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Economic analysis in pavement design

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may meh

on 12 April 2014

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Transcript of Economic analysis in pavement design

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Economic analysis in pavement design
Mayur Mehta
selection of pavement
Pavement Type Selection is a process by which the most effective pavement type is determined for a specific project or a planned corridor, considering engineering, economic, and other factors
the pavement being selected, regardless of type shall:
• Be capable of carrying the anticipated loading during the design lifetime.

• Be capable of performing under site specific geotechnical (soil support) and environmental (precipitation and drainage) conditions.

Factors to be considered in choosing pavement
soils characteristics
traffic volume and types
life cycle costs (including initial as well as future activities undertaken throughout the life cycle)
construction considerations.
agency costs, road user costs, and pavement performance
several miscellaneous factors that affect pavement type selection decisions. These factors include historical practice, constructability, recyclability, maintainability, adjacent existing pavements, availability of local materials, and local preference
Range of pavement materials
asphalt concrete
portland cement concrete (PCC)
chemically stabilized materials (lime- and cement - treated layers),
and granular materials
Economic-based ranking methods have become increasingly
common for evaluating roadway projects.

Economic analysis can be divided into two general categories:-

Economic analysis
cost-benefit analysis
an analysis that provides a quantitative assessment of the relative economic costs and benefits of alternatives and that provides a common monetary measurement. If all alternatives are believed to provide the same benefit, then comparison is left only on the life-cycle costs (LCC) basis
it deals with impacts that are not so easily quantified or for which there are no easily defined monetary values

life-cycle cost analysis (LCCA)
A life-cycle cost analysis (LCCA) procedure involves
modeling the performance of a particular pavement structure exposed to a given set of conditions over a period of time,
forecasting traffic
assigning future maintenance and rehabilitation treatments
performing economical analysis including all costs anticipated over the life cycle of the pavement strategy
cost-effectiveness evaluation
the effectiveness of each project is expressed in some standard unit

LCCA doesn’t directly take into account of effects of non-similar performance levels of candidate strategies. Cost-effectiveness analysis, on the other hand, is a well-known means of combining both benefits and costs into a single objective function for ranking candidate pavement strategies.

LCCA v/s Cost Effectiveness Analysis
Life-Cycle Costs
the following critical technical issues related to LCCA: accuracy of performance models, service life, effect of maintenance on performance, quantify time delays/travel speeds, future traffic levels, operating costs, discount rate, and salvage value.
is a key concern from both the agency and road user perspectives. that pavement serviceability must be defined relative to the basic purpose of pavements, i.e.,
to provide a smooth, comfortable, and safe ride. Based on this definition, the present serviceability index (PSI) measure was developed. PSI ranges from 0 to 5, with 5 representing the highest level of serviceability

LCCA at Network and Project Levels
Network level analysis involves management type functions such as establishing priorities for various design or construction projects, determining the optimal use of limited funds, and selecting optimum maintenance policies for the entire network.
Project level analysis generally provides criteria for the selection of an optimum pavement design strategy for a specific section of road.
Network level and project level management systems are inter-dependent
The framework outlines three phases of a typical decision making process:
Input data
: Type selection methodology is based on evaluating user-specified alternative strategies. Economic evaluation requires data pertaining to: (1) project size and location, and (2) the strategies’ materials quantities and performance.

Mathematical models
: These include models to calculate agency costs, user costs, a strategy’s performance estimate, total life-cycle cost, and cost effectiveness
Output economic indicators
: Some useful outputs include initial costs, total lifecycle costs, and a cost-effectiveness index.

