model incorporating sustainability measures in highway projects. Through
comparison with experience in real-life case projects, industry stakeholders can
evaluate and validate the model.
This study collected relevant data through a range of appropriate research methods,
and the extensive results and findings are presented in Chapters 4, 5, 6 and 7. The
next chapter discusses the questionnaire data analysis and findings.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 89
CHAPTER 4: COST IMPLICATIONS FOR HIGHWAY SUSTAINABILITY – SURVEY STUDIES
4.1 Introduction
This chapter reports the findings from phase 2 of the research process discussed in
the previous chapter (Section 3.3). It presents the results through the mixed method
strategy that analysed predominantly quantitative data. Phase 2 involved the survey
methods namely questionnaires and semi-structured interviews. The questionnaire
survey was administered as a means of intervention to identify the critical cost
components related to sustainable measures in highway infrastructure investments.
Semi-structured interviews aim to explore the different perceptions and expectations
of various stakeholders regarding the current practice of life-cycle cost analysis with
a view to integrating their expectations into a model that suitable for the long-term
financial management of Australian highway infrastructure. Figure 4.1 shows the
results from both methods that answer the second research question: What are the
specific cost components relating to sustainability measures about which highway
project stakeholders feel most concerned?
This chapter has four main sections. Section 4.2 provides a brief description of the
respondents. Next, Section 4.3 discusses the results and findings obtained through
both methods. This core process is necessary to convert the results into the
development of a decision support model for the evaluation of highway investment.
Section 4.4 provides a summary of the findings in this chapter.
90 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
3. Developing a decision support model
• Integrating the industry verified cost components with decision support model.
• Testing and evaluating the decision support model
1. Understanding cost implications of pursuing sustainability
• Understanding global initiatives on sustainable infrastructure development
• Understanding the context of highway infrastructure development in Australia
• Reviewing current LCCA model and programs
• Identifying sustainability-related cost components in highway infrastructure projects
What are the sustainability measures that have cost implications in highway projects?
Chapter 2
Literature Review
2. Identifying sustainability-related cost components that project stakeholders concerned with
• Exploring current practice of life cycle cost analysis in Australian highway infrastructure
• Identifying critical sustainability-related cost components in highway infrastructure investments
• Integrating various stakeholders’ expectation of sustainability enhancement in LCCA
What are the specific cost components relating to sustainability measures about which highway project stakeholders feel most concerned?
Chapter 4
Cost Implications for Highway Sustainability
How to access the long-term financial viability of sustainability measures in highway project?
Chapter 5 & 6
Decision Support Model
Development and Model Application
Chapter Research Objectives Research Questions
Figure 4.1: Purpose of survey in overall research aim
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 91
4.2 Profile of Respondents
Research projects take place in contexts that impact on the research and results. This
context includes the sample group characteristics (Fellows and Liu 2008). Having an
understanding and an awareness of the characteristics of the sample population helps
focus the analysis and put the results into perspective. The following sub-sections
discuss the profile of the respondents who participated in the questionnaire survey
and interviews in this study.
4.2.1 Respondents’ profiles - questionnaire survey
The questionnaire survey was administered in June 2009 by an online questionnaire
survey tool. A total of 150 questionnaires were delivered to survey participants with
a cover letter explaining the purpose of the study and providing an assurance of
anonymity. The selection criteria for the participants are based on the requirements
as explained in Section 3.3.2.2. Participants include staff from local authorities and
government officers from the public sectors. Participants from the private sectors
include project managers, engineers, quantity surveyors, planners, contractors and
subcontractors involved in highway projects in Australia. Their expertise in highway
infrastructure development strengthens the validity of the data. They hold positions
at middle and higher management levels. This helps to ensure the credibility of the
data collected. The participants represent more than 70 organisations throughout
Australia selected for their recent involvement in highway development. A good
level of support from stakeholders in the industry led to a response rate of 41%.
Out of the 150 questionnaires sent out, 71 questionnaires were returned including
nine that had not been completed in full. As a result, the useable response rate was
41% (62 questionnaires). Ahuja et al. (2009) and Love and Smith (2003) state that a
response rate of 30% to 40% for a questionnaire survey in the construction industry
can be considered satisfactory. Participants were asked to rate the importance of each
cost component in life-cycle cost considerations in their highway projects. Although
10 pilot studies had been completed prior to the final distribution of the
questionnaires, they are not considered in the questionnaire analysis.
92 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Nearly half of the participants in the survey were working in government agencies,
which reflects the public sector nature of highway development projects. Most
participants have more than 20 years of experience in highway construction. Base on
the type of their organisation, participants were divided into three groups: client
representatives (government agencies); project management and design consultants
(consultants); and construction contractors (contractors), as shown in Figure 4.2. The
majority of participants were involved in highway design and construction activities.
A small number of participants were also involved in maintenance and extension
works for highway infrastructure; others were involved in construction, extension
and maintenance works. Most of the participants were at the project management
level and expressed their interest in sustainability concepts in LCCA practice.
Figure 4.2 summarise the background details of the questionnaire participants. The
representative distribution of the respondents by categories shows that the largest
number was from government agencies and local authorities (53%), and the
remainder were contractors (24%) and consultants (23%). This means the
respondents participated in this study in the ratio of Consultants 1: Contractors 1:
Government Agencies and Local Authorities 2.
Figure 4.2: Categories of respondent in questionnaire survey
53%
24%
23%
Respondents Categories
Government Agencies and Local Authorities
Contractors
Consultants
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 93
The participants are all stakeholders in highway projects. Most of them hold
professional positions at middle and higher management levels. They are the
decision makers in highway development, so they have more experiences about the
economic dimension of highway projects. As shown in Table 4.2, almost half of the
participants work in government agencies and most have more than 20 years of
experience in highway projects. This background ensures that they can clearly
understand the questionnaire survey and are able to answer the questions without the
need for further assistance from the researcher.
Table 4.1: Respondents’ roles in highway projects
Project role CR PMC DC CC Total
Highway design and construction 6 11 10 4 31
Highway maintenance 3 3 1 5 12
Highway construction and extension 1 4 1 0 6
Highway construction and maintenance 2 2 0 1 5
Highway construction, extension and maintenance 2 5 0 1 8
Total 14 25 12 11 62
Notes: CR – client representative; PMC – project management consultants; DC – design consultants; CC/S – construction contractors/ specialist
Table 4.2: Respondents’ construction industry experience
Years of experience Category of respondents
Consulting Contractor Government
Agency Total
No. % No. % No. % No. %
1-5 years 2 14 1 7 2 6 5 7
6-10 years 0 0 5 33 4 12 9 15
11-15 years 4 29 1 7 4 12 9 15
16-20 years 5 36 3 20 1 3 9 15
Above 20 years 3 21 5 33 22 67 30 48
Total 14 100 15 100 33 100 62 100
All the participants had experience working in highway projects. It can be seen from
Table 4.1 that the majority of the participants were involved in highway design and
construction activities. A small number of participants were also involved in
94 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
maintenance works and extension works for highway infrastructure; others were
involving in construction, extension and maintenance works. Other respondents were
in roles such as client representatives, design consultants and construction
contractors in an equal number of participation.
4.2.2 Respondent’s profiles - semi-structured interview
Thirteen targeted senior practitioners from the highway infrastructure industry in
Australia were interviewed. Specifically, there were eight interviewees from
government departments, two from private companies and three from research or
academic institutions. A majority of these (10, or 77%) held senior to top
management positions and decision-making roles in their respective organisations,
while others (3, or 23%) are senior researchers in this area.
The professions of the respondents are classified into three categories: government
officers (46%); researchers (23%); and consultants (15%) and contractors (15% and
15% respectively). The government officers include managers in selected disciplines
such as asset strategies, asset and network performance and road transport policy and
investment. The researcher category encompasses the professors and senior research
fellows involved in highway infrastructure research. The consultants and contractors
category covers senior civil engineers, builders and network managers involved in
highway design and transportation management.
Meanwhile, since the questionnaire covered several main states in Australia, the
interviews were organised in the city of Sydney, Melbourne, Perth and Brisbane. In
particular, five interviews were conducted in Brisbane and eight were conducted in
regions outside Brisbane. It is noted that 13 rather than 14 interviews were conducted
in total because one of the 14 interviews was conducted with two respondents at the
same time. Prior to the interviews, the interview questions were sent to them by
email for their early perusal and preparation.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 95
4.3 Results and Findings
Chapter 3 described in detail the development process and the data analysis methods
utilised in this research, particularly the rationale for their use. The procedures
involved in their application were presented in that chapter. Here, the results from
their application to the analysis process are presented. The administered
questionnaire survey consisted of four main parts, each with a specific purpose and
utilising a particular ordinal scale. Hence, the approach to analysing the results is
divided into those four parts. The semi-structured interview also consisted of four
main areas. The findings from the analysis of the interview data are framed around
the core and the key cost components that satisfy the aims and objectives of this
study while synthesising the need to address the research questions. Significant
findings from the analysis of the quantitative and qualitative data are highlighted.
The overall interpretation and discussion of these results is carried out later in
Chapter 7, where the data of this study is integrated. However, the results from the
analysis of the questionnaire survey and semi-structured interview are briefly
highlighted in this section to address the research questions, with special attention
given to those that yielded significant values.
4.3.1 Questionnaire survey results and findings
The survey focused on the identification of critical cost components related to
sustainable measures that industry stakeholders believed to be necessary to
incorporate into highway investment decisions. The respondents were asked to
indicate the extent of the importance of statements on a five-point rating scale. The
different stakeholders’ perspectives of the importance of these cost components are
presented in Tables 4.3 to 4.5. The overall rates of the respondents are combined in
Table 4.6 for ease of reference and to facilitate interpretation. The following sections
contain only the salient information to avoid information ‘congestion’ and the use of
many large tables in the main text.
96 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
4.3.1.1 Sustainability-related cost components: perspective of consultants
The results are set out in Table 4.3 indicate that the importance level of
sustainability-related cost components according to the consultants are relatively
different compared to other stakeholders. The highest rated costs for consultants are
material costs (mean = 4.57), plant and equipment costs (mean = 4.36) and labour
costs (mean = 4.07) in the agency category. The vehicle operation costs (mean =
3.79), traffic congestion (mean = 3.79) and road accident - economic value of
damage (mean = 3.71) are the highest rated in the social category. The waste
management (mean = 3.93), ground extraction (mean = 3.86), disposal of material
costs (mean = 3.86) and hydrological impacts (mean = 3.86) are rated the highest in
the environmental category.
In the agency category, the results revealed that the consultants were more concerned
with the initial construction costs in highway development. They rated the material,
plant and equipment and labour costs as the highest in importance. Generally, the
consultants focused on the initial costs rather than on the life-cycle benefits for
highway operation and maintenance. Conversely, consultants were not very
interested in the pavement extension and demolition costs in the LCCA for highway
projects. They believed that by the pavements’ end of life, major rehabilitation works
are usually employed to improve the pavement.
In the social category of cost components, vehicle operation costs and traffic
congestion were the top two highly important item among the consultants. They
considered that those costs indirectly influenced the overall cost of a highway
throughout its lifetime. They highlighted that these costs should be taken into
account in LCCA in highway project. These costs are incurred by the road users but
are directly caused and attributable to the presence of a work zone and the
construction activities undertaken by the local governments. Widle et al. (2001) also
highlighted the costs occurred in lost travel time may sometimes exceed the agency’s
construction costs by a substantial amount, particularly in urban areas. The survey
results imply that the consultants were taking into consideration the vehicle operation
costs and traffic congestion in long-term financial decisions.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 97
In the environmental category of cost components, waste management costs were
rated as significant by the consultants. Waste management is an important cost
component in project management. Based on the comments from the consultants,
waste management costs were usually generated during the construction,
maintenance and rehabilitation stages of highway infrastructure. This cost is
significant because engineers take early decisions on design configurations,
construction methods/processes and material specifications. Such decisions have
very significant impacts on the overall highway project cost including the wastes
generated throughout the project life-cycle including its whole life cost. Thus, it is
important to ensure resource optimisation through reuse, recycling and innovation in
terms of materials, construction methods and processes.
Table 4.3: Consultants’ rating of sustainability-related cost components
Sustainability indicators
Sub-cost components Consultants (N =14)
Mean Standard Deviation
Rate
Agency category
Material costs 4.57 0.65 1 Plant and equipment costs 4.36 0.63 2 Labour costs 4.07 0.83 3 Major maintenance costs 4.00 0.96 4 Rehabilitation costs 3.93 1.00 5 Routine maintenance costs 3.86 1.10 6 Dispose asphalt materials costs 3.50 1.02 7 Recycle costs 3.43 1.34 8 Pavement extension costs 2.86 0.95 9 Demolition costs 2.86 1.41 9
Social category Vehicle operation costs 3.79 0.89 1
Traffic congestion 3.79 1.42 1 Road accident- economic value of damage
3.71 0.99 3
Reduce speed through work zone 3.64 1.34 4 Road accident- internal costs 3.64 1.22 5 Resettling cost 3.43 0.94 6 Road accident- external costs 3.43 1.28 6 Reduction of culture heritage 3.29 1.07 8 Negative visual impact 3.29 0.99 8 Community cohesion 3.14 1.35 10 Road tax and insurance 2.86 1.10 11 Property devaluation 2.79 0.70 12
Environmental category
Waste management costs 3.93 1.14 1 Ground extraction costs 3.86 1.10 2 Disposal of material costs 3.86 1.23 3 Hydrological impacts 3.86 0.95 3
98 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Sustainability indicators
Sub-cost components Consultants (N =14)
Mean Standard Deviation
Rate
CO2 emission 3.79 1.25 5 Land use 3.71 0.99 6 Loss of wetland 3.71 0.91 6 Dust emission 3.71 1.07 8 Soil disturbance 3.64 0.93 9 Extent of tree felling 3.64 0.74 9 Cost of barriers 3.64 0.93 9 Habitat disruption 3.57 0.94 12 Ecological damage 3.50 0.94 13 Air pollution effects on human health 3.29 1.14 14 Environmental degradation 3.21 0.89 15 Rough surface produce more tyre noise 3.21 1.19 15 Fuel consumption 3.07 1.27 17 Vehicle engine acceleration noise 3.07 1.21 18 Energy consumption 2.71 1.20 19 Driver attitudes 2.50 1.40 20
4.3.1.2 Sustainability-related cost components: perspective of contractors
For contractors, the most important cost components are those that threaten their
profit level, with material (mean = 4.50), plant and equipment (mean = 4.19),
rehabilitation (mean = 3.94) and recycling costs (mean = 3.94) rated in importance in
the agency category. The road accident- internal costs (mean = 4.25), traffic
congestion (mean = 4.00) and external costs (mean = 3.88) were rated the most
significant in the social category. The disposal of materials (mean = 4.13), ground
extraction (mean = 4.06) and waste management costs (mean = 4.00) were classified
as critical in the environmental category.
In regards to agency costs, contractors considered rehabilitation activities as the third
main cost component in this category. Rehabilitation activities are important to
ensure the optimisation of the performance of each highway pavement (Chung et al.
2006). Meanwhile, rehabilitation activities usually involve huge amount of costs
throughout the highway life span, so contractors can apply relevant techniques to
rehabilitate the highway infrastructures. Road accident costs are also highly rated by
contractors as they placed these in the top and the third most important rating in the
social category. They reported that highway safety is one of the major concerns in
highway development. Wilde et al. (2001) found that the roadway factors and
conditions directly influence the rates and types of accidents. Relevant rehabilitation
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 99
activities are needed to not only improve the pavement quality, but also the highway
safety.
Table 4.4: Contractors’ rating of sustainability-related cost components
Sustainability indicators
Sub-cost components Contractors (N =15)
Mean Standard Deviation
Rate
Agency category
Material costs 4.50 0.65 1 Plant and equipment costs 4.19 0.91 2 Rehabilitation costs 3.94 1.17 3 Recycle costs 3.94 1.23 3 Labour costs 3.88 1.29 5 Major maintenance costs 3.81 0.91 6 Dispose asphalt materials costs 3.63 1.12 7 Routine maintenance costs 3.44 1.09 8 Pavement extension costs 3.00 1.00 9 Demolition costs 3.00 1.12 9
Social category Road accident- internal costs 4.25 0.97 1
Traffic congestion 4.00 1.18 2 Road accident- external costs 3.88 1.00 3 Road accident- economic value of damage
3.81 1.00 4
Vehicle operation costs 3.75 1.2 5 Reduce speed through work zone 3.56 1.33 6 Resettling cost 3.44 1.09 7 Community cohesion 3.38 0.94 8 Negative visual impact 3.25 0.51 9 Property devaluation 3.06 0.92 10 Reduction of culture heritage 3.06 0.83 10 Road tax and insurance 3.00 1.24 12
Environmental category
Disposal of material costs 4.13 0.97 1 Ground extraction costs 4.06 0.86 2 Waste management costs 4.00 0.97 3 Dust emission 3.94 0.86 4 Energy consumption 3.88 0.39 5 CO2 emission 3.88 1.04 5 Loss of wetland 3.88 0.92 5 Fuel consumption 3.81 0.66 8 Soil disturbance 3.75 0.88 9 Habitat disruption 3.69 0.7 10 Cost of barriers 3.69 0.95 10 Extent of tree felling 3.63 0.97 12 Hydrological impacts 3.63 0.8 12 Air pollution effects on human health 3.56 1.08 14 Rough surface produce more tyre noise 3.5 0.94 15 Ecological damage 3.44 0.85 16 Land use 3.38 0.94 17 Environmental degradation 3.38 0.94 17
100 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Sustainability indicators
Sub-cost components Contractors (N =15)
Mean Standard Deviation
Rate
Vehicle engine acceleration noise 3.25 0.93 19 Driver attitudes 3.25 1.09 19
4.3.1.3 Sustainability-related cost components: perspective of government
agencies and local authorities
For government agencies and local authorities, the ten costs rated highest in
importance were those in the category of agency costs, namely, material (mean =
4.30), major maintenance (mean = 4.24) and rehabilitation costs (mean = 4.21). In
the social category, road accident costs, namely, internal (mean = 4.45), external
costs (mean = 4.39) and the economic value of damage (mean = 4.00) were rated
highest in the importance. In the environmental category, hydrological impacts
(mean = 4.36), loss of wetland (mean = 4.24) and cost of barriers (mean = 4.21) were
the most important.
In the agency category, the respondents from government agencies and local
authorities rated major maintenance and rehabilitation costs as the second and third
important costs. Due to the limited funds in government allocations, the greatest task
in managing highway infrastructure is the prioritisation of maintenance and repair
expenditure. As highway infrastructures approach the end of their design lives, there
is an increasing demand for new construction, rehabilitation, maintenance and repair
projects to create and/or extend the design life so that the potential for loss of
function or downtime can be minimised. To accomplish the difficult task of efficient
allocation of funds, it is necessary to develop decision support tools to handle the
priorities for these expenditures (Chouinard, Andersen and Torrey Iii 1996).
In the social category of cost components, road accident costs were rated as the
priorities for the respondents in the government agency and local authority group.
Similar to the contractors’ perspective, the respondents in this group are also
concerned about road safety. As mentioned by one of the respondents, the main
reason for highway infrastructure development is to improve the mobility of the
community and the road safety. This statement is supported by the result in
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 101
Gregersen et al. (1996) which found that consideration of factors such as wider
pavements can significantly reduce the rate of road accidents.
Table 4.5: Government agencies and local authorities’ rating of sustainability-related
cost components
Sustainability indicators
Sub-cost components
Government Agencies and Local Authorities (N =33)
Mean Standard Deviation
Rate
Agency category
Material costs 4.30 0.81 1 Major maintenance costs 4.24 0.83 2 Rehabilitation costs 4.21 0.65 3 Plant and equipment costs 4.09 0.77 4 Routine maintenance costs 4.06 1.00 5 Labour costs 3.82 0.77 6 Demolition costs 3.24 1.12 7 Recycle costs 3.21 0.99 8 Pavement extension costs 3.09 1.07 9 Dispose asphalt materials costs 3.00 1.00 10
Social category Road accident- internal costs 4.45 0.79 1
Road accident- economic value of damage
4.39 0.79 2
Road accident- external costs 4.00 1.12 3 Reduction of culture heritage 3.82 1.16 4 Vehicle operation costs 3.67 1.11 5 Resettling cost 3.58 1.30 6 Traffic congestion 3.55 1.23 7 Community cohesion 3.48 1.28 8 Negative visual impact 3.39 1.09 9 Reduce speed through work zone 3.18 1.26 10 Property devaluation 3.12 1.11 11 Road tax and insurance 2.79 1.17 12
Environmental category
Hydrological impacts 4.36 0.82 1 Loss of wetland 4.24 0.83 2 Cost of barriers 4.21 0.96 3 Land use 4.06 0.97 4 Rough surface produce more tyre noise 4.00 1.00 5 Dust emission 4.00 1.12 5 Disposal of material costs 3.97 1.02 7 Habitat disruption 3.97 0.92 8 Environmental degradation 3.88 1.05 9 Ground extraction costs 3.85 0.87 10 Extent of tree felling 3.85 1.00 11 Ecological damage 3.85 1.06 11 Soil disturbance 3.82 0.85 13 Air pollution effects on human health 3.79 1.22 14 CO2 emission 3.73 1.15 15
102 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Sustainability indicators
Sub-cost components
Government Agencies and Local Authorities (N =33)
Mean Standard Deviation
Rate
Waste management costs 3.70 1.10 16 Vehicle engine acceleration noise 3.52 1.28 17 Fuel consumption 3.33 1.16 18 Energy consumption 3.30 0.95 19 Driver attitudes 3.15 1.30 20
The survey result shows that practitioners in government agencies and local
authorities are most concerned about the highway investment. This is likely to be due
to the reason that they usually are the key drivers in highway development. As shown
in Tables 4.3 to 4.5, the survey results provide a means of identifying overall the cost
components that are critical to highway investment decisions among the three groups
of respondents.
4.3.1.4 Integration of sustainability-related cost components in LCCA studies
Table 4.6 shows the overall rating for the most significant sustainability-related cost
components in highway infrastructure projects. A general observation of the results
in Table 4.6 is that the cost components rated most highly by the respondents tended
to be those that are paramount to their particular business objectives. Based on the
analysis of the results, the ratings of importance in Table 4.6 reveal that the most
important cost components are centred on three major sustainability aspects of
agency, social and environmental issues. The following sections elaborate on these
findings in detail.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 103
Table 4.6: Perceptions of ‘importance level’ of cost components related to sustainable
measures by industry stakeholders
Sustainability indicators
Sub-cost components
Rating All
Consultants Contractors Government
Agencies t-value
Agency category
Material costs 1 1 1 1 *6.9164 Plant and equipment costs
2 2 2 4 *4.1927
Major maintenance costs
3 4 6 2 *2.7426
Rehabilitation costs 3 5 3 3 *2.8057 Labour costs 5 3 5 6 1.0383 Routine maintenance costs
6 6 8 5 0.6685
Recycle costs 7 8 3 8 -2.1226 Dispose asphalt Materials costs
8 7 7 10 -3.3851
Demolition costs 9 9 9 7 -4.1372 Pavement extension costs
10 9 9 9 -5.6353
Social category Road accident- internal costs
1 5 1 1 *3.7016
Road accident- economic value of damage
2 3 4 2 *3.2568
Road accident- external costs
3 6 3 3 0.7091
Vehicle operation costs
4 1 5 5 -0.3318
Traffic congestion 4 1 2 7 -0.2826 Resettling cost 6 6 7 6 -1.4152 Reduction of culture heritage
7 8 10 4 -1.6068
Community cohesion
8 10 8 8 -2.0669
Reduce speed through work zone
9 4 6 10 -2.3109
Negative visual impact
10 8 9 9 -3.0861
Property devaluation
11 12 10 11 -5.7471
Road tax and insurance
12 11 12 12 -6.1330
Environmental Category
Hydrological impacts
1 3 12 1 *2.9528
Loss of wetland 2 6 5 2 *2.6843 Disposal of material costs
3 3 1 7 *1.8748
Cost of barriers 4 9 10 3 *1.8670 Dust emission 5 8 4 5 1.4248 Ground extraction 6 2 2 10 1.4550
104 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Sustainability indicators
Sub-cost components
Rating All
Consultants Contractors Government
Agencies t-value
costs Waste management costs
7 1 3 16 0.6501
Land use 7 6 17 4 0.7231 Habitat disruption 7 12 10 8 0.8053 Soil disturbance 10 9 9 13 0.3620 CO2 emission 10 5 5 15 0.2763 Extent of tree felling
12 9 12 11 0.1693
Rough surface produce more tyre noise
13 15 15 5 -0.1472
Ecological damage 14 13 16 11 -0.4772 Environmental degradation
15 15 17 9 -0.9264
Air pollution effects on human health
15 14 14 14 -0.8076
Fuel consumption 17 17 8 18 -2.4828 Vehicle engine acceleration noise
18 18 19 17 -2.5144
Energy consumption
19 19 5 19 -3.3523
Driver attitudes 20 20 19 20 -4.2399 Note: * = t-value which is higher than the cut off t-value (1.6710) indicating the significance of the
indicators.
a. Agency category
Agency costs consist of all costs generated by the highway agencies’ activities over
the overlay system lifetime. These typically include construction and preservation
costs such as material costs, plant and equipment costs and labour costs. As
highlighted by the participants, material costs (mean = 4.40) and plant and equipment
costs (mean = 4.16) are the most important cost categories rated by the stakeholders.
This finding is consistent with the dominant view in the literature (Ugwu et al. 2005;
Singh and Tiong 2005; Tighe 2001). These costs are selected because of the huge
amount of capital needed to address the aspects of concern during the construction
stage.
The survey participants also reported that major maintenance costs and rehabilitation
costs (mean = 4.06) are the third most important in highway investment. They
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 105
explained that rehabilitation activities are important to preserve the effectiveness of
transportation, safety of road users and economic development. As stated by Rouse
and Chiu (2008), the quality of roads deteriorates over time. Hence, proper
maintenance of a highway system is necessary to maintain its serviceability and
structural reliability. Since highways have a long-term life span, maintenance
activities need to be considered from a life-cycle perspective. An optimal balance
between benefits and costs is crucial to achieving long-term financial viability while
ensuring the best service to road users.
Some factors are more important than others according to different stakeholders. For
example, pavement recycling costs were rated as the third most important cost
according to contractors. According to Widyatmoko (2008), recycled materials are
more cost effective compared to conventional materials. Recycled materials also
provide similar performance to pavement. Thus, contractors are increasingly
concerned with sustainable development, place an emphasis on material conservation
and re-use such as the recycling of pavement during highway maintenance and
rehabilitation activities.
b. Social category
Road accident cost components have emerged as the most important theme in the
category of social aspects. These costs refer to the economic value of damages (mean
= 4.10) caused by vehicle crashes, which includes internal costs (those incurred due
to damages and risks to the individual travelling in a particular vehicle), and external
costs (such as uncompensated damages and risks imposed by an individual on other
people) (Partheeban, Arunbabu and Hemamalini 2008). Road accident costs -
internal (mean = 4.23) were rated as the most important criteria because highway
safety is becoming a main priority. Highway construction needs to improve general
access for the community while highway upgrades, maintenance and rehabilitation
also help in improving road safety for users. Often decisions regarding highway
design selection are based not only on the development of the financial budget, but
also on the design safety for road users. Thus, road accident costs are a primary
concern in the social aspects of LCC analysis for highway projects.
106 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Traffic congestion (mean = 4.00, 3.79) receives a high importance rating among
social category by the contractors and consultants. Heavy traffic tends to degrade the
public realm (public spaces where people naturally interact) and in other ways
reduces community cohesion (Litman 2007). Highway traffic certainly involves
traffic delay costs to users who have been mathematically modeled and evaluated
based on simplifying assumptions (Jiang and Adeli 2003). Respondents comment
that the design and construction of highway infrastructure are critical because of the
natural increase and interstate migration that influence the growth of traffic in are
such as South East Queensland. This situation puts significant pressure on highway
infrastructure development.
