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40 Glossary Activity: A specific action performed by the highway agency or the con- Contractor: Private entity that provides design, construction and/or tractor, such as initial construction or major rehabilitation. An maintenance services to a highway agency. May refer to the design- activity is defined by its physical costs, its service life, and its effects builder or a concessionaire. on highway users. An activity is a component of an alternative. Corrective Maintenance: Activity performed to correct deficiencies that Administrative Costs: Costs incurred in contract management adminis- negatively impact the safe, efficient operations of the facility, and tration overhead expenses. future integrity of the pavement section. Corrective maintenance Agency: A government organization responsible for initiating and car- generally is reactive to unforeseen conditions to restore a pavement rying forward a highway program for the general public. May refer to an acceptable level of service. to a federal highway agency, state transportation department, met- Correlation Analysis: A statistical technique that is used to study the rela- ropolitan planning organization, local government organization, tionship among variables. and so forth. Correlation Coefficient: A statistical measure that indicates the strength Agency Costs: Monies spent by a highway agency for construction or of the linear association between two variables. A correlation coef- rehabilitation activities. ficient of +1 indicates that two variables are perfectly related in a Alternative Contracting: Type of contract that is executed in ways other positive linear sense, while a value of -1 indicates perfect negative than traditional design-bid-build type. correlation. Values closer to zero indicate poor or no correlation, Alternative-Preference Screening Matrix: A decision support tool that and other intermediate values indicate partial correlation. provides a structured approach for setting objectives, exploring the Cost-Based Estimating: A method to estimate the bid cost of a work strengths and weaknesses of alternatives, prioritizing alternatives, item by estimating the cost of resources (time, equipment, labor, and making the final "best possible" choice(s). and materials) for each component task necessary to complete the Alternatives: The complete set of initial and future activities that will work item, and then adding a reasonable amount for contractor's satisfy the established pavement performance objectives of a proj- overhead and profit. ect. In pavement-type selection, all alternatives being considered Depreciation: Loss in the value of an asset. for a single project will equally meet the project's performance Design-Bid-Build: A project delivery method in which the public requirements. agency provides the design and solicits bids for the construction of Analysis Period: The time period used for comparing pavement-type the specified design. alternatives. An analysis period may contain several maintenance Design-Build: A project delivery method in which the public agency and rehabilitation activities during the life cycle of the pavement combines procurement for both design and construction services being evaluated. The analysis period should not be confused with the into a single contract and from the same private-sector entity. pavement design or service life. Design Life: The length of time for which a pavement structure is being Award of Contract: The acceptance of a contractor's bid proposal by designed based on structural distresses and traffic loadings. the agency. Deterministic Analysis: Approach that uses single-point estimates in Bidder: An individual, partnership, firm or corporation formally submit- calculations without regard for the variability of the inputs. The ting a proposal for the advertised work or materials. single-point estimates usually are selected based on statistical aver- Commodity Price Adjustment: Adjustments made by the public agency ages, the most likely scenario, historical evidence, or professional to the contract unit prices of specific materials and supplies under experience. conditions of price volatility. Discount Rate: The time value of money used as the means of com- Competitive Bidding: The process in which the procuring agency is paring the alternative uses for funds by reducing the future required to advertise and award contracts to the lowest responsible expected costs or benefits to present-day terms. Discount rates and responsive bidder through open bidding, unless the use of the are used to reduce various costs or benefits to their present value agency's own labor forces and equipment is more cost-effective. or to uniform annual costs so that the economics of the various Construction Contingency Cost: An additional markup cost applied alternatives can be compared (approximately equal to interest to an estimate to account for undefined, unknown, and uncertain minus inflation). requirements. Downside Financial Risk: A chance for cost overrun or financial loss.

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41 Economic Analysis Technique: The approach used in the planning Net Present Value: The net value of all present and future costs and ben- process to analyze the relative costs and benefits of a potential invest- efits converted to a single point in time using a discount rate factor. ment. The most common economic analysis techniques include net Pavement Condition: A quantitative representation of pavement distress present value (NPV), benefit/cost (B/C) ratios, internal rate of return at a given point in time. (IRR), modified internal rate of return (MIRR) and equivalent uni- Pavement Life-Cycle Model: A combination of strategies to achieve the form annual costs (EUAC). desired functional and structural performance level of the pave- End-Result Specification: A type of specification in which the agency ment over the chosen analysis period. Strategies include the initial specifies the final characteristics of the product and provides flexibil- construction, structural and functional rehabilitation, preventive ity to the contractor in achieving it. maintenance, and corrective maintenance activities. Engineering Costs: Costs incurred with design of pavement alternatives, Performance Specifications: A type of specification that defines the construction engineering, construction supervision, materials test- performance characteristics of the final product and links them ing, and analysis of the pavement. to construction, materials, and other items under contractor Equivalent Alternatives: Pavement types that are designed to perform control. equally, provide the same level of service, over the same performance Performance-Trend Analysis: Statistical analysis to determine the period, and have similar life-cycle costs. longevity of a pavement structure or a rehabilitation strategy Expenditure-Stream Diagram: The graphical depiction of expenditures using historical data. over time associated with various activities in a pavement life cycle. Performance Warranty: A contract that requires the contractor to The upward arrows indicate expenditures, whereas the downward assume full responsibility for repairing or replacing defects in pave- arrows indicate benefits. ments during a prespecified period. Family of Pavements: A group of pavements that share similar charac- Preventive Maintenance: A planned strategy of cost-effective treat- teristics such as the pavement type, design features, materials, traffic