National Academies Press: OpenBook

Guide for Pavement-Type Selection (2011)

Chapter: Appendix B - Example of Pavement-Type Selection in Alternate Bidding

« Previous: Appendix A - Alternative-Preference Screening Matrix Example
Page 51
Suggested Citation:"Appendix B - Example of Pavement-Type Selection in Alternate Bidding." National Academies of Sciences, Engineering, and Medicine. 2011. Guide for Pavement-Type Selection. Washington, DC: The National Academies Press. doi: 10.17226/14538.
×
Page 51
Page 52
Suggested Citation:"Appendix B - Example of Pavement-Type Selection in Alternate Bidding." National Academies of Sciences, Engineering, and Medicine. 2011. Guide for Pavement-Type Selection. Washington, DC: The National Academies Press. doi: 10.17226/14538.
×
Page 52
Page 53
Suggested Citation:"Appendix B - Example of Pavement-Type Selection in Alternate Bidding." National Academies of Sciences, Engineering, and Medicine. 2011. Guide for Pavement-Type Selection. Washington, DC: The National Academies Press. doi: 10.17226/14538.
×
Page 53
Page 54
Suggested Citation:"Appendix B - Example of Pavement-Type Selection in Alternate Bidding." National Academies of Sciences, Engineering, and Medicine. 2011. Guide for Pavement-Type Selection. Washington, DC: The National Academies Press. doi: 10.17226/14538.
×
Page 54
Page 55
Suggested Citation:"Appendix B - Example of Pavement-Type Selection in Alternate Bidding." National Academies of Sciences, Engineering, and Medicine. 2011. Guide for Pavement-Type Selection. Washington, DC: The National Academies Press. doi: 10.17226/14538.
×
Page 55
Page 56
Suggested Citation:"Appendix B - Example of Pavement-Type Selection in Alternate Bidding." National Academies of Sciences, Engineering, and Medicine. 2011. Guide for Pavement-Type Selection. Washington, DC: The National Academies Press. doi: 10.17226/14538.
×
Page 56

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

51 This appendix illustrates how pavement-type selection is made in alternate bidding projects using the process proposed in the Guide. The information presented in this example is intended for illustrative purposes only. Needs Statement Assume that an agency is in the process of selecting pavement-type alternatives for a reconstruction project on a rural highway. The agency has evaluated the suitability of alter- nate bidding in this project and intends to use this method of project delivery if at least two qualifying alternatives are identi- fied through the pavement-type selection process. The agency routinely uses three pavement types for projects of this nature, as approved by the pavement-type selection committee. Project preliminary scoping studies found no engi- neering constraints in using any of these alternatives. The agency requires an LCCA of alternatives for all new or reconstruction projects and has established the following inputs for use in the LCCA: • Analysis period: 45 years. • Discount rate: 3 percent. • Computation approach: deterministic. • Economic analysis technique: NPV. • User costs are not considered. The agency applies predefined economic criteria to deter- mine the cost feasibility of alternatives and eliminates alter- natives whose initial or life-cycle costs exceed those of the competing alternatives by 20 percent. The agency has identified three noneconomic factors nec- essary for evaluation in the selection process: • Material recycling. • Stimulation of competition. • Maintenance experience and capability. The following steps illustrate the pavement-type selection process. Step 1: Identify a Pool of Pavement-Type Alternatives The pavement-type selection committee identifies a broader group of pavement-type alternatives for consideration in the selection process. The committee periodically identifies alter- natives based on what does or does not work in their state, region, or district. This step is not required for the selection process at the project level. For this example, the pavement- type alternatives approved by the selection committee are des- ignated Alternatives 1, 2, and 3. Step 2: Identify Feasible Alternatives for the Project At the project level, the process begins with the alternatives approved by the pavement-type selection committee. Within this group, pavement types that are considered inappropriate for this project are identified. For this example, all three alter- natives are used routinely for the anticipated section traffic level and composition, and there are no issues with the exist- ing pavement condition, historical trends, or roadway periph- eral features. The agency conducts an evaluation of existing pavement type through nondestructive testing and destructive sam- pling. In this example, the results indicate that there were no significant factors, such as the subgrade type or drainage conditions, that would override the use of these alternatives. During project scoping, the agency also evaluates roadway peripheral features such as changes in vertical profile, over- head clearances, and on-grade structures. In this case, no engineering constraints are found. Step 3: Develop Pavement Life-Cycle Strategies For each of the feasible alternatives identified in step 2, the agency develops pavement life-cycle strategies to maintain the desired performance level over the 45-year analysis period. A P P E N D I X B Example of Pavement-Type Selection in Alternate Bidding

