This economic analysis tool can help determine the best option for infrastructure projects by calculating the lowest cost over their life cycles.

In the face of growing public scrutiny, officials at transportation agencies are under increasing obligation to demonstrate their stewardship of taxpayer investments in the construction and maintenance of highway infrastructure, including bridges. Many agencies are investigating economic tools such as life-cycle cost analysis (LCCA) that will help them choose the most cost-effective alternatives and communicate the value of those choices to the public.

Any transportation agency can use LCCA to determine the design alternative that will accomplish a project's objectives at the lowest overall cost. By factoring in all costs over a project's total multiyear life cycle, not just the initial construction investment, LCCA helps to ensure that an agency can avoid selecting an alternative based solely on the lowest initial cost. Agencies typically use LCCA to choose among design alternatives that would deliver the same level of performance during normal operations over the project's life cycle.

Many Federal, State, and local agencies have successfully applied LCCA to analyze options for investments in highway infrastructure, particularly for decisions concerning the reconstruction, rehabilitation, preservation, and maintenance of pavements. LCCA concepts are even built into some pavement management systems, and the Federal Highway Administration (FHWA) recently developed a software tool called RealCost to support the application of LCCA in pavement design. RealCost incorporates probabilistic evaluation of multiple variable inputs including costs, service lives, and economic factors to estimate the likelihood of net present value (NPV).

Various States and organizations also have established their own procedures for analyzing life-cycle costs. Published and unpublished surveys of State practices indicate that many States currently use LCCA methods for making at least some pavement design and maintenance decisions, according to Eric Gabler, an economist in the Office of Asset Management at FHWA.

The use of LCCA is not widespread, however, for decisions about bridge projects. "States have been much less likely to apply LCCA to bridge design and maintenance decisions," Gabler says. "There is, however, a growing recognition of the importance of life-cycle concepts within the bridge community."

In addition, on August 10, 2005, the President signed into law the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). "Section 1904 of this law requires the application of value engineering methods," says Gabler, "including the analysis of life-cycle costs, to bridge projects with an estimated total cost of $20 million or more. Therefore, State applications of LCCA to bridge projects are likely to grow in the future."

The projects evaluated using LCCA may include maintenance, deck replacement and widening, strengthening, superstructure replacement, or bridge replacement.

Steve Chase, the research program manager and acting director of the Office of Infrastructure Research and Development at the FHWA Turner-Fairbank Highway Research Center (TFHRC) in McLean, VA, emphasizes the importance of developing life-cycle cost models for future bridge design and management. "The development of rational, realistic, accurate, and usable life-cycle cost methodologies and models is an important element of FHWA's research and development programs for highway infrastructure," he says. "Life-cycle cost models are essential for FHWA's Bridges of the Future initiative because they provide the objective function--the method for finding the best solution-for system optimization. They also are essential for FHWA's stewardship and management initiative because they are the underpinning of asset management systems."

Life-cycle cost analysis can support bridge design and management decisions by helping engineers evaluate the economic effectiveness of proposed construction or rehabilitation projects, using all costs incurred related to the bridge during its multiyear life cycle. All agency costs involved in each alternative over the planning period are factored into the analysis, potentially including costs for the following:

• Design

• New construction

• Contingency and administration

• Right-of-way

• Inspection and routine maintenance

• Painting and repair

• Rehabilitation and strengthening

• Deck widening, demolition, and replacement

• Superstructure demolition and replacement

• Total bridge demolition and replacement

The analysis should include those costs borne indirectly by users of the bridge and other parties, in addition to costs paid directly by the agency that owns the bridge. User costs include those caused by traffic control and detours due to bridge construction and maintenance, in the form of vehicle operating costs and costs from delays and crashes. The indirect user costs from delay and detours may be due to inadequate horizontal and vertical clearances, inadequate load capacity, environmental damage, congestion, or work zone impacts during construction. Agencies use the costs incurred on the bridge and their timing in computing an NPV of life-cycle costs for each alternative. The alternative with the lowest NPV of costs is the most cost-efficient alternative. In addition to the NPV of costs, political and environmental factors should be considered in deciding which alternative to implement.

