Life-Cycle Cost Analysis (LCCA)

The Bottom Line

Asphalt pavements are cost-effective in many ways:

• Low initial costs due to the speed of construction time
• Low maintenance costs
• Long life-cycle
• 100% recyclable
• Recycling asphalt saves U.S. taxpayers over $300 million each year as it is the most recycled material in America
• When in need of repair, asphalt can be milled and resurfaced using renewable resources

Four Easy Steps to Good Life-Cycle Cost Analysis (LCCA):

1. Discount Rate – The Real Deal

While some have argued in favor of a negative discount rate, the time value of money doesn’t work that way. A 2010 dollar is inevitably worth more than a 2030 dollar, or a 2050 dollar. Accordingly, LCCAExpress uses a real discount rate based on published information from the U.S. government’s Office of Management and Budget.

2. Inputs – Use Real Information

Inputs should come from relevant, historical data on previously bid projects of a comparable scale for a given location. Pavement performance periods (initial, rehabilitation, overlay, etc.) should be determined based on pavement data and historical experience. Don’t let promoters tell you what data to use – get it from the historical records.

3. Include All the Costs

Life-cycle cost analysis should look at initial costs and discounted future costs. Future costs include maintenance, reconstruction, rehabilitation, restoration and resurfacing over the life of the project. And don’t forget to factor in user delay. Even though not borne directly by the agency, user delay costs are real; they reflect the cost of construction delays incurred by the public.

4. Use the APA’s Software

The APA’s software comes in two versions: LCCA Original and LCCAExpress. Both use the principles recommended by FHWA. Both are unbiased and reliable.

LCCA Original calculates the net present value of different pavement alternatives using either deterministic or probabilistic analyses as described in FHWA Publication No. FHWA-SA-98-079, Life-cycle Cost Analysis in Pavement Design.

Among the powerful features of the software are:
• The ability to include or exclude user delay costs from the complete analysis or any single work activity
• Maximum AADT value, important for projects analyzed over long periods or with high traffic growth

Download LCCA Original 3.1 now

LCCAExpress is a simplified version of LCCA Original. Geared toward less-complex projects, it’s quick and easy to use.

Download LCCAExpress 1.0 now

The APA has also developed a flyer discussing the LCCAExpress software. Download it by clicking here.