Stochastic Life-Cycle Cost Analysis for Pavement Preservation Treatments

Abstract

The use of life-cycle cost analysis (LCCA) as a decision-making tool in pavement design and the analysis of competing alternatives is recommended by FHWA. However, dependence on deterministic LCCA raises issues about the accuracy of input information because of the degree of construction price volatility found in the underlying commodities used in pavements. Stochastic LCCA has been shown to produce superior results when used at the new pavement design or network level and is suggested for transportation use by FHWA. However, no project-level tools exist to facilitate use of a stochastic approach to evaluate pavement preservation treatment. This paper proposes a practical stochastic LCCA model on the basis of equivalent uniform annual cost, specifically to compare pavement preservation treatment alternatives. The paper explores statistical LCCA techniques that expose inherent uncertainties to identify and quantify the risk of commodity price volatility. The proposed methodology enhances a pavement engineer's ability to address budget issues, mitigate risk, and justify pavement preservation treatment decisions. Underlying commodity price volatility in pavement treatment costs can be modeled effectively with stochastic LCCA.