The agency first performs the structural designs, estimates the service lives, and identifies the timings and extents of antici- pated M&R treatments. The agency develops pavement designs for the alternatives using the same inputs and design criteria such as daily traffic volume, design life, reliability, and terminal performance with appropriate design procedures. In routine practice, the agency typically uses statewide pavement management data to develop service life estimates of the initial structure and rehabilitation activities through performance trend analysis. The service life estimates of the three alternatives are presented in Table B1. The agency identifies the type of major rehabilitation activ- ities for each alternative and sequences their timing based on the service-life estimates (results are provided in Table B2). Major rehabilitation is planned at years 20 and 33 for Alterna- tive 1, at year 25 for Alternative 2, and at years 15, 27, and 37 for Alternative 3. Scheduled maintenance will be performed annually for all the alternatives. While Alternatives 1 and 2 are expected to have no useful remaining life at the end of the 45-year period, Alternative 3 is likely to have 2 years of unused life, as the scheduled reha- bilitation at year 37 will extend its service life by 10 years. Therefore, salvage value is included only for Alternative 3 in the LCCA. Step 4: Perform LCCA The agency’s LCCA procedure requires the computation of NPV over a 45-year analysis period at a discount rate of 3 per- cent. While the agency considers salvage value and supple- mental costs for traffic control, preliminary engineering, and construction engineering, it does not consider road-user costs in the pavement-type selection process. The agency reports the direct cost estimate of each activity with supplemental costs included. Table B3 and Table B4 present the direct agency costs for each alternative by the activity type in both real (undiscounted) and discounted terms, respectively. The salvage value for Alter- native 3 has been calculated using the straight line depreciation method (see Figure B1). The expenditure-stream diagrams of each alternative are presented in Figure B2 through Figure B4. The summary of the LCCA is presented in Table B5. Step 5: Evaluation Using Economic Factors Upon computing the life-cycle costs, the agency conducts an economic evaluation of alternatives to assess their cost feasibil- ity at the project level as well as the agency level. The agency first determines the cost feasibility of alternatives at the project level. The agency eliminates an alternative when its initial cost or life-cycle cost is 20 percent higher than that of the lowest competing alternative. Based on the cost estimates presented in Table B5, the life- cycle cost of Alternative 1 is the lowest. The life cycle costs of Alternatives 2 and 3 are approximately 7 and 16 percent higher 52 Table B1. Service-life estimates of pavement types. Table B2. Timing and type of M&R activities. Table B3. Direct agency costs (real dollars). Table B4. Direct agency costs (discounted dollars). Pavement Alternative Expected Service Life (Years) First Rehabilitation Subsequent Rehabilitation 21311 02022 01213 Pavement Alternative Time at which M&R Strategies will be performed Rehabilitation 1 Rehabilitation 2 Rehabilitation 3 Maintenance 1 Year 20 Year 33 Annual 2 Year 25 Annual 3 Year 15 Year 27 Year 37 Annual Pavement Alternative Initial Structure Rehabilitation 1 Rehabilitation 2 Rehabilitation 3 Maintenance Salvage Value 1 $2,650,000 $335,100 $405,000 $2,025/year 2 $3,100,000 $188,500 $1,951/year 3 $2,910,000 $357,000 $412,000 $474,000 $2,250/year -$94,800 Pavement Alternative Initial Structure Rehabilitation 1 Rehabilitation 2 Rehabilitation 3 Maintenance Salvage Value 1 $2,650,000 $185,537 $152,696 $49,650 2 $3,100,000 $104,357 $47,836 3 $2,910,000 $229,145 $185,478 $158,782 $55,167 -$25,069

53 Figure B1. Salvage value calculation for Alternative 3. Figure B2. Expenditure-stream diagram for Alternative 1. Figure B3. Expenditure-stream diagram for Alternative 2. Figure B4. Expenditure-stream diagram for Alternative 3. En d of se rv ic e lif e En d of an al ys is pe rio d Im pr ov em en t c o st En d of a na ly sis pe rio d In iti al c on str uc tio n En d of a na ly sis pe rio d In iti al c on str uc tio n En d of a na ly sis pe rio d In iti al c on str uc tio n

