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  • MTO-Life Cycle Financial Analysis For Bridge Rehabilitations-1986

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    MTO-Life Cycle Financial Analysis for Bridge Rehabilitations-1986

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    18 views10 pages

    MTO-Life Cycle Financial Analysis For Bridge Rehabilitations-1986

    Uploaded by

    Ashton Martyn

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
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    Minisiry of Transportation Ontario Manual SO-89-06 Structural Office Life Cycle Financial Analysis for Bridge Rehabilitations ppaacs Bmvv Jue 1 3 80 LIFE CYCLE FINANCIAL ANALYSIS FOR BRIDGE REHABILITATIONS R.S. Reel and C. Muruganandan Ministry of Transportation, Ontario, Canada. Abstract} The paper presents the methodology of carrying out financial analysis to compare the life cycle costs of different rehabilitation options. A computer program, utilizing Lotus 1-2-3, version 2.01, is developed for the analysis. Actual life cycles of different techniques employed on bridge rehabilitation projects are given. The application of the technique is illustrated by an actual example of a bridge rehabilitation project. MINISTRY OF TRANSPORTATION UBRARY AND INFORMATION CENTRE —| 1 For presentation at the joint I.STRUT.E/ B.R.E International Seminar on "LIFE OF STRUCTURES". Brighton, England. april, 1989. PRINCIPLES OF FINANCIAL ANALYSTS The technigue used for the financial analysis is the present value analysis. Present Value Analysis The present value analysis technique involves the calculation of the cost of alternative schemes in present day dollars, i.e. the dollars that are required in today's value to obtain goods and services at any future date. This is based on a simple investment principle. A capital or principal (P) invested for n years at an interest rate (r), compounds to a sum (C) such that: C=P(l+r)* Stated in another way the net present value (P) of a sun (C) spent in year n at a discount rate (r) i € aery* This is the basis of net present value analysis as it allows for the comparison of alternative schemes on an equitable basis. In general, the alternative with the least present value is the preferred alternative. Consider two options for a bridge rehabilitation project, such that: option (1): Time frame to be considered = Ny years Cost Estimate = Cyn (n= 21, .++--N2) Cin = the cost of option (1), over the time frame considered. option (2): Time frame same as for Option (1) = Ny years Cost Estimate = Con (n= 1, «---Ny) Con = the cost of option (2), over the time frame considered. The present values for option 1 and 2 are et Cin a sc PV,=) — PV2= a sai(l+r)® ai(l+r)® Parameters Required for Financial Analysis The following parameters are required to perform the financial analysis. Parameters related to the proposed rehabilitation or replacement of each alternative. - Capital costs - Life cycle - Residual life - Future maintenance costs Parameters related to the existing condition of the structure. - Estimated residual life without remedial work. Parameters related to discount rate, - Rate reconmended by the agency or the governnent. - Variations in discount rate. capital cost The following should be estimated for each alternative in constant doliar terns. Engineering design cost -Construction cost -Miscellaneous costs such as, demolition, right-of-way, approaches, utilities, stream-diversion, detours, etc, Life cycle The life cycles of the alternatives should be estimated for the financial analysis. Usually, it is the time between two successive replacenents or rehabilitations. The assuned life cycle values given in Table 1 are based on experiences in Ontario. These may be varied based on local experiences. TABLE 1 Life cycles ‘Treatment Life cycle Paving 1. Asphalt 15 2. Mastic waterproofing and asphalt 15 3. Hot applied rubberized waterproofing 30 + Mill and replace top course of asphalt 15 : Replace waterproofing and asphalt 30 Bare Concrete Deck slabs 1. 0 mm to 75 mm deck slab - plain reinf. 5 2. 75 mm to 125 mm deck slab - plain reint. 10 3. 125 mm to 180 mm deck slab + Plain reinforcement 10 + Top layer, epoxy coated 20 4. 180 mm to 225 mn deck slab - Plain reinforcenent 15 + Top layer, epoxy coated 25 5. Solid thick deck slabs + Plain reinforcenent 10 : Top layer, epoxy coated 20 6. Voided thick slabs . Plain reinforcenent 10 + Top layer, epoxy coated 20 Coating systems 1. Alkyd system 10 2. High Build Alkyd system 10 3. Inorganic-zine / Vinyl system 20 4. Epoxy-Zinc / Vinyl System 20 5. Aluminum filled Epoximastic system 10 6. Hot Dip galvanizing 20 7. Zinc Metallizing 20 Residual Life and value. The various alternatives considered may have useful lives at the end of the time-frame. This is termed as the residual life. There are no specific methods of assessing this. A thorough knowledge of the performance of past rehabilitations and experienced engineering judgement are probably the best way of assessing the useful residual life. From the residual life the residual value of the structure is calculated. There are several methods available for calculating the residual value. The nethod used here is the 2nd cycle replacement method. Let the 2nd replacement of option (1) be Ny years. and 2nd replacement of Option (2) be N2 years. The calculations for residual values are shown in Table 2: TABLE 2 Residual value Year of |Replace-| Resi- | value | Differen- | Residual Option] Replace- ment dual jat Year/tial Value| Value at ment cost Years| N12 (option 1] Year 0 (2nd as base) cycle) 1 i c ° c ep. crt 2 N2 ¢ NQ-N C2

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