Nevertheless, due to increasing usage of highway infrastructure, renewal works are
needed for highway infrastructure at some points in time. Surplus funds may be
needed to ensure that renewal or extension works take place during the highway life
span. It is a challenge for the stakeholders to optimise the desired service levels while
minimising life-cycle costs for highway infrastructure.
c. Environmental category
Highway systems produce a mixture of impacts on the environment, and costs
involved in environmental issues also vary depending on the situation and the nature
of the project (Surahyo and El-Diraby 2009). Water pollution, such as hydrological
impacts (mean = 4.36), and loss of wetland (mean = 4.24), are rated as the most
important costs by the participants in government agencies and local authorities.
They highlighted that these impacts impose various costs including those related to
polluted surfaces and groundwater, contaminated drinking water, increased flooding
and flood control costs, loss of unique natural features, and aesthetic losses.
Quantifying these costs is challenging. It is difficult to determine how many motor
vehicles contribute to water pollution problems since impacts are diffuse and
cumulative.
Ground extraction costs, disposal of material costs, and waste management costs are
the top three environmental cost components rated as significant by the contractors
and consultants in managing highway infrastructure. Solid waste is usually generated
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 107
during the construction, maintenance and rehabilitation stages of highway
infrastructure. This waste imposes a variety of environmental, human health,
aesthetic, and financial costs. Some legislation and policies are designed to ensure
that the disposal of materials is properly managed (Hao, Hills and Huang 2007).
Therefore, legislation makes it mandatory for the stakeholder to prepare a relevant
budget for managing the disposal of solid waste.
The survey respondents highlighted that construction and demolition waste
management activities exist through the whole life-cycle of a construction project
from the initial design until demolition, which is consistent with the viewpoint in the
literature (Shen et al. 2005). Planning for waste management is a process that
involves many complex interactions such as transportation systems, land use, public
health considerations and interdependencies in the system such as disposal and
collection methods.
4.3.2 Summary of the questionnaire survey results and suggestions
The results of the questionnaire survey revealed three themes that can be outlined as
following:
1. There are similarities and differences between industry stakeholders
regarding the importance of sustainability-related cost components.
• The perception between the consultants and contractors are relatively
similar. (e.g. material, plant and equipment costs are classified as the
top main cost components in highway investment).
• Some differences of the importance level of cost components were
found between the groups of stakeholders (e.g. the government
agencies and local authorities have slightly differing opinions
compared to other groups as they are the main investors in public
highway infrastructure).
• Different organisations have their own goals and needs.
Organisational differences affect the consideration of these cost
components in highway investment decisions.
108 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
2. The sustainability-related cost components in highway investment are
important.
• Most of the survey participants agreed that sustainability-related cost
components are vital in highway investment decisions.
• The consideration of these costs is essential and must be integrated
into LCCA for highway investment decisions.
3. The results on critical cost components are indicated by the t-value which is
higher than the cut-off t-value (1.6710) offering supporting evidence for the
importance of cost components related to sustainable measures in highway
infrastructure investments. These top ten rated cost components were
identified and validated by industry stakeholders as shown in Table 4.7.
Table 4.7: Industry validated sustainability-related cost components in highway
infrastructure
Sustainability Criteria Main Cost Components
Agency category
Material costs Plant and equipment costs Major maintenance costs
Rehabilitation costs
Social category Road accident- internal costs
Road accident- economic value of damage
Environmental category
Hydrological impacts Loss of wetland
Disposal of material costs Cost of barriers
The revelation of cost components as shown in Table 4.7 have achieved one of the
sub-objectives, which is to identify the cost components that are significant in
highway infrastructure investment. The results from the questionnaire survey also
raised a number of issues extending the quantitative data. These issues generated the
following questions.
• What is the current industry practice in applying LCCA?
• What are the ways to quantify cost components related to sustainable
measures in highway investments?
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 109
• What are the challenges of integrating these cost components into LCCA
practice?
• What are the actions needed to enhance sustainability in LCCA practice?
These questions influence the identification of the critical cost components related to
sustainable measures in highway infrastructure investments. They helped shape the
semi-structured interview of this study covered in next section.
4.3.3 Semi-structured interview results and findings
The current construction industry faces many challenges of integrating cost
components related to sustainable measures in LCCA for highway infrastructure, as
indicated by the comments from participants in the questionnaire survey and in the
literature. These issues might be due to the current industry practices and the ways of
quantifying these costs. Prior to the analyses of the feedback on these potential
issues, the interviewees’ perspective and comments on current industry practice on
LCCA and the ways to deal with these cost components are studied to determine the
reality of industry experience.
This section reports on the results and findings of the second part of the survey. It
demonstrates the in-depth understanding of these cost components through the semi-
structured interviews with a number of construction industry practitioners and
researchers. The following sections are organised as follows. Section 4.3.3.1 begins
with the identification of current industry practice in applying LCCA. This is
followed by an overview of the ways of quantifying sustainability-related cost
components in section 4.3.3.2. Section 4.3.3.3 discusses the challenges of integrating
cost components related to sustainable measures. Finally, Section 4.3.3.4 presents the
interviewees’ suggestions for enhancing sustainability in LCCA practice.
4.3.3.1. Current industry practice of LCCA application
In order to identify the current industry practice of applying LCCA for highway
infrastructure projects, six main questions were presented to the interviewees as
shown in Table 4.8.
110 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Table 4.8: Questions to identify current industry practice of LCCA
No. Question
1 Does your organisation currently apply LCCA in determining pavement type for highway infrastructure?
2 Does you organisation plan to utilise LCCA in determining pavement type for highway projects in future?
3 How long do you think is relevant for the analysis period of LCCA?
4 What discount rate do you utilise?
5 Please list the highway maintenance treatments that you will consider in LCCA evaluation and at which year(s) during the analysis period do you assume they will occur: (i.e. fog sealing @ year 6, milling with overlay @ year 12, etc.).
6 Based on the current practice or your experience, what are the types of data (Historical and Theoretical Data) are used to determine the type and frequency of the highway maintenance treatments?
For Question 1, the current utilisation of LCCA in determining pavement type for
highway infrastructure is summarised in Figure 4.2. Almost 62% of the interviewees
reported that their organisations utilise LCCA practice in highway infrastructure
project. They highlighted that new major highway projects usually applied LCCA in
practice. In a typical example, one respondent stated that:-
“Yes, LCCA usually applied for major highway infrastructure projects.”
Figure 4.3: Respondents’ utilisation of LCCA in highway projects
Yes; 62%
No; 38%
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 111
However, 38 % of the respondents reported that they did not apply LCCA in their
highway projects due to the fact that they deal with maintenance and upgrading
works in the regional areas. It is understandable that only recent large highway
infrastructure projects would apply LCCA. These respondents did, however, mention
about the utilisation of benefit cost analysis in their highway planning in regional
level.
Question 2 examined the future plans of the agency to apply LCCA in determining
highway infrastructure projects. All the respondents highlighted that they planned to
utilise LCCA in highway infrastructure development. They also stated that there is a
need to do so because there are too many uncertainties occuring in highway
infrastructure development. Government agencies face challenges to ensure
sufficient funds are spent on renewing highway infrastructure so that related services
are delivered economically and sustainably to meet the needs of the community into
the future. This position is also supported by Chan et al. (2008) who highlighted that
effective highway investment has become crucial as highway funding continues to
fall short of infrastructure needs. Therefore, the interviewees agreed that LCCA is a
useful tool to assist them to adopt robust and transparent methods to evaluate and
rate projects to ensure that renewal and new highway projects are prioritised
objectively.
Highway infrastructure typically has a long-term life span, and is usually designed to
a life-cycle period of 50 years (Gerbrandt and Berthelot 2007). In life-cycle cost
assessment, the analysis period depends on the nature of the project. Some studies
stated that 20 to 30 years analysis periods are necessary for pavement (Haas and
Kazmierowski 1997) while others suggest an analysis period of more than 35 years
to include at least one major rehabilitation event for each alternative being
considered (Walls Iii and Smith 1998). In this study, interviewees were asked about
the relevant analysis period of LCCA for highway infrastructure (Question 3). Based
on their experience and knowledge, the relevant periods of LCCA analysis are in the
range of 30-50 years depending on pavement types and conditions as shown in Table
4.9.
112 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Table 4.9: Relevant analysis period of LCCA
Question 3
How long do you think is relevant for the analysis period of LCCA?
Interviewee Annotation
H1, H2, H4,
H12, and H13
Usually for highway pavement, we take into account relevant analysis period of 30 years.
H3, H5, H6,
H7 and H8
Highway pavement maybe in the range of 30-40 years, however for bridges, it can last for 50 years or more.
H9, H10 40-50 years depend on types of highway infrastructure.
The discount rate is another concern in LCCA calculation as the discount rate may
significantly influence the overall cost in the long term. In Question 4, interviewees
were asked to explain the employment of discount rates in LCCA calculation in
practice. The discount rate is one of the variables necessary to calculate net present
value (NPV). It is used to reduce future expected expenditures to present day terms
and is one of the most controversial variables in the NPV equation (Tighe 1999). The
discount rate (true interest rate) is determined using the inflation rate (annual
compound rate of increase in the cost of pavement construction) and the interest rate
associated for the agency borrowing money (market interest rate). The discount rate
should also reflect historical trends over long periods of time. Historically, nominal
discount rates over an extended period of time have been 3 to 4 percent (Kerr and
Ryan 1987).
A typical response is that:-
“In Australia, values of up to 10 percent have been used, but a range of 4 to 8
percent is more common.” (H5)
Meanwhile, interviewees H10 and H13 stated that:
“We recommended that constant dollars and real discount rates be used.”( H10,
H13)
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 113
The use of real discount rates eliminates the need to estimate and include the
premiums for both cost and discount rates. Real discount rates are recommended
over nominal discount rates (inflation) because they reflect the true value of money
over time with no inflation premiums and should be used in conjunction with non-
inflated dollar cost estimates. The analysis period is the length of time selected for
the life-cycle cost, and it should not extend beyond the period of reliable forecasts.
At the discount rate used by most agencies (generally ranging from 4% to 8%), any
expenditures or benefits in the order of 30 years or more represent a small present
worth value (Haas, Tighe and Falls 2006).
Table 4.10: Maintenance treatments of highway infrastructure
Question 5
Please list the highway maintenance treatments that you will consider in LCCA evaluation
and at which year(s) during the analysis period do you assume they will occur: (i.e. fog
sealing @ year 6, milling with overlay @ year 12, etc.).
Interviewee Annotation
H1, H9, H11 “Every year we allocate $2000 every kilometer for day to day maintenance and routine maintenance. Maintain road sign…. Including day to day activities.” (H1)
“Again, after 5 years, we have all seal roads here, aggregate sealing. Every 5 years sealing, 10mm aggregate sealing. We need to allocate money for that. After 20 years, we need to rehabilitate the highway pavement. We usually design the pavement for 20 years life span. When 20 years, we believe pavement crack, determinate, we need to plan for major rehabilitation, add more gravel and compact and double sealing but after 20 years.” (H9)
“Usually, current available budget for maintenance from states government is not enough because of the more than expected vehicles which may reduce the quality of the pavement. For example more vehicles and other industrial vehicles may significantly reduce the pavement quality and significantly increase the maintenance cycle.” (H11)
H2, H8 “… we would normally reseal the pavement 10-14 years but some are earlier than others depend on the conditions.” (H2)
“...maintenance for asphalt pavements and intersection would be 15-20 years …” (H8)
H3 “Is done with BCR [Benefit Cost Ratio] for overlays and pavement at the same time, sealing was at 7 years and is pushed out pending funding.” (H3)
H4, H7 “The principle seems to be that the number of treatment needed. In that life-cycle of highway infrastructure, for example for 40 years life, 8 years
114 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
fog sealing.” (H4)
“The resurfacing program which was automatically topping up for improving, for example 6 years or 8 years or 12 years. You simply see the number of treatment in that period, you are looking at both material and construction cost also the risk and the interruption of heavy load traffics in certain areas.”(H7)
H5 “It depends on the projects and the nature of the environment,” (H5)
Table 4.10 shows the maintenance treatments that are undertaken by highway
industry stakeholders in practice. From their feedback, maintenance costs can be
categorised as routine maintenance and major maintenance. Routine maintenance
includes relatively inexpensive activities such as filling potholes and performing
drainage improvements. These treatments have a service life of 1 to 4 years (Haas
and Kazmierowski 1997). Major maintenance is more substantial and is usually
associated with structure or surface improvement such as patching or microsurfacing.
These treatments have an expected service life of 5 to 10 years (Haas, Tighe and
Falls 2006; Haas and Kazmierowski 1997). It is recommended that only major
maintenance be included in the LCCA because routine activities tend to be consistent
across pavement design types.
Question 6 investigates the types of data (Historical and Theoretical Data) are used in
current industry to determine the type and frequency of the highway maintenance
treatments. The results of this question are summarised in Figure 4.4.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 115
Figure 4.4: Types of data utilised by respondents in highway treatments
Almost 69% of the interviewees reported that their organisations utilise both
historical and theoretical data in evaluation of highway maintenance treatments. As
some of the interviewees highlighted, in planning highway maintenance, general
principles and theoretical principles are important in planning the type and frequency
of the highway maintenance treatment.
A typical example came from interviewee H12 who stated that:-
“We actually applied are based on local data and also experience whether those
theoretical numbers should be adjusted in reality. Based on theoretical principles,
we do need to undertake major maintenance for pavement around 8-12 years.
Sometimes, the engineers who in charge in the region will consider other factors
such as the traffic condition and weather conditions that may reduce the
performance in a shorter period. As a result, the experiences turn out to be the great
reference in managing highway maintenance treatment.”(H12)
Another example is from interviewee, H5 who stated that:
“It is a bit of both. In the sense of theoretical data, for example, when we built
certain highway, we are expected certain maintenance and certain rehabilitation
activities throughout the phase, we would use theoretical such as we use program or
model. However, it depends on the situation and the condition of the pavement. If let
69%
31% Theoretical and Historical Data
Historical Data
116 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
say in theoretical, we need to reseal this road after 7 years but due to the pavement
conditions, it needs to be reseal in 3 years, so certain adjustment is important.
Overall, the use of theoretical is to have a broad understanding; however, historical
data is more applicable in practice.”(H5)
On the other hand, 31% of the interviewees highlighted that they only use historical
data as the priority. They adopted the historical data as their guide to planning the
maintenance treatment and reported that this is because the historical data are
statewide averages and are well documented in their organisations.
It can be concluded that in highway infrastructure management, both historical and
theoretical data are important for stakeholders in managing the highway maintenance
treatment. This is consistent with the result from Ugwu et al. (2005) stating that the
recurrent highway maintenance treatments are often computed using historical cost
data and unit rates that are determined by theoretical principles such as the highway
features (e.g., running surface of vehicular structure, pedestrian structure, roadside
slope and noise barrier).
Based on the overall results for Questions 1 to 6, it can be concluded that long-term
financial management is important in highway infrastructure management. Although
some of the regions apply LCCA and some regions apply BCA, the stakeholders
have some general understanding of the details of each application and details of life-
cycle cost assessment. Their opinions have direct connection to their profession and
organisation. However, they do agree that the incorporation of sustainability
concepts into long-term financial management is important to deal with highway
investment in the future. It is essential to improve current calculation methods in
dealing with sustainability-related cost components. The following sections provide
more details on how the industry currently deals with these cost components in
highway infrastructure.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 117
4.3.3.2. Ways to quantify cost related to sustainable measures
Question 7 examined that the future plans of the respondent’s agency to take
sustainability-related cost components into consideration in highway infrastructure
projects. All the respondents reported that they do not consider it at the moment but
they are on the way to working on it. They stated that there is a need to do so because
of uncertainties, environmental pressures, and limited funding from governments to
preserve the infrastructure in the long run.
Typical examples are from interviewees, H7, H10, H13 who stated that:
“Sustainability is also about sustaining the highway infrastructure networks and
dollars is an important part of it.” (H7)
“We don't do at the moment but in future we hope to. Right now not every project is
considering social and environmental issues.” (H10)
“We do need strategy level but not every project. Some can quantitative can be
difficult to quantitative comparison for environmental assessment methods based on
Austroad’s guideline. We don't do quantitative on environmental cost right now.”
(H13)
Based on these statements, we can see that the industry stakeholders plan to integrate
sustainability costs and issues into highway infrastructure investment consideration.
Due to the lack of quantitative methods to transfer social and environmental issues
into real costs, industry stakeholders are hindered in their intentions to integrate these
issues into current LCCA practice. Table 4.11 outlines current industry practice
regarding their routines to integrate and quantify several costs related to sustainable
measures in LCCA practice for highway projects.
118 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Table 4.11: Ways to quantify cost related to sustainable measures
Question 7.1
And if so, please briefly explain how agency cost is determined and calculated based on the
list below.
Agency cost categories Annotations
Initial construction costs Yes from all the interviewees
“Initial Construction done on model estimation.” (H3)
“…We probably use unit rates to try to work on…” (H5) Maintenance costs Yes from all the interviewees
“Maintenance Costs off historical data.” (H4) Pavement upgrading
costs
Yes from all the interviewees
“Pavement Upgrading costs off historical data.” (H4) Pavement end-of-life
costs
50%Yes and 50% No from interviewees
“We don't take into account recycling. It all depending on the current situation.” (H11)
“End-of-life, would be considered but it probably small cost as it discounted for 50-60 years, it turn out to be smaller costs based on future cost.” (H5)
Question 7.2
And if so, please briefly explain how social cost is determined and calculated based on the
list below.
Social cost categories Annotations
Vehicle operating costs “We use external factors if they have been published such as travel time delay, we have a standard way to calculate those cost but we have not a standard which published.” (H10)
“We used guidelines from the Austroads to quantify the Vehicle Operating costs.” (H4)
Travel delay costs
Social impact influence 23% Yes and 77% No from interviewees.
“We do part of it. We don’t do for we do need to have some social factors. We do it on much larger and strategitic projects.” (H1)
“Some of establish priority but sometime it depend on convert into value level.” (H2)
Accident cost “We do have factors like safety and do consider road safety as a part of evaluation.”(H11 and H13)
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 119
Question 7.3
And if so, please briefly explain how environmental cost is determined and calculated based
on the list below.
Solid waste
generation cost
46 % Yes and 54% No from interviewees
“We consider these costs in the construction stage which involve waste management.”H10
“Environmental Impact assessments is part of our environmental evaluation process that we need to consider before construction activities” H4
“Part of the construction cost, which link together. Pollution implication, that's we reference the Austroads requirement.” H3
Pollution
damage by
agency
activities
Resource
consumption No from all the interviewees
Noise pollution 15% Yes and 50% No from the interviewees.
Noise pollution, could be referencing Austroad, we just based on guidelines from Austroads which they really take into account certain environmental factors. (H11)
It is consider as an external costs which we usually make it as a wrap up cost. (H12)
Air pollution
Water pollution
The feedback from the interviewees indicates that in terms of agency cost categories,
they are able to quantify these costs based on the existing models and programs.
Meanwhile, they also use historical data as a guideline in dealing with these costs.
The social and environmental costs are still not very clear in the estimation methods.
Some of the interviewees mentioned that they use a wrap up cost, some mentioned
using the environmental impact assessment as their guideline, and some mentioned
that it is very hard to convert each of the components into real costs money. From all
of these responses, it can be concluded that the current industry lacks knowledge and
methods to deal with the social and environmental costs in highway infrastructure. In
the following section, the limitations of integrating sustainability-related cost
components into LCCA are further discussed.
120 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
4.3.3.3. Challenges in integrating costs related to sustainable measures into
LCCA practice
Despite the existence of models and guidelines that are able to calculate agency costs
in highway infrastructure, there are still challenges in integrating costs related to
sustainable measures into real cost value. Table 4.12 outlines the major clarifications
provided by the various stakeholders on the challenges to emphasising costs related
to sustainable measures into LCCA practice for highway project.
Table 4.12: Challenges to integrating costs related to sustainable measures into LCCA
Question 9
What are the difficulties to emphasise sustainability-related cost components in LCCA
practice for highway infrastructure project?
Interviewee Annotations
H11 and H6 “Obvious limitation is a way to quantify and compare the social and environmental cost options depend on different design options, we are working to plug the hole on this.” (H11)
“Limitation comes to the quality of assumption and the quality of data. We need to use knowledge and experience.” (H6)
H1, H7, H9 and
H12
“Economical value is still very limitation on determine and measurable and a lot we are not too sure.” (H1)
“Yes, not everything can be quantified into real dollar.” (H7)
“We can quantify to a cost, green house components for pavement options can be quantified into ton for CO2, sometime, like other sustainability cost such as water quality, and sometimes it is hard to value.” (H12)
“Sometimes, we are looking on the willingness to pay and clean up options, that doesn't really reflect environmental value, but it's comes out into economic and we don't know what they going to be able to know what is the long- term effect to the environment.”(H9)
H3 “Information can be used in a certain point in time and this could significantly change with vehicle usage/population growth in a later period.” (H3)
H5 “Sustainability is something that we are conscious of but it is very difficult to put a dollar figure around. We mostly consider the sustainability factors and impacts based on our experience.” (H5)
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 121
The feedback from the interviewees as summarised in the table reveals that there are
two main domains identified which contribute to the different challenges to
emphasise sustainability-related cost components into LCCA practice. They are:
The omission of social and environmental costs in LCCA: This omission is caused
by the difficulty of putting a dollar figure on each factors, the difficulty of
quantifying social and environmental related costs and unclear impacts on the social
and environmental issues.
Uncertainty environment: Uncertainty is caused by the lack of data in these areas;
especially in identifying real cost values for the sustainability-related cost
components, the assumptions needed in calculating and identifying these cost
components, uncertainties of the future social and environmental impacts caused by
highway infrastructure development, dynamic changes in the environment, the lack
of techniques or models in evaluation sustainability-related costs, and changes in the
government policies and guidelines.
Based on the overall results highlighted in this section, it can be concluded that there
are challenges in applying sustainability concepts in long-term financial
management. Although some efforts have been done to consider sustainability
impacts on the highway infrastructure, the stakeholders report that more work needs
to be done to deal with this uncertainty and also to improve the decision making
process in highway investments. The following sections discuss in more detail the
suggestions from industry stakeholders about how to enhance sustainability-related
considerations in LCCA for highway infrastructure projects.
4.3.3.4. Suggestions for enhancing sustainability in LCCA practice
Based on the results outlined in the previous section, it is concluded that there are
many challenges in enhancing sustainability in LCCA practice. The industry
stakeholders do believe that improvements can be made in current LCCA practice.
Table 4.13 outlines the suggestions made by the various stakeholders about how to
enhance sustainability in LCCA practice for highway projects.
122 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
Table 4.13: Stakeholders’ suggestions for enhancing sustainability in LCCA
Question 10
What is your suggestion to improve the measurement methods of social and environmental
costs and to enhance sustainability in LCCA for highway projects?
Interviewee Annotations
H3 “Full costs can’t be accurately determined, public survey may assist with
attaining some information.” (H3)
H5 “Not everything can be quantified; the use of multi-criteria evaluation
methods may help in considering social and environmental impacts in
highway projects.” (H5)
H7 “Even though it is hard to put all these factors into real dollar, our
experience and knowledge may also significantly contribute to the
enhancement of sustainability.” (H7)
H8 “…Engineering input is still a valuable part of the process…” (H8)
H11 “It would be good if we got our initial estimate and it was our plan to
develop a database that stores the initial estimated and the quality
impact. We have a sort of data. Resources to check back the assumption.”
(H11)
H12 “It is really hard and we just based on experience, we rely on people with
experience and we are model driven, and we still need expert input to
improve on it.” (H12)
The feedback from the interviewees indicates that there are still areas for
improvement in current long-term financial management. In order to employ
sustainability in long-term financial management, there is a need for tools that are
not only able to evaluate real cost data but also able to evaluate the importance of
sustainability-related issues and impacts on the highway infrastructure investment
decisions.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 123
4.3.4 Summary of semi-structured interview results and suggestions
The results and findings of the semi-structured interviews can be summarised as four
themes as follows:
1. The overall scenario of current highway industry in LCCA application.
• Understanding of the LCCA concept is still evolving and the
stakeholders have some general ideas of this concept but little
assistance is done in current industry practice.
• LCCA is usually only applied in large and new highway infrastructure
projects.
• The current industry is actively promoting the application of LCCA in
enhancing long-term financial management in highway infrastructure.
2. The ways to quantify sustainability-related cost components in highway
investment.
• The organisations employed existing models and software in
quantifying the agency-related cost components (e.g. the application
of Highway Design and Maintenance standard model Version 4
(HDM4) to quantify costs associated with construction and
maintenance activities.)
• There is a lack of standard calculation methods for social- and
environmental-related cost components. The current industry faced
some issues in quantifying these cost components.
- There are no published models and calculation methods in
dealing with these cost components.
- These costs are difficult to convert into real dollar value.
- These costs are classified as external costs or wrap up costs.
(e.g. Waste management costs are part of the construction
costs).
3. The challenges to integrate sustainability-related cost components into LCCA
practice.
124 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies
• There are limitation in the methods and models in quantifying cost
components related to sustainable measures.
• There is a poor quality of assumptions and data in dealing with these
costs.
• It is difficult to examine the long-term effects and costs associated to
with communities and environments.
4. The suggestions to enhance sustainability in LCCA practice.
• The application of multi-criteria evaluation methods may help in
considering social and environmental effects in highway infrastructure
projects.
• Industry experience and knowledge may significantly contribute to
the enhancement of sustainability in LCCA.
• There is a need to improve the existing models to cope with industry
highway projects.
• There is a need of tools to improve the financial decision-making
process in highway investments.
Thus, this section has achieved another two sub-objectives, which are to explore the
different perceptions of various stakeholders regarding the LCCA practice and to
explore the industry expectation about enhancing sustainability for life-cycle cost
analysis in Australian highway infrastructure.
4.4 Chapter Summary
This chapter reported the findings from phase 2 of the research process that involved
two survey methods. The findings from both the questionnaire survey and semi-
structured interview answered the second research question: What are the specific
cost components relating to sustainable measures about which highway project
stakeholders feel most concerned?
The conclusions drawn from the questionnaire survey and semi-structured interview
results have verified the findings from the literature. Their comparison is illustrated
in four relevant subjects as shown in Table 4.14.
Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 125
Table 4.14: Comparison of the survey results with literature findings
Research Objective Relevant Subjects Literature Findings Survey Findings
To identify the critical cost components
related to sustainable measures in highway
infrastructure investments.
Industry status and LCCA application in highway infrastructure
• Existing studies has highlighted several LCCA models and programs for highway infrastructure
• LCCA concepts are evolving in highway infrastructure industry
• Different environments and problems associated with highway infrastructure projects
The scenario is based on the Australian highway industry:
• Applied in large and new highway infrastructure development
• Promoting LCCA application in highway infrastructure
• Understanding of the LCCA concept is still evolving
Critical sustainability-related cost components in highway infrastructure
• Literature review has identified 42 cost components related to sustainable measures in highway projects
The questionnaire surveys indicate the following result:
• Ten critical cost components related to sustainable measures in highway infrastructure investments
Challenges of integrating sustainability-related cost components in LCCA
• Social and environmental costs are considered as the external costs
• Unclear boundaries in considering sustainability-related costs (e.g. some researchers focus on the global impacts of sustainability in highway projects)
The interviews indicates the following results.
• Limitation in the methods and models in dealing with cost components related to sustainable measures.
