Peter Bziuk, P.

Eng
Manager Construction Services
County of Essex
pbziuk@countyof essex.on.ca
519-796-7827
Life Cycle Options
 During the design stage and procurement stage there
will be options
 Aluminum vs steel
 LED lighting vs Incandescent
 Concrete vs asphalt
 Natural gas vs diesel fuel
 Roundabout vs signalized intersection
 Brand name options
 Ford vs Chrysler vs Lamborghini
Life Cycle Options
 How do you decide what option is best suited for the
situation?

 You need to conduct an economic comparison of the

available options
Pay Now or Pay Later
 An option will save funds up front and require
maintenance costs later

 OR

 An option will cost more up front and reduce

maintenance costs later
Life Cycle Cost Terminology
 Analysis Period – the duration of the economic
comparison

 Initial Cost – the capital cost required to procure

(construct, manufacture, produce) the service or
product

 Maintenance Cost – the future costs required to

maintain the service or product
Life Cycle Cost Terminology
 Salvage / Residual Value – the expected value at the
end of the analysis period

 Present Worth – The cost of future activities

discounted to present dollars

 Interest Discount Rate – the rate at which current

funds are discounted to a future year value
Life Cycle Equation
LCC = A + (E1)(PWF1) + ….. (Ek)(PWFk) – (S)(PWFn)

Where:
LCC = Life Cycle Costs
A = Initial cost
Ek = Maintenance cost in year k
PWFi = Present Worth Factor
N = Analysis Period
S = Salvage Value
Example 1 (Simplified)
 Consider the purchase of a printer and ink cartridges
 Initial cost of printer A = $55
 Initial cost of printer B = $99
 Cost of ink cartridge A = $39 per year
 Cost of ink cartridge B = $15 per year
Example 1 (Simplified)
 Calculate the 3 year life cycle cost of each printer option

 For printer A, the cost of 3 ink cartridges

 = (3)(39)
 = $117
 For printer A, total 3 year cost
 = $55 + $117
 = $172
Example 1 (Simplified)
 Calculate the 3 year life cycle cost of each printer option

 For printer B, the cost of 3 ink cartridges

 = (3)(15)
 = $45
 For printer B, total 3 year cost
 = $99 + $45
 = $144
Example 1 (Simplified)
 Calculate the 3 year life cycle cost of each printer option

 In comparing the 3 year life cycle cost, the less expensive

option is Printer B
Example 2
 Consider 50 year analysis period for the construction
and maintenance of 1 km of 4 lane pavement
 Compare concrete pavement and asphalt pavement
 Proposed concrete pavement consists of 200 mm of
concrete on 200 mm granular A
 Proposed asphalt pavement consists of 150 mm asphalt
on 150 mm granular A and 450 mm granular B
Example 2 (cont’d)
 The concrete pavement requires $15,000 of repairs
during years 12, 25 and 40
 The asphalt pavement requires $125,000 of repairs
during years 10, 20, 35 and 45
 The estimated capital cost of the concrete pavement is
$980,100
 The estimated capital cost of the asphalt pavement is
$850,000
 Assume interest rate = 4%
 Assume no salvage value at the end of life
Example 2 (cont’d)
Calculate Present Worth Maintenance Costs
Year PWF Asphalt Concrete
10 .6756 $84450
20 .4564 $57050
35 .2534 $31675
45 .1712 $21400
12 .6246 $9369
25 .3751 $5626
40 .2083 $3125
Example 2 (cont’d)
 Concrete LCC = 980100 +18120 = $998220

 Asphalt LCC = 850000 +194575 = $1044575

 Conclusion: Life Cycle of asphalt pavement is more

expensive than life cycle of concrete pavement