Payment selection flow chart
Georgia Department of Transportation
-Pavement Design Manual
LCCA is an analysis tool that compares alternate pavement types which are designed for a given project. LCCA compares the associated costs, including future maintenance and rehabilitation costs, over an Analysis Period for each alternate pavement type.
General Approach to LCCA
a. Develop the new work or pavement rehabilitation alternatives to be considered.
b. Determine the length of the analysis period and the discount rate.
c. Determine the performance period and sequence of rehabilitation for each alternative over the duration of the analysis period.
d. Determine the agency cost for each alternative and rehabilitation strategy.
e. Evaluate user costs for each strategy (if appropriate).
f. Compute Net Present Value (NPV) for each alternative.
g. Review and analyze the results.
h. Adjust input variables and re-run the analysis to determine the sensitivity of the results to the input variables (best-case / worstcase scenarios).
i. Use the data to assist in selecting the appropriate alternative.
j. The costs be estimated in constant dollars and discounted to the present using a real discount rate. This combination eliminates the need to estimate and include an inflation premium for both cost and discount rates.
Analysis Period
The analysis period is the time period over which the economic analysis is conducted. For Alberta highways, an analysis period of 30 years is used to compare alternatives

the analysis period shall be long enough to incorporate at least one rehabilitation activity for each alternative. Regardless of the analysis period chosen, the analysis period shall be the same for all alternatives
For projects where pavement design alternatives are developed to temporarily improve the pavement serviceability (for instance 10 years) until total reconstruction, a shorter analysis period is appropriate.
Discount rates are used to convert future expenditures into equivalent current costs. Real discount rates reflect the true value of money with no inflation premium.
Discount Rate
Higher discount rates typically favor lower initial costs and higher futurecosts. Lower discount rates do the opposite.
Initial Capital Costs
Initial capital costs are the total sum of the investments to design and construct a highway or a highway improvement. The most significant items include grading, base course, surfacing, bridge structures, right-of-way, engineering, signing, and signals.
Rehabilitation Costs
Rehabilitation costs are associated with upgrading or overlaying a pavement when the riding quality or serviceability decreases to a minimum level of acceptability. Items include overlays, recycling, seal coats, andreconstruction.
Maintenance Costs
Maintenance costs are those costs that are essential to maintain a pavement investment at a specified level of service or at a specified rate of deterioration
For LCC analysis, items directly affecting pavement surface performance include crack filling, crack repair, grinding, and patching.
Residual Value
The residual value is the value of the investment or capital outlay remaining at the end of the analysis period. For a valid LCC analysis, the residual value must be included.
Design Period
The design period is the time period for which the pavement structure is designed to carry the anticipated traffic loadings. As a matter of policy, 20 years is used by AT&U and this would generally apply to the design of new construction, final stage and structural overlay pavements.
Service Life
The service life is the estimate of the time period for which the pavement will provide adequate structural and/or ride quality performance before rehabilitation is necessary. The estimated service lives of alternative strategies are critical inputs into LCC analysis.
Method of Economic Evaluation
The empirical relationship to determine the present worth of some future expenditure is solved by the following equation:

PW = F / (1 + I)n

where PW = present worth
F = future value
I = discount rate = 4%
n = number of years in the future that the amount is to be received.
Summary of LACC
The process of carrying out a life cycle cost analysis to allow potential design strategies to be evaluated on an economic basis is:

1. Estimate unit and per km construction costs of each alternative.
2. Estimate yearly maintenance costs if there are significant differences between alternatives.
3. Estimate the service life for each alternative.
4. Determine the unit and per km construction costs, maintenance costsand future rehabilitation costs for each alternative for a 30 year analysis period.
5. Estimate the residual value of the final rehabilitation at the end of the analysis period.
6. Using a 4% discount rate, calculate the present worth of initial construction, rehabilitation, and maintenance costs and residual value for each alternative.
Alberta Transportation And Utilities
-Pavement Design Manual
Colorado Department of Transportation
-Pavement Design Manual
Lest we forget
Satyendra Dubey
Satyendra Dubey (1973–2003) was an Indian Engineering Service (IES) officer. He was the Project Director in the National Highways Authority of India (NHAI) at Koderma.
Saatyendra was the topper of the state in 10th and 12th board exams. He got admission to the Civil Engineering Department of IIT Kanpur in 1990 and graduated in 1994. Subsequently, he did his M. Tech (Civil Engg.) from IIT Varanasi in 1996.
He was murdered in Gaya, Bihar after fighting corruption in the Golden Quadrilateral highway construction project.
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