• Lack of quality assumptions and data to deal with these costs
• Employ multi-criteria evaluation methods in analysis of sustainability-related cost components
• Need to improve the existing models
The needs for the decision support models to assist in highway investment decisions
• There are still limitations in the current LCCA model that emphasises sustainability.
126 Chapter 5: A Decision Support Model for Evaluating Highway Infrastructure Projects Investment
From the comparison as set out in Table 4.14, the questionnaire survey has verified
the critical cost components related to sustainable measures in highway
infrastructure. The semi-structured interview has identified the challenges to improve
long-term financial decisions in the current industry. All these results and findings
guide the researcher to the next stage of the research work. This involves the
development of a decision support model to assist the stakeholders in dealing with
highway investment decisions. Chapters 5 and 6 will introduce and present the
decision support model and present a case study for in-depth application and
verification.
Chapter 5: A Decision Support Model for Evaluating Highway Investment 127
CHAPTER 5: A DECISION SUPPORT MODEL FOR EVALUATING HIGHWAY INVESTMENT
5.1 Introduction
This chapter reports the process of model development in detail. It presents a series
of Fuzzy Analytical Hierarchy Process (Fuzzy AHP) and Life-cycle cost analysis
(LCCA) evaluation methods in dealing with the sustainability-related cost
components validated by industry stakeholders. The findings of the questionnaire
survey in Chapter 4 identified the ten most critical cost components in highway
investment. The semi-structured interview results also identified the industry
challenges and suggestions to integrate of sustainability concepts in LCCA practice.
As a baseline of this study, the analysis of the survey indicates the need to develop a
decision support model in dealing with the long-term financial decisions in highway
projects. Figure 5.1 illustrates that the findings from the survey serve as the platform
for the development of decision support model.
This chapter discussed work that has achieved one of the purposes in the third
objective, which is to apply the industry verified cost components and identified the
industry challenges and suggestions of integration of sustainability concepts to
develop a decision support model. The links between the research objectives,
research questions and the development of the model are set out in Figure 5.2. The
model development considered three essential requirements. Firstly, the model
should be applicable regardless of the project size and type. Secondly, the modelling
result should be convincing in order to enable practitioners to adopt a final decision,
which is selecting the most sustainable project alternative. Thirdly, the model should
effectively assess the ten sustainability-related cost components in the early stage of
the project development. The overall concept of the model is intended to be tested
and evaluated in real case scenarios in which multiple alternatives are proposed.
128 Chapter 5: A Decision Support Model for Evaluating Highway Investment
This chapter has seven sections. Section 5.2 provides a brief description of the model
structure and application. Next, Section 5.3 discusses the assessment procedure of
the Fuzzy AHP method. This is followed by Section 5.4, which explores the
application of LCCA in highway infrastructure and assessment procedures. Section
5.5 then discusses the final decision process that includes the combinations of the
weighted values for both the Fuzzy AHP and LCCA assessment. Finally, Section 5.6
explains the sensitivity analysis for the proposed model. Finally, Section 5.7
discusses the model validation process, and Section 5.8 provides a summary of this
chapter.
Industry Challenges
Industry Suggestions
Agency Category • Material costs • Plant and equipment costs • Major maintenance costs • Rehabilitation costs
Social Category • Road accident - internal costs • Road accident- economic
value of damage
Environmental Category • Hydrology impacts • Loss of wetland • Disposal of material costs • Cost of barriers
Industry Validated Sustainability Related Cost Components
Development of a decision support model for dealing with long-term financial decisions in highway projects
Figure 5.1: Integration of survey findings with model development
Chapter 5: A Decision Support Model for Evaluating Highway Investment 129
3. Developing a decision support model
• Integrating the industry verified cost components with decision support model
• Testing and evaluating the decision support model
2. Understanding cost implications of pursuing sustainability
• Understanding the global initiatives on sustainable infrastructure development
• Understanding the context of highway infrastructure development in Australia
• Reviewing current LCCA models and programs
• Identifying sustainability-related cost components in highway infrastructure projects
What are the sustainability measures that have cost implications in highway projects?
Chapter 2
Literature Review
3. Identifying sustainability-related cost components that project stakeholders are concerned about:
• Exploring current practice of life cycle cost analysis in Australian highway infrastructure
• Identifying critical sustainability-related cost components in highway infrastructure investments
• Integrating various stakeholders’ expectations of sustainability enhancement in LCCA
What are the specific cost components relating to sustainability measures about which highway project stakeholders feel most concerned?
Chapter 4
Cost Implications for Highway Sustainability
How to assess the long-term financial viability of sustainability measures in highway projects?
Chapters 5 & 6
Decision Support Model Development
and Model Application
Chapter Research Objectives Research Questions
Figure 5.2: Development of model based on research objectives and questions
130 Chapter 5: A Decision Support Model for Evaluating Highway Investment
5.2 The Model Structure and Application
This section presents the overall structure and development of a conceptual model in
order to effectively assist industry stakeholders in dealing with complex highway
investment decisions. The model development consists of two stages, as shown in
Figure 5.3. The first stage identifies the sustainability-related cost components in
highway projects through a review of literature and industry reports. The second
stage develops the decision support model by the adoption of Fuzzy AHP and
LCCA, integrating industry verified cost components as well as industry problems
and suggestions extracted from the survey of industry practitioners.
5.2.1. The model structure and development: stage 1
The literature review in Chapter 2 served to understand the extent of the
sustainability-related cost components in highway infrastructure. An extensive
literature review and evaluation of project reports from previous highway projects
Literature Industry Reports
Sustainability-Related Cost Components in Highway Infrastructure
Agency Social Environmental
Ten Critical Cost Components in Highway Infrastructure
Decision Support Model
Industry Suggestions
Life-Cycle Cost Analysis
Concept
Industry Problems
Fuzzy Analytical Hierarchy Process
Stage 2
Stage 1
Figure 5.3: Decision support model development process
Chapter 5: A Decision Support Model for Evaluating Highway Investment 131
was first conducted to reveal all potential cost components. Forty-two imperative
aspects of these cost components were identified. .These cost components are
grouped in three main categories as shown in Table 5.1.
Table 5.1: Sustainability-related cost components for highway infrastructure
Sustainability Criteria
Sustainability-Related Cost Components Main Factors Sub Factors
Agency Category
Initial Construction Costs Labour Cost Materials Cost Plants and Equipments Cost
Maintenance Costs Major Maintenance Cost Routine Maintenance Cost
Pavement Upgrading Costs Rehabilitation Cost Pavement Extension Cost
Pavement End-of-Life Costs Demolition Cost Disposal Cost Recycle and Reuse Cost
Social Category
Vehicle Operating Costs Vehicle Elements Cost Road Tax and Insurance Cost
Travel Delay Costs Speed Changing Cost Traffic Congestion Cost
Social Impact Influence
Cost of Resettling People Property Devaluation Reduction of Culture Heritage and Healthy Landscapes Community Cohesion Negative Visual Impact
Accident Costs Economy Value of Damages Internal Cost External Cost
Environmental Category
Solid Waste Generation Costs Cost of Dredging/Excavating Material Waste Management Cost Materials Disposal Cost
Pollution Damage by Agency Activities
Land Use Cost Distraction to Soil Extent of Tree Felling Habitat Disruption and Loss Ecology Damage Environmental Degradation
Resource Consumption Fuel Consumption Cost Energy Consumption Cost
Noise Pollution
Cost of Barriers Tyre Noise Engine Noise Drivers’ Attitudes
Air Pollution Effects to Human Health Dust Emission CO2 Emission
Water Pollution Loss of Wetland Hydrological Impacts
132 Chapter 5: A Decision Support Model for Evaluating Highway Investment
In addition, the contemporary LCCA models in the evaluation of road infrastructure
were reviewed. None of these methods or programs highlights social and
environmental aspects, nor do they provide the means to add future components.
Followed by the questionnaire surveys and semi-structured interviews as discussed in
chapter 4, this study managed to identify ten most critical cost components in
highway investments with sustainability objectives. These top ten rated cost
components were validated by industry stakeholders as shown in Table 4.7 in section
4.3.2. These critical cost components reveal the common opinions of Australian
highway industry stakeholders in both theory and practice of highway infrastructure
development in Australia.
Although many of these cost components are neither fully understood nor easy to
calculate, an attempt to quantify and evaluate each aspect should be made in
developing a comprehensive financial decision support tool. Therefore, this research
employed the Fuzzy AHP and the LCCA approaches to develop the decision support
model. Both methods were selected to deal with quantitative and qualitative
sustainability-related cost components.
5.2.2. The model structure and development: stage 2
This section presents the integration of the Fuzzy AHP approach and the life-cycle
costing analysis (LCCA) concept to develop the decision support model. This study
found that the issue with traditional LCCA model is focusing on quantifiable agency
cost components. There is a lack of systemical evaluation of soft factors such as
social and environmental costs, which are characterised as qualitative, intangible, and
informal cost components. The Fuzzy AHP was selected in this study because of its
ability to provide quantitative measures for soft factors by using the same scale.
To effectively employ these two concepts in the model development, the researcher
firstly needed to understand these concepts. It was also necessary to identify ways to
effectively integrate these concepts into development of the model. To accomplish
the design of the whole model, the industry problems in LCCA application and the
challenges of integrating sustainability-related cost components in LCCA were
Chapter 5: A Decision Support Model for Evaluating Highway Investment 133
extracted from the semi-structured interviewed of practitioners as reported in Chapter
4.
Two assessment methods were employed to evaluate the industry verified
sustainability-related cost components as shown in Figure 5.4. These modules
include Fuzzy AHP and LCCA. Single assessment method was not a realistic option
for assessing these cost components as all them have multi-criteria characteristics.
For this reason, the qualitative cost components were assessed by Fuzzy AHP
method that is able to deal with soft factors. On the contrary, quantitative cost
components were assessed by LCCA method. The application of each assessment
method is explained in detail in the next section.
5.3 The Fuzzy Analytical Hierarchy Process
The Fuzzy Analytic Hierarchy Process is a method of multi-criteria decision-making
(MCDM) and is considered to be a descriptive approach to decision-making (Lee and
Chan 2008; Nobrega et al. 2009; Jaskowski, Biruk and Bucon 2010; Peihong and
Jiaqiong 2009). According to Cho (2003), the MCDM method deals with decisions
involving the choice of a best or appropriate alternative from several potential
‘candidates’, subject to several criteria or attributes. However, the current
Sustainability Highway Infrastructure Assessment
Fuzzy Analytical Hierarchy Process
Assessment Methods for Qualitative Cost Components
Life Cycle Costing Analysis
Assessment Methods for Quantitative Cost
Components
Figure 5.4: Proposed assessment methods for the decision support model
134 Chapter 5: A Decision Support Model for Evaluating Highway Investment
construction industry’s problems are becoming more complex and it is more difficult
for the stakeholders to reach a precise decision in these complex situations. To deal
with an MCDM problem, Fuzzy AHP methodology is used as a decision support tool
in this study. The Fuzzy AHP methodology is intended for alternative selection by
integrating the concept of fuzzy set theory and hierarchical structure analysis. The
application of fuzzy methodology enables the decision makers evaluate the decisions
based on both qualitative and quantitative data. For this reason, it improves the level
of confident of decision makers in giving interval judgments rather than fixed value
judgments. In this approach, triangular fuzzy numbers are employed for evaluating
the preferences of one criterion over another. Then, by using the extent analysis
method, the synthetic extent value of the pairwise comparison is calculated. The
proposed fuzzy AHP approach does not merely constitute a technical solution for an
isolated problem, but rather represents a comprehensive concept of the entire
selection process.
The model involves the benefit evaluation of alternatives. It passes through the stages
in fuzzy AHP principles as illustrated in Figure 5.5. It addresses a multi-criteria
decision making problem, where there are a number of significant criteria that need
Hierarchy Revision
Qualitative cost components in the evaluation of highway infrastructure projects using Fuzzy AHP
Hierarchy construction with soft factors
Pairwise comparison for all sets of factors
Calculation of priority factors
Scoring of alternatives
Aggregate the relative weights
Calculate the total score for each alternative
Select the alternative that has the highest total score
Figure 5.5: Proposed application of the Fuzzy AHP
Chapter 5: A Decision Support Model for Evaluating Highway Investment 135
to be considered in the selection process. The related important factors and criteria
require the prioritisation or weighting of some factors to be identified. Those factors
or criteria with high ratings are said to be critical. To perform the operation
successfully, the decision maker must first organise and prioritise the problem. It
then requires an effective decision making technique to systematically evaluate the
selection process, which, in this case, will help the individual practitioner to select
the most appropriate choice for highway infrastructure projects based on
sustainability indicators. The fuzzy AHP was chosen for this research to provide the
decision maker with a logical framework to model a complex decision scenario,
which can integrate perceptions, judgments and experiences into a hierarchy. It
therefore allows a better understanding of the problem, its criteria and possible
choices.
5.3.1. Fundamentals of Fuzzy AHP
The Fuzzy AHP began with the basic concept of the Analytical Hierarchy Process
(AHP). AHP was developed by Saaty (1980) in the early 1970s to help individuals
and groups deal with decision making problems. Saaty (1980) first introduced AHP
as a new approach to dealing with complex economic, technological, and socio-
political problems, which often involve a great deal of uncertainty. However, due to
the complexity of current problems, the fuzzy concept was employed to be integrated
with AHP methods to handle more complex decisions.
The earliest work in integrating between Fuzzy Logic and AHP concepts appeared in
the early 1980s, with several researchers working on the concepts and starting to
determine fuzzy priorities of comparison ratios by using the geometric mean
(Boender, de Graan and Lootsma 1989; Buckley 1985; Van Laarhoven and Pedrycz
1983). In the 1990s, studies in Fuzzy AHP became more popular and several
improvements on the methods were developed (Deng 1999; Chang 1996; Ruoning
and Xiaoyan 1992). Chang (1996) introduced triangular fuzzy numbers for pairwise
comparison scales of Fuzzy AHP and the use of the extent analysis method for the
synthetic extent values of the pairwise comparisons. Zhu et al. (1999) investigated
the extent analysis method and applied some practical examples of Fuzzy AHP.
136 Chapter 5: A Decision Support Model for Evaluating Highway Investment
Recently, Fuzzy AHP has been extensively applied in the literature. In the
construction industry, the application of Fuzzy AHP is becoming popular because it
aids industry stakeholders in dealing with complex decisions. Several research
studies have proved the efficacy of the method. For example, Pang (2008) proposes
the Fuzzy AHP in selecting a suitable bridge construction method. Peihong and
Jiaqiong (2009) apply Fuzzy AHP methods to risk assessment in an international
construction project. Jaskowski et al. (2010) assess contractor selection with Fuzzy
AHP in a group decision environment. Based on these studies, it can be concluded
that Fuzzy AHP is a practical approach in dealing with complex decisions in the
construction industry.
This research proposes the use of the Fuzzy AHP model to evaluate highway
infrastructure projects by comparing alternative choices based on the sustainability-
related cost components. The proposed Fuzzy AHP model does not merely provide a
technical solution for an isolated problem, but rather represents a comprehensive
concept of the entire selection process.
5.3.2. Fuzzy AHP assessment procedure
The first step in the Fuzzy AHP assessment procedure is establishing a hierarchical
structure. The Fuzzy AHP is a part of the model assessment process. The purpose of
applying the Fuzzy AHP is to assess ten industry verified cost components in a
systemic manner. The Fuzzy AHP results will be integrated with other estimation
results in the final decision making process to determine the most sustainable
alternative of highway infrastructure projects.
Figure 5.6 illustrates the Fuzzy AHP hierarchy structure. The first sets of layers are
the agency, environmental, and social aspects described as the first level. The second
level consists of three (3) groups. The three groups represent the triple bottom-line
approach of the Fuzzy AHP hierarchy. Four (4) qualitative indicators are grouped
under the agency aspect. Another four (4) qualitative indicators are categorised under
the environmental aspect. A remaining two (2) qualitative indicators are grouped
under the social aspect. The third level is the number of proposed alternatives subject
to assessment of each qualitative indicator in the second level.
Chapter 5: A Decision Support Model for Evaluating Highway Investment 137
In order to perform a pairwise comparison among the parameters, the triangular
numbers and fuzzy conversion scale are employed based on the Fuzzy scale used in
existing studies (Aya and Özdemir 2006; Fu et al. 2008; Peihong and Jiaqiong 2009;
Perçin 2008). Figure 5.7 shows the linguistic scale for the triangular numbers. The
fuzzy conversion scale are shown in Table 5.2. Throughout this study, the
importance of the benefits of information-sharing criteria and sub-criteria are
evaluated by five main linguistic terms. The terms are:
• “EI: equally important”,
• “WMI: weakly more important”,
• “SMI: strongly more important”,
• “VSMI: very strongly more important” and
• “AMI: absolutely more important”.
Qualitative Sustainability Benefits Assessment
Importance of Economic Aspect
Importance of Environmental Aspect
Importance of Social Aspect
Group of cost components from Economic Aspect
Group of cost components from
Social Aspect
Group of cost components from
Environmental Aspect
Alternative “n” per each cost
component in economic aspect
Alternative “n” per each cost component
in environmental aspect
Alternative “n” per each cost
component in economic aspect
Aggregate hierarchy value to make a final
prioritisation
LEVEL 1 Focus
LEVEL 3 Sub Criteria of
Desired components
LEVEL 4 Alternatives
LEVEL 2 Sustainability
Criteria
Figure 5.6: Hierarchy map of sustainability-related cost component assessment
138 Chapter 5: A Decision Support Model for Evaluating Highway Investment
This study has also considered the respondents’ reciprocals:
• “ALI: absolutely less important”,
• “VSLI: very strongly less important”,
• “SLI: strongly less important” and
• “WLI: weakly less important”.
By using the linguistic terms, decision makers will feel more comfortable using such
terms in highway investment assessments. For example, someone may consider that
cost components i is “absolutely important” compared with the component j under
certain criteria; decision makers may set 𝑎𝑎𝑎𝑎𝑎𝑎 = (5/2,3, 7/2). If element j is thought
to be “absolutely less important” than element i, the pair wise comparison between j
and i could be presented by using fuzzy number, 𝑎𝑎𝑎𝑎𝑎𝑎 = (1/𝑢𝑢_1 ,1/𝑚𝑚_1 ,1/𝑙𝑙_1 ) =
2/7,1/3,2/5.
Table 5.2: Triangular fuzzy conversion scale
Linguistic scale for importance Triangular fuzzy scale Triangular fuzzy reciprocal scale
Equal important (EI) (1/2, 1, 3/2) (2/3, 1, 2)
Weakly more important (WI) (1, 3/2, 2) (1/2, 2/3, 1)
Fairly more important (FI) (3/2, 2, 5/2) (2/5, 1/2, 2/3)
Very strongly more important (VSI)
(2, 5/2, 3) (1/3, 2/5, 1/2)
Absolutely more important (AI) (5/2, 3, 7/2) (2/7, 1/3, 2/5)
1/2 1 3/2 2 5/2 3 7/2
1.0 EI WI FI VSI AI µRI
RI
Figure 5.7: The linguistic scale of triangular numbers for relative importance
Chapter 5: A Decision Support Model for Evaluating Highway Investment 139
To generate pairwise comparison matrices, a group of 5 respondents from each case
projects were interviewed. Then the fuzzy evaluation matrix relevant to the goal of
each case projects was obtained with the consensus of the respondents. Their
feedback was then be recorded in the form of linguistic expressions and analysed in a
spreadsheet.
The outlines of the extent analysis method on Fuzzy AHP (Zhu, Jing and Chang
1999; Chang 1996; Ruoning and Xiaoyan 1992) can be summarised as follows:
Let x = {x1, x2, … , xn} be an object set, and u = {u1, u2, … , un} be a goal set.
According to Chang’s extent analysis method, each object is taken and extent
analysis for each goal 𝑔𝑔𝑎𝑎 is performed, respectively. Therefore, the C extent analysis
values for each object can be obtained and shown as follows:
𝐶𝐶𝑔𝑔𝑎𝑎1 ,𝐶𝐶𝑔𝑔𝑎𝑎 ,…,2 𝐶𝐶𝑔𝑔𝑎𝑎𝑚𝑚 , 𝑎𝑎 = 1,2, … , 𝑛𝑛 (1)
where all the Cgij (j = 1, 2, … , m) are triangular fuzzy numbers (TFNs) whose
parameters are l, m and u. They are the least possible value, the most possible value,
and the largest possible value, respectively. A TFN is represented as (l, m, u). The
steps of the extent analysis method can be given as follows (Büyüközkan et al.
2004):
Step 1: The value of fuzzy synthetic extent with respect to the 𝑎𝑎𝑡𝑡ℎ object is defined
as:
Si = �Cgi
jm
j=1
⊗ ���Cgij
m
j=1
n
i=1
�
−1
(2)
140 Chapter 5: A Decision Support Model for Evaluating Highway Investment
To obtain ∑ Cgijm
j=1 , this study performs the fuzzy addition operation of m extent
analysis values for a particular matrix such that:
�Cgi
j =m
j=1
�� lij ,�mij ,�uij
m
j=1
m
j=1
m
j=1
� (3)
and to obtain �∑ ∑ Cgijm
j=1ni=1 �
−1, this study performs the fuzzy addition operation of
Cgij (j = 1, 2, … , m) values such that:
where,
��Cgij =
m
i=1
n
i=1
�� lij ,�mij ,�uij
m
i=1
m
i=1
m
i=1
�
li = � ly , mi = �mij , ui =m
j=1
m
j=1
�uij
m
j=1
(4)
Then, the inverse of the vector in equation (5) is computed as:
���Cgi
jm
j=1
n
i=1
�
−1
= �1
∑ uini=1
,1
∑ mini=1
,1
∑ lini=1
� (5)
Where ∀ ui, mi, li > 0
Finally, to obtain the 𝑆𝑆𝑎𝑎 in equation (2), we perform the following multiplication:
Chapter 5: A Decision Support Model for Evaluating Highway Investment 141
Si = �Cgi
jm
j=1
⊗ ���Cgij
m
j=1
n
i=1
�
−1
= ��×1
∑ mini=1
, lij ,m
j=1
�uij
m
j=1
×1
∑ lini=1
� (6)
Step 2: The degree of possibility of 𝐶𝐶2 = (𝑙𝑙2,𝑚𝑚2,𝑢𝑢2) ≥ 𝐶𝐶1 = (𝑙𝑙1,𝑚𝑚1,𝑢𝑢1) is defined
as:
V(C2 ≥ C1) = sup �miny≥x
�μM2 (y)�� (7)
This can be expressed equivalently as follows:
V(C2 ≥ C1) = hgt(C1 ∩ C2) = μC2 (d) = �
10
(l1 − u2)(m2 = u2)− (m1 = u1)
� ,if M2 ≥ M1if M2 ≥ M1otherwise
(8)
where d is the ordinate of the highest intersection point D between μM1 and μM2 . To
compare 𝐶𝐶1and 𝐶𝐶2, both the values of V(C1 ≥ C2) and V(C2 ≥ C1) are needed. The
intersection between 𝐶𝐶1 and 𝐶𝐶2, is shown in Figure 5.8.
Step 3: The degree possibility for a convex fuzzy number to be greater than k convex
fuzzy numbers mi(i = 1,2, … , k) can be defined by:
V(C ≥ C1, C2, … , Ck) = V[(C ≥ C1and C ≥ C2 and … and C ≥ Ck)]
= min V(C ≥ Ci) , i = 1,2, … , k
(9)
142 Chapter 5: A Decision Support Model for Evaluating Highway Investment
Assume that:
D′(Si) = min V ( Si ≥ Sk) (10)
For = 1,2 … , n; k ≠ i . Then the weight vector is given by:
W′ = D′((S_1 ), D^′ (S_2 ), … , D′(S_n ))T (11)
where 𝑆𝑆𝑎𝑎(𝑎𝑎 = 1, 2, … ,𝑛𝑛) are n elements
Step 4: After normalisation (the elements of each column are divided by the sum of
that column the elements in each resulting row are added and this sum is divided by
the number of elements in the row), the normalised weight vectors are obtained as
follows:
W = (D(S1), D(S2), … , D(S1)T (12)
µC
1 C1 C2
D
0 C
V(C1 ≥ C2)
l1 m1 l2 d u1 m2 u2
Figure 5.8: The intersection between C1 and C2
Chapter 5: A Decision Support Model for Evaluating Highway Investment 143
The issue of consistency in Fuzzy AHP is another subject that needs to be examined.
The consistency index (CI) and consistency ratio (CR) are calculated as follows:
CI =
(λmax − n)(n − 1)
(13)
where λmax is the largest eigenvalue of the comparison matrix, n is the number of
items being compared in the matrix, and RI is a random index. If the CR is less than
0.10, the comparisons are acceptable, otherwise not. The decision maker has to make
the pairwise judgments again (Saaty 1990, 1980).
By applying Fuzzy AHP assessment procedure, it allows all aspects of the cost
components-related to sustainable measures in highway infrastructure to be evaluated
in order to elicit meaningful data. Subsequently, this provides a platform for the
model development based on ten industry verified sustainability-related cost
components. Table 5.3 summarises how these critical cost components could be
meaningfully investigated by the fuzzy AHP and LCCA methods.
Table 5.3: Assessment approach of critical sustainability cost components
Main Criteria Sub-Criteria Investigation Methods Agency category Material costs LCCA + Fuzzy AHP
Plant and equipment costs LCCA + Fuzzy AHP
Major maintenance costs LCCA+ Fuzzy AHP
Rehabilitation costs LCCA + Fuzzy AHP
Social category Road accident- internal costs LCCA + Fuzzy AHP
Road accident- economic value of damage
Fuzzy AHP
Environmental category
Hydrological impacts Fuzzy AHP
Loss of wetland Fuzzy AHP
Disposal of material costs Fuzzy AHP
Cost of barriers Fuzzy AHP
144 Chapter 5: A Decision Support Model for Evaluating Highway Investment
5.4 Life-Cycle Cost Analysis
Life-cycle cost analysis (LCCA) is one of the decision support tools employed in the
model development. As shown in Table 5.3, LCCA approach is ideal to evaluate cost
components that are able to convert into monetary value. Life-cycle cost calculation
will handle existing cost components such as agency and some social cost
components, while Fuzzy AHP will deal with the unquantified factors such as some
social and environmental cost components. In this research, the life-cycle cost
calculation is based on real case data; it involves components such as the agency
costs for the maintenance activities.
5.4.1. Life-cycle cost analysis in highway infrastructure
The LCCA will be calculated and entered for the appropriate year depending on the
highway maintenance strategy selected and also the life span of the highway
infrastructure. The timing of all construction activities are recorded, with the timing
then used in calculating the agency costs associated with a project. This timing of
events is illustrated in Figure 5.9, which shows a conceptual diagram of pavement
performance, with corresponding marks on the horizontal axis indicating the year in
which the work will be performed.
The combined agency costs for each event will be entered in the life-cycle cost
analysis at the predicted age of the pavement. The total cost calculated for each year
is then discounted to the present time to obtain its present value, for comparison.
Condition
Time
Figure 5.9: Timing of maintenance and rehabilitation
Chapter 5: A Decision Support Model for Evaluating Highway Investment 145
Using the economic analysis strategies, the total life-cycle costs of each alternate
design were analysed and rated. The conceptual graph in Figure 5.10 shows the
agency costs associated with each construction activity over the life of the highway
project.
In Figure 5.11, the dotted arrows represent the social and environmental costs, which
are associated with construction activities every time a construction work zone is in
place. These costs are in addition to all agency costs that are incurred because of the
construction activities. Social and environmental costs vary greatly, depending on the
number of vehicles passing through the work zone, but can easily be much greater
than the total cost of the actual construction activities. The essence of life-cycle
costing is to capture all predictable costs that may have an impact on the economy or
society that could be affected by the highway pavement project under consideration.