Cost estimation could be based on historical data for contract awards and in-house activities, expert elicitation, or prediction. State agencies that use the Pontis bridge management system already have some form of historical data as part of their Pontis database so they do not have to search through hard-copy documents. Some State agencies have used their Pontis databases, which contain element-level data on the cost values and timing for many maintenance, rehabilitation, and replacement (MR&R) actions, to support bridge LCCA.

In recent years, the National Cooperative Highway Research Program (NCHRP) and the National Institute of Standards and Technology (NIST) have produced tools to help State departments of transportation (DOTs) calculate the life-cycle costs of project alternatives for highway bridges.

Bridge Life-Cycle Cost Analysis (BLCCA), developed under NCHRP Project 12-43, is an analysis tool with an engineering-oriented approach that uses models to estimate cost data, traffic growth, bridge condition, and load capacity, both under normal conditions and during construction activities. The cost models include agency, user, and vulnerability costs. Vulnerability costs may include potential costs of damage due to earthquakes, scour, flooding, collision, overload, or fatigue. They are calculated by multiplying the potential cost of a particular type of damage, such as seismic displacement or scour, by the likelihood of that damage occurring.

Developed by NIST, Bridge Life-Cycle Cost (BridgeLCC) is software with an easy-to-use interface that enables designers to view the life-cycle costs for project alternatives from different perspectives, such as that of cost holders (the person or agency that pays the cost directly or indirectly), bridge components, application of new technologies, and cost timeline.

Performing a life-cycle cost analysis, whether using an off-the-shelf tool or a solution developed by a State DOT, can enhance an agency's ability to select cost-efficient solutions for bridge improvement projects. LCCA tools help engineers and designers focus on the long-term implications of their decisions, boosting their engineering and experience judgment. Just as important, this type of analysis helps decisionmakers understand future maintenance requirements and costs, enabling them to make more informed decisions from the standpoint of conserving scarce public resources.

"The future challenge for bridge owners is to build economical, longer lasting, and low-maintenance bridges with minimal disruption to traffic," says Thomas Everett, team leader for bridge programs in the FHWA Office of Bridge Technology. "Bridges that incorporate the latest advances in materials, design methodologies, and construction techniques will help address this challenge."

Successfully applying life-cycle cost analysis to bridge management depends to a large extent on the availability and quality of relevant data, such as types, costs, and frequency of bridge maintenance and related activities. Over the past year, the Bridge Management Information Systems Lab (BMISL) at TFHRC undertook a pilot study of current practices in 10 States regarding the application of LCCA to bridge management. In particular, the study focused on efforts involving bridges with concrete decks.

A survey was sent to the 10 States, and 6 responded. Analysis of the survey results revealed that the States generally perform similar types of maintenance activities: deck overlays, sealing, and patching; wearing surface replacement; joint repair and replacement; deck widening; and deck replacement, including removal and disposal. Though their activities are similar, the States differ in their methods of collecting and maintaining data, the level of detail, and their confidence in the quality of the cost data and the cycles or frequency of activities. In general, the responding States rely on expert opinion rather than cost data as the main source for predicting repair cycles. A few States, however, have developed models to predict the life cycle of the bridge deck, for example, by using a repair matrix based on the condition rating and the actions taken.

The Ohio DOT (ODOT) is among the State agencies that participated in the FHWA study. In March 2001, ODOT studied the I-90 bridge over the Grand River. The 265-meter (870-foot)-long bridge was built in 1960 as twin steel truss structures. Each structure carries two lanes on a 12.2-meter (40-foot)-wide deck.

