The American Society of Civil Engineers and Eno Center for Transportation question the first-cost philosophy behind much transportation infrastructure funding, based on findings from “Maximizing the Value of Investments Using Life Cycle Cost Analysis.”
Released late last year, the report surveys industry practitioners and policymakers on current use of life-cycle cost analysis (LCCA), and their beliefs on what role it should play in the decision-making process. It also features six case studies that demonstrate the benefits of implementing LCCA. While almost all those surveyed said the method should be part of the process, only 59 percent said it was currently being used.
“Considering the full cost of a project throughout its lifespan is essential if we want to make the best investment with the limited funding available,” says ASCE Executive Director Pat Natale, announcing the report’s release at a Capitol Hill briefing. “There is a clear desire to use this more in the transportation industry. Now is the time for our policymakers to incentivize using LCCA to ensure we choose the right project and design options.”
“Far too often not enough analysis goes into transportation investment decisions as the emphasis is placed on upfront costs rather than long-term costs and benefits,” adds Eno President and CEO Joshua Schank. “Both local and federal planners and policymakers can make a difference in the future of this country’s transportation and infrastructure network by implementing life cycle cost analysis.”
Using LCCA is an “emerging and significant topic,” notes Federal Highway Administration Acting Administrator Greg Nadeau, one of the industry experts who shared unique perspectives during the report briefing. He pointed to the need for maximizing investment as the nation faces constrained budgets and aging infrastructure.
Beth Osborne from Transportation for America, and ASCE Industry Leaders Council member Christopher Stone, president of Clark Nexsen, shared viewpoints from different perspectives on the current use of LCCA in the industry and value of increasing its implementation. Osborne believes using LCCA will become easier very quickly, as greater implementation will lead to a discovery that the data needed is already exists in unexpected places. To help support civil engineers as they incorporate LCCA into decision-making, Stone observes that a course to train leaders in LCCA is critical, as it will reduce the barriers to entry.
“Maximizing the Value of Investments Using LCCA” authors contend:
- When making funding decisions under constrained budgets, it is tempting to place high importance on the up-front costs and pay little attention to costs in the future.
- The United States needs to begin thinking more strategically about how it maintains and operates its transportation network, and manages its assets in the future.
- With the focus of funding shifting toward system preservation, greater use of LCCA can ensure sustainability of future budgets and better management of vital infrastructure.
- An LCCA program is undoubtedly a challenging endeavor for a state agency to undertake, but just because it is challenging or has not been done before does not mean that it cannot be done
- Though federal policy encourages the use of economic analysis, particularly LCCA, its use is not mandatory or incentivized with funding.
Some state and local agencies have implemented successful programs, authors add, but these programs have resulted from unique situations under strong political and agency-level leadership. LCCA can be more widely implemented through direct action at the federal, state, and local level that requires and encourages the development of more robust, data-driven analysis programs at relatively low cost to agencies.
To imporve decision making, the report gives a series of policy recommenations on how to implement LCCA, a process which ensures total costs related to an asset – incluing the cost to operate the infrastructure in the future – is accounted for. The report can be downloaded from www.enotrans.org/publications.
HIGHWAY TRUST FUND: A SUNSET?
The Eno Center for Transportation, a non-partisan think-tank that promotes policy innovation in the field of transportation, released “The Life and Death of the Highway Trust Fund” in December. The study evaluates the current political, economic and legal forces behind the Highway Trust Fund and examines the lessons from other nations on how they provide long-term sustainable funding for their transportation investments. It concludes with recommendations for policymakers on how to provide sustainable funding while at the same time improving the federal program’s effectiveness. Among the report’s key takeaways is that the current approach to funding surface transportation is not working and that maintaining the status quo will continue to produce uncertainty and exacerbate existing infrastructure shortfalls.
The three potential solutions offered in the study include: adjusting spending to reflect revenues (either by reducing spending or increasing revenues); adopting a hybrid approach that combines general funds and gas tax revenues; or, eliminating the Highway Trust Fund and replacing it with general fund revenues. — National Stone, Sand & Gravel Association