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LIFE CYCLE ASSET MANAGEMENT

The objective of the MAV Asset Management Knowledge Base is to identify and disseminate best practice in life cycle asset management to the Victorian local government sector.

Life cycle costs are defined as the cost of the construction or renewal work divided by the actual or estimated economic (or useful life).  Life cycle costs are expressed in dollars per square metre per annum ($/m2/yr).

Road network life cycle costs are calculated for three road management activities:

·          Sealed roads routine maintenance

·          Sealed roads reseals

·          Sealed road pavement renewals

And for:

·          Unsealed roads routine maintenance

·          Unsealed roads resheets

Councils have road assets to provide the service of transportation to their communities.  If there was no need for the community to have a transportation service, there would be no need for road assets.  The following model takes a management approach to providing transportation services from road assets.

Assumptions

·          Sealed roads length   295 km

·          Unsealed roads length 398 km

·          Service levels are uniform across sealed roads and unsealed roads

·          Bitumen seals last 15 year before reseals are required

·          Reseals cost $19,700 per km on average.

·          Sealed pavements last on average 50 year before renewal is required.

·          Renewal of sealed pavements cost $160,000 per km on average.

·          Gravel resheets last an average 10 years before resheeting is required.

·          Gravel resheets cost

MANAGEMENT ACTIVITIES FOR LOCAL ROADS

Routine maintenance

Sealed roads routine maintenance

·          Current budget - $292,000  ($990 per km for 295 km)

Unsealed roads routine maintenance

·          Current budget - $484,000  ($1,216 per km for 398 km)

Maintenance budgets are assumed to be adequate.

Renewal activities

Sealed roads reseals

·          Sealed road length  295 km

·          Reseal life  15 years

·          Annual reseal need  19.67 km per annum

·          Cost of reseal  $19,700 per km

Therefore annual reseal need  $387,433

Current reseal budget is $200,000

Sealed roads pavement renewals

·          Sealed road length  295 km

·          Pavement life  50 years

·          Annual renewal need  5.90 km per annum on average over the 50 year life cycle.

·          Cost of pavement renewal  $160,000 per km

Therefore annual pavement renewal need is $944,000

Current pavement renewal budget is $160,000

Unsealed roads resheeting renewals

·          Unsealed road length  398 km

·          Gravel resheet average life  10 years

·          Annual resheet need  39.80 km per annum on average.

·          Cost of gravel resheeting  $21,000 per km

Therefore annual gravel resheeting need is $834,500

Current gravel resheeting budget is $457,000

ROAD NETWORK OWNERSHIP COSTS

The above data can be summarised into the cost of owning the road network.

The funding gap is $1,350,233 per annum.

The funding gap included the average pavement renewal cost over the 50 year life cycle of the pavement.  This is the amount that is estimated to be needed for pavement renewal over the 50 years life cycle.  For a council with relatively new roads, or road in good condition, the current pavement renewal need may be less that the long term average.

If we assume that the current pavement renewal expenditure of $160,000 is adequate for the next 5 or so years, the current road ownership cost can be reduced to $2,159,233 per annum ($944,000 - $160,000), which reduces the current funding gap to $566,233.

This recognises pavement renewal as a future liability and allows time to refine renewal projections and to plan for required renewal expenditure and funding.

The current funding gap may be managed by refining the model by setting appropriate levels of service for road hierarchy categories, eg high volume gravel roads are graded 4 times per year, low volume gravel roads are graded once per two years and by focusing on reducing the life cycle cost for reseals, pavement renewals and resheeting, ie the cost per km per annum.

For example, using a polymer modified bitumen binder for reseals may add 10% to the reseal cost and extend the reseal life by 30% and lower the life cycle cost of reseals.

Although funding for pavement renewals may not be required at the present time, the renewal liabilities should not be ignored.  If a council is spending at 20% of the life cycle average for pavement renewal, at some time, it may need to spend 180% of the average.  It is important that the council takes this time to plan for future pavement renewals and how these are to funded.

The MAV Asset Management Knowledge Base is to source and provide best practice information to practitioners on asset management life cycle costs to assist councils in providing the appropriate levels of transportation service at the lowest life cycle cost.