than that of Alternative 1, respectively. Also, the initial cost of Alternative 1 is the lowest. The initial costs of Alternatives 2 and 3 are approximately 17 and 10 percent higher than that of Alternative 1, respectively. Since the initial and life-cycle costs of Alternatives 2 and 3 are within the 20 percent threshold, none of them are eliminated. The agency then determines if the selection of an alterna- tive would have an adverse impact on the agency’s financial goals and the overall system needs. The economic factors include: • Initial costs. • Life-cycle costs. • Annual maintenance costs. • Future rehabilitation costs. The agency finds the cost estimates of alternatives compara- ble and unlikely to have adverse impacts at the agency level and concludes that all three alternatives satisfy its economic evalu- ation criteria. Step 6: Evaluation Using Noneconomic Factors In this step, the agency ascertains whether the risks from noneconomic factors will override inclusion of the alternative. The agency considers the following noneconomic factors nec- essary for evaluation in the selection process: • Material recycling—Does the inclusion of this alternative encourage material recycling? • Stimulation of competition—Does the inclusion of this alternative hinder competition? • Maintenance capability—Does the maintenance unit have the experience and equipment to maintain this alternative? Based on its evaluations, the agency concludes that all alternatives meet the evaluation of noneconomic criteria (see Table B6). Step 7: Weighing of Economic and Noneconomic Factors Since all the alternatives meet the economic criteria and there are no noneconomic factors to override their inclu- sion, these alternatives are considered as qualified alternatives. Now these alternatives are compared using an alternative- preference screening matrix to determine if there are consid- erable differences in the economic and noneconomic aspects of these alternatives. Based on this comparison, if a single alternative emerges as the most advantageous alternative, it is selected for traditional design-bid-build contracting. Other- wise, if two or more alternatives emerge with no significant differences, then these alternatives are considered for alter- nate bidding. A detailed discussion of the alternative-preference screening matrix is presented in Appendix A. This section presents only the application of the screening matrix in selecting the pre- ferred pavement types for the project under consideration. Step 7a. Identification and Grouping Evaluation Factors The factors considered in the evaluation are presented in Step 5 and Table B6. Step 7b. Assignment of Group and Individual Factor Weights The agency’s goal is to select the preferred alternative(s) with overall cost-effectiveness and lower initial costs. There- 54 Table B5. Results of LCCA. Table B6. Evaluation of alternatives using noneconomic factors. Cost Factor Alternative 1 Alternative 2 Alternative 3 Initial costs $2,650,000 $3,100,000 $2,910,000 Present value of future rehabilitation costs $338,232 $90,029 $548,336 Present value of future maintenance costs $49,650 $47,836 $55,167 Present value of total costs $3,037,882 $3,237,865 $3,513,503 Noneconomic Factors Alternative 1 Alternative 2 Alternative 3 Material recycling More recycling possibilities Some recycling possibilities More recycling possibilities Stimulation of competition Encourages competition Encourages competition Encourages competition Maintenance capability Common experience Common experience Common experience

fore, the agency has assigned 80 percent weight to economic factors and 20 percent to noneconomic factors. Since the agency considers alternate bidding as an option, the agency has placed additional emphasis on life cycle among the eco- nomic factors and the stimulation of completion among the noneconomic factors. Table B7 presents the distribution of weights assigned to individual factors within each group, as well as their relative importance in the overall evaluation of the matrix. Step 7c. Preference Rating of Individual Factors In this step, preference ratings are assigned to individual fac- tors based on the comparative evaluation of advantages and disadvantages of each alternative. Table B8 presents the percent differences in cost estimates for the three alternatives for the various economic factors. As noted, Alternative 1 has the lowest initial and life-cycle costs, while Alternative 2 has the lowest rehabilitation costs. The estimated maintenance costs of all three alternatives are com- parable. In terms of noneconomic factors, the comparative advantages and disadvantages can be established based on the information presented in Table B6. The agency then assigns preference ratings to evaluation fac- tors based on the advantages that a given alternative offers. Table B9 presents the guidelines for rating economic factors. In this example, Alternative 1 has the lowest initial and life- cycle costs among the alternatives, so it is rated “High” for these factors. Similarly, as the life-cycle cost of Alternative 3 is more than 10 percent of the lowest life-cycle costs, the alternative is rated “Low” for life-cycle cost factor. Table B10 presents the complete set of evaluation factors and the ratings for the alter- natives considered in this example. Step 7d. Scoring Pavement-Type Alternatives In this step, the preference ratings are converted to numer- ical scores. Next, for each alternative, the unweighted numer- ical scores are adjusted to weighted scores using the weights tabulated in Table B7. Then the unweighted group scores are 55 Table B7. Weighing for individual factors and groups. Table B8. Comparative evaluation of economic factors. Table B9. Agency’s rating of economic factors. Group Factor Factor Weights within a Group Factor Weights across Groups 2151stsoclaitinIsrotcafcimonocE Rehabilitation costs 25 20 Maintenance costs 5 4 Life-cycle costs 55 44 Group total 100 80 Noneconomic factors Material recycling 20 4 Stimulation of competition 50 10 Maintenance capability 30 6 Group total 100 20 Note: All values are in percent. Economic Factors Difference in Cost Estimate (%) Alternative 1 Alternative 2 Alternative 3 Initial costs 0 17 10 Present value of future rehabilitation costs 276 0 509 Present value of future maintenance costs 4 0 15 Net present value of life- cycle costs 0 7 16 Note: “0” indicates the alternative having the lowest cost estimate for the specific economic factor. Factor Eliminate Low Medium High Initial costs Cost > 20 % Cost >10% and <20 % Cost >5% and ≤10 % Cost ≤ 5 % Rehabilitation costs Cost >10% and <20 % Cost >5% and ≤10 % Cost ≤ 5 % Maintenance costs Cost >10% and <20 % Cost >5% and ≤10 % Cost ≤ 5 % Life-cycle costs Cost > 20 % Cost >10% and <20 % Cost >5% and ≤10 % Cost ≤ 5 % Note: The percentage differences of cost items are calculated to their corresponding lowest value of the alternatives.

