Life-Cycle Cost Analysis: Step 8 - Analyze Results


The FHWA will evaluate the Betterment by considering several factors:

  • Site Eligibility: Is the damage serious and was it caused by the approved event? If the damage is heavy maintenance, or frequently occurs during non-ER events, or is considered normal for the site the damage is not eligible for any ER funding and cannot be used to justify a Betterment.
  • Future Damage Frequency: Are past records for the damaged site available for review? Does the projected damage frequency exceed the frequency of approved disasters in the area?
  • Future Damage Severity: How does past damage compare to current damage? Is the estimated severity of future damage based on sound reasoning? Is the primary cause of past damage understood and mitigated?
  • Alternative Creditability: Is the proposed Betterment supported by preliminary design analysis? Does the proposed Betterment specifically address the root cause of the damage? Is the grade raise or proposed bridge high enough, is the bridge long enough, is the culvert large enough, is scour addressed and is the erosion protection adequate? Are natural processes such as deposition, debris impact, channel instability mitigated?
  • Repair Costs: Are detailed cost estimates provided? Are real costs and not year of expenditure/inflated costs used to estimate the cost of future repairs?
  • Analysis Period: Is the analysis period appropriate for the facility. Is it a reasonable time period considering the uncertainty of projecting future damage out into the future and the requirement to clearly economically justify Betterments?
  • Discount Rate: Is the rate appropriate for the length of the analysis?
  • Inputs: Are all the inputs to the economic analysis solid and supported? Are only ER eligible repair costs used in the analysis? Are there non-eligible costs such as economic costs, user costs, heavy or routine/normal maintenance included?
  • Input sensitivity: What is the confidence level in the estimated severity and cost of future repairs? Can inputs with less certainty be adjusted + 25% without changing the preferred alternative? How sensitive is the result of the analysis to the discount rate?
  • Future Sustainability: Is the road generally stable and well maintained or are there multiple other places that are likely to fail in a future event? Is the road owner actively pursuing correction of these deficiencies? Is this a good investment in a sustainable transportation facility?
  • Economic Benefit: Is the proposed Betterment clearly an economic benefit for the ER Program?

If the FHWA determines that the Betterment is clearly economically justified it may be approved for funding.

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