At the time that ODOT conducted the LCCA study of the I-90 bridge over the Grand River, the bridge had a superstructure appraisal rating of 4 and sufficiency ratings of 61.4 for the left span and 67.1 for the right span. An appraisal rating is indicative of the superstructure condition of a bridge and is done on a scale of discrete values from 0 through 9, with 9 being an excellent condition. A rating of 4 and below shows that the superstructure is in a deficient condition. The sufficiency rating is a numerical value that gives an indication of a bridge's eligibility for rehabilitation or replacement and is based on structural adequacy, safety, serviceability, functional obsolescence, and essentiality for public use. Sufficiency is measured on a scale of 0 for the worst possible state to 100 for the best possible state. The appraisal and sufficiency ratings for the Grand River bridge indicated that it was structurally deficient because of the poor condition of the superstructure and should be rehabilitated.

ODOT selected an analysis period of 50 years, starting in 2005 and ending in 2054. Engineers identified 12 alternative strategies to improve the bridge, all with the same benefit of keeping Ohio I-90 in service.

The life cycle of each alternative included five construction or maintenance "projects" with a set of actions to be applied on the bridge. Projects 1, 2, 3, 4, and 5 consisted of actions to be scheduled in the years 2005, 2015, 2025, 2035, and 2045, respectively. Cost components during the 50-year analysis period were discounted to the base year (2005) to compare the NPV of the costs for the alternatives. ODOT used a real discount rate of 4.2 percent in the analysis.

Four of the 12 alternatives (A, B, C, and D) used the existing structure in the improvement projects. Alternative A included minimum maintenance only, Alternative B included repair and strengthening in addition to maintenance, and Alternative C included deck replacement and maintenance. Alternatives A, B, and C kept the existing deck width at 12.2 meters (40 feet). Alternative D included maintenance, repair, strengthening, and deck replacement with a wider deck of 15.25 meters (50 feet).

Eight improvement alternatives (E, F, G, H, I, J, K, L) included construction of a new superstructure or a new bridge with a 17-meter (56-foot)-wide deck. Additional roadway width is accounted for by eliminating user costs for delays during construction in the future after a deck-widening project. Crash occurrences and ride ability were not expected to change among the alternatives because the deck will be maintained in fair to good condition.

Alternative E proposed a new steel superstructure to replace the existing one. Alternatives F, H, and J planned for a new concrete structure to replace the existing structure, while Alternatives G, I, and K planned for a new steel replacement structure. (Alternative E has a new steel superstructure only, while Alternatives G-K have a new steel structure that necessitates replacing the entire bridge.) Alternatives F and G considered using the existing curved alignment of the bridge. Alternatives H and I proposed using a bridge alignment tangent to the existing curved alignment. Alternatives J and K planned for using a new tangent alignment for the bridge. Alternative L was a deferred start of Alternative F, in which the construction of a new concrete structure was scheduled for 2015 instead of 2005.

The LCC of the alternatives was composed of agency costs, user costs, industry costs, right-of-way costs, and remaining service life values. Agency costs include those related to inspection, routine maintenance, repair and rehabilitation, and construction project costs based on data in the ODOT summary of contract awards. User costs during construction result from lane closings on the structure, detours, and other impacts created by traffic management. Industry costs--a subset of user costs-result from detours due to size and weight restrictions, creating delays and increased mileage.

The ODOT engineers then estimated residual values at the end of the 50-year study period for each alternative. They assumed that existing superstructures and new concrete superstructures would have no residual values. They also assumed new steel superstructures and existing substructures would have residual values equal to half of the construction value. New substructures were assumed to have three-quarters of the construction values as their residual values.

The LCC study for improving the Ohio I-90 bridge revealed that, for this specific example, alternatives with new construction projects were more cost efficient than alternatives that keep the existing structure over the analysis period.

Among the options using the existing structure, deck replacement Alternative C for this specific example was the most expensive in terms of NPV of costs. The strengthening Alternative B was 33 percent less than the maintenance Alternative A in terms of NPV of costs. Alternative D, with strengthening and deck replacement and widening, was 50 percent less than Alternative A in terms of NPV of costs. In other words, for the existing bridge options (A to D) for this specific example, the analysis led to the conclusion that the strengthening and deck widening alternative was the most cost efficient, followed by deck strengthening only, then maintenance only, and finally deck replacement.

