2016 LPA Day Session, District Two December 8, 2016
Instead of Focusing on the things we can’t change; let look at what we can. It took me along time to understand when I was growing up and Dad always saying… “ Son, remember poor people can’t afford to buy cheap” Process Process Process - Application of an Economic Model along with Revenue estimates will generate the greatest “profit” - Industrial Design\System Process Engineers are in my opinion becoming ever increasingly important
First decision to be made on any public project… • Do I replace it or do I repair it? This question is too often not asked
ECONOMIC REPLACEMENT THEORY Decisions about infrastructure should be made based on sound economic principles, not emotions or intuition (Douglas, 1975). Economic replacement theory models attempt to answer the question: “What is the optimum economic life of this piece of infrastructure?” The goal is to find an optimum length of service for a given piece of infrastructure. After this time has expired, there is at least one other alternative (replace, retire, rebuild, etc.) which is more economical than keeping the infrastructure in its present state. The models attempt to find the optimum length of service by using a variety of techniques based on the science of economics. There are three basic theories in the field of economic replacement that are relevant to an understanding of this dissertation. They are: the cost minimization model, the profit maximization model, and the repair limit model .
Decision Making Process Let’s Consider……… Infrastructure is NOT a fixed asset—its value is consumed in the production of work (time and loading). The ultimate goal of this work is to make a “profit” for the owner—if there is no profit, there is no point in owning the inventory item. There are a finite number of loads that a road can take and a finite number trips a bridge can take and still make profits for their owners. Inventory items are routinely bought, operated, and sold during the normal course of business. There is an endless cycle of decisions that must be made with respect to infrastructure ownership. The Engineer must decide how much and how often regarding routine Preventive Maintenance . Preventive maintenance is defined as those routine, periodic actions undertaken to minimize repair costs or extend the life of the infrastructure— each spring power washing the lower cord of a truss bridge is a good example. Repair decisions occur on the next level. When the item or one of its components breaks down during the normal course of business, it must be fixed to regain operational status. Rebuild decisions concern major mechanical refurbishments that extend the life of the item when some inventory items are satisfactory. When a road or bridge is nearing the end of its profitable life, the Engineer must make a Replace decision.
• What is 'Scarcity‘ • Scarcity refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants at possible. Any resource that has a non-zero cost to consume is scarce to some degree.
Project Initiation • LPA Application through CEAO, MPO, etc. • Estimate based upon similar projects • ODOT Planning – Scope of Services USE YOUR RESOURCES HERE • Once an LPA has determined that they will be utilizing Federal Funds, that Agency has accepted that there are Rules and Regulation that WILL have to be followed. These items can not be changed….like it or not
Instead of Focusing on the things we can’t change; let look at what we can. It took me along time to understand when I was growing up and Dad always saying… “ Son, remember poor people can’t afford to buy cheap” Process Process Process - Application of an Economic Model along with Revenue estimates will generate the greatest “profit” - Industrial Design\System Process Engineers are in my opinion becoming ever increasingly important
SEN-CR38-9.32 Bridge over Sandusky River Bridge Built in 1913 - 2 Span Pony Truss Bridge Replaced in 1970 - Utilized Existing Abutments and center Pier • Bridge beams were rejected by the Engineer but was overruled by the Commissioners
Environmental and Right of Way • In my opinion easily to most tedious part of the process • Involves coordination and relationship building • Many times as Engineer’s we may look at the bottom line rather than the big picture • Most requirements are managed by ODOT but these are NOT ODOT regulation • Early involvement with local landowners and Federal Agencies is critical • Most of these regulation can be managed in-house
Environmental Coordination -US Army Corp of Engineer’s -US EPA -Ohio EPA -US Fish and Wildlife Service -Ohio Scenic Rivers
Right of Way – Must be acquired according to Federal Guidelines -Traditional Purchase -Donation
Organized Meetings- Proper preparation assures compliance with State and Federal Guidelines Pre-Construction Meeting - Provide Compliance Information - Collect Contractor Information - Haul Routes - Sub-Contractors - DBE Requirements - Project Schedule - Contact Information - Billing Cycle and Process Progress Meeting(s) - Review all work to date - Review and modify schedule - Discuss any Change Orders - Review Testing and Process
I often consider that this box is as important as the actual project.
Economic Modeling Process the Engineer’s Side Economic decisions Engineer’s are faced with are also quite complex. There is the same interactive effect between owning costs and operating costs that cannot be ignored when searching for an optimal solution. Ownership costs are important to consider, both in their timing and in their magnitude. The periodic usage and accounting data maintained by counties can be used to produce a stream of data that defines ownership costs. Most Engineer’s are not very knowledgeable about Life Cycle Analysis, but know how to make the most of the information they have. The point is that it can be done better. Tools can be developed and employed which will improve the economic decision making capabilities of Engineers.
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