Cost
Year (i)
Initial Cost
Maintenance 1
Maintenance 2
Rehabilitation 1
Maintenance n
Maintenance n
Rehabilitation n
Figure 5.10: Agency costs associated with construction activities
146 Chapter 5: A Decision Support Model for Evaluating Highway Investment
5.4.2. LCCA calculation procedure
This research attempts to provide a means for identifying and estimating all costs that
may have an effect on these entities involved in the construction and use of the
highway section. Out of ten sustainability-related cost components, five are a part of
the LCCA assessment because they are considered as quantitative factors that can be
estimated in terms of monetary value.
Most conventional LCCA methodologies, such as the Federal Highway
Administration model, adopts the present value method that brings the future value
back to the base year. Future value is defined as any capital investment requirement
scheduled after the base year. Future costs need to be discounted to take into account
the time value of the money. Ockwell (1990) introduced two approaches in LCCA
calculations. The first approach considers simultaneously both the inflation rate and
the nominal discount rate, as shown in Equations 14, and 15.
FV = $const .(1 + i)n (14)
Cost
Year (i)
Initial Cost
Maintenance 1
Maintenance 2
Rehabilitation 1
Maintenance n
Maintenance n
Rehabilitation n
Figure 5.11: Social and environmental costs added to agency costs associated with construction activities
Chapter 5: A Decision Support Model for Evaluating Highway Investment 147
PV =FV
(1 + dn)n (15)
The second approach uses the real discount rate. The real discount rate takes into
account only the real earning potential of money over time. Equation 16 can
calculate the real discount rate. The present value is calculated by multiplying the
constant dollar value and the discount factor, using the real discount rate as shown in
Equation 17.
dr =
1 + dn
1 + i− 1
(16)
PV = $const . × DF, DF =1
(1 + dr)n (17)
where
FV = future current dollar value
PV = present constant dollar value,
DF = discount factor,
$const= constant dollar value,
i = inflation rate,
dn = nominal discount rate
dr = real discount rate, and
n = number of years in the future at which costs are incurred.
148 Chapter 5: A Decision Support Model for Evaluating Highway Investment
Since the constant dollar value at the base year can be estimated, the selection of the
discount rate and the application of the discount factor significantly control the
overall performance of the LCCA and the effective long-term economical judgment
between comparable alternatives. The present value is significantly decreased by a
high discount factor, especially for an extremely long life-cycle. The discount factor
is a function of two factors - time and the discount rate. From the broader point of
view of road users and the wider community, economic analysis suggests the net
present value at a 7% real discount rate will achieve a positive economic. A real
discount rate of 7% is based on the guidance recommended by Austroads and the
Road and Transport Authority (RTA), Australia. It is extremely difficult to predict
the future discount rate because economic fluctuation is influenced by too many
external factors. If present value is used for real cost estimation, discount factor
simulation that takes multiple discount rates is recommended to minimise
misinterpretation in the life-cycle cost analysis.
In summary, decision makers should assess the benefit of future savings between
proposed alternatives. Decision makers should not underestimate the future cost
implications by using an unrealistic discount rate because a significant reduction of
present value makes the future investment insignificant. When using a real cost
estimation method, decision makers should consider this tendency in conventional
LCCA models. The future economical benefit should be carefully assessed by not
only including the present value of future cost, but also by considering the realistic
monetary value of the future task.
These cost components represent quantitative indicators in economical assessment.
Discount factors can be applied to all cost components except initial cost
components. Real cost estimation analysis should include not only the total sum of
costs, but also effectiveness of each cost component between proposed alternatives.
All other qualitative economical indicators are assessed as a part of Fuzzy AHP
evaluations. The combination of the two separate results will be done during the final
decision making process.
The summation of all quantitative cost items is expressed in Equation 18.
Chapter 5: A Decision Support Model for Evaluating Highway Investment 149
Real costs ($) = �(Ci) (18)
where Ci= quantitative sustainability indicators for cost estimation
5.5 Final Decision Making Process
The final decision is based on two modular results from the overall sustainability
assessment processes, as shown in Table 5.4. The two modular results have different
dimensional (criteria) values. Another MCDM is required to integrate both values
into a single uniform process (the first MCDM used in this model is Fuzzy AHP for
qualitative indicator assessment). The simplest and most effective MCDM method
for a single level of decision making is the Weighted Sum Model (WSM)
(Triantaphyllou et al. 1997).
Normalisation requires consideration of different characteristics for each modular
result. High values are preferred for these results. For example, Fuzzy AHP and
LCCA provide high value preferred results. Equation 19 calculates the normalised
values of modular results. Symbol (ahigh i
) is used for the normalisation of high value
preferred results.
ahigh i = �Ri
∑ (Ri)ni=1
� (19)
where
Ri
The relative importance of each modular result is expressed as an interval value from
0 to 1. The sum of the relative importance must be equal to one. This relative
= a result corresponding to an alternative from each modular assessment, and
n = number of alternatives.
150 Chapter 5: A Decision Support Model for Evaluating Highway Investment
importance is used as a weight factor 𝑊𝑊𝑎𝑎 in Equation 20, which is used to calculate
the overall sustainability 𝑆𝑆 of each alternative. The sum of the weighted normalised
values of all alternatives in Table 5.3 must be equal to one. Subsequently, the sum of
𝑆𝑆𝑎𝑎 values must also equal one. The highest 𝑆𝑆 value represents the most sustainable
alternative method.
𝑆𝑆𝑎𝑎 = �𝑎𝑎𝑎𝑎𝑎𝑎𝑊𝑊𝑎𝑎
𝑚𝑚
𝑎𝑎=1
(20)
where,
Si
Table 5.4: WSM calculation table for final decision making
= relative sustainability of alternative A (e.g. Alt 1, Alt 2, Alt i), and
m = number of module results (1-2).
Modular Results Weight Factor Alternative 1 Alternative 2 Alternative i
Fuzzy AHP W Fuzzy AHP -
Alt 1 1 Fuzzy AHP -
Alt 2
Fuzzy AHP -
Alt i
LCCA W $ - Alt 1 2 $ - Alt 2 $ - Alt i
Weighted Sum Value W i S=1 S1 S2 i
The relative importance of each modular result can be decided by the subjective and
intuitive assessment of decision makers and other stakeholders. Therefore, sensitivity
tests are required to determine if the final decision requires changing the relative
importance of each modular result. Sensitivity analysis for this study adopts
proportional changes of weight factors by the given magnitude of the weight factor.
For example, when a weight factor for Fuzzy AHP is changed, all other weight
factors are changed proportionally from their original values. Therefore, a higher
weight factor value is changed proportionally higher than for a lower weight factor.
An equation detailing this sensitivity analysis is presented in Chapter 6 along with a
case study.
Chapter 5: A Decision Support Model for Evaluating Highway Investment 151
The last step of the decision support model application is to approve the final result
from the WSM. If the final prioritisation result is not approved by the decision
maker, then the modelling process should be repeated. This looping function should
include cancellation of the project development and modification of alternatives of
the projects.
5.6 Sensitivity Analysis
Sensitivity analysis was conducted to verify the vulnerability of final result reversion
by changing the weight factors of Weighted Sum Model (WSM). The analysis was
conducted as part of the final decision-making process. All two weight factors are
applied to the sensitivity analysis. The sensitivity analysis results provide a range of
weight factors that can make a difference in the outcome of the final decision
making. Therefore, when a specific weight factor is an issue and it is significant to
the overall sustainability, sensitivity analysis can demonstrate ‘what-if’ scenarios by
applying different weight factors.
There are various approaches to sensitivity analysis. Changing the weight factors
used for WSM is considered as the most appropriate method for two reasons: 1)
weight factors can be decided by the subjective judgments of decision makers, which
may cause conflict between stakeholders; and 2) all previous assessment outcomes
(two modular results) can be treated as non-negotiable results in order to improve the
consistency of the model application. Two sensitivity analyses and the output data
are presented in the following sections.
The selected calculation process for the sensitivity analysis is based on changing a
weight factor, which is subject to the analysis. When a value of a weight factor is
changed by the sensitivity analysis, other weight factors are decreased or increased
by proportional changes of the weight factor. Then, these adjusted weight factors and
changed weight factor are multiplied by the normalised assessment results. The total
sum of the two weight factors is always equal to one (1). Proportional adjustments
for other weight factors are calculated by Equation 21.
152 Chapter 5: A Decision Support Model for Evaluating Highway Investment
𝑊𝑊𝑊𝑊𝑎𝑎𝑎𝑎𝑎𝑎 .𝑎𝑎 =
�𝑊𝑊𝑊𝑊𝑡𝑡ℎ𝑛𝑛𝑔𝑔 .𝑎𝑎 − 𝑊𝑊𝑊𝑊𝑎𝑎 ��1 −𝑊𝑊𝑊𝑊𝑎𝑎 �
×𝑊𝑊𝑊𝑊𝑎𝑎 (21)
where,
𝑊𝑊𝑊𝑊𝑎𝑎𝑎𝑎𝑎𝑎 .𝑎𝑎= adjusted other weight factors except sensitivity analysis weight
factor,
𝑊𝑊𝑊𝑊𝑡𝑡ℎ𝑛𝑛𝑔𝑔 .𝑎𝑎= changed weight factor of sensitivity analysis,
𝑊𝑊𝑊𝑊𝑎𝑎= originally given weight factor of sensitivity analysis, and
𝑊𝑊𝑊𝑊𝑎𝑎= original weight factors except sensitivity analysis weight factor.
5.7 Chapter Summary
This chapter provided a detailed methodology and illustration of the proposed
decision support model for long-term financial investments in highway
infrastructure. The preliminary model effectively assesses various aspects of cost
components related to sustainability measures. This also helps to enhance the
sustainability of the highway project. The model focuses on project level application
and assessing the relative sustainability of proposed alternatives in the feasibility
stage of the project development. Finally, it helps decision makers facing an
investment decision to select the most sustainable and the most financially viable
alternative for the project.
For development of the model, temporal and spatial boundaries of the model specify
the area and range of the assessment process. Ten (10) industry validated cost
components related to sustainable measures constituted the model. The model
provides two modules for the assessment process: (1) the Fuzzy Analytic Hierarchy
Process, and (2) life-cycle cost analysis. Each assessment module produces a
different attribute (criterion) of the result. Each criterion was considered as an
independent attribute. The weighted sum model, one of the methods of multi-criteria
decision making, is proposed for the final decision making process.
Chapter 5: A Decision Support Model for Evaluating Highway Investment 153
A preliminary model is designed to be applied regardless of the project size and type
in the area of highway infrastructure development. The model requires real world
scenario application and validation from senior decision makers in the industry. The
implementation, verification and validation of the model are reported through case
studies in the next chapter.
Chapter 6: Model Application Through Case Studies 155
CHAPTER 6: MODEL APPLICATION THROUGH CASE STUDIES
6.1 Introduction
Conclusions from the data explored in the previous chapters have highlighted the
need to improve current life-cycle cost analysis (LCCA) models so that practitioners
are able to deal with sustainability issues in highway infrastructure projects. The
improvements include:
• incorporating the industry verified sustainability-related cost components into
current LCCA models for highway infrastructure projects; and
• developing a benchmarking model to improve the long-term financial
investment decisions for highway infrastructure development.
To address these necessary improvements, Chapter 5 discussed the overall
development of the proposed model to deal with long-term financial decisions as
well as sustainability-related cost components. This chapter aims to answer the third
research question: How to assess the long-term financial viability of sustainability
measures in highway project? This can be achieved through application of the
preliminary model. The process included applying and validating the model in real
case projects. The links between the research objectives and research questions and
the process for testing and evaluating the model are set out in Figure 6.1.
The development of this model includes the combination of two methodologies,
namely the Fuzzy Analytical Hierarchy Process (Fuzzy AHP) method and life-cycle
costing analysis. Sustainability-related cost components that cannot be quantified
into real cost data were evaluated by the Fuzzy AHP method while LCCA was used
to analyse the real cost data that can be quantified in highway infrastructure projects.
To have a better understanding of this model application, two highway infrastructure
projects were employed. The industry stakeholders involved in the projects were
interviewed based on the case projects characteristics and needs.
156 Chapter 6: Model Application Through Case Studies
This chapter discusses application and validation of the model in handling long-term
financial decision support and sustainability benefits based on two highway
infrastructure projects. The chapter is divided into seven sections. Section 6.2
discusses the characteristics of Case Projects A (Wallaville Bridge) and B (Northam
4. Developing a decision support model
• Integrating the industry verified cost components with decision support model.
• Testing and evaluating the decision support model
4. Understanding cost implications of pursuing sustainability
• Understanding the global initiatives on sustainable infrastructure development
• Understanding the context of highway infrastructure development in Australia
• Reviewing current LCCA model and programs
• Identifying sustainability related cost components in highway infrastructure projects
What are the sustainability measures that have cost implications in highway projects?
Chapter 2
Literature Review
5. Identifying sustainability-related cost components that project stakeholders are concerned with:
• Exploring current practice of life-cycle cost analysis in Australian highway infrastructure
• Identifying critical sustainability-related cost components in highway infrastructure investments
• Integrating various stakeholders’ expectations of sustainability enhancement in LCCA
What are the specific cost components relating to sustainability measures about which highway project stakeholders feel most concerned?
Chapter 4
Cost Implications for Highway Sustainability
How to assess the long-term financial viability of sustainability measures in highway project?
Chapters 5 & 6
Decision Support Model Development
and Model Application
Chapter Research Objectives Research Questions
Figure 6.1: Approach to model application and overall research aim
Chapter 6: Model Application Through Case Studies 157
Bypass) in detail. It outlines the background, key milestones and major events of the
projects. The significance of these cases to the research project is further justified in
Section 6.3. Based on the real case projects, this research tests the proposed model as
well as evaluates these two projects in Sections 6.4 and 6.5. The application of the
Fuzzy AHP and LCCA is demonstrated. Section 6.6 validates the application of the
model. Industry stakeholders were interviewed to gather their comments and
opinions on improving the model. A summary of the findings is provided in Section
6.7.
6.2 Selection of the Case Study Projects
Both case study projects fulfilled the selection criteria, as set out earlier in the thesis
(Section 3.4.5.2). The background information about the projects has been sourced
from interviewee accounts, project documentations and government reports.
6.2.1 Case study A: Wallaville bridge
The Wallaville Bridge formed part of the Bruce Highway until it was replaced by the
Tim Fischer Bridge in July 1999 at a cost of $28.3m. The project involved
construction of a new 8.3 km section of the Bruce Highway at Wallaville, 40 km
southwest of Bundaberg, including a 307 metre bridge across the Burnett River and
two smaller bridges—240 metres and 95 metres long respectively—over the
floodway channels on the approach road network. The construction of the new bridge
started in December 1997, and replaced a narrow and poorly aligned bridge (located
5 km downstream from the new one) built during World War II and constructed at a
cost of $50,000 (Figure 6.2). The new 307 metre bridge was opened to the public for
use on 5 July 1999 under the name, Tim Fischer Bridge (Figure 6.3).
158 Chapter 6: Model Application Through Case Studies
Figure 6.2: Wallaville Bridge in flood (BTRE 2007a)
The replacement of the old bridge did not become a priority for the Federal
Government until a weir was proposed in the mid-1990s across the Burnett River, 11
km downstream of the old bridge. The traffic on the Wallaville Bridge section of the
Bruce Highway was less than 1800 vehicles per day in 1992. Although the old bridge
was a structure of between Q2 and Q3.51 with an average closure time of 52.3 hours
during floods, the availability of alternative route through Bundaberg meant that the
bridge upgrade was not regarded as a high priority project by the Department of
Transport at that time. The Walla Weir (now called Ned Churchward Weir) was
planned to be constructed in two stages, the first of which would increase the time of
closure due to flooding and the second of which would result in the inundation of the
old bridge. However, due to unexpectedly prolonged drought conditions, the planned
stage two construction of the weir did not occur. This meant that the old Wallaville
Bridge would not be inundated by higher water levels and would not be lost as a road
asset as originally expected.
Chapter 6: Model Application Through Case Studies 159
Figure 6.3: Tim Fischer Bridge (BTRE 2007a)
There would also be a cost penalty attributable to constructing across ponded water
after the weir was built. The new bridge has provided improved flood immunity,
safety and road alignment compared with the level crossing.
In November 1997, the Federal Government approved $24.4m for the construction.
6.2.2 Case study B: Northam bypass
Northam is a town on the Great Eastern Highway (GEH), approximately 97 km east
of Perth. Northam has a population of around 7000 and is a major service and
160 Chapter 6: Model Application Through Case Studies
administration centre for the Western Australia Central Wheat Belt Region. Prior to
the Northam Bypass being built, the GEH passed through the centre of the town with
heavy vehicles having to negotiate the main shopping area, including two railway
crossings, four right angle turns and many busy intersections. These vehicles
included B-Doubles and truck/trailer combinations up to 67.5 tonnes. The primary
aim of the bypass was to divert through-traffic away from the townsite, thus
overcoming the difficulties and dangers of heavy vehicles using the pre-existing
route through built-up areas as well as improving the safety and amenity of the major
streets of Northam.
The Northam Bypass involved construction of a new road approximately 14.9 km
long including eight bridges - 2 over rivers, 2 over railways and 4 over existing roads
(Figure 6.4). The bypass starts from the old GEH to the west of Northam near the
entrance to the Army camp. Passing north-east, it crosses the Northam-Toodyay
Road via an overpass north-west of the Colebatch Road intersection and follows an
alignment between the town wastewater treatment ponds and the cemetery. It is then
carried on a 230-metre bridge over the standard gauge railway line, Avon River and
Katrine Road. From Katrine Road, the bypass continues in a north-easterly direction,
passing over the Irishtown Road before heading east to cross over the Northam-
Pithara Road to the north of the airstrip. From the Northam-Pithara Road back to the
existing GEH, the bypass follows a south-easterly alignment, passing north of the
racecourse and a road train assembly area. The bypass route connects with the pre-
existing highway east of the Katrine Highway.
Chapter 6: Model Application Through Case Studies 161
Figure 6.4: Northam Bypass (BTRE 2007b)
The total budgeted cost for the project was estimated to be $47m (in 1998 prices) in
the Stage 3 Project Proposal Report. Australian Federal Government funding was
capped at $40m. The State Government was committed to bear any additional cost in
excess of $40m. The actual project cost was $49.4m (nominal).
The project commenced in January 2001 and was completed in May 2002.
6.3 Significance of the Case Projects
The case projects were selected based on the criteria as stated in Section 3.3.5.2.
They are significant because both cases have completed in around 8-15 years prior to
2010, so they have relevent data to carry out life-cycle costing anaylsis. The Bureau
of Transport and Regional Economics, Australia has evaluated both case projects
under the economic evaluation of the National Highway Project. This shows the
reliability of the information from both projects. Both projects were used to apply,
test and evaluate the proposed decision support model. Although the evaluation
provides some useful cost data, the complex nature and difficulties in both case
projects were thoroughly examined.
162 Chapter 6: Model Application Through Case Studies
6.4 Model Application in Case Study A - Wallaville Bridge
This case study illustrates the importance of three base case specifications when
there is interdependency between two projects: in this case, the Ned Churchward
Weir and the Tim Fischer Bridge. It also provides an example of how to undertake a
complex road closure/flooding plus diverting evaluation.
6.4.1 Project alternatives
According to the industry report, the case project considered three alternatives as
follows:
Alternative 1 (A1): This alternative assumed that the weir will be constructed stage
2 with a height of 21m. During construction of the new bridge,
the removal of the existing bridge would also commence.
Without access to the old Wallaville Bridge all Bruce Highway
traffic would divert to a longer route via Bundaberg,
Queensland. This base case can be defined as the ‘no bridge’
option.
Alternative 2 (A2): This alternative base case assumes stage 1 construction of the
weir as a certainty, with stage 2 construction of the weir
uncertain. Therefore, the old Wallaville Bridge would be open
for light vehicle traffic only until the stage 2 construction of the
weir or the end of the physical life of the old bridge (say 2010).
From this time all light vehicles would have to diver through
Bundaberg. All heavy vehicles would have to divert through
Bundaberg from the start of the evaluation period for safety
reasons. This base case can be defined as the 'bridge partially
open’ option.
Alternative 3, (A3): The old Wallaville Bridge remains open for the entire evaluation
period for all vehicles. A minimum capital expenditure of $5
million is required to ensure the serviceability of the old bridge
for highway traffic. This base case can be labelled as the 'bridge
open’ option.
Chapter 6: Model Application Through Case Studies 163
6.4.2 Fuzzy AHP for qualitative indicators
To create pairwise comparison matrices, a group of five stakeholders involved in this
project was interviewed. Then, the fuzzy evaluation matrix relevant to the goal was
obtained with the consensus of the stakeholders.
6.4.2.1 Evaluation of criteria weight
Some examples of decision makers’ answers in the form of linguistic expressions
about the importance of the sustainability-related cost components were given in
Appendix C2. The consistency of the pairwise comparison matrices were examined
and it was determined that all the matrices were consistent.
By applying formula (2) given in Step 1:
SACI = (3.0, 4.0, 5.0) ⊗�1
12.5,
19.33
,1
7.17�
= (0.24, 0.44, 0.70 )
𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 = (2.0, 2.67, 3.5) ⊗�1
12.5,
19.33
,1
7.17�
= (0.16, 0.29, 0.49 )
𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 = (2.17, 2.67, 4.0) ⊗�1
12.5,
19.33
,1
7.17�
= (0.17, 0.29, 0.56 ) are obtained.
164 Chapter 6: Model Application Through Case Studies
Using these vectors and formula (8), the following values are calculated:
𝑉𝑉 (𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 = 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆) = 1.00,𝑉𝑉 (𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = 1.00,𝑉𝑉 (𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = 1.00
𝑉𝑉 (𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 = 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆) = 1.00,𝑉𝑉 (𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆) = 0.64,𝑉𝑉 (𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆) = 0.69
Finally, by using formula (10), the following results are obtained:
𝑆𝑆′𝐴𝐴𝐶𝐶𝑆𝑆 = 𝑉𝑉(𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 ≥ 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 ,𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = min(1.00, 1.00)
= (1.00 )
𝑆𝑆′𝑆𝑆𝐶𝐶𝑆𝑆 = 𝑉𝑉(𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 ≥ 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 , 𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = min(0.64, 1.00)
= (0.64)
𝑆𝑆′𝐸𝐸𝐶𝐶𝑆𝑆 = 𝑉𝑉(𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 ≥ 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 , 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆) = min(0.69, 1.00)
= (0.69 )
Therefore, the weight vector is calculated as W′ = (1.00, 0.63, 0.69)T . After
normalisation, the normalised weight vectors of objective with respect to the cost
components criteria ACI, SCI and ECI from Table 6.1 are obtained as WObjective =
(0.43, 0.27, 0.30)T. According to the answers by the decision makers, it is concluded
Chapter 6: Model Application Through Case Studies 165
that the agency and environmental category are more important than the social
category in this project.
Table 6.1: The fuzzy evaluation matrix with respect to the goal
ACI SCI ECI
Agency category (1,1,1) (1, 3/2, 2) (1, 3/2, 2)
Social category (1/2, 2/3, 1) (1,1,1) (1/2,1,3/2)
Environmental category (1/2, 2/3, 1) (2/3,1,2) (1,1,1)
Table 6.2: The relative importance of agency cost components
MC PEC MMC RC
Material costs (1,1,1) (1, 3/2, 2) (3/2, 2, 5/2) (1, 3/2, 2)
Plant and equipment costs (1/2, 2/3,1) (1,1,1) (1, 3/2, 2) (1/2, 1, 3/2)
Major maintenance costs (2/5, 1/2, 2/3) (1/2, 2/3, 1) (1,1,1) (1/2, 1, 3/2)
Rehabilitation costs (1/2, 2/3, 1) (2/3, 1, 2) (2/3, 1, 2) (1,1,1)
Table 6.3: The relative importance of social cost components
RA-IC RA-EVD
Road accident- internal costs (1,1,1) (1, 3/2, 2)
Road accident- economic value of damage (1/2, 2/3, 1) (1,1,1)
Table 6.4: The relative importance of environmental cost components
HI LW DMC CB
Hydrological impacts (1,1,1) (1, 3/2, 2) (1/2, 1, 3/2) (3/2, 2, 5/2)
Loss of wetland (1/2, 2/3, 1) (1,1,1) (1/2, 1, 3/2) (1, 3/2, 2)
Cost of barriers (2/3, 1, 2) (2/3, 1, 2) (1,1,1) (1, 3/2, 2)
Disposal of material costs (2/5, 1/2, 2/3) (1/2, 2/3, 1) (1/2, 2/3, 1) (1,1,1)
From Table 6.2, the weight vectors were calculated as SMC = (0.19, 0.35, 0.59) ,
SPEC = (0.13, 0.25, 0.43) , SMMC = (0.10, 0.19, 0.33) , SRC = (0.12, 0.22, 0.47) ,
V (SMC ≥ SPEC ) = 1.00, V (SMC ≥ SMMC ) = 1.00 , V (SMC ≥ SRC ) = 1.00 ,
V (SPEC ≥ SMC ) = 0.69 , V (SPEC ≥ SMMC ) = 1.00 , V (SPEC ≥ SRC ) = 1.00 ,
166 Chapter 6: Model Application Through Case Studies
V (SMMC ≥ SMC ) = 0.44 , V (SMMC ≥ SPEC ) = 0.77 , V (SMMC ≥ SRC ) = 0.87,
V (SRC ≥ SMC ) = 0.67 , V (SRC ≥ SPEC ) = 0.92 , V (SRC ≥ SMMC ) = 1.00. Then the
normalised weight vector from Table 6.2 is calculated as
WACI = (0.36, 0.25, 0.16, 0.24). Based on these results, it is concluded that in the
agency cost components, the material, plant and equipment and rehabilitation costs
appear to be more important than the rehabilitation costs in highway investment
decisions. The other two matrices relevant to pairwise comparisons of the sub-
criteria of social and environmental cost components and the relative importance of
each matrix are given in Table 6.3 and Table 6.4, respectively.
The normalised weight vector from Table 6.3 is calculated as WSCI = (0.68, 0.32)T .
It is observed that for the social cost components in highway infrastructure, road
accident- internal costs play a much more important role than other criteria.
The normalised weight vector from Table 6.4 is calculated as
WECI = (0.33, 0.25, 0.14, 0.28)T . From this result it is deduced that the most
important criteria for the environmental cost components in highway investment
decisions in this project are hydrological impacts, disposal of material costs and loss
of wetland. Table 6.5 presents the composite priority weights obtained by the
evaluation of the significance of sustainability-related cost components in highway
infrastructure investments with respect to the main criteria and sub-criteria.
6.4.2.2 Evaluation of alternatives
In the following step of the evaluation procedure, the alternatives in the case project
were compared based on three main highway bridge design alternatives with respect
to each of the sub-criteria separately. These results in the matrices are shown in
Tables 6.6 to 6.15. Alternative 1 except for three sub-criteria with respect to major
maintenance costs, rehabilitation costs and hydrological impacts, shows a good
performance in terms of all criteria. Alternative 3 is the weakest except for the three
sub-criteria in which it shows the highest performance level. This means that
industry stakeholders in this project consider the Alternatives 1 and 2 as being more
satisfactory than Alternative 3 in considering long-term highway infrastructure
sustainability.
