TM 5-822-11/AFP 88-6, Chap. 7
APPENDIX D
LIFE-CYCLE COST ANALYSIS
D-1. Procedure.
(2) Determine the cost of each resealing
a. In any rehabilitation project, the decision
operation.
criterion used to select an alternative must evalu-
(3) Determine the present worth of the re-
ate that alternative over a future time period. This
sealing costs by using the following formula:
analysis is usually termed a "life-cycle cost analy-
PW = R*[1.0/(1+i)n]
sis." Short term repairs that may be inexpensive
initially may end up costing more than another
where
alternative after repairs to the alternative have
PW = the present worth.
been made several times over the life of the
i = the annual interest rate.
pavement. The life-cycle cost analysis clearly
R = the cost of each sealant installation.
shows which alternative will give the least cost
n = the number of years from the present
over the life of the pavement. After completion of
time until resealing will be required again.
life-cycle costing, one should consider the impact
(4)
Repeat the formula for every sealing pe-
of each alternative on interference with mission
riod and sum the total present worth of each
operations.
alternative.
b. Required Data. To perform the life-cycle
d. Selecting the Best Alternative. Select the al-
cost analysis, certain data are required for each of
ternative with the least present worth. This cost
the sealing alternatives. The data required
indicates the alternative that would cost the least
includes:
over the entire life expressed as dollars at today's
value. In this manner, a relatively expensive
(1) Unit cost of the sealant in place. This
sealant with long life may be more economical
can be broken into material cost and installation.
over the life of the pavement than a series of less
(2) The expected remaining life, in years, of
costly procedures. The decision on whether this
the pavement feature being resealed before major
higher initial investment is affordable must be
rehabilitation or abandonment is scheduled.
made separately, considering more than just life-
(3) The expected lives of the sealants are
cycle cost.
being considered as alternatives. Because some
installations may have adequate data on the service
D-2. Example.
life of sealants while others may not, the major
a. Data. A pavement has a life of 16 years
command engineers must have input in setting life
before major rehabilitation in the form of an
expectancy levels for a life-cycle cost analysis
overlay is performed. The interest rate for this
compatible with paragraph (2) as mentioned.
period is estimated to be 12 percent a year.
Inflation is not considered in this initial analysis.
(4) The interest rate in effect over the life of
There are two alternatives for sealing the pave-
the pavement must be selected. Depending upon
ment. The two alternatives are:
the economic climate, this value may be very
(1) Seal every 3 years at a cost of
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.60 perdifficult to estimate for any time in the future.
linear foot.
(5) The use of inflation in a life-cycle cost
(2) Use a seal with a life expectancy of 15
analysis is somewhat controversial; however, it
years at a cost of .00 per linear foot.
should be used by the installation when evaluating
b. Calculations. For the first alternative, there
alternatives. One method to obtain inflation is to
will be six costs of
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.60 per foot. The joints mustuse the expected future cost of materials and
be resealed before the overlay in year 16 so that
labor.
there are five time increments. For the second
c. Procedure. A life-cycle cost analysis can be
alternative, there will be one initial payment at
performed by completing the following steps:
time zero and one resealing job before the overlay
(1) Determine how many times the
with the least expensive method. The computation
pavement must be resealed over the analysis
of the present worth for both alternatives is as
period.
follows:
D-1
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