Among the new construction alternatives, the ones that use the existing alignment were more cost efficient than those using a new alignment because of additional roadway and right-of-way costs needed for a new alignment. The ODOT engineers noticed a slight difference in NPV of costs between new concrete and steel alternatives for improving the bridge, with concrete being lower in NPV of costs. Finally, the study demonstrated that delaying the start of a new construction project for the bridge was not cost efficient.

The ranking of alternatives in descending order of NPV of life-cycle costs was C, A, B, K, J, D, I, H, L, E, G, F. Alternative F, new curved concrete structure on the existing alignment, had the lowest LCC and therefore was the best and most cost-efficient alternative. However, Alternative G, new curved steel structure on the existing alignment, was only 3 percent higher than Alternative F in NPV of life-cycle costs, a value likely to be less than the uncertainty in estimating several cost parameters. Thus, Alternative G could also be considered in the decisionmaking process.

In conclusion, the study recommended a new construction project to completely replace the existing structure with a concrete (or steel) beam type structure on the existing alignment of the bridge starting in 2005. The LCC approach used in the ODOT study helped the decisionmakers not only to consider the initial costs for the alternative projects, but also to compare the total costs throughout a longer analysis period. ODOT decisionmakers were able to find the most economical alternative by comparing the NPV of life-cycle costs in base-year dollars for all cost components of the alternatives during a long analysis period.

Matt Shamis, bridge engineer for the FHWA Ohio Division, explains how the LCC tool helps in the selection of bridge improvement projects: "Although most projects involve only informal LCC investigations within the preliminary design process, certain projects are strong candidates for a formal LCC study. When various project alternatives involve complex issues such as differing maintenance costs, differing life spans, large financial investments, and large user costs, a formal LCC is an excellent tool to quantify the pros and cons and help select the proper alternative."

Some States have recognized the need to look beyond initial costs and have taken the practical step of initiating or implementing LCCA in the management of their bridges. Although this is encouraging, some challenges still need to be overcome in order to improve the process. Experts in many States have identified the lack of complete and good quality data as an obstacle to applications of LCCA.

Technical guidance for estimating the cost data needed for bridge LCCA and timing of the actions could prove useful in promoting more applications of this tool to bridge management. The guidance should address all significant agency costs, user costs, vulnerability costs, and other costs borne by affected parties or businesses. Agency costs would need to be estimated as part of an LCCA provided they vary between the alternatives being evaluated. States will likely vary in the importance that they assign to user costs and other nonagency costs relative to agency costs.

Finally, LCCA in bridges could be significantly enhanced over time by treating every bridge as an object and maintaining in a database all activities associated with the bridge throughout its history. The database can include agency costs in contract awards, cycles of maintenance, in-house activities, costs for bridge users, and other costs borne by affected businesses and neighborhoods. Contract and maintenance management systems can be used as potential sources for some of these cost data.

In summary, the application of LCCA to bridges is valuable for developing cost-efficient, long-term, comprehensive plans for optimal design and management that make the most of available resources.

Life-Cycle Cost Calculation and Selection of Alternatives

PROJECT TITLE ――――
ALTERNATIVE ――――
BASE YEAR (Y0) ――――
DISCOUNT RATE (i) ――――

Legend for Chart:

A - (1) TYPE OF COST
B - (2)
C - (3)
D - (4) t = (3) - Y0
E - (5)(5) = (1 + i) - t
F - (6) (6)=(2) X (5)

  A          B          C             D           E         F

AGENCY   $ AMOUNT   TIME OF       TIME FROM   DISCOUNT   PRESENT
COST                OCCURRENCE,   BASE YEAR   FACTOR     VALUE
                    YEAR                                 OF COST

TOTAL DISCOUNTED AGENCY COST (7)

AGENCY   $ AMOUNT   TIME OF       TIME FROM   DISCOUNT   PRESENT
COST                OCCURRENCE,   BASE YEAR   FACTOR     VALUE
                    YEAR                                 OF COST
TOTAL DISCOUNTED USER COST (8)

AGENCY   $ AMOUNT   TIME OF       TIME FROM   DISCOUNT   PRESENT
COST                OCCURRENCE,   BASE YEAR   FACTOR     VALUE
                    YEAR                                 OF COST

