A more comprehensive life cycle cost analysis of pavement materials alternatives

Abstract

Life Cycle Cost Analysis (LCCA) is a commonly used tool in analyzing the economic viability of highway construction investments. The initial and life-cycle materials costs associated with highway construction involve a high level of uncertainty and therefore warrant extensive and dynamic cost analysis. These uncertainties derive from extensive materials usage costs. Despite the advantages of implementing a probabilistic approach to cost analysis, many state departments of transportation (DOTs) continue to employ a deterministic model, thereby misjudging, and often altogether neglecting the underlying uncertainty and risks. The goals of this paper are twofold: first, to validate forecasting as a viable method to predict future materials' prices, and second, to explore economies of scale as a potential driver of uncertainty. The paper will then apply these results to a case study methodology, looking at a comparative LCCA of two materials alternative, asphalt vs. concrete pavement designs for two states: Florida and Colorado. Endeavoring in this light, the author has characterized uncertainty in a way that will be comprehensible by practitioners. This research has successfully validated out-of-sample forecasting as a superior method of forecasting materials prices, characterized uncertainty related to project quantity, and delivered results using a relatable case study approach.