adjusted to weighted group scores. Table B11 summarizes the total scores for the alternatives considered in this example, and Table B12 presents the completed worksheets of the screening matrix. Step 7e. Interpreting Results As noted in Table B11, Alternative 1 ranks firsts, followed by Alternatives 2 and 3. Alternatives 1 and 2 have nearly similar scores, but Alternative 3 has a much lower score (primarily because of the rehabilitation cost requirements). Therefore, Alternative 3 can be eliminated. The initial cost for Alternative 1 is about 7 percent less than that for Alternative 2, and both alternatives have comparable scores. This situation is ideal for alternate bidding. By leaving the decision of selecting the final pavement type to the contrac- tors, there is potential for savings in initial costs and gain from the competition between the industries. Therefore, the agency considers Alternative 1 and Alterna- tive 2 as equivalent pavement types and selects these alternatives for alternate bidding. Step 7f. Calculate Bid Adjustment Factor The agency then determines the bid adjustment factor for alternatives based on the difference in the present value of their future costs. Using the estimates presented in Table B5, the agency calculates the bid adjustment factor for the project as follows: Future costs of Alternative 1 (Present value) = $338,232 + $49,650 = $387,882. Future costs of Alternative 2 (Present value) = $90,029 + $47,836 = $137,865. Bid adjustment factor = difference in future costs = $387,882 − $137,865 = $250,017. Table B10. Ratings of economic and noneconomic factors. Group Factor Alternative 1 Alternative 2 Alternative 3 Economic factors Initial costs High Low Medium Rehabilitation costs Low High Low Maintenance costs High High Low Life cycle costs High Medium-high Low Noneconomic factors Material recycling Medium-high Medium Medium-high Stimulation of competition High High High Maintenance capability No difference No difference No difference Table B11. Summary of the alternative-preference screening matrix scores. Table B12. Alternative-preference screening matrix worksheet. Group Alternative 1 Alternative 2 Alternative 3 Preferred Alternative Economic factors 64.0 61.6 20.8 1 & 2 Noneconomic factors 13.2 12.4 13.2 Total score 77.2 74.0 34.0 Note: All values in percent. Factors and Groups Factor Weight Alternative 1 Alternative 2 Alternative 3 Rating Weighted Score Rating Weighted Score Rating Weighted Score Group A. Economic factors 0.9muideM0.3woL0.51hgiH51stsoclaitinI Future rehabilitation costs 25 Low 5.0 High 25.0 Low 5.0 Future maintenance costs 5 High 5.0 High 5.0 Low 1.0 0.11woL0.44hgih-muideM0.55hgiH55stsocelcycefiL Group A unweighted total 100 80.0 77.0 26.0 Group B. Noneconomic factors Material recycling 20 Medium-high 16.0 Medium 12.0 Medium-high 16.0 Stimulation of competition 50 High 50.0 High 50.0 High 50.0 Maintenance capability 30 No difference 0.0 No difference 0.0 No difference 0.0 Group B unweighted total 100 66.0 62.0 66.0 Subtotals Group Weights Group Unweighted Total Group Weighted Total Group Unweighted Total Group Weighted Total Group Unweighted Total Group Weighted Total A. Economic factors 80 80.0 64.0 77.0 61.6 26.0 20.8 B. Noneconomic factors 20 66.0 13.2 62 12.4 66 13.2 001latotdnarG 77.2 74.0 34.0 Note: All values in percent.

Next: Appendix C - Example of Pavement-Type Selection in Design-Build Operations & Maintenance Projects »
Guide for Pavement-Type Selection Get This Book
×
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

TRB’s National Cooperative Highway Research Program (NCHRP) Report 703: Guide for Pavement-Type Selection includes processes for conducting systematic evaluations of pavement alternatives and for making decisions on pavement-type selection.

The processes may be used for both agency-based and contractor-based type selections and may be applied to different pavement types and structures.

Further elaboration on the work performed in developing this report is available online.

In July 2013, the following errata on NCHRP Report 703 was issued: On page 67, in the second bullet point at the bottom of the page, the second to last sentence should read, “To maximize the economic value, the agency should consider alternatives that stimulate competition and incorporate innovative approaches.” The wording has been corrected in the online version of the report.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!