Life-Cycle Cost Analysis

completed

Life-Cycle Cost Analysis (LCCA) has become an integral part of many State highway agencies' pavement design and type selection considerations. With increasing miles of our national pavement network needing major rehabilitation or reconstruction during the next several years and the significant impact construction activities have on already overstretched roadways, initial and long-term agency and user costs have become an important part pavement design and type selection process. While past efforts at Federal Highway Administration have addressed the issue of work zone user costs, a number of other related issues have not been addressed in appropriate detail and gaps remain in certain areas, such as how to handle abnormal short-term construction cost fluctuations, market conditions and discount rate, updating of financial data for LCCA, the true remaining value of each alternative at the end of analysis period, and how stochastic analyses can best be used to address some of these difficult issues. The Federal Highway Administration (FHWA) has been advocating LCCA and many State highway agencies have developed pavement type selection protocols mostly based on the FHWA's Technical Bulletin on LCCA and RealCost software. However, guidelines on how to handle these issues are lacking and State highway agencies are having difficulty in using LCCA effectively to make informed decisions. A recent peer exchange meeting and site visits have raised this as one of the difficulties faced by State highway agencies in conducting LCCA. Technically and economically sound and defensible methods and guidelines to address these issues in a practical manner are needed and will be the goal of this activity.