Determining Return on Long-Life Pavement Investments
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abstract
It is becoming increasingly necessary in life-cycle analysis (LCA) of infrastructure assets, including pavements, to take a longer-term approach than has been used, mainly to ensure sustainability and assess the impacts of today's decisions accurately. LCA can include primarily life-cycle cost analysis (LCCA), but it also can include considerations of resource conservation, environmental impacts, energy balance, and so forth, and it can involve short-, medium-, and long-term periods. It is thus possible to develop a context for LCA of likely and uncertain societal activities, including transportation, over these periods. Conventional LCCA is directed toward comparing competing alternative investment strategies and can involve a range of stakeholders. Of the methods available, present worth of costs is almost exclusively used in the pavement field. However, when medium- to longer-term life-cycle periods are involved, rate-of-return and cost-effectiveness formulations can be applicable. A numerical example shows how an agency can determine the internal rate of return for two investment alternatives involving different pavement designs and a life-cycle period of 50 years. In addition, a cost-effectiveness example is provided for a sidewalk network, again with a life-cycle period of 50 years. Conventional LCCA for calculating present worth of costs will undoubtedly continue to be used in the pavement field as a primary tool. However, using a rate-of-return or cost-effectiveness formulation, especially for medium- to longer-term life-cycle periods, should be given more consideration.
