LCCA Tools Simplify Total Cost of Ownership Analysis for Pavements

Life cycle cost analysis (LCCA) is an analytical technique that can be used to compare alternative designs by considering significant costs over a defined analysis period. For an LCCA to be meaningful, credible and provide the information needed to make the best selection possible, the economic analysis must reflect the most likely expenditures for each alternative over the analysis period as accurately as possible.

The current LCCA practice is to assume that prices of materials are relatively stable and inflate at the same rate as the average for all goods in the economy (quantified as the consumer price index - CPI). However, 40 years of national data from the Bureau of Labor Statistics (BLS) shows that construction materials have different rates of inflation and can vary significantly from the CPI, which if not accounted for can seriously bias the results. The PDF file and PowerPoint presentation describe the issue and remedies in greater detail and this spreadsheet shows the impact that "Real Price Changes" can have on a LCCA for competing asphalt and concrete pavement alternatives using future material price projections as outlined in the MIT CSHub Research.