SP1 Road renewals

Introduction

These procedures (SP1) provide a simplified method of evaluating the economic efficiency of work to be funded under work categories ³ :

• 214: pavement rehabilitation
• 213: drainage renewals
• 231: associated improvements (seal widening)
• 241: preventive maintenance.

To be eligible for funding under these categories, the work must be shown to be the long term, least cost option for the road controlling authority, and must not include geometric improvements. (This requirement is not intended to prevent investment in work that will coincidentally give benefit to road users. For example seal widening will usually provide some safety benefits to road users but if the investment is justified on the grounds that it is the most cost effective way to maintain a road shoulder it shall be funded under the seal widening work category).

Under these procedures the present value (PV) cost of the option is determined and compared with the existing maintenance strategy. An existing maintenance strategy commonly includes pavement maintenance work such as dig-outs, reseals, and/or other localised repairs needed to 'hold' the condition of an asset.

The worksheets use a 10% discount rate and 25 year evaluation period. The procedures assume that projects will be completed within the first year and will be in service by the start of Year 2. Where costs are common to both the existing maintenance strategy and the option(s), they are not included in the analysis. All costs shall be exclusive of GST.

³ Land Transport NZ's Programme and funding manual, chapter 2.

Evaluation summary

Explanation for worksheet 1

Worksheet 1 provides a summary of the general data used for the evaluation as well as the results of the analysis.

The information required is a subset of the information entered into LTP online.

1. Evaluator(s)/reviewer(s): Enter the full name, contact details, name of organisation, office location, etc, of the evaluator(s) and reviewer(s).
2. Project/package details: Provide a general description of the project and package (where relevant), describe the problem being addressed in the existing maintenance strategy, any particular problems and why ongoing maintenance is not viable.
3. Location: A brief description of the project location including:
   • a location/route map
   • a layout plan of the project.
4. Alternatives and options: Describe the do minimum strategy against which options will be compared. Describe the options assessed and how the preferred option will improve on the existing maintenance strategy and reduce or eliminate any problems.
5. Timing: For purposes of the economic efficiency evaluation, the construction start is assumed to be 1 July of the financial year in which the project is submitted for a commitment to funding.
6. Economic efficiency: Enter the timeframe information, the PV cost of the do minimum, the PV cost of the preferred option and the PV total net benefits of the preferred option. Use worksheet 2 to calculate the PV cost of the existing maintenance strategy that will keep the road in service without any improvements. Use worksheet 3 to estimate the PV cost of the preferred project option.
7. PV cost saving: Calculate the cost saving (in PV terms) for the preferred option compared with the do minimum.

Worksheet 1(54.5 kb)

Cost of existing maintenance strategy

Explanation for worksheet 2

The existing maintenance strategy for pavement rehabilitation will normally include pavement maintenance work and reseal for the whole period of the analysis. For major drainage work, seal widening and preventative maintenance work, the existing maintenance strategy will usually include localised repairs and patching.

1. Historic maintenance cost data: provide the actual (or estimated) maintenance costs for the site for the past 3 years as well as forecasted costs for the current year and future years.
2. Enter the average annual maintenance work costs (including dig-outs not associated with resealing work). Multiply by 9.52 to get the PV for 25 years (a). To convert dollar values from different years to base date values, use the update factors in appendix A12.3.
3. Periodic maintenance costs: For pavement rehabilitation, enter the costs for heavy maintenance and maintenance resealing. Heavy maintenance is activities such as dig-outs and crack bandaging which are often carried out immediately prior to maintenance reseal. For major drainage work, seal widening and preventative maintenance work enter the costs of work required less often than annually. Enter the appropriate SPPWF from table 1 below. The sum of the PV's of periodic maintenance is entered at (b).
4. Add (a) + (b) to get A, the PV cost of the existing maintenance strategy. Transfer the PV of total maintenance cost to A on worksheet 1.

Table 1 Single payment present worth factors - for 10 percent discount rate

Single payment present worth factors table - 10% discount rate (18.7 kb)

Worksheet 2 (72 kb)

Cost of the option

Explanation for worksheet 3

Worksheet 3 is for calculating the PV costs of the proposed option. Cost items to include are: investigation, design, construction, annual maintenance, periodic maintenance (eg, resealing).

1. Enter the cost of the work. The cost of the proposed option is estimated separately on an estimate sheet, which shall be attached to worksheet 3. Multiply the cost of the proposed option by the discount factor 0.91 and enter the cost at (a).
2. Enter the cost of annual routine maintenance for year 1 at (b). As this is assumed to be the year that the proposed option works are carried out, this cost will commonly be the same as that for the existing maintenance strategy, as per step 2 on worksheet 2.
3. Enter the estimated cost of annual maintenance (following completion of the works) and multiply by 8.57 to get the PV for years 2 to 25 inclusive. Enter this cost at (c).
4. Enter the years when periodic maintenance is required, the type of maintenance, the $ amount and the SPPWF. The sum of these gives the PV of periodic maintenance. Enter this at (c). Obtain the SPPWF from table 1.
5. Sum (a) + (b) + (c) + (d) to get the PV total costs for the option and enter at B. Transfer the PV total costs for the preferred option to B on worksheet 1.

Worksheet 3 (46.5 kb)