Chapter 6: Model Application Through Case Studies 167
Table 6.5: Composite priority weights for sustainability-related cost components
evaluation criteria
Main Criteria Local weights
Sub-criteria Local weights
Agency category 0.43 Material costs 0.36
Plant and equipment costs 0.25
Major maintenance costs 0.16
Rehabilitation costs 0.24
Social category 0.27 Road accident- internal costs 0.68
Road accident- economic value of damage 0.32
Environmental category
0.30 Hydrological impacts 0.33
Loss of wetland 0.25
Cost of barriers 0.14
Disposal of material costs 0.28
Table 6.6: Evaluation of the alternatives with respect to material costs
A1 A2 A3 WMC
Alternative 1 (1,1,1) (1,3/2,2) (2,5/2,3) 0.60
Alternative 2 (1/2,2/3,1) (1,1,1) (3/2,2,5/2) 0.37
Alternative 3 (1/3,2/5,1/2) (2/5,1/2,2/3) (1,1,1) 0.04
Table 6.7: Evaluation of the alternatives with respect to plant and equipment costs
A1 A2 A3 WPEC
Alternative 1 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.52
Alternative 2 (1/2,2/3,1) (1,1,1) (3/2,2,5/2) 0.39
Alternative 3 (2/5,1/2,2/3) (2/5,1/2,2/3) (1,1,1) 0.08
Table 6.8: Evaluation of the alternatives with respect to major maintenance costs
A1 A2 A3 WMMC
Alternative 1 (1,1,1) (2/5,1/2,2/3) (2/5,1/2,2/3) 0.12
Alternative 2 (3/2,2,5/2) (1,1,1) (2/5,1/2,2/3) 0.30
Alternative 3 (3/2,2,5/2) (3/2,2,5/2) (1,1,1) 0.58
168 Chapter 6: Model Application Through Case Studies
Table 6.9: Evaluation of the alternatives with respect to rehabilitation costs
A1 A2 A3 WRC
Alternative 1 (1,1,1) (2/5,1/2,2/3) (1/3,2/5,1/2) 0.04
Alternative 2 (3/2,2,5/2) (1,1,1) (1/2,2/3,1) 0.37
Alternative 3 (2,5/2,3) (1,3/2,2) (1,1,1) 0.60
Table 6.10: Evaluation of the alternatives with respect to road accident- internal costs
A1 A2 A3 WRA-IC
Alternative 1 (1,1,1) (1,3/2,2) (1,3/2,2) 0.46
Alternative 2 (1/2,2/3,1) (1,1,1) (3/2,2,5/2) 0.42
Alternative 3 (1/2,2/3,1) (2/5,1/2,2/3) (1,1,1) 0.12
Table 6.11: Evaluation of the alternatives with respect to road accident- economic value of damage
A1 A2 A3 WRA-EVD
Alternative 1 (1,1,1) (1/2,2/3,1) (1,3/2,2) 0.35
Alternative 2 (1,3/2,2) (1,1,1) (1,3/2,2) 0.47
Alternative 3 (1/2,2/3,1) (1/2,2/3,1) (1,1,1) 0.18
Table 6.12: Evaluation of the alternatives with respect to hydrological impacts
A1 A2 A3 WHI
Alternative 1 (1,1,1) (1/2,2/3,1) (1/3,2/5,1/2) 0.30
Alternative 2 (1,3/2,2) (1,1,1) (2/5,1/2,2/3) 0.14
Alternative 3 (2,5/2,3) (3/2,2,5/2) (1,1,1) 0.55
Table 6.13: Evaluation of the alternatives with respect to loss of wetland
A1 A2 A3 WLW
Alternative 1 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.56
Alternative 2 (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.34
Alternative 3 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.09
Chapter 6: Model Application Through Case Studies 169
Table 6.14: Evaluation of the alternatives with respect to cost of barriers
A1 A2 A3 WCB
Alternative 1 (1,1,1) (1,3/2,2) (1/2,1,3/2) 0.38
Alternative 2 (1/2,2/3,1) (1,1,1) (1/2,1,3/2) 0.28
Alternative 3 (2/3,1,2) (2/3,1,2) (1,1,1) 0.34
Table 6.15: Evaluation of the alternatives with respect to disposal of material costs
A1 A2 A3 WDMC
Alternative 1 (1,1,1) (3/2,2,5/2) (1,3/2,2) 0.55
Alternative 2 (2/5,1/2,2/3) (1,1,1) (1,3/2,2) 0.29
Alternative 3 (1/2,2/3,1) (1/2,2/3,1) (1,1,1) 0.16
6.4.2.3 Final scores of alternatives
In Tables 6.16 to 6.19, this research presents the last computations in order to obtain
the alternative priority weights of alternatives. This is done by gathering the weights
over the hierarchy for each alternative. To achieve this, the weights of each criterion
are multiplied to a decision alternative, and then those results are summed up over all
the different pathways to that decision alternative. By combining the weights for the
sub-criteria and alternatives, the priority weight of each alternative is calculated in
(Büyüközkan et al. 2004). The final score results can be ascertained from the final
priority weights presented in Table 6.19.
Table 6.16: Priority weights of the alternatives with respect to agency aspects
MC PEC MMC RC Alternative Priority Weights
Weights 0.36 0.25 0.16 0.24
Alternative 1 0.60 0.52 0.12 0.04 0.37
Alternative 2 0.37 0.39 0.30 0.37 0.36
Alternative 3 0.04 0.08 0.58 0.60 0.27
170 Chapter 6: Model Application Through Case Studies
Table 6.17: Priority weights of the alternatives with respect to social aspects
RA-IC RA-EVD Alternative Priority Weights
Weights 0.68 0.32
Alternative 1 0.46 0.35 0.43
Alternative 2 0.42 0.47 0.43
Alternative 3 0.12 0.18 0.14
Table 6.18: Priority weights of the alternatives with respect to environmental aspects
HI LW CB DMC Alternative Priority Weights
Weights 0.33 0.28 0.14 0.28
Alternative 1 0.30 0.56 0.38 0.55 0.45
Alternative 2 0.14 0.34 0.28 0.29 0.25
Alternative 3 0.55 0.09 0.34 0.16 0.30
Table 6.19: Final scores of the alternatives
ACI SCI ECI Alternative Priority Weights
Weights 0.43 0.27 0.30
Alternative 1 0.37 0.43 0.36 0.41
Alternative 2 0.36 0.43 0.22 0.35
Alternative 3 0.27 0.14 0.14 0.24
The main result is that Alternatives 1 and 2 are the preferred key decisions. It appears
all stakeholders would agree that these cost components are important in this
highway infrastructure investment. Moreover, based on the final scores in Table
6.19, it can also be concluded that Alternative 3 has a relatively low score in overall
design alternatives based on the sub-criteria. In order to have more holistic results in
terms of financial benefit, the next section discusses the life-cycle cost calculation
and selects the most economical alternative.
Chapter 6: Model Application Through Case Studies 171
6.4.3 LCCA calculation for quantitative indicators
Five available cost components, including construction, materials, major
maintenance, rehabilitation and road accident costs, are estimated using the LCCA
process. This process treats these costs as resources of a highway infrastructure
structure. The magnitude of the required amount of the costs represents the economic
efficiency of a project development. Assuming that all future costs and temporal
intervals for maintenance, operation, and rehabilitation are equivalent, the future
costs are significant enough to enable relative comparisons to be made in this case
study. There are three alternatives to be compared. The future opportunity costs were
evaluated and acquired from various sources such as industry published reports and
project reports. However, the costs of the construction method and material are
significantly variable depending on specific project requirements, complexity of the
project, capability of the contractor, market conditions, and all other unexpected
risks. Therefore, the reasonable judgment of the decision maker is required to make a
sensible comparison of these cost items.
As shown in Table 6.20, the deterministic LCCA computes three alternatives project
strategies. The discount rate used in this analysis is 4 percent, and a 28-year analysis
period is used.
Table 6.20: Determination of activity timing
Year Alt. 1 Alt. 2 Alt. 3 0 Initial Construction Initial Construction Major Maintenance 12 Maintenance costs for
12 years (per annum) Maintenance costs for 12 years (per annum)
20 Major rehabilitation 8 years annual maintenance, Stage 2 Construction
5 years annual maintenance, Major rehabilitation
28 End-of-life of existing bridge and new construction needed
35 End of Analysis Period
Alternative 1 is characterised by few construction and rehabilitation activities
compared to Alternatives 2 and 3, but the activities require more extensive and costs
compared to the others. Alternative 2 requires two stages of construction and requires
172 Chapter 6: Model Application Through Case Studies
more frequent use of rehabilitation activities to maintain the service level of the
highway infrastructure compared to Alternative 1. Meanwhile, in Alternative 3, there
is no initial construction but several huge maintenance and rehabilitation activities
are needed to maintain the services of the existing highway infrastructure compared
to Alternatives 1 and 2.
The expenditure on maintenance activities is necessary to keep old Wallaville Bridge
open. Maintenance costs are estimated in short-, medium- and long-term options, as
shown in Table 6.21. The estimated costs for providing services to local traffic
ranged from $36,000 to $231,000 depending on how long the bridge would remain in
service.
Table 6.21: Estimated expenditures to keep old bridge open
Items Maintenance Costs ($) Short
term
(2 years)
Medium term
(7 years)
Medium- long term
(15 years)
Long term
(20 years)
Guardrail repair/ replacement 20,000 20,000 20,000 20,000 Alkali- aggregate reaction monitoring
16,000 56,000 70,000 79,000
Ongoing maintenance 26,000 42,000 Fixed joint repairs 4,000 4,000 4,000 Expansion joint repairs 6,000 6,000 6,000 Replacement of superstructure elements
80,000
Total 36,000 86,000 126,000 231,000
Agency and social costs for each activity are in constant, base year dollars. Social
costs are based upon average accident costs. Costs to year 28 reflect the value of the
remaining service life for each alternative in that year. Based on the data reported in
Table 6.22 and Table 6.23, due to the uncertain life span of the existing bridge for
Alternative 3, the bridge was assumed to reach the end of life at year 28. During that
stage, construction costs were three times higher based on the existing capital costs
of Alternative 1. This value was calculated based on the future value with the
consideration of 4% interest. As a result, the value for construction costs was turned
out to be $73,168,361.
Chapter 6: Model Application Through Case Studies 173
Table 6.22: Costs of agency and social category
Cost Items Alt. 1 Alt. 2 Alt. 3 Capital costs ($’000) 24,400 18,090 5000 Maintenance cost ($’000 per annum) 52 52 52 Additional expenditure for old bridge open N/A 126,000 231,000 Salvage value ($’000) N/A 500 500 Average accident cost ($) 64,000 64,000 64,000
Table 6.23: Computation of expenditure by years
Year Alt. 1 Alt. 2 Alt. 3 0 24,400,000 18,090,000 5,000,000 12 624,000 624,000 20 231,000 18,321,000 5,231,000 28 73,168,361
End of Analysis Period
Using the discount factor, with the interest rate of 4%, the present value is calculated
using Equation 15, for each of the agency and social costs. Based on the results
shown in Table 6.24, Alternative 1 has the lowest combined agency and social costs,
where as Alternative 2 has the lower initial construction. However, Alternative 3 has
no initial construction costs but more construction costs are needed in year 28.
Table 6.24: Computation of life-cycle cost analysis
Year Discount Factor Alt. 1 ($) Alt. 2 ($) Alt. 3 ($)
0 1.0000 24,400,000 18,090,000 5,000,000
12 0.6246 0 389,749 389,749
20 0.4564 57,505 8,361,465 2,387,360
28 0.3335 0 0 24,400,000
End of Analysis Period
Total Cost (PV) 24,457,505 26,841,214 32,177,109
Based on the information alone, the decision makers could lean toward either
Alternative 1 (based on overall costs) or Alternative 2 (due to its lower initial
construction costs). Alternative 3 turns out to be the worse choice as more overall
cost is needed at year 28. However, more analysis might improve the accuracy of the
decision. The following section explains in detail the weighted sum model (WSM) to
combine both results generated from Fuzzy AHP and LCCA.
174 Chapter 6: Model Application Through Case Studies
6.4.4 Final decision making
The weight sum model is used to obtain final the decision. The summary of the two
modular results are presented in Table 6.25. The WSM process is based on higher
value preferred normalised results. The weight factors were calculated based on
Equation 19.
Table 6.25: Summary of sustainability assessment results
Items Alt 1 Alt.2 Alt.3 Fuzzy AHP 0.41 0.35 0.24 LCCA Calculation ($) 24,457,505 26,841,214 32,177,109
Table 6.26 presents the summary of the normalised two modular results. The sum of
each row is equal to one and the total sum of all values is equal to the number of
modular results. The relative importance of each result is expressed in weight factors
for WSM as shown in Table 6.27 and Figure 6.5. The summation of each column
yields prioritisation of sustainability and long-term financial assessment by selecting
a particular alternative. In this case, Alternative 1 was selected as the main priority
compared to the other two alternatives in this project.
Table 6.26: Summary of normalised sustainability assessment result
Assessment Items Alt. I Alt. II Alt. III Total Fuzzy AHP 0.409 0.350 0.241 1.000
LCCA 0.591 0.409 0.000 1.000 Total 1.000 0.758 0.241 2.000
Table 6.27: Weight factors for normalised sustainability assessment results and final
prioritisation
Assessment Items Weight Factor Alt. I Alt. II Alt. III Fuzzy AHP 0.5 0.204 0.175 0.121
LCCA 0.5 0.296 0.204 0.000 Total 1 0.500 0.379 0.121
Prioritisation
1 2 3
Chapter 6: Model Application Through Case Studies 175
Figure 6.5: Final decision making by WSM
6.4.5 Sensitivity analysis
Sensitivity analysis serves to verify the weakness of final result reversion by
changing the weight factors of WSM. The selected calculation process for the
sensitivity analysis is based on changing a weight factor, which is subject to the
analysis. When a value of a weight factor is changed by the sensitivity analysis, other
weight factors are decreased or increased by proportional changes of the weight
factor. Then, these adjusted weight factors and changed weight factor are multiplied
by the normalised assessment results. The total sum of the two weight factors is
always equal to one. Proportional adjustments for other weight factors are calculated
by Equation 21.
6.4.5.1 Sensitivity analysis for Fuzzy AHP
Weight factors for AHP raging from 0.1 to 0.9 are applied to perform sensitivity
analysis, as shown in Table 6.28. The sensitivity analysis result shows that there is a
reversion of the decision making by changing the weight factor of Fuzzy AHP which
is originally 0.5. As indicated in Figure 6.6, the gap between the three alternatives
reduces as the Fuzzy AHP weight factor increases. In conclusion, there is a
possibility to change the final decision making by increasing or decreasing the
significance of the Fuzzy AHP. However, for this analysis, it is shown that any
00.10.20.30.40.50.60.70.80.9
1
AHP Cost Total
WF Alt. I Alt. II Alt. III
176 Chapter 6: Model Application Through Case Studies
changes in the Fuzzy AHP weight factors cannot possibly reverse the most
sustainable alternative selection, which is Alternative 1.
Table 6.28: Changes in prioritisation value by changing the Fuzzy AHP weight factors
Fuzzy AHP Weight Changes Alt. I Alt. II Alt. III 0.1 0.57 0.40 0.02 0.2 0.56 0.40 0.05 0.3 0.54 0.39 0.07 0.4 0.52 0.39 0.10 0.5 0.50 0.38 0.12 0.6 0.48 0.37 0.15 0.7 0.46 0.37 0.17 0.8 0.45 0.36 0.19 0.9 0.43 0.36 0.22
Figure 6.6: Sensitivity analysis for Fuzzy AHP weight factor changes
6.4.5.2 Sensitivity analysis for LCCA
Weight factors for life-cycle cost analysis, ranging from 0.1 to 0.9, are applied to
perform sensitivity analysis as shown in Table 6.29. The sensitivity analysis result
0.01
0.11
0.21
0.31
0.41
0.51
0.61
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
Fina
l Res
ult C
hang
es
Fuzzy AHP Weight Factor ChangesAlt. I Alt. II Alt. III
Chapter 6: Model Application Through Case Studies 177
shows that there is no reversion of the decision-making by changing the weight
factor of the life-cycle cost component, which is originally 0.5. As indicated in
Figure 6.7, the gap between the three alternatives is getting wider as the LCC weight
factor increases. As a result, there is no possibility to change the final decision by
increasing or decreasing the significance of LCC impacts in this case study.
Therefore, any potential disagreement between industry stakeholders regarding to the
LCC is unlikely.
The model application in Case A has drawn several achievements and
recommendations that should be considered by the researcher. The summary of the
model application is further explained in Section 6.6.
Table 6.29: Changes in prioritisation value by changing the LCC weight factors
LCC Weight Changes Alt. I Alt. II Alt. III 0.1 0.43 0.36 0.22 0.2 0.45 0.36 0.19 0.3 0.46 0.37 0.17 0.4 0.48 0.37 0.15 0.5 0.50 0.38 0.12 0.6 0.52 0.39 0.10 0.7 0.54 0.39 0.07 0.8 0.56 0.40 0.05 0.9 0.57 0.40 0.02
178 Chapter 6: Model Application Through Case Studies
Figure 6.7: Sensitivity analysis for LCCA weight factor changes
6.5 Model Application in Case Study B - Northam Bypass
The Great Eastern Highway presently runs through the town of Northam (Figure
6.8). This current alignment has inherent problems for local traffic in terms of
congestion and the frequency of accidents. Further problems include noise and visual
pollution caused by traffic, particularly heavy vehicles. To alleviate these problems,
three different alignments and alternatives around the town have been proposed.
0.01
0.11
0.21
0.31
0.41
0.51
0.61
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
Fina
l Res
ult C
hang
es
LCCA Weight Factor Changes
Alt. I Alt. II Alt. III
Chapter 6: Model Application Through Case Studies 179
Figure 6.8: Alternative alignment options of Northam Bypass (EPA 1993)
6.5.1 Project alternatives
According to the project report, three alternatives were considered in the case
project:
• Route 9 (R9): after the common staring point, Route 9 traverses an area
through rural farming land requiring bridges over the railway, Avon River,
Katrine Road and Irishtown Road. Route 9 then passes over the Northam-
Pithara Road, behind the Doctors Hill locality and to the north of the
Northam racecourse to finally link up with the existing Great Eastern
Highway. In 1993 terms, the Route 9 alignment would cost approximately
$32 million to construct. Main Roads propose to construct the bypass in two
stages. Stage 1 will involve the construction of a single carriageway with land
acquisitions and road reserves capable of eventually accommodating the
second (stage 2) carriageway. Overall, the final dual carriageway bypass
including median strip and road reserve will be approximately 33 metres
wide, with its length dependent upon the chosen alternative route.
• Route 6 (R6): from the common starting point (88.9 km from Perth) this route
then traverses the railway line and Avon River requiring bridges for both
180 Chapter 6: Model Application Through Case Studies
crossings. The alignment then continues along the northern bank of the Avon
for approximately 2 kilometres, passing the Northam Cemetery and then
through the Doctors Hill locality. The Doctors Hill portion of this route
requires extensive cut and fill to achieve required gradients and some noise
minimisation. Finally, Route 6 crosses the Mortlock River and another
railway line before running behind the Northam Racecourse and linking up
with the existing Great Eastern Highway. In 1993 terms, the Route 6
alignment would cost approximately $38 million to construct.
• Route 6A (R6A): after the common staring point Route 6A crosses the
railway line and Avon River then continues in a wide arc around the Northam
Cemetery requiring some degree of cut and fill. The route then continues in
an easterly direction and travels along the northern bank of the A von until it
links up with the same alignment as Route 6 to eventually re-join the existing
Great Eastern Highway. In 1993 terms, the Route 6A alignment would cost
just over $40 million to construct.
6.5.2 Fuzzy AHP for qualitative indicators
To create pairwise comparison matrices, a group of five stakeholders involved in this
project was interviewed. Then, the fuzzy evaluation matrix relevant to the goal was
obtained with the consensus of the stakeholders.
6.5.2.1 Evaluation of criteria weight
As set out earlier in Section 6.4.2.1, the decision makers in this project commented in
the form of linguistic expressions about the importance of the sustainability-related
cost components in highway infrastructure (Appendix C2). The consistency of the
pairwise comparison matrices were examined and it was determined that all the
matrices were consistent. By applying formula (2), (8) and (10), the weight vector is
calculated as W′ = (1.00, 0.63, 0.69)T . After normalisation, the normalised weight
vectors of the objective with respect to the cost component criteria ACI, SCI and ECI
from Table 6.30 are obtained as WObjective = (0.43, 0.27, 0.30)T .
Chapter 6: Model Application Through Case Studies 181
The answers from the decision makers indicate that the agency and environmental
categories are more important than the social category in long-term financial
management for highway infrastructure investment. As a consequence, the
consideration of agency and environmental categories can result in much greater
efficiency for highway infrastructure investment decisions. In a similar pattern, the
sub-criteria with respect to the main criteria are compared, beginning with, the sub-
criteria of agency cost components. Table 6.31 presents the results for the relative
importance of agency cost components in sub-criteria.
The normalised weight vectors for Table 6.31 are calculated based on formula (2),
(8) and (10) as shown in Section 5.3.2 and the results are shown as WACI =
(0.29, 0.25, 0.25, 0.21). From these results, it is concluded that agency cost
components such as the material, plant and equipment, and major maintenance costs
appear to be more important than the rehabilitation costs in highway investment
decisions. The other two matrices relevant to pairwise comparisons of the sub-
criteria of social and environmental cost components and, the relative importance of
each matrix are given in Table 6.32 and Table 6.33, respectively.
182 Chapter 6: Model Application Through Case Studies
Table 6.30: The fuzzy evaluation matrix with respect to the goal
ACI SCI ECI
Agency category (1,1,1) (1, 3/2, 2) (1, 3/2, 2)
Social category (1/2, 2/3, 1) (1,1,1) (1/2,1,3/2)
Environmental category (1/2, 2/3, 1) (2/3,1,2) (1,1,1)
Table 6.31: The relative importance of agency cost components
MC PEC MMC RC
Material costs (1,1,1) (1/2, 1, 3/2) (1, 3/2, 2) (1, 3/2, 2)
Plant and equipment costs (2/3, 1, 2) (1,1,1) (1/2, 1, 3/2) (1/2, 1, 3/2)
Major maintenance costs (1/2, 2/3, 1) (2/3, 1, 2) (1,1,1) (1, 3/2, 2)
Rehabilitation costs (1/2, 2/3, 1) (2/3, 1, 2) (1/2, 2/3, 1) (1,1,1)
Table 6.32: The relative importance of social cost components
RA-IC RA-EVD
Road accident- internal costs (1,1,1) (1, 3/2, 2)
Road accident- economic value of damage (1/2, 2/3, 1) (1,1,1)
Table 6.33: The relative importance of environmental cost components
HI LW CB DMC
Hydrological impacts (1,1,1) (1/2, 1, 3/2) (3/2, 2, 5/2) (1, 3/2, 2)
Loss of wetland (2/3, 1, 2) (1,1,1) (3/2, 2, 5/2) (1, 3/2, 2)
Cost of barriers (2/5, 1/2, 2/3) (2/5, 1/2, 2/3) (1,1,1) (2/5, 1/2, 2/3)
Disposal of material costs (1/2, 2/3, 1) (1/2, 2/3, 1) (3/2, 2, 5/2) (1,1,1)
The normalised weight vector from Table 6.32 is calculated as 𝑊𝑊𝑆𝑆𝐶𝐶𝑆𝑆 = (0.68, 0.32)𝑇𝑇 .
It is observed that the social cost components, namely road accident - internal costs,
play a much more important role than road accident - economic value of damage.
Chapter 6: Model Application Through Case Studies 183
The normalised weight vectors from Table 6.33 are calculated as WECI =
(0.34, 0.34, 0.26, 0.06)T. From this result, it is deduced that the most important
criteria for this project base on the environmental cost components in highway
investment decisions are hydrological impacts and loss of wetland. Table 6.34
presents the composite priority weights obtained by the evaluation of the significance
of sustainability-related cost components in highway infrastructure investments with
respect to the main criteria and sub-criteria.
6.5.2.2 Evaluation of alternatives
In the following step of the evaluation procedure, the alternatives in the case projects
were compared based on three main highway bridge design alternatives with respect
to each of the sub-criteria separately. The results in the matrices are shown in Tables
6.35 to 6.44. Route 9 shows a good performance in terms of all criteria. Route 6 is
the weakest among the three alternatives except for rehabilitation costs and cost of
barriers in which it shows a higher performance level compared to Route 6A. This
means that industry stakeholders in this project consider the Route 9 option to be
satisfactory than Route 6A and Route 6 in long-term financial management for
highway infrastructure taking into account the sustainability objectives.
Table 6.34: Composite priority weights for sustainability-related cost components evaluation criteria
Main Criteria Local Weights
Sub-Criteria Local Weights
Agency category 0.43 Material costs 0.29
Plant and equipment costs 0.25
Major maintenance costs 0.25
Rehabilitation costs 0.21
Social category 0.27 Road accident- internal costs 0.68
Road accident- economic value of damage 0.32
Environmental category
0.30 Hydrological impacts 0.34
Loss of wetland 0.34
Cost of barriers 0.26
Disposal of material costs 0.06
184 Chapter 6: Model Application Through Case Studies
Table 6.35: Evaluation of the alternatives with respect to material costs
R9 R6A R6 WMC
Route 9 (1,1,1) (3/2,2,5/2) (3/2,2,5/2) 0.51
Route 6A (2/5,1/2,2/3) (1,1,1) (1/2,2/3,1) 0.31
Route 6 (2/5,1/2,2/3) (1,3/2,2) (1,1,1) 0.19
Table 6.36: Evaluation of the alternatives with respect to plant and equipment costs
Table 6.37: Evaluation of the alternatives with respect to major maintenance costs
Table 6.38: Evaluation of the alternatives with respect to rehabilitation costs
R9 R6A R6 WRC
Route 9 (1,1,1) (1,3/2,2) (1,3/2,2) 0.45
Route 6A (1/2,2/3,1) (1,1,1) (1/2,1,3/2) 0.26
Route 6 (1/2,2/3,1) (2/3,1,2) (1,1,1) 0.29
Table 6.39: Evaluation of the alternatives with respect to road accident- internal costs
R9 R6A R6 WRA-IC
Route 9 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.60
Route 6A (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.35
Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.05
R9 R6A R6 WPEC
Route 9 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.58
Route 6A (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.35
Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.08
R9 R6A R6 WMMC
Route 9 (1,1,1) (1,3/2,2) (1/2,1,3/2) 0.38
Route 6A (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.34
Route 6 (2/3,1,2) (1/2,2/3,1) (1,1,1) 0.29
Chapter 6: Model Application Through Case Studies 185
Table 6.40: Evaluation of the alternatives with respect to road accident- economic
value of damage
R9 R6A R6 WRA-EVD
Route 9 (1,1,1) (1,3/2,2) (1,3/2,2) 0.47
Route 6A (1/2,2/3,1) (1,1,1) (1/2,2/3,1) 0.18
Route 6 (1/2,2/3,1) (1,3/2,2) (1,1,1) 0.35
Table 6.41: Evaluation of the alternatives with respect to hydrological impacts
R9 R6A R6 WHI
Route 9 (1,1,1) (3/2,2,5/2) (3/2,2,5/2) 0.71
Route 6A (2/5,1/2,2/3) (1,1,1) (1,3/2,2) 0.28
Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.02
Table 6.42: Evaluation of the alternatives with respect to loss of wetland
R9 R6A R6 WLW
Route 9 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.71
Route 6A (2/5,1/2,2/3) (1,1,1) (1,3/2,2) 0.28
Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.02
Table 6.43: Evaluation of the alternatives with respect to cost of barrier
R9 R6A R6 WCB
Route 9 (1,1,1) (2,5/2,3) (3/2,2,5/2) 0.80
Route 6A (1/3,2/5,1/2) (1,1,1) (1/2,1,3/2) 0.02
Route 6 (2/5,1/2,2/3) (2/3,1,2) (1,1,1) 0.18
Table 6.44: Evaluation of the alternatives with respect to disposal of material costs
R9 R6A R6 WDMC
Route 9 (1,1,1) (1,3/2,2) (1,3/2,2) 0.55
Route 6A (1/2,2/3,1) (1,1,1) (1/2,1,3/2) 0.29
Route 6 (1/2,2/3,1) (2/3,1,2) (1,1,1) 0.16
186 Chapter 6: Model Application Through Case Studies
6.5.2.3 Final scores of alternatives
Tables 6.45 to 6.48 present the last computations to obtain the priority weights of
these project alternatives. This is accomplished by aggregating the weights over the
hierarchy for each decision alternative. The evaluation process are similar as
discussed in Section 6.4.2.3. These weight values represent the overall score result,
as shown in Table 6.48.