USER COST WEIGHT (9)(*)

TOTAL WEIGHTED USER COST (10) = (8) X (9)

AGENCY   $ AMOUNT   TIME OF       TIME FROM   DISCOUNT   PRESENT
COST                OCCURRENCE,   BASE YEAR   FACTOR     VALUE
                    YEAR                                 OF COST

TOTAL DISCOUNTED OTHER COSTS (11)

OTHER COSTS WEIGHT (12)(*)

TOTAL WEIGHTED OTHER COSTS (13) = (11) X (12)

NET PRESENT VALUE OF LIFE-CYCLE COSTS (14) = (7) + (10) + (13)

(*) USE 1.0 IF COSTS HAVE SAME
WEIGHT AS AGENCY COST; OTHERWISE,
USE THE WEIGHT CONVENIENT TO THE AGENCY.

Source: Adapted and modified from the "Worksheets for LCC
Analysis" used in Fuller, S.K. and S.R. Petersen, Life-Cycle
Costing Manual for the Federal Energy Management Program,
NIST Handbook, U.S. Department of Commerce,
Technology Administration, National Institute of
Standards and Technology, 1995,
www.bfrl.nist.gov/oae/publications/handbooks/135.pdf.

Step 1. Comparison of life-cycle costs

- List all alternatives analyzed, their present value costs, and LCCs

- Compare the LCCs

- Rank the alternatives in ascending order of their LCCs

Step 2. Sensitivity analysis

- Check for uncertainty about the input values - Perform sensitivity analysis, if needed, and enter results - Correct ranking of alternatives, if appropriate

Step 3. Selection of preferred alternative

- Enter the top-ranked alternative and document reasons

- If LCCs are identical, consider nonquantifiable benefits or costs for ranking

ALTERNATIVE          TITLE/DESCRIPTION

A1
A2
...
An

1. ALTERNATIVES ANALYZED

ALTERNATIVE          A1     A2   …   An

LIFE-CYCLE COST

TOTAL LCC

RANK

2. SENSITIVITY ANALYSIS

NEW RANK

3. SELECTION BY LCC

ALTERNATIVE       RANK       TITLE/DESCRIPTION

COMMENTS:

(Above) When the appraisal and sufficiency ratings for this bridge with two spans carrying I-90 over the Grand River in Lake County, OH, indicated that it was structurally deficient because of the poor condition of the superstructure and should be rehabilitated, the Ohio Department of Transportation (ODOT) conducted an LCCA study to determine which potential rehabilitation strategy would be the most cost effective. Photo: Barr Engineering Company.

For this I-76 reconstruction project in northeastern Colorado in 2001 and 2002, alternative pavement designs were developed and evaluated using deterministic LCCA during design of the four-lane rural interstate section.

Simulation results for a pavement design showing variation and magnitude of possible outcomes. The charts were developed using the RealCost software and show identical information in both frequency distribution and cumulative probability curves to aid in identifying critical factors. Source: FHWA.

The cashflow timeline of the cost components for the different alternatives identified in the LCCA of the Grand River bridge is shown here. Source: Adel Al-Wazeer.

This figure shows the comparison of the NPV of costs for the different alternatives identified in the LCCA of the Grand River bridge. Source: Adel Al-Wazeer.

A "before" view of the I-90 bridge over the Grand River.

~~~~~~~~

By Adel Al-Wazeer; Bobby Harris and Christopher Nutakor

Adel Al-Wazeer is a senior research engineer with bd Systems, Inc., working at the FHWA Bridge Management Information Systems Laboratory at TFHRC.

Bobby Harris is senior manager at bd Systems, Inc., and serves as the contractor's project manager at the FHWA Bridge Management Information Systems Laboratory. He has 18 years of experience in transportation information technology design and implementation, with more than 8 years supporting bridge management research.

Christopher Nutakor, Ph.D., P.E., P.M.P., is a senior analyst and research engineer with bd Systems, Inc., also working at the FHWA Bridge Management Information Systems Laboratory.