AirCost LCCA Software
An overview of AAPTP 06‐06
American Concrete Pavement Association, Southeast Chapter
Paul M. Dalbey, P.E.
American Concrete Pavement Association, Southeast Chapter Concrete Airport Pavement Workshop Atlanta, GA O t b 28 2010 October 28, 2010Overview
Overview
Life‐Cycle Cost Analysis What is a LCCA? Why is an LCCA important to your project? What do we get as a result of our LCCA? Origins of AAPTP 06‐06 AirCost SoftwareWhat is a Life‐Cycle Cost Analysis?
What is a Life‐Cycle Cost Analysis?
Analysis technique that helps managers, engineers, planners, and
other decision makers determine the most cost‐effective other decision makers determine the most cost effective pavement alternative over a given period of time
Multiple options can be subjectively evaluated
• Initial construction or rehabilitation
• Major vs minor rehabilitation vs preventive maintenance
• Concrete vs AsphaltConcrete vs Asphalt
• 20‐year design vs 40‐year design Should be completed as early as possible in the project d l h development phase Identifies “total” costs of different plans over the course of the analysis period analysis period LCCA IS A TOOL, NOT AN ANSWER!!!!
Possible Life‐Cycle Alternatives of Pavement
Possible Life‐Cycle Alternatives of Pavement
Typical Life Cycle Cost Diagram
Typical Life Cycle Cost Diagram
Initial Construction B Initial Construction A Rehab 1B($)
Rehab 1A Rehab 2A Rehab 3AC
ost
(
End-of-Analysis Salvage ValueC
Ti
Time
LCCA “Ingredients”
LCCA Ingredients
Alternatives • Overall pavement cycle strategy • Initial Construction • Rehabilitation strategies Variables • Discount Rate • Service Life • Unit Costs • Analysis PeriodDiscount Rate
Discount Rate
Variable that represents real value of money over time
Allows analyst to convert costs of future rehabilitations into
present‐day dollars.
As general rule of thumb discount rate = interest – inflation
As general rule of thumb, discount rate = interest – inflation Use a single discount rate for entire analysis Higher discount rate favor alternatives with higher future g g spending Lower discount rate favor alternatives with higher up‐front costs Typical value is 4%, values between 3‐5% are acceptable OMB Circular No. A‐94, Appendix C – updated annually
• Based on Treasury Notes and Bonds
• Based on Treasury Notes and Bonds
Service Life
Service Life
Amount of time between construction activities
Measured from completion of construction to the time when the
pavement is structurally inadequate.
“Service” life is typically a little longer than “Design” life
Service life is typically a little longer than Design life
• Service life is typically the time associated with 50% reliability • Design life generally has 85‐95% reliability Each construction activity has its own service life Typically derived from historical performance data If f d t i il bl “ t” i i If performance data is unavailable, use “expert” opinion
Unit Costs
Unit Costs
Unit Cost – price per unit
Typically, each pavement type and thickness is a separate line
item.
• Concrete vs AsphaltConcrete vs Asphalt
• 14” vs 18”, etc.
• May even include separate items for each layer
i l ld ll i l d l i
Material costs would generally include total construction cost
Area of line item required to determine subtotal line cost
To reduce bias unit costs should be based on reliable historical
To reduce bias, unit costs should be based on reliable historical
Analysis Period
Analysis Period
MUST be long enough to include at least one future rehabilitation f h l i event for each alternative State highway agencies commonly use 40 years for new/ reconstruction projects reconstruction projects State highway agencies commonly use 30 years for rehabilitation projects Using longer analysis periods may reduce reliability of performance models and unit cost projections One analysis period is to be used for all alternatives being
One analysis period is to be used for all alternatives being
Steps in Analysis
Steps in Analysis
Typically done with Excel or other software to expedite process. Start with Alternative 1 • Start with Event #1 (initial construction) Get subtotal for each line item in event Sum each line to get event cost in base‐year dollars Use discount rate to determine required investment in base‐year dollars Repeat for each event/rehabilitationp / • Sum costs for each event in Alternative • Calculate Salvage value of pavement at end of analysis period• Repeat for each Alternative
• Repeat for each Alternative
Results
Results
Net Present Worth/Value • Sum of all costs for all events in a given alternative • Represents the entire investment required, in base‐year dollars, to execute alternative Equivalent Uniform Annualized Cost• Represents cost of an annuity to cover NPW based on discount rate
• Represents cost of an annuity to cover NPW based on discount rate
• If analysis period of different alternatives is equal, NPV and EUAC will yield equivalent results
U f l h l ki t b d t t bli h d l b i
Net Present Value
NET PRESENT VALUE
$
)
o
st (
$
C
o
Time
Equivalent Uniform Annualized Cost
Equivalent Uniform Annualized Cost
$
)
o
st (
$
C
o
Time
Agency (Direct) Costs
Agency (Direct) Costs
Physical Costs of Maintenance Activities • Cost of materials • Cost of construction • Cost of maintenance Supplemental Costs • Administrative Costs E i i C t • Engineering Costs • Maintenance of Traffic (MoT) • Often, these are percentages of Physical Costs (~5% typical) Salvage ValueSalvage Value
Salvage Value
Prorated (Remaining) Life • Straight‐line depreciation of final pavement event • Compliant with GASB‐34 • Very easy to calculate • Does not account for structural use of underlying layers id l l Residual Value • Actual value of remaining pavement at end of analysis period if sold or recycled • May be negative value if cost to remove material value of material • Very difficult to estimate due several project‐specific factors• Differences between alternatives is usually not large, especially whenDifferences between alternatives is usually not large, especially when discounted over long periods of time.