Table 6.45: Priority weights of the alternatives with respect to agency aspects
MC PEC MMC RC Alternative Priority Weights
Weights 0.29 0.25 0.25 0.21
Route 9 0.51 0.58 0.38 0.45 0.48
Route 6A 0.31 0.34 0.34 0.26 0.31
Route 6 0.19 0.08 0.29 0.29 0.21
Table 6.46: Priority weights of the alternatives with respect to social aspects
RA-IC RA-EVD Alternative Priority Weights
Weights 0.68 0.32
Route 9 0.60 0.47 0.56
Route 6A 0.35 0.18 0.30
Route 6 0.05 0.35 0.14
Table 6.47: Priority weights of the alternatives with respect to environmental aspects
HI LW CB DMC Alternative Priority Weights
Weights 0.34 0.34 0. 26 0.06
Route 9 0.71 0.71 0.80 0.45 0.72
Route 6A 0.28 0.28 0.02 0.26 0.21
Route 6 0.01 0.01 0.18 0.29 0.07
Chapter 6: Model Application Through Case Studies 187
Table 6.48: Final scores of the alternatives
ACI SCI ECI Alternative Priority Weights
Weights 0.43 0.27 0.30
Route 9 0.48 0.56 0.63 0.57 Route 6A 0.31 0.30 0.17 0.28 Route 6 0.21 0.14 0.14 0.15
Route 9 is the preferred option in this project, and all stakeholders agreed that the
cost components in this option are important in this highway infrastructure
investment. It also concluded that the Route 6 option has a relatively low score in
overall design alternatives based on the sub-criteria. The next section discusses the
real cost calculation and select the most economical option to generate a more
holistic result in terms of financial benefit.
6.5.3 LCCA calculation for quantitative indicators
Three available cost items, including construction, maintenance and rehabilitation
costs, are estimated for the LCCA cost estimation process. Construction costs are
acquired from current industry reports such as the survey from bid schedules and
published reports. Maintenance and rehabilitation costs are based on the construction
cost references and expert interviews. The LCCA cost estimation process treats costs
as resources of a highway infrastructure. Assuming that all future costs and temporal
intervals for maintenance, operation and rehabilitation are equivalent, the future costs
are significant enough to enable relative comparisons in this case study. There are
three alternatives (Route 9, Route 6 and Route 6A) to be compared in this case. The
future opportunity costs were evaluated and acquired from various sources such as
industry published reports and project reports. However, the cost of the construction
method and material costs is changeable depending on specific project requirements,
density of the project, capability of the contractor, market conditions, social and
environmental effects, and all other unexpected risks. Therefore, the reasonable
judgment of the decision maker is required to make a sensible comparison of these
cost items.
188 Chapter 6: Model Application Through Case Studies
The LCCA computes three alternatives project strategies. The discount rate used in
this analysis is 4 percent, and a 28-year analysis period is used. Table 6.49 presents
the LCCA comparison of three alternative project strategies. Each alternative
supplied the same level of performance or benefit, so the application of LCCA is
appropriate. In this case, Route 9 is characterised by an initial construction and one
rehabilitation activity in 20 years compared to Route 6 and 6A which have similar
construction costs, but are more focused on major maintenance activities every eight
years. R6 and R6A require three stages of major maintenance and require a more
frequent use because the R6 and 6A pass through the town centre of Northam, so
there is a significant volume of vehicles and more intersections in between. More
maintenance activities are needed to maintain the level of service of the highway
infrastructure compared to R9.
Table 6.49: Determination of activity timing
Year Route 9 (R9) Route 6 (R6) Route 6A (R6A) 0 Initial Construction Initial Construction Initial Construction 12 Maintenance one (8-
year service life) Maintenance one (8-year service life)
20 Rehabilitation one (20-year service life)
Maintenance two (8-year service life)
Maintenance two (8-year service life)
28 Maintenance three (8-year service life)
Maintenance three (8-year service life)
End of Analysis Period
The LCCA costs for each activity are constant. Table 6.50 shows all the activities
associated with the alternative routes. The total sum of R9 turns out to be the highest
compared to other routes, which is $47 million considering several activities
throughout its life span. Meanwhile, R6 has a lower overall cost which is $39.872
million compared to R6A at $41.872 million. Table 6.51 computes all the
expenditures for the three routes based on the costs to year 28. This reflects the value
of the remaining service life for each alternative in year 28. This value was
calculated based on the future value with the consideration of 4% interest.
Chapter 6: Model Application Through Case Studies 189
Table 6.50: Costs of agency and social category
Cost items R9 R6 R6A Construction Costs ($’000) 32,000 38,000 40,000 Maintenance Cost One ($’000 per annum) 624 624 Maintenance Cost Two ($’000 per annum) 624 624 Maintenance Cost Three ($’000 per annum) 624 624 Rehabilitation Cost ($’000 per annum) 15,000 Total 47,000 39,872 41, 872
Table 6.51: Computation of expenditure by years
Year R9 R6 R6A 0 32,000,000 38,000,000 40,000,000 12 624,000 624,000 20 15,000,000 624,000 624,000 28 624,000 624,000
End of Analysis period
Using the discount factor, with the interest rate of 4%, the present value is calculated
using Equation 15, for each of the agency and social costs.
Table 6.52: Computation of life-cycle costs
Year Discount Factor R9 ($) R6 ($) R6A ($) 0 1.0000 32,000,000 38,000,000 40,000,000
12 0.6246 0 389,749 389,749
20 0.4564 6,845,804 284,785 284,785
28 0.3335 0 208,090 208,090
End of Analysis Period
Total Cost (PV)
38,845,804 38,882,624 40,882,624
Based on the results shown in Table 6.52, R9 has the slightly lowest present value on
the overall cost after computing the present value calculation. R6 has the lower initial
costs but in terms of the present value, it is slightly higher than R9. R6A has lower
initial construction costs but ends up being the highest after calculating the present
value for 28 years. Based on the information alone, the decision maker could lean
toward either R9 (based on overall costs throughout its life span) or R6 (due to its
lower initial costs). However, more analysis might improve the accuracy of the
190 Chapter 6: Model Application Through Case Studies
decision. The following section explains in details the Weighted Sum Model (WSM)
to combine the results generated from the Fuzzy AHP and LCCA.
6.5.4 Final decision making
As discussed in Section 6.4.4, WSM serves to obtain a final decision which changes
the two modular results into weighted factors that are standardised to be calculated.
The summary of the two modular results are presented in Table 6.53. The WSM
process is based on higher value preferred normalised results. The weight factors
were calculated based on Equation 19.
Table 6.53: Summary of weighted sum assessment results
Items R9 R6 R6A Fuzzy AHP 0.57 0.28 0.15 LCCA Calculation ($)
38,845,804 38,882,624 40,882,624
Table 6.54 presents the summary of the normalised two modular results. The sum of
each row is equal to one and the total sum of all values is equal to the number of
modular results. The relative importance of each result is expressed in weight factors
for WSM as shown in Table 6.55 and Figure 6.9. The summation of each column
yields prioritisation of sustainability and long-term financial assessment by selecting
a particular alternative. In this case, R9 was selected as the main priority compared to
the other two alternatives in this project.
Chapter 6: Model Application Through Case Studies 191
Table 6.54: Summary of normalised weighted sum assessment results
Assessment Items R9 R6 R6A Total Fuzzy AHP 0.572 0.278 0.151 1.000
LCCA 0.505 0.495 0.000 1.000 Total 1.076 0.773 0.151 2.000
Table 6.55: Weight factors for normalised weighted sum assessment results and final
prioritisation
Assessment Items Weight Factor R9 R6 R6A Fuzzy AHP 0.5 0.286 0.139 0.075
LCCA 0.5 0.252 0.248 0.000 Total 1 0.538 0.386 0.075
Prioritisation
1 2 3
Figure 6.9: Final decision making by WSM
6.5.5 Sensitivity analysis
As discussed in Section 6.4.5, sensitivity analysis are conducted through the process
as stated in Section 5.6. Equation 21 calculates proportional adjustments for other
weight factors. The total sum of the two weight factors in this case is always equal to
one. The following sections demonstrate the sensitivity analysis for the model.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
AHP Cost Total
WF R9 R6 R6A
192 Chapter 6: Model Application Through Case Studies
6.5.5.1 Sensitivity analysis for Fuzzy AHP
Weight factors for Fuzzy AHP ranging from 0.1 to 0.9 are applied to perform
sensitivity analysis as shown in Table 6.56. The sensitivity analysis result shows that
there is a reversion of the decision making by changing the weight factor of Fuzzy
AHP, which is originally 0.5. As indicated in Figure 6.10, the gap between R9 and
R6 widens while the gap between R6 and R6A reduces as the Fuzzy AHP weight
factor increases. In conclusion, there is a possibility to change the final decision by
increasing or decreasing the significance of the Fuzzy AHP. However, for this
analysis, it is shown that any changes in Fuzzy AHP weight factors cannot possibly
reverse the most sustainable and cost viability selection, which is Route 9.
Table 6.56: Changes in prioritisation value by changing the Fuzzy AHP weight factors
Fuzzy AHP Changes R9 R6 R6A 0.1 0.511 0.474 0.015 0.2 0.518 0.452 0.03 0.3 0.525 0.43 0.045 0.4 0.531 0.408 0.06 0.5 0.538 0.386 0.075 0.6 0.545 0.365 0.091 0.7 0.551 0.343 0.106 0.8 0.558 0.321 0.121 0.9 0.565 0.299 0.136
Chapter 6: Model Application Through Case Studies 193
Figure 6.10: Sensitivity analysis for Fuzzy AHP weight changes
6.5.5.2 Sensitivity analysis for LCCA
Weight factors for, life-cycle cost analysis ranging from 0.1 to 0.9, are applied to
perform sensitivity analysis as shown in Table 6.57. The sensitivity analysis result
shows that there is no reversion of the decision-making by changing the weight
factor of LCC, which is originally 0.5. As indicated in Figure 6.11, the gap between
R9 and R6 reduces while the gap between R6 and R6A widens as the LCC weight
factors increases. As a result, there is no possibility to change the final decision by
increasing or decreasing the significance of LCC impacts in this case study.
Therefore, a potential disagreement between industry stakeholders regarding the life-
cycle cost analysis is unlikely.
The model application in Case B has drawn several achievements and
recommendations that should be considered by the researcher. The summary of the
model application is further explained in Section 6.6.
0.01
0.11
0.21
0.31
0.41
0.51
0.61
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
Fina
l Res
ult C
hang
es
AHP Weight Factor ChangesR9 R6 R6A
194 Chapter 6: Model Application Through Case Studies
Table 6.57: Changes in prioritisation value by changing the Fuzzy AHP weight factors
LCC Weight Changes R9 R6 R6A 0.1 0.565 0.299 0.136 0.2 0.558 0.321 0.121 0.3 0.551 0.343 0.106 0.4 0.545 0.365 0.091 0.5 0.538 0.386 0.075 0.6 0.531 0.408 0.06 0.7 0.525 0.43 0.045 0.8 0.518 0.452 0.03 0.9 0.511 0.474 0.015
Figure 6.11: Sensitivity analysis for LCCA weight factor changes
0.01
0.11
0.21
0.31
0.41
0.51
0.61
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
Fina
l Res
ult C
hang
es
LCC Weight Factor Changes
R9 R6 R6A
Chapter 6: Model Application Through Case Studies 195
6.6 Summary of Model Application
Based on the model application in Case A and B, it concluded that the integration of
Fuzzy AHP and LCCA into the proposed model has generated systematic and
informative assessment approaches to deal with highway investment decisions. This
model proved its capability to evaluate sustainability-related cost components, which
is one that cannot be done by existing tools. This study has gone a step further by
incorporating Weighted Sum Model (WSM) and sensitivity analysis into the model.
WSM generates normalised value for the assessments and sensitivity analysis deals
with uncertainty decisions before decision makers obtain final decision.
Implementation of the decision in both case studies resulted in several lessons that
could enhance the outcomes of future applications. The model process needs to be
facilitated to be truly effective. In Case A, an introduction to the model and several
examples of Fuzzy AHP and LCCA assessment were provided (similar to the process
used on Case B) however, there was still some confusion, specifically pertaining to
identifying an appropriate base case and how to interpret the definitions.
There are several lessons learned specific to the application of the model in the case
projects. The researcher has evaluated the alternatives based on the projects and then
introduced the model. In Case A and B, the process was facilitated and many of the
unclear items or interpretations were clarified as several iterations were undertaken.
It appears several iterations and feedback loops to facilitate a common understanding
of the definitions and evaluation indicates that there is a learning curve associated
with the model application.
This is to be expected as it is a new decision support tool. Since all the performance
categories are not used in typical day-to-day industry practice, additional time is
required to work with the definitions in order to fully understand them. Some
components will be more valuable to certain projects depending on the scenario and
requirement of the projects. This provided a clear understanding about the model
application so participants can evaluate alternatives in a systematic and effective
manner in the future. This is an important element to consider when applying it in
future projects.
196 Chapter 6: Model Application Through Case Studies
6.7 Validation of the Model
The model was applied in real highway infrastructure projects through case studies.
To enrich the findings of a finalised model, a discussion was conducted with the
industry stakeholders involved in the case studies. Their respective professional
backgrounds, experiences and also their involvement in the case projects makes them
best fit to test and validate the proposed model. The discussions revealed some of the
industry feedback and comments that could enhance the model and make it more
applicable and user friendly for industry practice.
The process of model validation starts with first, once the preliminary model was
developed, the researcher made a separate appointment with each participant. The
objective of the session was explained. These application and enhancement processes
were conducted through the discussion sessions which focused on the following
areas of investigation:
1. The application of the proposed preliminary model in real case projects.
2. The problems associated with the proposed preliminary decision support
models in handling highway investment.
3. The extent to which the proposed model are consistent with good practice in
the highway industry in dealing with highway investment decisions.
4. The success of the developed model and the practitioners’ comments and
opinions about the improvement of the model.
The comments and opinions of the participants were recorded for later editing. The
participants were asked about their satisfaction with the research findings. The
results indicated the two case projects’ members were satisfied with the model in
general. The results from the case studies demonstrate three supportive feedback
from the decision makers to the model:
• The proposed model is capable of actually assess qualitative factors
(environmental and partial social cost components) and quantify quantitative
factors (agency and partial social cost components) of a highway
infrastructure project. Five out of ten quantitative and qualitative cost
Chapter 6: Model Application Through Case Studies 197
components related to sustainable measures were actually evaluated through
Fuzzy AHP and LCCA assessment approaches that were actually
implemented on the two case study projects.
• The decision makers agreed that the evaluation decisions can enhance
sustainability performance on highway infrastructure projects. By using
Fuzzy AHP to evaluate the qualitative factors, stakeholders may able to rate
the importance of the related cost components based on the scenario of the
projects as well as the requirement of the projects. This shows that unquantify
factors can also be assess with suitable assessment tools while quantify
factors can convert into real cost data.
• The model shows that sensitivity analysis can be adapted to aid stakeholders
in dealing with uncertainty future decision.
The senior decision makers of both projects proposed that the platform for
developing decision support model should be added into the model for better
understanding on its function in dealing with highway investment decisions.
Reviewing the model development and testing has proven the validation of the
model. Overall, the model has achieved the objective that it can assist industry
stakeholders to evaluate highway infrastructure projects and compare alternative
choices based on the sustainability indicators. The positive and supportive feedback
from the industry stakeholder representatives encourages the consideration of further
improvement to the preliminary proposed model. These comments are considered to
revise the model and finalise it in the following chapter.
6.8 Chapter Summary
This chapter reported the findings from phase 4 of the research process that involved
the case study method. The findings from the case study answered the third research
question: How to assess the long-term financial viability of sustainability measures
in highway projects?
The conclusions drawn from the case study results have verified the findings from
the literature (Chapter 2) and survey (Chapter 4). This chapter has outlined findings
regarding the application of the model and the data analysis from the case study.
198 Chapter 6: Model Application Through Case Studies
Specifically, it demonstrates the model application and also how it supports decision
making for stakeholders. Two highway infrastructure case projects were selected to
test and evaluate the model. Based on both case projects, three alternatives from each
project were used to test and evaluate the model. The alternatives were evaluated by
using Fuzzy AHP and LCCA approaches to identify the most suitable alternative in
terms of long-term highway infrastructure investment. As summarised in the
comparison as in Table 6.58, the industry stakeholders agreed that the proposed
model is useful in supporting the decision-making process. Accordingly, the results
on this model pave the way for further discussions on findings and model finalisation
of the overall research to be reported in more detail in the following chapter.
Chapter 6: Model Application Through Case Studies 199
Table 6.58: Comparison of the case study results with literature and survey findings
Research Objective
Relevant Subjects Literature Findings
Survey Findings Case Study Findings
To develop a decision support
model for the evaluation of long-
term financial decisions regarding
sustainability for highway projects
Industry status and LCCA application in highway infrastructure
Refer to Table 4.14 for details
The scenario is based on the Australian highway industry:
• Applied in huge and new highway infrastructure development
• Promoting LCCA application in highway infrastructure
• Understanding of the LCCA concept is still evolving
Both highway infrastructure projects were used to demonstrate the application of the decision support model. The case studies indicate the following results:
• The model employs multi-criteria evaluation method (Fuzzy AHP) to analyse sustainability-related cost components.
• The model can employ industry stakeholders’ experiences and knowledge as an input for the model evaluation process.
• This model improves the existing models by integrating Fuzzy AHP with the LCCA method to develop a new decision support model.
Critical sustainability-related cost components in highway infrastructure
The questionnaire survey indicates the following result:
• Ten critical cost components related to sustainability measures in highway infrastructure investments.
Challenges of integrating sustainability-related cost components in LCCA
The interviews indicate the following results:
• Limitations methods and models in dealing with cost components related to sustainability measures.
• Lack of quality assumptions and data to deal with these costs
• Employ multi-criteria evaluation methods in analysis of sustainability-related cost components
• Need to improve the existing models
The needs for a decision support model to assist in highway investment decisions
Chapter 7: Findings and Model Finalisation 201
CHAPTER 7: FINDINGS AND MODEL FINALISATION
7.1 Introduction
This chapter integrates the quantitative (questionnaire survey) and qualitative (semi-
structured interview and case Studies) data of the mixed methods. Integration of the
quantitative and qualitative data provides a mechanism to further explain the results
and findings of the main issues arising out of this study and in the context of the
literature review as reviewed in Chapter 2. The analysis and discussion of the results
and findings are centred on the interpretation of the quantitative and qualitative data
contained in Chapter 4 (questionnaire survey and semi-structured interviews),
Chapter 5 (model development) and Chapter 6 (case studies), and the insights with
the concepts identified in the literature review. This chapter is designed as an
opportunity to address the aim, objectives and questions of the research. The main
conclusion drawn from this integration process is presented in the next chapter.
The analysis, interpretation and literature review support the findings which
crystallised into the formation of the decision support model. The development of the
model has enabled the author to accomplish the overall aim of this research, that is,
to develop and recommend a decision support model for handling long-term financial
decisions in Australian highway projects.
This chapter is divided into seven sections. The first section concentrates on
synthesising phases 1 to 4 for interpretation and discussion. The next section
discusses the critical sustainability-related cost components in highway
infrastructure. This section discusses the three dimensions of sustainability and the
framework of the industry verified cost components. Next, the sustainability
enhancement for LCCA is outlined. This section is followed by a discussion on
industry practice of LCCA and the challenges of incorporating sustainability into
LCCA. Subsequently, the long-term financial management in highway infrastructure
and model finalisation is then presented, followed by a summary of this chapter.
202 Chapter 7: Findings and Model Finalisation
7.2 Synthesising Phases 1 to 4 for Interpretation and Discussion
Four phases of this study were implemented to address the research questions. The
literature review in Phase 1 was aimed at gaining a broad spectrum of the cost
implications of pursuing sustainability in highway projects. Based on the review of
literature, this study managed to identify 14 main and 42 sub-cost components
related to sustainable measures (as shown in Table 5.1 in Chapter 5) for the in-depth
investigation into the subject of the research. The questionnaires and interviews in
Phase 2 focused specifically on the highway infrastructure industry in Australia to
identify the critical cost components related to sustainable measures. In this phase,
the quantitative and qualitative findings were used to assist in explaining,
interpreting and extending the results. Phase 3 of this study involved model
development, which identified the industry verified cost components in existing
LCCA models for further development. The case studies in Phase 4 concentrated on
the application and verification of the decision support model for evaluating the
long-term financial decisions regarding sustainability in highway projects.
Four main areas are discussed as follows:
• Critical sustainability-related cost components - the discussion and
interpretation in this section integrates quantitative data (questionnaire
survey). These data emanated from the current industry practice of LCCA,
industry verified cost components related to sustainable measures and
challenges of enhancing sustainability in LCCA practice in the context of
highway infrastructure (addresses Research Question 2).
• Sustainability enhancement for LCCA practice - the discussion and
interpretation in this section integrates critical factors from the interview
findings (addresses Research Questions 2).
• Long-term financial management in highway investment - the discussion
and interpretation in this section involve the integration of quantitative data
and results as well as critical factors from the interview data and model
development (addresses Research Questions 2 and 3).
Chapter 7: Findings and Model Finalisation 203
• Model Finalisation - the discussion and interpretation in this section involve
the integration of quantitative and qualitative data and results as well as
critical factors from the model development and case study data (addresses
Research Question 3).
The questionnaire, interview and case study data suggest that a fuller understanding
and a holistic view of developing a decision support model for long-term financial
investments in Australian highway projects are possible. The overwhelming amount
of evidence collected from the literature review, questionnaires, interviews and case
studies across the range of highway industry practice gave a strong indication of the
validity. One obvious factor from the evidence is that the development of a decision
support model for highway investment with sustainability objective is not as straight-
forward as giving a ‘how?’ answer but it is necessity to provide the ‘what?’,
‘where?’, ‘who?’, ‘when?’ and ‘why?’ components of that answer. Answering the
question ‘How to assess the long-term financial viability of sustainability measures
in the highway project?’ is considered within all the categories and sub-categories
that encapsulate this study’s aim and objectives and therefore, need to be considered
as a whole.
7.3 Critical Sustainability-Related Cost Components
Premised on the sustainability-related cost components from the review of literature,
the study employed questionnaire survey advanced into its subsequent stage –
identifying the most critical cost components in highway investments with
sustainability objectives. Figure 7.1 shows an expanded view of the industry verified
sustainability-related cost components in highway infrastructure. These critical cost
components reflect the consensus opinions of a group of experienced highway
industry stakeholders in both theory and practice of highway infrastructure
development. The discussions are further interpreted in the following sections.
204 Chapter 7: Findings and Model Finalisation
7.3.1. Agency dimension of sustainability
Highway infrastructure development usually involves huge capital. Agency cost is an
important consideration over the highway’s lifetime. The findings from the
questionnaire indicated that the material, plant and equipment costs are the main cost
criteria that considered in highway investment. These costs significantly influence
the overall profit margin of the highway investment. This is consistent with Wilde,
Waalkes and Harrison (2001) who found that agency cost is still a major cost that
needs to be included into the highway investment and design decision process.
Major maintenance and rehabilitation costs were also highly rated by industry
stakeholders in the questionnaire. These costs usually contribute to the annual cost as
the maintenance and rehabilitation activities are applied in a given year to improve
the highway pavement. However, the strategies of maintenance and rehabilitation
depend on the predicted pavement condition as well as the real condition of the
highway infrastructure. This finding is also supported by the observation by Widle,
Waalkes and Harrison (2001) that the pavement is evaluated at the end of each year
by the performance models, and the distress levels are evaluated by the strategies’
modules. These models and modules are able to assist the stakeholders in identifying
an appropriate maintenance and rehabilitation strategy for a highway infrastructure
project.
Agency Cost Components
Social Cost Components
Environmental Cost
Components
Material Plant and Equipment
Major Maintenance
Rehabilitation
Hydrological impacts
Loss of wetlands
Disposal cost of materials
Cost of barriers
Road Accident- internal cost
Road accident - economic value
of damage
Figure 7.1: Critical sustainability-related cost components in Australian highway
infrastructure projects
Chapter 7: Findings and Model Finalisation 205
7.3.2. Social dimension of sustainability
One of the interesting points of the social dimension of sustainability in the highway
infrastructure investment is related to health and safety impacts. Stakeholders
considered internal, external or economic value of damage as the most important
components compared to other cost components in highway investment. Highway
accident costs comprise a huge portion of costs over overall highway investment.
The general high rating indicates very high levels of awareness about health and
safety-related matters in highway infrastructure development and the wider society.
Meanwhile, the results from the questionnaire and interviews also highlighted that
improving highway performance and quality is one of the factors to improve
highway health and safety. Tighe et al. (2000) who found that the incidence of road
accidents has a strong relationship with the pavement condition. Another study also
found that traffic accident frequencies are based on different pavement conditions
(Chan, Huang et al. 2010). It is of interest that all stakeholders’ were aware of the
need to consider accident costs as part of overall highway investment costs.
7.3.3. Environmental dimension of sustainability
Differences of the importance level of cost components were found between groups
of stakeholders. Government agencies and local authorities rated hydrological
impacts as the most important factors in highway investment decisions, where as
consultants rated it as the third most important and contactors rated it as the twelfth
most important factor in environmental category. These differences suggest a general
understanding among government agencies and consultants that government
statutory instruments are effective in controlling water quality and minimising
pollution that often emanates from highway infrastructure development. On the other
hand, the questionnaire results also indicate that contractors are not really concerned
about the hydrological impacts as long-term impacts. The reason for this may be that
contractors have no liability after projects are finished, as highlighted by Tighe
(2001).
206 Chapter 7: Findings and Model Finalisation
Based on the questionnaire findings, the cost of the disposal of materials is another
environmental cost that stakeholders are concerned about. Contractors rated it as the
most important component in highway investments, consultants rated it as the third
most important, while government agencies rated it at seventh among all the
environmental cost components. This result indicates that contractors are more
concerned about the direct waste generation costs occur in highway infrastructure
construction. In contrast, government agencies are less concerned about the cost of
material disposal because contractors are the key players in waste management in
highway construction. This result is supported by Lingard, Graham and Smithers
(2000) who found that contractors are responsible for the waste management, the
fees for which represent a significant cost to them. Waste management involves
many complex interactions such as transportation systems, land use, public health
considerations and interdependencies in the system such as disposal and collection
methods. A well managed plan is needed to prevent over-expenditures in these
activities.
7.4 Enhancement of LCCA for Sustainability Measures
Making highway investment decisions is complex. Several tools currently available
aim to structure, simplify this complexity, and support the decision maker in a
highway infrastructure investment situation. However, as indicated by the findings
from the semi-structured interviews, several of these tools are insufficient for the
problems faced in highway investment decision-making. To solve some of these
problems, the results from the interview suggested future efforts in the development
of decision support tools in the following areas:
(1) Further development of tools that integrate social, environmental and micro-
economic dimensions. This approach follows the ‘a little is better than
nothing’ advice and is foremost supported by the decision makers’ familiarity
with economic units. It is advocated by the work of Epstein (2008).
