- Report Published -
|Methodologies for Determining Life Cycle Costs of Highway System Maintenance and Facilities|
|Department of Transportation|
|SJR 21 (Regular Session, 1994)|
|Life cycle cost analysis (LCCA) refers to an economic evaluation or methodology for determining present and future costs of an investment action. Principles of engineering economics such as interest rates and cash flow analysis are applied to proposed investment alternatives, as well as determining what the costs for the life of the project will be, beginning with design and culminating with salvage.|
Leading research authorities in the public transportation field have documented the benefits of life cycle cost analysis including cost savings and selection of more efficient alternatives. The Federal Highway Administration (FHWA) and the American Association of State Highway and Transportation Officials (AASHTO) encourage application of LCCA. Literature, seminars, and a national symposium have elevated the importance of the methodology while illustrating its applications. FHWA recently issued a policy statement which recognized that the initial costs of a project only represent a fraction of the total cost; economic analysis limited to the first costs will no longer be acceptable for comparing infrastructure investment alternatives. The Life Cycle Cost Symposium in 1993 acknowledged limitations, however, that may be imposed upon public agencies required to conduct LCCA such as an inability to react to technological evolution, incomplete cost information, and lack of reliable performance models.
The Virginia Department of Transportation (VDOT) has applied LCCA since 1984. Primarily used in the past for new construction and major pavement rehabilitation projects, VDOT is improving its own methodology and has added the cost of traffic delays to the analysis. With the advent of the Intermodal Surface Transportation Efficiency Act and supporting automated technology, improvements and further use of LCCA will be applied to bridges, other major structures, and other infrastructure and operating facilities maintained by VDOT. Impairing the widespread and effective use of LCCA is the lack of cost and benefit information. Improved databases of inventory, condition information, and design through maintenance costs are essential. Efforts to create and/or improve databases are underway and should be continued.
LCCA ideals were developed in Phase I. The second phase of this study will involve application of these ideals in order to identify maintenance activities best suited for analysis. A final report will be prepared for the Governor and 1996 Session of the General Assembly.