User (Indirect) Costs
User (Indirect) Costs
Disruption of revenue as a result of construction activities
Reductions in operations, passengers, and/or cargo
• Passenger Facility Charge
Loss of Daily Operating Revenue
Loss of Daily Operating Revenue • Land fees lost for each arriving plane • Fuel flowage fee Other fees charged by the airport Frequency AND duration of rehabilitation events play major roles in user costs in user costs
Analysis
Analysis
Total cost = Agency Cost (incl. salvage value) + User Cost
Due to complexities of calculating User Cost, some agencies use
only direct costs, esp. in highway LCCA
Final decisions are rarely made solely on the results of an LCCA
Final decisions are rarely made solely on the results of an LCCA Many other factors play into decision of final alternatives • Political • Agency experience with construction • Confidence in LCCA parameters • FundingFunding
Deterministic vs Probabilistic Analysis
Deterministic vs Probabilistic Analysis
Deterministic – One time through procedure • All variables have exact values Discount Rate is fixed All units costs are fixed All service lives are fixed • Result is a single value • Comparison between alternatives can be done easily • Agency often utilize a “buffer” to call alternatives economically equivalent.Deterministic vs Probabilistic Analysis (cont )
Deterministic vs Probabilistic Analysis (cont.)
Probabilistic – 1,000’s of random iterations • Some or all variables are selected based on statistical parameters Normal distribution – μ, σ Triangular distribution – min, max, mode Uniform distribution – min, max • For each iteration, software selects one set value of variables and performs a deterministic analysis • Simulation typically runs up to 5,000 iterations or until convergence • Result is a range of values with a mean and standard deviation• May not give a clear cut “winning” alternative but requires analyst orMay not give a clear cut winning alternative but requires analyst or agency to evaluate some acceptance of risk
Probabilistic Results
Probabilistic Results
AAPTP 06‐06 – Life‐Cycle Cost Analysis
For Airport Pavement
Project to develop h i i f comprehensive overview of current airport LCCA practices Identify and provide guidanceIdentify and provide guidance on most appropriate procedures for airport LCCA l d h Develop LCCA spreadsheet software to handle deterministic and probabilistic analysisp y Develop training materials for implementation of LCCA methodology methodology
Current State of Airport LCCA
Current State of Airport LCCA
Use of LCCA in airfield pavements far behind usage in highway li i applications Most projects are analyzed using in‐house tools or softwareadapted from the highway industry adapted from the highway industry Little documentation specifically aimed at airfield pavement • FAA Northwest Mountain Region’s Design Guide Supplement: PCC Airport P t (S tt 2003) Pavements (Scott, 2003) • Operational Life of Airport Pavements (Garg, Guo, & McQueen, 2004) • Full‐Cost Approach to Airport Pavement Management (McNerney & Harrison, 1995)
FAA Guidance
FAA Guidance
Section 910, FAA Order 5100.38C • FAA offices directed to encourage life cycle‐costing when certain conditions can be met: IFB states LCC will be used in determining low bidder Factors to be considered are specified and quantifiable IFB explains how costs for each factor will be calculated • Unit costs A l i i d • Analysis period • “The item that meets the bidding specification and has the lowest life‐cycle cost is the successful bid.”FAA Guidance (cont )
FAA Guidance (cont.)
FAA AC 150/5320‐6E, Appendix 1 • Step‐by‐Step procedure for conducting LCCA • Recommendations Net Present Worth Discount Rate = 4.0% Analysis Period = 20 years Salvage value as remaining life of final rehabilitation • “Evaluate the most promising alternatives based on costs, time required, operational constraints, chance for success, etc.”AirCost
AirCost
Deterministic and probabilistic airport LCCA
Built with Microsoft Excel VBA
• Excel 2000 or newer
• Some additional features when using Excel 2007 or 2010Some additional features when using Excel 2007 or 2010
Allows 4 alternatives to be evaluated • Each alternative can contain up to 7 events (Initial construction 6 h b ) + 6 rehabs) • Maintenance operations handled separate from rehab events Runway and shoulder maintenance handled separately Maintenance activity service life always deterministic Activities have set frequency and maximum number of applications