(2) Improve the understanding of socially and environmentally-related decision-
making and use of tools such as the multi-criteria decision support approach.
This approach acknowledges that individuals in making decisions use
cognitive skills, which are influenced by both personal values and perceived
Chapter 7: Findings and Model Finalisation 207
benefits. Recognising the decision maker’s behaviour, an extended approach
and a way forward is to develop and use decision strategies that also consider
cognitive aspects.
(3) Extend the system boundaries by complementing LCC-oriented tools with
tools that focus on physical measures, for example LCCA and Fuzzy AHP
methods in this study. This combination of analysis methods is also supported
by Koo, Ariaratnam and Kavazanjian (2009) and recognises the social and
environmental aspects more extensively. The interview findings also revealed
that the recognition of the decision maker’s cognitive skills is essential to
deal with highway investment decisions.
The development of a decision support model for this study builds upon the findings
from the literature, questionnaires and interviews revealing a range of issues related
to adopting sustainability-related cost components into LCCA, including the
following obstacles:
• Lack of data,
• Lack of contractual agreements, and
• Lack of standardisations.
A life-cycle perspective is important since it extends the system boundaries and
incorporates some costs that are incurred in the future. Using a multi-criteria decision
support approach, such as Fuzzy AHP, in making investment decisions both long-
term economic values as well as social and environmental cost components are
considered. In contrary, Gluch and Baumann (2004) argue that life-cycle cost
analysis is an imperfect theoretical base as its limitation in quantifying social and
environmental-related cost components must be recognised. This issue was also
acknowledged in this study. The interview findings reveal that decision makers use
decision support tools to rationally evaluate options (alternatives) to make an optimal
decision.
Another interesting finding is a change towards more socially and environmentally
responsible behaviour in the highway infrastructure industry which requires a wider
understanding of the decision maker’s situation and behavior. This recognises the
208 Chapter 7: Findings and Model Finalisation
importance of other decision processing aspects in addition to making a rational
choice among alternatives in highway investment decisions.
As a result, the extended perspective of the decision-making context gives rise to a
focus in this research on stakeholders from different backgrounds who should
cooperate. The outcome of this research is the development of a model that involves
people in the decision process, such as brainstorming about the sustainability issues
and about decision options based on financial consideration.
7.4.1. Industry practice of LCCA
This study provided evidence that LCCA is acknowledged as a robust evaluation
technique for choosing between different types of pavements for highway
infrastructure. The potential benefits of the LCCA and the applicability of this
technique to evaluate highway investment is recognised by the industry stakeholders.
This is supported by the work of Ozbay et al. (2004b) and Gluch and Baumann
(2004).
The interview results confirmed that highway infrastructure projects are of
considerable importance to politicians and individual interest groups. This study
showed that the governmental guidelines and reports on LCCA (or any evaluation
technique) could significantly influence its actual implementation. Any guidance
must be even-handed and based on proven scientific research. For example, the
Association of Australian and New Zealand Road Transport and Traffic Authorities
(
Government agencies are usually required to prepare a highway construction and
planning program that highlights the activity in the long-term. Therefore, a
construction program needs to be closely monitored. Any government departments
involved are likely to be queried and must be prepared to defend the situation
publicly as well as in the legislature. Typically, when projects are priced, their costs
are estimated in term of the current cost of the projects, and this estimate is not
Austroads) has developed a guideline for the discount rate value, the analysis
period, the inclusion of the user delay cost during rehabilitation activities, and the
intention of adopting the probabilistic approach.
Chapter 7: Findings and Model Finalisation 209
adjusted to fit the future situation. These cost increases can be amplified at a higher
rate in the near future. This significantly affects the overall cost of an investment.
Stakeholders are able to estimate future funding and project costs by life-cycle cost
analysis. This was also evident in the study conducted by Wilmot and Cheng (2003)
who found that future funding is obviously never known and involves a great deal of
uncertainty. In contrast to the work of Gerbrandt and Berthelot (2007), LCCA is able
to guide the decision makers in forecasting future funding and reducing the risk of
project investments.
This study found that the industry stakeholders rely on their expert opinion and past
practices to establish the life-cycle strategies for the alternatives, which specify the
timing of rehabilitation, upgrading and reconstruction. An asset forecast life is a
major influence on life-cycle analysis (Woodward 1997). An error in forecast may
cause a huge difference when predicting the costs for an asset such as highway
infrastructure with a 50 to 60 year life span. To minimise the errors, the utilisation of
theoretical and historical data in life-cycle cost analysis becomes crucial in long-term
highway investment. This finding is also supported by Hastak, Mirmiran and Richard
(2003) and Arja, Sauce and Souyri (2009), but is contrary to Carroll and Johnson
(1990) who observed that descriptive decision-making studies have shown that
individuals are not making rational decisions, especially when uncertainty is
involved because of complex and long-term consequences, which is typical for
highway investment decisions.
An appropriate discount rate is a crucial decision in a life-cycle cost analysis. The
industry stakeholders in dealing with LCCA evaluation use specific discount rates.
Usually the discounted rates are based on the Austroads standard; however, an
appropriate adjustment is needed to suit the project’s environment. Therefore, this
study shows that theoretical and historical data are significantly important for
decision makers to evaluate competing initiatives and find the most sustainable
growth path for the highway infrastructure.
210 Chapter 7: Findings and Model Finalisation
7.4.2. Challenges of incorporating sustainability into LCCA
The interview results brought to light the general tendency of Australian highway
industry to exclude some cost components encountered by communities and
environments (especially during normal operations) from the LCCA of transportation
projects based on the assumption that such costs are common to all alternatives.
The inclusion/ exclusion of social and environmental costs: Research on how to
quantify and monetise such costs – vehicle operating costs, comfort, risk and
reliability, noise and health effects – continues to grow as these cost components are
proven to be significant based on years of empirical and theoretical research results.
More importantly, in considering social and environmental costs, industry
practitioners tend to exclude these costs in their analysis based on the unfounded
argument that these components are not real costs, let alone the difficulty in
monetising these externalities (Surahyo and El-Diraby 2009).
A monetary value: ‘Sustainability’ LCCA aims at translating social and
environmental problems into a one-dimensional monetary unit. However, this study
found that the attempts of life-cycle cost analysis to translate these problems into a
monetary unit may oversimplify reality. Neoclassical economic theory presupposes
that all relevant aspects have a market value, that is, a price. The interview findings
showed that there are items that are not possible to price. This leads to monetary
calculations being incomplete with regard to socially and environmentally-related
cost components. Many economic theorists suggest different ways to put a price on
social environmental items, for example through taxes (Pearce and Turner 1990;
Hanley, Shogren and White 1997; Turner, Pearce and Bateman 1994), but this study
argues that it is impossible to catch all relevant aspects of these complex problems
into one monetary figure. A similar finding was drawn from the research conducted
by Surahyo and El-Diraby (2009). The monetarism of LCC consequently results in
loss of important details which in turn limits the decision maker’s possibility to
obtain a comprehensive view of these problems.
Decision-making under uncertainty situation: This research observed that industry
stakeholders usually have overlooked the uncertainty factor when applying LCCA.
Chapter 7: Findings and Model Finalisation 211
The social and environmental consequences of a highway investment decision often
occur long after the decision was made, and not necessarily in the same location.
Furthermore, these decisions have cumulative effects on social and ecological
systems, which are difficult to detect (Arja, Sauce and Souyri 2009; Gilchrist and
Allouche 2005; Yu and Lo 2005). A similar finding was drawn from the semi-
structured interviews, in which interviewees agreed that issues that are not
considered as problems today may well be in the future. In the same way, today’s
social and environmental problems were not anticipated yesterday. Long-term
investment decisions with large social and environmental impacts therefore are
characterised by considerable uncertainty at all stages of the decision-making
process, such as the problem definition, possible outcomes and probabilities of the
outcomes (Arja, Sauce and Souyri 2009).
Business and Political influences: The questionnaire and interview results show
that investment decisions for a highway infrastructure are affected by business,
physical and institutional uncertainties, this findings also highlighted by Alam,
Timothy and Sissel (2005); Chou et al. (2006); Gerbrandt and Berthelot (2007) and
Gransberg and Molenaar (2004). Physical risks are often due to uncertainty about a
highway infrastructure’s design or a material’s functional characteristics and
performance change during its lifetime. Such uncertainty may involve the material
being found unsuitable through new scientific evidence has become unsuitable.
Business uncertainty is connected to unpredictable fluctuations in the market and
institutional uncertainties reflected in the effect of changing regulations on
infrastructure development. Many political decisions can instantly change the “rules
of the game”. It is also easy to predict that materials and components that are
difficult to recycle will be expensive to dispose of in the future both for technical
reasons and due to increasing disposal taxes. This study revealed that the political
decisions, external market factors, institutional regulations and environmental
changes may also lead to changing conditions.
Irreversible decisions: Another interesting finding from the interviews is that
analysis that relies on estimation and valuation of uncertain future incidents and
outcomes (social and environmental cost components) is problematic. There are
numerous techniques available that attempt to decrease the uncertainty of future
212 Chapter 7: Findings and Model Finalisation
consequences, for example scenario forecasting, sensitivity analysis, probability
analysis, decision trees and Monte Carlo simulation (Hastak, Mirmiran and Richard
2003; Hong, Han and Lee 2007; Tighe 2001). However, these techniques presuppose
that decision makers are aware of the nature of the uncertainties that can be expected
during the highway’s lifetime. A study of risk management (Li and Madanu 2009)
revealed that stakeholders when conducting a sensitivity analysis of life-cycle cost
analysis only considered tangible aspects such as interest rate. Furthermore, when
estimating social and environmental cost components, the stakeholders relied more
often on their intuition and rules of thumb than on techniques, such as sensitivity
analysis.
7.5 Model Finalisation
Based on all the findings discussed above relating to the critical sustainability-related
cost components and sustainability enhancement for LCCA practice, a platform of
overall scenario of long-term financial management with sustainability objective in
highway infrastructure development has been established. The platform, illustrated in
Figure 7.2 summarises and provides an overall picture of the current industry’s
practice, challenges and perspectives on sustainability enhancement for current
LCCA in the context of highway infrastructure development.
The framework clearly outlines the links between current industry practices on
LCCA, challenges of integrating sustainability-related cost components into LCCA
and the various stakeholders’ perceptions of sustainability enhancement as identified
in the interviews. In addition, the questionnaire findings also encapsulated the ten
critical sustainability-related cost components pertinent to the highway infrastructure
project.
The platform serves as a clear picture for understanding the current industry practice
and general perceptions held by the various stakeholders in long-term highway
infrastructure investment with the sustainability objective.
Chapter 7: Findings and Model Finalisation 213
Challenges of integrating cost related to sustainability measures
• The inclusion/ exclusion of social and environmental costs
• A monetary value • Decision-making under uncertainty
situation • Business and political influences • Uncertainties evaluation techniques • Irreversible decisions
Industry practice of LCCA application
• Industry recognition of LCCA
• The theoretical and historical data of LCCA
• Government guidelines and reports
Sustainability enhancement for LCCA practice • Further development of tools that integrate social, environmental and
micro-economic dimensions • Extend the system boundaries by complementing LCC-oriented tools • Improve the understanding of socially and environmentally related
decision-making through multi-criteria decision support approach.
Sustainability-related cost components in highway infrastructure development
Social Category • Road Accident -
Internal Cost • Road Accident -
Economic Value of Damage
Environmental Category
• Hydrological impacts
• Loss of wetlands • Disposal of
material • Cost of barriers
Agency Category • Material • Plant and Equipment • Major Maintenance • Rehabilitation
Questionnaire Results and Findings Interview Results and Findings
Development of Decision Support Model for Highway Investment Decisions
Figure 7.2: Platform for developing financial decision support model in highway infrastructure sustainability
214 Chapter 7: Findings and Model Finalisation
By knowing the overall status and challenges that the industry is currently facing,
strategies to improve and encourage the industry stakeholders to enhance life-cycle
cost analysis with sustainability objective can be better organised and articulated. By
closely monitoring of the implementation of sustainability measures against LCCA,
this study ensures that assessing highway investment can be more informative and
systematic, therefore resulting in better decisions for overall sustainability
infrastructure development.
Premised on this platform, the research advanced into its subsequent stage – the
development of the decision support model, the application in real case projects and
the evaluation through the case studies. Based on the findings of these last
development steps, the proposed decision support model was finalised with minor
improvements. The finalised decision support model is shown in Figure 7.3 and
revealed the suggestion from the participants to incorporate the platform into the
model to generate a clear picture on the functions of the model in dealing with
highway investment decisions.
Chapter 7: Findings and Model Finalisation 215
PLATFORM FOR DEVELOPING DECISION SUPPORT MODEL
Agency Category
Social Category
Environmental Category
Sustainability- Related Cost Components
Sustainability enhancement for LCCA practice
Industry practice of LCCA application
Challenges of integrating sustainability-related costs
Qualitative Quantitative
Assessment Methods for Cost Components
Fuzzy Analytical Hierarchy Process (Fuzzy AHP)
• Evaluation of criteria weight
• Evaluation of alternatives • Final score of alternatives
Life-Cycle Cost Analysis (LCCA)
• Determination of activity timing
• Computation of expenditure by year
• Compute of life-cycle cost analysis
Final Decision Making Process • Applying weight sum model to total up final scores
Fuzzy AHP LCCA
Sensitivity Analysis
• Changes in prioritisations value by changing the Fuzzy AHP weight factors
• Changes in prioritisations value by changing the LCCA weight factors
Model Validation • Application of the proposed preliminary model in real case
projects • Problems associated with the proposed model • Comments and opinions to improve the model
FINANCIAL DECISION SUPPORT MODEL FOR HIGHWAY INFRASTRUCTURE
SUSTAINABILITY Applying in real
case projects
Enh
anci
ng th
e m
odel
Feedback from project stakeholders
Figure 7.3: The finalised financial decision support model for highway infrastructure
sustainability
216 Chapter 7: Findings and Model Finalisation
Results of the propositions analysed in the validation phase demonstrate that the
decision support model successfully performed the intended functions:
• The ability of the model to emulate a systematic evaluation process was
satisfied.
• The rating system provides a comprehensive fuzzy value to be evaluated and
analysed in the model.
• The results show that it identifies significant project decisions and the
appropriate timing on a project.
• The ability of the model to generate new and innovative solutions was also
demonstrated.
In total, the above four aspects in the validation phase were satisfied, which provide
sufficient evidence to validate the functionality of the model to perform as intended.
Results from the numerical phase demonstrate the alternatives selected in the study
are consistent with an independent review of historical data and therefore are
accurate and reliable. Since the result in the numerical phase was satisfied, this
provides strong evidence to support the numerical validation of the model. The
interviewed project stakeholders acknowledged that the model could improve
investment decisions in the highway infrastructure projects.
The case studies demonstrate that the model is capable to evaluate quantitative as
well as qualitative cost components. However, based on the study conducted by
(Surahyo and El-Diraby 2009), there is a clear inconsistency in the evaluation
methods used by researchers and practitioners to estimate these costs. This study
proved that with the application of Fuzzy AHP and LCC approach, these cost
components can be consistently evaluated based on the weighted factors.
One other noteworthy observation is the influence of decision-making process of the
stakeholders in evaluating highway investment decisions. The systematic nature of
evaluation process shows the ability of Fuzzy AHP to define the linguistic scale of
decision into fuzzy value. The results from the Fuzzy AHP demonstrated the
systematic evaluation process, illustrating its ability to efficiently convert human
Chapter 7: Findings and Model Finalisation 217
linguistic idea into value that follow the scientific method when evaluating highway
infrastructure alternative solution.
Additionally, the cost data that can be retrieved from the case projects also provides a
mechanism to define value on a project team decisions. The value generated from
Fuzzy AHP and LCCA assessment is explicitly tailored to the projects with the
model weighting factors. The resulting weighted factors objectively define the value
on the project and are used to determine how well aligned each alternative is with the
specified project priorities and scenario. This function was applied during the model
application on two real case studies to assist the decision makers in determining
which alternatives to implement in the projects.
7.6 Chapter Summary
This chapter discusses the results from the questionnaires, interviews, model
development and case study findings, concerning chapters 4, 5 and 6. Firstly, the
critical cost components related to sustainable measures in highway infrastructure
development were discussed. These components included the various stakeholders’
perceptions of the cost components that are crucial in highway investment decisions.
Following the industry verification, the cost components were consolidated into ten
main sustainability-related cost components, which constitute the critical cost
components for Australian highway infrastructure investments. It is crucial to further
investigate the current industry practice, how these cost components are quantified
and the challenges to incorporating these cost components.
Therefore, the major contributions from the interviews include the identification of
current industry practice in life-cycle cost assessment, the challenges of integrating
sustainable measures into LCCA practice and the stakeholders’ perspectives on
sustainability enhancement for LCCA. These findings were used to formulate the
overall scenario of long-term financial management in highway infrastructure which
served as a preliminary model for subsequent investigation. The conclusion of the
questionnaires and interviews paved the way and lead to the development of the
model. This model was tested and evaluated through the case studies. The model
218 Chapter 7: Findings and Model Finalisation
were tested and evaluated by industry stakeholders based on two real highway
infrastructure projects.
The derived findings from the three unique research approaches were included in the
establishment of the decision support model to assist industry stakeholders in
investment decisions for Australian highway infrastructure projects as the outcome
of this research.
Chapter 8: Conclusion 219
CHAPTER 8: CONCLUSION
8.1 Introduction
Australia is putting a great emphasis on the development and rejuvenation of
highway infrastructure because of the recent resource boom and regional economic
growth. Stakeholders of these highway projects need to respond to the sustainability
challenge while ensuring the associated financial implications and risks are dealt
with and in control. This calls for a better decision support tool to help with reaching
investment decisions among the complex sets of issues and agenda. This study
developed a decision support model in dealing with highway investment decisions
with sustainability objectives.
This chapter presents the achievement of the research through the review of research
objectives and development processes in Section 8.2, prior to the presentation of the
conclusions to the research objectives in Section 8.3. Research contributions are
discussed in Section 8.4, the study limitations in Section 8.5, and the
recommendations for future research in Section 8.6.
8.2 Review of Research Objectives and Development Processes
The research objectives were established when the research gap was identified
through a review of literature (Chapter 2). This review was undertaken in
consultation with the industry practitioners and academics.
Specifically, this research sought to achieve the following objectives:
• To understand the cost implications of pursuing sustainability in highway
projects.
• To identify the critical cost components related to sustainable measures in
highway infrastructure investments.
220 Chapter 8: Conclusion
• To develop a decision support model for the evaluation of long-term financial
decisions regarding sustainability for highway projects.
The objectives provided a clear direction upon which the research advanced with
confidence. Three interrelated but distinctive approaches to data acquisition were
selected and adopted in this research, namely:
1) Questionnaires distributed to industry stakeholders to confirm the cost
components related to sustainable measures that are significant in highway
infrastructure investments.
2) Semi-structured interviews among experienced practitioners and academics to
explore the current practice of life-cycle cost analysis, challenges to enhance
sustainability in the life-cycle cost analysis and the suggestions of the various
stakeholders towards financially sustainability in Australian highway
infrastructure.
3) Case studies conducted to apply proposed decision support model based on real
case scenarios and collect expert opinions as well as real-life project information
to enhance and validate the model.
8.3 Research Objectives and Conclusions
Three objectives were posed to address the aim of this research. The following sub-
sections revisit the research objectives and present the conclusions and key findings from
the interpretation and discussion of the results reported in the previous chapters.
8.3.1. Research objective 1
RO 1. To understand the cost implications of pursuing sustainability in highway
projects.
The literature review (Chapter 2) found that public awareness and the nature of
highway construction works demand that sustainability measures are put on top of
the development agenda. There are some stakeholders who consider sustainability as
extra work that costs extra money. However, stakeholders in general have realised
Chapter 8: Conclusion 221
the importance of pursuing sustainability in infrastructure development. They are
keen to identify the available alternatives and financial implications on a life-cycle
basis. Due to the complex nature of decision making in highway infrastructure
development, expertise and tools to aid the evaluation of investment options, such as
provision of environmentally sustainable features in roads and highways, are highly
desirable.
Benefit-cost analysis (BCA) and life-cycle cost analysis (LCCA) are generally
recognised as valuable approaches for long-term financial investment decision
making for construction works. However, LCCA applications in highway
development are still limited. This is because the current models focus on economic
issues alone and are not able to deal with sustainability factors, which are more
difficult to quantify and encapsulate in estimation modules. Based on the literature
review, the limitation of current LCCA models and programs can be summarised as
follows:
1. inconsistent estimation method in environmental and social costs calculation,
2. unclear boundaries in considering sustainability impacts,
3. difficult to quantify sustainability-related cost components, and
4. ambiguity in identifying relevant costs for LCCA in highway projects.
While sustainability and long-term financial management are the logically linked to
highway infrastructure projects, past research for this industry sector mainly focused
on traditional LCCA methods. Little has been done to incorporate sustainability-
related cost components into LCCA practice, especially in highway infrastructure.
There is a need to find effective ways to enhance sustainability foci in LCCA, along
with the development of long-term financial decision support methods. The gap must
be closed between the traditional LCCA practice and the need for a new decision
support model capable of taking account into financial sustainability assessment.
Thus, the identification of sustainability-related cost components for assessing
highway investments is becoming imperative.
This research addressed these problems by identifying the relative importance of the
various costs components in highway infrastructure projects. A set of key cost
222 Chapter 8: Conclusion
components related to sustainable measures in highway infrastructure projects was
produced as listed in Table 2.6 in Chapter 2. There are three main cost categories
based on the study of previous Australian highway infrastructure projects:
• Agency category,
• Social category, and
• Environmental category.
These cost categories are expanded into 14 main factors with 42 sub factors for in-
depth investigation (see Table 2.6). This achieved the first objective of the research
and paved the way for the pursuit of the second objective.
8.3.2. Research objective 2
RO 2. To identify the critical cost components related to sustainable measures in
highway infrastructure investments.
The industry practitioners, based on their perceptions and experience, evaluated these
identified cost components through questionnaire surveys (in Chapter 4). The most
critical industry verified cost components in highway investments in the Australian
context were therefore revealed. These ten critical cost components were ascertained
against the proposed decision support model.
The interviews with senior industry stakeholders found that LCCA practice has
increasing recognition in the contemporary industry. Government agencies are
putting a significant emphasis on early identification of the financial outlook when
contemplating highway infrastructure investment. With improving social awareness,
they will also need to overcome the traditional imbalance between sustainable
measures and project budgets. Meanwhile, government reports provided by agencies
and associations also significantly impact on the LCCA implementation. The
Australian industry stakeholders rely on these reports, their expert opinion and past
practices to establish the life-cycle strategies for the highway infrastructure
alternatives. This inclusion of theoretical and historical data is significant for
Chapter 8: Conclusion 223
decision makers to evaluate competing initiatives and find the most sustainable
growth path for highway infrastructure.
The above findings provide a platform for the formulation of a preliminary decision
support model capable of embedding sustainability objectives and considerations for
highway investment decisions. Thus, it provides a holistic industry perception of
enhancing sustainability in LCCA and critical cost components related to sustainable
measures in the context of highway infrastructure development. This view allows the
formulation of a decision support model. This helped to achieve the second objective
and provide an imperative next step towards developing of a decision support model
to aid decision makers in highway investment.
8.3.3. Research objective 3
RO 3. To develop a decision support model for the evaluation of long-term financial
decisions regarding sustainability for highway projects.
Ten most important cost components related to sustainable measures were
determined against the proposed model. There is a need of multi-criteria decision
support approaches to evaluate the model. Fuzzy AHP, LCCA, Weighted Sum
Model (WSM) and sensitivity analysis were employed to develop the model. At this
point, the researcher evaluated the proposed decision support model with integrated
procedures of application and evaluation (as mentioned in Chapter 5) through case
studies (as documented in Chapter 6). Two highway infrastructure projects were
selected to apply, test and evaluate the model based on the project alternatives.
The model provides project stakeholders with guided decision-making assistance
when contemplating alternatives. This process also demonstrates that, a systematic
model in dealing with highway investment decisions. This confirms the findings
from previous empirical case studies in Chapter 6 that the validation of the model
should focus on the comments and suggestions from project stakeholders. Therefore,
a finalised financial decision support for highway infrastructure sustainability has
been developed (refer to Chapter 7). The formulation of the decision support model
achieved the third objective of this study.
224 Chapter 8: Conclusion
8.4 Research Contributions
This research has contributed the knowledge and understandings of life-cycle cost
analysis in highway infrastructure in the context of maximising sustainability
initiatives and potentials. The specific contribution is according to two different
perspectives: the contributions to academic knowledge and to the infrastructure
industry.
8.4.1. Contribution to academic knowledge
Contributions of this research to academic knowledge about the link between
infrastructure and sustainability are:
1. Integrated approaches to evaluating financial decisions for highway
infrastructure investment with sustainability objectives and action plans
This research promotes multi-criteria decision support and life-cycle cost analysis
approaches in proposed decision support model when performing highway
investment evaluation. Cost components related to sustainable measures and industry
suggestion of enhancing sustainability for life-cycle cost analysis practice established
the platform for the researcher to develop this model. This model not only provides a
decision support tool for agency costs; it also allows industry stakeholders to
consider the impacts of specific design alternatives on the community.
2. Filling a knowledge gap in the evaluation of highway alternatives through a
systematic decision-making process.
The proposed model provides a structured and systematic approach to evaluate
alternatives for highway infrastructure projects through the economical and
sustainability consideration. Following the scientific method, a solid yet flexible
model is developed to continuously identify ways to evaluate alternative solutions
before implementing the projects. This model is significant as it provides a process to
continuously generate new and innovative solutions that improve highway
investment decision and increase levels of sustainability.
Chapter 8: Conclusion 225
8.4.2. Contribution to the industry
Contributions are made to industry practice in the following ways:
1. A practical tool for highway investment decisions with sustainable goals.
The proposed decision support model provides industry stakeholders with a practical
tool that helps facilitate highway investment decisions with sustainable goals. This
model is much needed by practitioners to optimise highway investments and to
maximise the value of the assets over their life cycles. It will ensure the highway
investment can be more informative and systematic in dealing with better decision in
overall highway infrastructure development.
2. Decision support model improves the awareness of industry stakeholders in
sustainability.
The decision support model raised the awareness of industry stakeholders in
considering sustainability while making investment decisions. This was done by
integrating industry verified sustainability-related cost components into the model
and ’guide’ stakeholders to think. The gauging of the practical issues encouraged
their sustainability-related endeavours and exploration of thoughts for future research
and development.
8.5 Study Limitations
The research has developed a model with the ability to improve investment decisions
and promote higher levels of sustainability achievement in highway infrastructure.
This research is limited in two aspects:
• The findings and views presented in the model are more reflective of
highway infrastructure projects such as highway bridges and bypass rather
than other types of road infrastructures. Undoubtedly, a wider coverage of
other types of road infrastructures namely rural and urban arterial roads, and
rural and urban local roads would add and enrich the findings. However, this
226 Chapter 8: Conclusion
was not the focus or ambit of this research. To this end, this research is more
about developing methodology and application prototype. Nevertheless, some
enhancements are needed to the proposed model to deal with investment
decisions with sustainability objectives for other types of road infrastructure.
• Given the fact that the participating respondents and the case projects are
from Australia, the models developed are specifically applicable to the
Australian highway infrastructure context rather than to that of other regions
in the world. This is because different regions or countries have different
legal, cultural and political environments, which might be unique or specific.
Nevertheless, the learning from this study can provide a good source of
reference to the industries in other regions with slightly modification needed
to fit to the needs of the particular region.
