ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
LIFE CYCLE COST ANALYSIS (LCCA) “A State Perspective” Kevin W. McMullen, P.E. President Wisconsin Concrete Pavement Association ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Introduction • PCA Paving Committee Meeting of August 26-27, 2013 • Meeting focus on LCCA • There is a lot of hope that the use of LCCA will open pavement markets • Consensus that project decisions should not be made on first costs only • I continually hear a common statement made about LCCA ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Introduction • Everybody knows that someone that is good at life cycle cost analysis can adjust the inputs to justify an outcome • I agree. • I was a master of this in my former career at the Wisconsin Department of Transportation ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Did your father ever say to you? • Be careful what you ask for……, you just might get it !!! • We don’t want to be in this position after we have pushed hard for state agencies to use LCCA in the pavement type selection process • Coming back and saying we don’t like the way you are doing it will be very unpopular ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
This workshop is about….. • Why should we do LCCA? • The major guiding principles • This presentation is about how do we do it in Wisconsin • First a little history. ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
WisDOT 1993 • WisDOT had been using some form of LCCA since 1984 when federal regulations started requiring it. • Each project engineer did their design and LCCA and chose pavement type with minimal review. • No real guidance was supplied on how to do it. • Designers were supplied a spreadsheet that did the thickness design and LCCA ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
WisDOT 1993 • Results varied • Pavement selections were unpredictable • Paving industries were consistently bringing debates to upper management on project selections • WisDOT managers were finding it difficult to keep pavement quantities balanced in their “two healthy pavement industry concept policy” ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
WisDOT PAVEMENT QUANTITIES COMPARISON S.Y. Tons 5000 1000s of SY of Concrete and Tons 4500 4000 (projected) 3500 3000 2500 of Asphalt 2000 1500 1000 500 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fiscal Year
WisDOT 1993 • Maintaining competition within an industry and between the industries was a core concept of then Secretary Ron Fiedler. • The order was given, “I want a pavement selection process that is rational, predictable and defendable”. • “If both industries are happy you will have done a great job, if both are unhappy you will have done a good job, if only one of them is happy, I will be unhappy” ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
WisDOT 1995 • I completed the work in 1995 and implemented the new policies • Still in force today • Basis of PCA Paving: New Realities report ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
So, what were our goals? • Rational – Good Engineering and Pavement Management Principles • Predictable and Defendable – Good Policies in Place • This is not about individual projects • Rather this is about building pavement programs that are sustainable year after year. • Our goal should be to have the project engineer equipped with tools and policies such that he/she can do the pavement design, LCCA and selection, develop a concrete alternative for every project and select it when appropriate without ramifications or questions. ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Critical Steps in the LCCA Process 1. Develop structurally equivalent alternatives 2. Develop pavement service life models for new and rehabilitated pavements 3. Select an analysis period 4. Select a discount rate 5. Estimate initial agency costs 6. Estimate future agency costs and timing 7. Estimate residual value 8. Compare alternatives 9. Determine best value alternative ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Structurally Equivalent Alternatives • WisDOT long policy of AASHTO ‘72 • WisDOT implementing MEPDG in 2014 • Cities and counties –StreetPave • Non-equivalent designs can be too hard to over come in the LCCA due to the initial cost only • Getting a concrete alternative and an asphalt alternative is the key • The example of Fond du Lac, WI ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Structurally Equivalent Alternatives • Known traffic, soils and materials • Good construction specifications and standards must be part of this. – Base – Concrete mix – Joint spacing – Etc. • Design life and specifications must compliment each other • If they don’t, it is our responsibility to help them bring this together. • WCPA Municipal Concrete Pavement Specification ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Life-Cycle Cost Analysis What are comparable sections? • Same structural capacity • Similar traffic-carrying capacity over the analysis period • Provide reasonably similar level of service •Traffic •Traffic •Reliability •Reliability = •Subgrade •Subgrade •Terminal •Terminal Condition Condition ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Pavement Service Life Models • Are they managing their pavements? • Do they really know how long they last? • Does their maintenance and rehabilitation procedures really extend the life as expected? • Quality of the model – all asphalt pavement average being used interstate projects? • Pavement design life versus actual life • MEPDG is so critical in this effort. • The last time I built concrete……. ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Equal Levels of Service ? And Equal Service Lives Pavement Quality Minimum Acceptable Condition Time ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
What is the service life? Pavement Quality Minimum Acceptable Condition Service life when rehab should be done Service life when rehab actually done Time ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
WisDOT Initial Construction Service Lives ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
WisDOT Rehab Expectations ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Analysis Period • Timeframe over which the alternative strategies/treatments are compared. • Long enough to reflect significant differences in performance • Must encompass the initial performance period and at least one major rehabilitation • FHWA Policy Statement requires this • WisDOT policy requires a 50 year analysis period • The same for all alternatives ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Discount Rate • Hour long discussion on this topic alone • What is being used? • Federal OMB Circular A-94? ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Discount Rate ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Discount Rate ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Discount Rate Common quote from Dr. Mark Wolfgram, former Administrator, Division of Investment Management, Wisconsin DOT “Discount rates become a controversial issue in the life cycle cost analysis procedure when the policies surrounding the rest of the inputs into the analysis are weak” ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Initial Agency Costs • The current world of information allows us to capture the bid tabs • We know what they are paying for asphalt and concrete pavements • We have the ability to debate use of inflated prices or low ball prices in an LCCA • States, cities and counties are posting bid tabs on their websites • Open records law ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
Initial Agency Costs • Costs should be based on history • Agencies spend significant resources on developing engineering estimates and training staff how to do them • There is no one project so special that it justifies departure from historic costs • WisDOT approach: county, surrounding counties, region, statewide • Statewide average unit bid prices are not allowed ACPA - Applying Life-Cycle Cost Analysis (LCCA) in Pavement Selection - June 24, 2014
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