ments to an existing roadway system and its appurtenances that volume, functional classification, and so on. preserves the system, retards future deterioration, and maintains or Functional Classification: The process by which highways and streets are improves the functional condition of the system (without signifi- grouped into classes, or systems, according to the type of service they cantly increasing the structural capacity). are intended to provide. Plans, Specifications, and Estimates (PS&E): A project document con- Functional Performance: Ability of the pavement to provide a smooth, taining contract drawings, project cost estimates, contract provi- comfortable, and safe ride to the road user, as measured by sions, and requirements for facilitating construction and contract smoothness. control. Functional Treatments: Activity to extend the functional performance Preliminary Engineering: The project development phase involving of an in-service pavement. activities such as environmental review, preparation of construc- Historical Bid-Based Estimating: A method of estimating current unit tion documents, work zone impacts, development of geometric prices using historical bid data of similar projects from recently design, utilities discovery and verification, geotechnical studies for awarded contracts. foundation and pavement design, preliminary drainage work, and Incentive/Disincentive: Pay adjustments awarded to the contractor as cost estimates. reward/penalty based on the quality or performance of the finished PublicPrivate Partnership (P3): A contractual agreement formed product. between a public agency and a private-sector entity that allows for International Roughness Index: A pavement roughness index computed greater private-sector participation in the delivery and financing of from a longitudinal profile measurement using a quarter-car simu- transportation projects. lation at a simulation speed of 50 mph (80 km/h). Probabilistic Analysis: Approach that considers the inherent variability Life-Cycle Cost Analysis: An economic assessment of an item, area, of inputs in addition to single-point estimates. system, or facility and competing design alternatives considering all Rehabilitation: The act of restoring a pavement to a former condition. significant costs of ownership over the economic life, expressed in Remaining Service Life: Structural life remaining in the pavement at the equivalent dollars. end of analysis period. Life-Cycle Cost: The total cost of ownership of a pavement section com- Request for Proposals: A document issued by the procuring agency to puted over the analysis period. potential bidders detailing the requirements of a specific service or Life-Cycle Cost Adjustment Factor: The difference in future costs of two commodity sought on a particular project and soliciting detailed pavement alternatives. proposals from them. In P3 projects, the request for proposal is Maintenance: The preservation of the entire roadway, including surface, often part of a two-step procurement process, where the invitation shoulders, roadsides, structures, and such traffic control devices as is issued only to potential bidders meeting desired minimum qual- are necessary for its safe and efficient utilization. ifications in the preliminary process. Maintenance Treatments: Treatment activities intended to correct or Residual Value: Value of the in-place pavement materials less the cost to preserve a roadway pavement for its safe and efficient utilization. remove and process the materials for reuse. Materials and Workmanship Type Warranty: A warranty that requires Responsive Bid: A bid submittal that meets all the requirements of the contractors to correct defects in the pavement caused by elements advertisement and proposal. within their control and assumes no contractor responsibility for Risk: The potential impact of an uncertain condition or action on proj- the design. ect objectives and outcomes. MechanisticEmpirical: A design approach that incorporates the princi- Risk Allocation: The process of allocating contractual obligations and ples of mechanics of solids with empirically derived performance risks between parties. The fundamental tenets of risk allocation relationships to accomplish the design objectives. include allocating risks to the party best able to manage them, allo- Monte Carlo Simulation: A computational algorithm based on repeated cating risks in alignment with project goals, and allocating risks random sampling that often is used in simulating a distribution of to promote team alignment with customer-oriented performance likely results. goals.

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42 Risk Assessment: The systematic process of identifying and determin- Traffic Control Costs: Costs incurred in managing vehicular and pedes- ing the qualitative or quantitative impact of risks associated with an trian traffic around a construction work zone to ensure safety. Costs activity. include traffic control setup and communications. Salvage Value: The value (positive if a residual economic value is realized Unit Price: The fixed price (including materials, labor, equipment, and negative if demolition costs are accrued) of competing alterna- overhead, and profit) paid by the agency for a specific unit of work tives at the end of the life cycle or analysis period. Typically consists described in a contract. of remaining service life and residual value. Upside Financial Risk: A chance for cost underrun or financial Sensitivity Analysis: The study in which the inputs of a model are changed gain. systematically to assess their effects on the final outcome. User Costs: Costs incurred by highway users traveling on a facility, as Service Life: The period of time from completion of construction until well as the costs incurred by those who cannot use the facility the structural integrity of the pavement is determined to be un- because of either agency or self-imposed detour requirements. User acceptable and rehabilitation/replacement is required. costs typically consist of vehicle operating costs, accident costs, and Stakeholder: Stakeholders in a construction project typically include the user delay costs. In LCCA, user costs could take the form of delay owners and users of facilities, government agencies, project man- costs or of changes in vehicle operating costs associated with vari- agers, contractors, subcontractors, material and equipment suppli- ous alternatives. ers, designers, financial service providers, funding agencies, road Warranty: A written assurance that a product or service provided by a users, neighbors, and the general public. contractor will meet certain specifications and provide desired per- Structural Performance: Ability of the pavement to support anticipated formance over a specified period of time, as well as the responsibil- traffic loadings and withstand environmental effects to resist the ity of the contractor (or a subcontractor or supplier) for the repair occurrence of physical distress. or replacement of the deficiencies. Survival Analysis: A technique that analyzes the probability of nonoccur- Warranty Ceiling: A contractual ceiling clause that specifies the limits rence of failure with time or traffic loadings for a family of pavements. on the warranty terms offered by the contractor, such as a cap on the Tornado Plot: Describes how sensitive the value of an output variable is total project expenditure or the expiration of warranty after X num- to the input variables of the model. ber of heavy trucks.