8.6 Recommendations for Future Research
This study presented a model for performing financial decision support for highway
infrastructure sustainability. As sustainable highway infrastructure developments
continue to mature, new ways to achieve sustainability objectives while improving
the financial decision-making process must be discovered. Further studies could
consider the following approaches and issues:
• This study focuses only on the Australian highway infrastructure context. It
will be valuable for future researchers to cover other regions of the world by
considering different legal, cultural and political environments that are
specific to local conditions.
• The enrichment of data is also important to improve the accuracy of the
prediction model. A major improvement would be the ability to automatically
calibrate the performance models using local condition survey data. This
could be accomplished by allowing the industry stakeholders to enter relevant
information along with historical environmental and as-built construction
data. In addition to this information, variability in construction aspects, such
as pavement strength and thickness and the surface roughness, should be used
to calibrate the models.
Chapter 8: Conclusion 227
• Due to time constraints and different focus, it was not possible for this
research to generate a computer package to further aid stakeholders in dealing
with highway investment. From the ease of operation point of view, a
computerised procedure and package could have been more user friendly.
Future research may develop a computerised version of the derived model.
• This study focuses purely in financial implication for highway infrastructure
sustainability. This could also be extended to include risk assessment method
to evaluate the variability of critical input variables in cost estimation
(litigation, cost overruns, contingencies, etc.). The types of analysis that can
be considered are:
1. Establish probability risk assessment that include quantitative analysis
of risk.
2. Conduct the empirical study by using statistical analysis to obtain
critical factor of risks as the output of life-cycle cost estimation.
In these ways, future researcher should look into these aspects in order to further
improve and refine the research findings.
8.7 Summary
The push for sustainability has added new dimensions to the evaluation of highway
infrastructure projects, particularly on the cost front. The incorporation of
sustainability-related cost components in highway investment decisions is a crucial
step to ensure that the projects are economically feasible, socially viable and
environmentally responsible in the societal investment. Understanding the current
industry practice in life-cycle cost analysis, recognising the challenges faced by the
current industry in incorporating sustainability-related cost components into
consideration, and gathering suggestions to formulate a tool to enhance sustainability
in life-cycle cost analysis for highway infrastructure, are major endeavours to
generate a clear picture of highway infrastructure practice and needs.
Accordingly, this research has moved a step further in developing a decision support
model with sustainability objectives in evaluating highway infrastructure investment.
The proposed model will help promote a more systematic, comprehensive and
228 Chapter 8: Conclusion
promising approach among key stakeholders in the process of highway investment
decision-making. It will enhance the viability of the financial considerations and
respond positively to sustainability concerns in highway infrastructure projects in
Australia.
Appendices 229
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LIST OF APPENDICES APPENDIX A: Questionnaire
A1: Invitation Letter - Questionnaire
A2: Sample of Questionnaire
APPENDIX B: Semi-structured Interview
B1: Invitation Letter - Semi-structured Interview
B2: Sample of Consent Form
B3: Sample of Semi-structured Interview
APPENDIX C: Case Study
C1: Invitation Letter – Fuzzy AHP Questionnaire
C2: Sample of Fuzzy AHP Questionnaire
APPENDIX D: List of Publications
246 Appendices
APPENDIX A1: INVITATION LETTER-QUESTIONNAIRE
Invitation to Questionnaire Survey Sustainability Based Life-Cycle Costing Analysis (LCCA) for Highways
TO WHOM IT MAY CONCERN Dear Sir/Madam I am a doctoral candidate in the School of Urban Development, at Queensland University of Technology (QUT). Currently, I am doing a research that aims to develop the life-cycle cost analysis (LCCA) model to measure the benefit of sustainability versus financial viability in highway infrastructure project management. I am looking for the expertise of construction stakeholders in highway and road infrastructure development such as local authorities and government agencies, contractors, specialist contractors in highway development, project managers, quantity surveyors, engineers, planners and developers. Your relevant experience and expertise in highway infrastructure is valuable and you are invited to participate in a questionnaire. If you agree, you will be sent the questionnaire. We will highly appreciate, if you could forward this request to your colleagues and staffs involved in this project and highway infrastructure development, where applicable. Details of the questionnaire and how to participate can be found by clicking on the following link: http://www.surveymonkey.com/s.aspx?sm=Sw5Qal3Cvibf_2bHDvz_2bx3qg_3d_3d Password: 82105 This questionnaire is divided into 6 sections and will take about 10-15 minutes to complete. This questionnaire serves to identify the cost elements in life-cycle costing analysis, particularly those construction stakeholders use when making decisions and selecting highway infrastructure projects. Please note there is no expected right or wrong answer for each question. I am seeking your expert comments. All the answers will remain confidential, and all the information will be analysed in general, without reference to specific individuals (See the back of this letter for more details). If you have any queries about this project, please contact me or my Principal Supervisor, Prof. Dr Jay Yang on (07)31381028 or QUT Research Ethic office on (07)31382340 for further information about the ethical conduct of the project. Your contribution towards this study is greatly appreciated! Yours sincerely Kai Chen Goh Postgraduate Candidature School of Urban Development Faculty of Built Environment & Engineering Queensland University of Technology Australia Tel : +61 (07)3138 2105
+61 (07)3138 7647 Mobile : +61 (0)433902219 Email : [email protected]
Appendices 247
QUT is committed to researcher integrity and the ethical conduct of research projects. However, if you do have any concerns or complaints about the ethical conduct of the project you may contact the QUT Research Ethics Officer on 3138 2340 or
Additional Information Participation Thank you for your time to consider this survey. Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT. Please note that it will not be possible to withdraw, once you have submitted the questionnaire.
Risks There are no risks beyond normal day-to-day living associated with your participation in this project.
Confidentiality All comments and responses are anonymous and will be treated confidentially. The names of individual persons are not required in any of the responses.
Consent to Participate The return of the completed questionnaire is accepted as an indication of your consent to participate in this project.
Questions / further information about the project Please contact the researcher team members named above to have any questions answered or if you require further information about the project.
Concerns / complaints regarding the conduct of the project
[email protected]. The Research Ethics Officer is not connected with the research project and can facilitate a resolution to your concern in an impartial manner.
248 Appendices
APPENDIX A2: SAMPLE OF QUESTIONNAIRE
Survey Time frame: Please take approximately 10-15 minutes to complete the questionnaire.
SUSTAINABILITY BASED LIFE-CYCLE COSTING (LCC) ANALYSIS IN HIGHWAY PROJECT
Background: With increasing pressure to provide environmentally responsible infrastructure products and services, stakeholders are focusing on the early identification of financial viability and outcome of infrastructure projects. Traditionally, there has been an imbalance between sustainable measures and project budget. However, industry is under pressure to continue to return profit, while better adapting to current and emerging global issues of sustainability. For the highway infrastructure sector to contribute to sustainable development in Australia, it needs to address relevant sustainability criteria while ensuring financial viability and efficiency. This research aims to further develop the life- cycle cost analysis (LCCA) model to measure the benefit of sustainability versus financial viability in highway infrastructure project management. Objective: This questionnaire aims to identify the various categories of cost elements that are related to life-cycle costing analysis (LCCA) and at the same time complement the concept of sustainability. Once these cost elements are identified, they will be used to further develop the LCCA model to facilitate decision making in highway project management. Private and Confidential: All responses will be kept strictly confidential and will only be used for research purposes.
Private and Confidential: No information provided here will be used to identify any individual respondent in either the analysis of results or dissemination of findings. 1. How do you classify your company?
2. Your experience in the construction industry is (years)?
Consulting Contractor Developer Government Agency Other (Please Specify)
1-5 6-10 11-15 16-20 Above 20
SECTION 1: COMPANY’S TECHNICAL EXPERTISE
Appendices 249
3. Please indicate the type of road infrastructure project do you mostly undertaken by ticking the appropriate boxes.
4. Please indicate your role in highway projects?
Road and highway construction Road and highway extension works Road and highway maintenance works Other (Please Specify)
Local Authority and Government Agency Project Manager Designer/ Engineer Quantity Surveyor Planner Contractor Specialist/ Subcontractor Developer Other (Please Specify)
250 Appendices
INSTRUCTION FOR SECTION 2
Based on your experience, please rate the significance of the cost elements listed in order to make the life-cycle cost analysis (LCCA) more sustainable in highway projects.
How important are each of the following sustainability-related cost elements and issues when selecting a highway infrastructure projects? (Please tick level of importance)
i. Agency Cost and Issues
Categories Description Level of Importance Low ---------High 1 2 3 4 5 Initial Construction Costs
Labour costs including cost allocation of workers in highway projects.
Material costs including materials needed for highway construction.
Plant and equipment costs including plant and machinery used in highway construction.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Maintenance Major maintenance activities are necessary only a few
times throughout the design life of a highway to distress and maintain its quality
Routine maintenance normally undertaken either annually for minor level distresses and maintenance of the pavement quality.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Pavement Upgrading Costs
Rehabilitation costs including structural enhancements that extends the service life of an existing pavement and/or improve its load carrying capacity.
Pavement extension costs including extension for driveways in highway projects.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Pavement End-of-Life Costs
Cost allocation for demolition activities on the pavement layer together with the road elements.
Cost to recycle and reuse materials reclaimed from pavements and to reduce disposal of asphalt materials.
Disposal costs including managing cost of disposing asphalt and other excavated materials.
Other cost elements and issues considered important in highway projects based on this category (please specify)
SECTION 2: SUSTAINABILITY RATING COST ELEMENTS
Appendices 251
ii. Social Cost and Issues
Categories Description Level of Importance Low -------High 1 2 3 4 5 Vehicle Operating Costs
Elements of vehicle operation including cost for fuel and oil consumption, tyre wear, vehicle maintenance, vehicle depreciation and spare parts.
Road tax and insurances including costs for users due to policies and regulations.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Travel Delay Costs
Reduced speed through work zone increases the value of time spent on the journey to the destination.
Traffic congestion increases the value of time spent on the road and results in vehicle idling and produces high levels of emissions.
Other cost elements and issues considered important in highway projects based on this category (please specify)
Categories Description Level of Importance Low -------High 1 2 3 4 5 Social Impact Influence
Cost of resettling people when land is resumed for highway infrastructure project.
Property devaluation caused by increased traffic creating additional pollution.
Reduction of cultural heritage and healthy landscapes due to highway construction impacting on tourism industry.
Community cohesion decreases when highway construction directly influences housing diversity, social alienation, social interaction and exacerbated urban problems.
Negative visual impact due to highway construction reducing recreational land and landscape beauty.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Accident Cost Economic value of damage to vehicles and road
infrastructures; crash prevention and protection expenditures.
Internal costs when victims suffer injuries or lose quality of life and medical treatment costs.
External costs of unemployment and uncompensated grief and lost companionship to crash victim’s family and friends.
Other cost elements and issues considered important in highway projects based on this category (please specify)
252 Appendices
iii. Environmental Cost and Issues
Categories Description Level of Importance Low ---------High
1 2 3 4 5 Solid Waste Generation
Dredged or excavated material including cost of extracting ground material such as excavation or rock blasting.
Waste management including cost of planning and monitoring of waste materials.
Disposal of material costs including cost of handling, transporting, disposal platform and special treatment of waste.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Pollution Damage cause by Agency Activities
Land use including cost of using native land and land development.
Disturbance and importing of soil material including the cost allocation for the use of plant and machinery.
Extent of tree felling especially on hillsides due to disturbance of soil structure reducing its strength.
Habitat disruption and loss due to use of land for highway construction.
Ecological damage with animals killed directly by motor vehicles; animal behaviour and movement patterns are affected by roads.
Environmental degradation due to increase road accessibility stimulating development, demand for urban services, which stimulates more development and cycle of urbanization.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Resource Consumption
Fuel consumption including cost of natural resources in the production and operation of motor vehicles.
Cost of energy consumption for equipment during construction and maintenance of road; followed by usage of roadway services.
Other cost elements and issues considered important in highway projects based on this category (please specify)
Appendices 253
5. Do you think the sustainability-related cost elements discussed above will influence the decision of selecting a highway project?
Categories Description Level of Importance Low ---------High
1 2 3 4 5 Noise Pollution
Cost of barriers including walls and other structures, trees, hills, distance and sound- resistant buildings (e.g., double-paned windows) to reduce noise impacts.
Rougher surfaces tend to produce more tyre noise, and certain pavement types emit less noise.
Vehicles with faster acceleration, harder stopping and faulty exhaust systems tend to produce high engine noise levels.
Driver attitude and vehicle congestion produce disturbance noises such as horns.
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Air Pollution Effects on human health due to highway construction
including long term diseases and health problems.
Dust emission created during road construction process and road maintenance.
CO2 emission causes green house problem and global warming
Other cost elements and issues considered important in highway projects based on this category (please specify)
1 2 3 4 5 Water Pollution
Loss of wetland due to pavement construction which reduces flows, plant canopy and surface and groundwater recharge.
Hydrological impacts including stormwater problems that increase impervious surfaces, concentrated runoff and flooding.
Other cost elements and issues considered important in highway projects based on this category (please specify)
Yes No (please specify)
254 Appendices
6. Do you have any other comments about this project either relating to the previous questions, or otherwise?
Thank you for completing this questionnaire. Your time and cooperation is greatly appreciated as your effort will contribute to the development of a new and practical model for stakeholders to evaluate investment decisions and reach an optimum balance between financial viability and sustainability deliverables in highway infrastructure project management.
Please complete the following personal details for contact purposes only (confidential):
Your Name : Company Name : Email Address : Phone Number : Would you like a copy of our research findings? Yes No
Please save it and send it back to
[email protected] Thank you
Appendices 255
APPENDIX B1: INVITATION LETTER- SEMI-STRUCTURED INTERVIEW
Invitation for Interview Participation
TO WHOM IT MAY CONCERN Dear Sir/Madam I am a doctoral candidate in the School of Urban Development, at Queensland University of Technology (QUT). My research aims to develop the life-cycle cost analysis (LCCA) model to measure the benefit of sustainability versus financial viability in highway infrastructure project management.
Sustainability Based Life-Cycle Costing Analysis (LCCA) for Highways
I am looking for the expertise of construction stakeholders in highway and road infrastructure development such as local authorities and government agencies, contractors, specialist contractors in highway development, project managers, quantity surveyors, engineers and planners. Your relevant experience and expertise in highway infrastructure is valuable and you are invited to participate in this interview. If you agree, please email me at: [email protected] or [email protected]. We can arrange the time that suits to your schedule to conduct this interview. This interview will take about 30-45 minutes to complete. The interview serves to seek for comments and perspectives on how the sustainable related cost elements and issues can be measured in life-cycle costing analysis, particularly those construction stakeholders concern when making decisions and selecting highway infrastructure projects. Please note there is no expected right or wrong answer for each question. I am seeking your expert comments. All the answers will remain confidential, and all the information will be analysed in general, without reference to specific individuals (See the below of this letter for more details). If you have any queries about this project, please contact me or my Principal Supervisor, Prof. Dr Jay Yang on (07)31381028 or QUT Research Ethic office on (07)31382340 for further information about the ethical conduct of the project. Your contribution towards this study is greatly appreciated!
Yours sincerely
Kai Chen Goh
Postgraduate Candidature School of Urban Development Faculty of Built Environment & Engineering Queensland University of Technology Australia Tel : +61 (07)3138 2105
+61 (07)3138 7647 Mobile : +61 (0)433902219 Email : [email protected]
256 Appendices
Additional Information Participation Thank you for your time to consider this interview. Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT. Please note that it will not be possible to withdraw, once you have submitted the questionnaire.
Risks There are no risks beyond normal day-to-day living associated with your participation in this project.
Confidentiality All comments and responses are anonymous and will be treated confidentially. The names of individual persons are not required in any of the responses.
Consent to Participate The return of the completed questionnaire is accepted as an indication of your consent to participate in this project.
Questions / further information about the project Please contact the researcher team members named above to have any questions answered or if you require further information about the project.
QUT is committed to researcher integrity and the ethical conduct of research projects. However, if you do have any concerns or complaints about the ethical conduct of the project you may contact the QUT Research Ethics Officer on 3138 2340 or
Concerns / complaints regarding the conduct of the project
[email protected]. The Research Ethics Officer is not connected with the research project and can facilitate a resolution to your concern in an impartial manner.
Appendices 257
APPENDIX B2: SAMPLE OF CONSENT FORM
CONSENT FORM for QUT RESEARCH PROJECT
“Sustainability Life-Cycle Costing Analysis (LCCA) in Road
Infrastructure Project”
Statement of consent
By signing below, you are indicating that you:
• have read and understood the information document regarding this project
• have had any questions answered to your satisfaction
• understand that if you have any additional questions you can contact the research team
• understand that you are free to withdraw at any time, without comment or penalty
• understand that you can contact the Research Ethics Officer on 3138 2340 or [email protected] if you have concerns about the ethical conduct of the project
• agree to participate in the project
Name
Signature
Date / /
258 Appendices
APPENDIX B3: SAMPLE OF INTERVIEW
1. Does your organisation currently apply LCCA in determining pavement type for highway infrastructure?
Interview Questions
2. Does you organisation plan to utilise LCCA in determining pavement type for highway projects in future?
3. How long do you think is relevant for the analysis period of LCCA? 4. What discount rate do you utilise? 5. Please list the highway maintenance treatments that you will consider in
LCCA evaluation and at which year(s) during the analysis period do you assume they will occur: (i.e. fog sealing @ year 6, milling with overlay @ year 12, etc.).
6. Based on the current practice or your experience, what are the types of data (Historical and Theoretical Data) are used to determine the type and frequency of the highway maintenance treatments?
7. In life-cycle cost analysis (LCCA), will you include sustainability-related costs in your analysis?
7.1. And if so, please briefly explain how agency cost is determined and calculated based on the list below.
Initial Construction Costs Labours Cost Materials Cost Plants and Equipments Cost
Maintenance Costs Major Maintenance Cost Routine Maintenance Cost
Pavement Upgrading Costs Rehabilitation Cost Pavement Extension Cost
Pavement End-of-Life Costs Demolition Cost Disposal Cost Recycle and Reuse Cost
7.2. And if so, please briefly explain how social cost is determined and calculated based on the list below.
Vehicle Operating Costs Vehicle Elements Cost Road Tax and Insurance Cost
Travel Delay Costs Speed Changing Cost Traffic Congestion Cost
Social Impact Influence
Cost of Resettling People Property Devaluation Reduction of Culture Heritages and Healthy Landscapes Community Cohesion Negative Visual Impact
Accident Cost Economy Value of Damages Internal Cost External Cost
7.3. And if so, please briefly explain how environmental cost is determined and calculated based on the list below.
Appendices 259
Solid Waste Generation Cost
Cost of Dredge/Excavate Material Waste Management Cost Materials Disposal Cost
Pollution Damage by Agency Activities
Land Use Cost Distraction to Soil Extent of Tree Felling Habitat Disruption and Loss Ecology Damage Environmental Degradation
Resource Consumption Fuel Consumption Cost Energy Consumption Cost
Noise Pollution
Cost of Barriers Tire Noise Engine Noise Drivers’ Attitude
Air Pollution
Effects to Human Health Dust Emission CO2 Emission
Water Pollution Loss of Wetland Hydrological Impacts
8. What are the limitations in the estimation and calculation methods for the social and environmental cost and issues in current LCCA practice?
9. What are the difficulties to emphasise sustainability-related cost elements in LCCA practice for highway infrastructure project?
10. What is your suggestion to improve the measurement methods of social and environmental costs and to enhance sustainability in LCCA for highway projects?
260 Appendices
APPENDIX C1: INVITATION LETTER- FUZZY AHP QUESTIONNAIRE
Invitation for Fuzzy AHP Questionnaire Participation
TO WHOM IT MAY CONCERN Dear Sir/Madam This research study intends to investigate and evaluate the highway infrastructure projects by comparing alternatives based on the sustainability- related cost components. Previous survey (Questionnaire Survey) was designed to extract a group of sustainability-related cost components to assess the critical cost factors in highway investment decision. In this survey (Fuzzy AHP Questionnaire), this study aims to prioritise these critical components by pair-wise comparison, and to investigate the interdependent relationship between the alternatives and the sustainability indicators of the highway infrastructure in this project.
Sustainability Based Life-Cycle Costing Analysis (LCCA) for Highways
Your inputs are greatly valuable and we do hope that you can participate in this final survey. Your relevant experience and expertise in highway infrastructure is valuable and you are invited to participate in this survey. If you agree, please email me: [email protected]. We can arrange the time that suits to your schedule to conduct this survey. This survey will take about 30 minutes to complete. All the answers will remain confidential, and all the information will be analysed in general, without reference to specific individuals (See below of this letter for more details). If you have any queries about this project, please contact me or my Principal Supervisor, Prof. Dr Jay Yang on (07)31381028 or QUT Research Ethic office on (07)31382340 for further information about the ethical conduct of the project. Your contribution towards this study is greatly appreciated! Yours sincerely Kai Chen Goh Postgraduate Candidature School of Urban Development Faculty of Built Environment & Engineering Queensland University of Technology Australia Tel : +61 (07)3138 2105
+61 (07)3138 7647 Mobile : +61 (0)433902219 Email : [email protected]
Appendices 261
QUT is committed to researcher integrity and the ethical conduct of research projects. However, if you do have any concerns or complaints about the ethical conduct of the project you may contact the QUT Research Ethics Officer on 3138 2340 or
Additional Information Participation Thank you for your time to consider this survey. Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT. Please note that it will not be possible to withdraw, once you have submitted the questionnaire.
Risks There are no risks beyond normal day-to-day living associated with your participation in this project.
Confidentiality All comments and responses are anonymous and will be treated confidentially. The names of individual persons are not required in any of the responses.
Consent to Participate The return of the completed questionnaire is accepted as an indication of your consent to participate in this project.
Questions / further information about the project Please contact the researcher team members named above to have any questions answered or if you require further information about the project.
Concerns / complaints regarding the conduct of the project
[email protected]. The Research Ethics Officer is not connected with the research project and can facilitate a resolution to your concern in an impartial manner.
262 Appendices
Instruction Each section in this survey consists of a number of question sets. Each question within a question set asks you to compare two factors/criteria at a time (i.e. pair-wise comparisons) with respect to a third factor/criterion. Please read each question carefully before giving your opinions/answers, and answer according to the following rating scale:
APPENDIX C2: SAMPLE OF FUZZY AHP QUESTIONNAIRE
Linguistic Scale for importance Abbreviation Absolutely More Important AMI
Very Strong More Important VSMI Strong More Important SMI Weakly More Important WMI
Equal Important EI Weakly Low Important WLI Strong Low Important SLI
Very Strong Low Important VSLI Absolutely Low Important ALI
Example If a sustainability indicator on the left is more important than the one on the right, put cross mark ‘‘X’’ to the left of the ‘‘Equal Importance’’ column, under the importance level (column) you prefer. On the other hand, if a on the left is less important than the one on the right, put cross mark “X” to the right of the equal important “EI” column under the importance level (column) you prefer based on the project preference. Q1. How important is the agency costs and issues when it is compared to social costs and issues? Q2. How important is the agency costs and issues when it is compared to environmental costs and issues? Q3. How important is the environmental costs and issues when it is compared to social costs and issues? Answers to some of the sample questions from the questionnaire Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Q1 X Q2 X Q3 X
Appendices 263
Section 1: Relative importance of the following sustainability-related cost components with the respect to the projects
Q1. How important is the agency cost components when it is compared to social cost components? Q2. How important is the agency cost components when it is compared to environmental cost components? Q3. How important is the environmental cost components when it is compared to social cost components? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Q1 Q2 Q3
The relative importance of agency cost components sub criteria Q4. How important is the material cost components when it is compared to plant and equipment cost components? Q5. How important is the material cost components when it is compared to major maintenance cost components? Q6. How important is the material cost components when it is compared to rehabilitation cost components? Q7. How important is the plant and equipment cost components when it is compared to major maintenance cost components? Q8. How important is the plant and equipment cost components when it is compared to rehabilitation cost components? Q9. How important is the major maintenance cost components when it is compared to rehabilitation cost components? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Q4 Q5 Q6 Q7 Q8 Q9
The relative importance of social cost components sub criteria Q10. How important is the road accident- internal cost components when it is compared to road accident- economic value of damage cost components? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Q10 The relative importance of environmental cost components sub criteria Q11. How important is the hydrological impacts when it is compared to loss of wetlands?
264 Appendices
Q12. How important is the hydrological impacts when it is compared to cost of barriers? Q13. How important is the hydrological impacts when it is compared to disposal of material costs? Q14. How important is the loss of wetlands when it is compared to cost of barriers? Q15. How important is the loss of wetlands when it is compared to disposal of material costs? Q16. How important is the cost of barriers when it is compared to disposal of material costs? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Q11 Q12 Q13 Q14 Q15 Q16
Section 2: Relative importance of the following sustainability-related cost components with the respect alternative to the projects The relative importance of agency category
Agency category
Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Material Costs ALT 1 ALT 2 ALT 3
Plant and Equipment
Costs
ALT 1 ALT 2 ALT 3
Major Maintenance
Costs
ALT 1 ALT 2 ALT 3
Rehabilitation Costs
ALT 1 ALT 2 ALT 3
The relative importance of social category
Social category
Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Road Accident –
Internal Costs
ALT 1 ALT 2 ALT 3
Road Accident – Economic Value of Damage
ALT 1 ALT 2 ALT 3
Appendices 265
The relative importance of environmental category Environmental
category Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI
Hydrological Impacts
ALT 1 ALT 2 ALT 3
Loss of Wetland
ALT 1 ALT 2 ALT 3
Cost of Barriers
ALT 1 ALT 2 ALT 3
Disposal of Material Costs
ALT 1 ALT 2 ALT 3
All collected data will be kept strictly confidential and anonymous, and they will
be used for academic research purposes ONLY.
Thank you for completing the questionnaire. We appreciate your time.
~End~
266 List of Publications
Goh, K. C. and Yang. J. 2009a. "Extending life-cycle costing (LCC) analysis for sustainability considerations in road infrastructure projects." In Proceedings of 3rd CIB International Conference on Smart and Sustainable Built Environment, SASBE2009, Aula Congress Centre, Delft, Amsterdam, edited.
Goh, K. C. and Yang. J. 2010a. "Measuring costs of sustainability issues in highway infrastructure: perception of stakeholders in Australia, edited, 428-434: Faculty of Construction and Land Use, The Hong Kong Polytechnic University.
Goh, K. C. and Yang. J. 2010b. "Responding to Sustainability Challenge and Cost Implications in Highway Construction Projects." In CIB 2010 World Congress, Conseil International du Bâtiment (International Council for Building), The Lowry, Salford Quays. , edited, 102.
Goh, Kai Chen and Yang. Jay 2010c. "The importance of environmental issues and costs in Life Cycle Cost Analysis (LCCA) for highway projects." In The 11th International Conference on Asphalt Pavement, , Nagoya Congress Center, Aichi, edited, 228-235: International Society for Asphalt Pavements (ISAP).
Goh, Kai Chen and Yang. Jay 2010d. "Incorporating sustainability measures in life-cycle financial decision making for highway construction." In New Zealand Sustainable Building Conference - SB10, Te Papa, Wellington, edited.
Goh, Kai Chen and Yang. Jay 2009b. "Developing a life-cycle costing analysis model for sustainability enhancement in road infrastructure project." In Rethinking Sustainable Development : Planning, Infrastructure Engineering, Design and Managing Urban Infrastructure, Queensland University of Technology, Brisbane, edited, 324-331.
Yang, Jay and Goh. Kai Chen 2009. "Developing a Life-cycle Costing Analysis Model for Sustainable Highway Infrastructure Projects " In Proceedings of the 14th International Symposium on Construction Management and Estate (CRIOCM2009), Nanjing, edited, 2460-2465.
APPENDIX D: LIST OF PUBLICATIONS