Designation: C1131 − 10´1

Standard Practice for

Least Cost (Life Cycle) Analysis of Concrete Culvert, Storm
Sewer, and Sanitary Sewer Systems1
This standard is issued under the fixed designation C1131; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.

´1 NOTE—Editorial changes were made throughout in April 2011.

1. Scope 2.1.3 direct costs—the costs of excavation, removal, and

1.1 This practice covers procedures for least cost (life cycle) disposal of existing materials, systems, or structures; installa-
analysis (LCA) of materials, systems, or structures proposed tion and testing of replacements materials, systems, or struc-
for use in the construction of concrete culvert, storm sewer, and tures; backfill; surface restoration, traffic rerouting, safety,
sanitary sewer systems. utility relocations; and additional future costs required by new
land uses, population growth.
NOTE 1—As intended in this practice, examples of analyses include, but
are not limited to the following: (1) materials-pipe linings and coatings, 2.1.4 discount rate—accounts for the time value of money
concrete wall thicknesses, cements, additives, etc.; (2) systems-circular and reflects the impartiality of paying or receiving a dollar now
pipe, box sections, multiple lines, force mains, etc.; and (3) structures-wet or at a future time.
and dry wells, pump and lift stations, etc. 2.1.4.1 Discussion—The discount rate is used to convert
1.2 The LCA method includes costs associated with plan- costs occurring at different times to equivalent costs at a
ning, engineering, construction (bid price), maintenance, reha- common time. Discount rates may be expressed in nominal or
bilitation, replacement, and cost deductions for any residual real terms.
value at the end of the proposed project design life. 2.1.5 future costs—costs incurred after a project has been
1.3 For each material, system, or structure, the LCA method constructed and operating, such as maintenance, rehabilitation,
determines in present value constant dollars, the total of all and replacement costs.
initial and future costs over the project design life, and deducts 2.1.6 indirect costs—the costs to the owner that users pay in
any residual value. terms of delayed time.
1.4 Major factors in the LCA method include project design 2.1.7 inflation rate—an increase in the volume of money
life, service life, and relevant interest and inflation rates. and credit relative to available goods and services resulting in
a continuing rise in the general price level.
2. Terminology 2.1.7.1 Discussion—In this practice, inflation refers to
2.1 Definitions: yearly change in the Producer Price Index (1).2
2.1.1 constant dollars—dollars of uniform purchasing 2.1.8 interest rate—the cost of borrowed money.
power exclusive of inflation or deflation. 2.1.9 maintenance costs—the annual or periodic direct and
2.1.1.1 Discussion—Constant dollars are costs stated at indirect costs of keeping a material, system, or structure
price levels for a specific reference year, usually the particular functioning for the project design life; such maintenance does
time that the LCA is being conducted. not extend the service life of the material, system, or structure.
2.1.2 current dollars—dollars of purchasing power in which 2.1.10 nominal discount rate—a discount rate that takes into
actual prices are stated, including inflation or deflation. account both the effects of inflation and the real earning
2.1.2.1 Discussion—Current dollars are costs stated at price potential of money invested over time.
levels in effect whenever the costs are incurred. In the absence 2.1.10.1 Discussion—When future costs and values are
of inflation or deflation, current dollars are equal to constant expressed in current dollars, after having been adjusted for
dollars. inflation, a nominal discount rate is used to convert the future
costs and values to present value constant dollars. Users of this
1
This practice is under the jurisdiction of ASTM Committee C13 on Concrete practice should consult with their accountant or client to
Pipe and is the direct responsibility of Subcommittee C13.05 on Special Projects. determine the appropriate discount rate for a given project.
Current edition approved Dec. 1, 2010. Published January 2011. Originally
approved in 1995. Last previous edition approved in 2007 as C1131 – 95 (2007).
2
DOI: 10.1520/C1131–10E01. The boldface numbers refer to the list of references at the end of the standard.

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 C1131 − 10´1
2.1.11 original costs—costs incurred in planning, designing, 4.3 Criteria—Establish basic criteria that should be fol-
and constructing a project. lowed in applying the LCA method, including project design
2.1.12 project design life—the number of years of useful life life; the material, system, or structure service life; direct and
the material, system, or structure must provide. indirect costs and timing of maintenance, rehabilitation and
replacement; real or nominal discount rate; and the compre-
2.1.13 real discount rate—a discount rate that takes into hensiveness of the LCA evaluation.
account only the real earning potential of money over time and
is the differential between the interest and inflation rates. 4.4 Compile Data—Compile basic data required to compute
2.1.13.1 Discussion—When future costs and values are the LCA of potential alternatives, including costs of planning,
expressed in future constant dollars, a real discount rate is used design, engineering and construction; maintenance costs; reha-
to convert constant dollars to present value dollars. Life cycle bilitation costs; replacement costs; residual values; and the
economic analyses conducted in constant dollars and a real time periods for all future costs.
discount rate are often preferred to similar analyses conducted 4.5 Compute LCA—The LCA of a material, system, or
in current dollars using nominal discount rates because no structure can be formulated in simple terms with all costs and
forecast of the inflation rate is required. values in present value constant dollars:
2.1.14 rehabilitation costs—the direct and indirect costs of
rehabilitating a material, system, or structure to extend the
LCA 5 C 2 S1 ( ~ M1N1R ! (1)

service life of the material, system, or structure. where:

2.1.15 replacement costs—the direct and indirect costs of C = original cost,
S = residual value,
replacing a material, system, or structure before the end of the
M = maintenance cost,
project design life, so it will again function as originally N = rehabilitation cost, and
intended. R = direct and indirect replacement cost.
2.1.16 residual value—the remaining value of the material, 4.5.1 Original Cost—Original cost is defined in Section 2
system, or structure at the end of the project design life. and is normally developed from the engineer’s estimate or is
2.1.17 service life—the number of years of service a mate- the actual bid price. A material, system, or structure may have
rial, system, or structure will provide before rehabilitation or a service life longer than the project design life and, conse-
replacement is required. quently, would have a residual future current dollar value,
2.1.17.1 Discussion—Project design life and service life are which must be discounted back to a present constant dollar
usually established by the owner or controlling agency. value, and subtracted from the original cost. Since mainte-
nance, rehabilitation, and replacement costs may be incurred
3. Significance and Use several times during the life of the project, the future current
3.1 The significance of the LCA method is that it is a dollar value of each occurrence must be discounted back to a
comprehensive technique for taking into account all relevant present constant dollar value and the values summed.
monetary values over the project design life and provides a 4.5.2 Future Costs—Future costs are normally estimated in
measure of the total cost of the material, system, or structure. constant dollar values, which are then converted to future
current dollar values by an inflation factor and then discounted
3.2 The LCA method can be effectively applied in both the back to present constant dollar values by an interest factor:
preconstruction and bid stages of projects. After bids are taken,
FV 5 A ~ 11I ! n (2)
real costs can be used instead of estimates.
where:
4. Procedures FV = future current dollar value,
4.1 The procedures for determining the LCA of a material, A = constant dollar value,
system, or structure can be summarized in five basic steps. I = inflation rate, and
n = number of years in the future at which costs are
4.1.1 Identify Objective, Alternatives, and Constraints.
incurred.
4.1.2 Establish Basic Criteria.
4.1.3 Compile Data. FV
PV 5 (3)
4.1.4 Compute LCA for Each Material, System, or Struc- ~ 11i ! n
ture. where:
4.1.5 Evaluate Results. PV = present constant dollar value, and
4.2 Objectives, Alternatives, and Constraints—Establish the i = interest or nominal discount rate.
specific objectives of the project and identify alternative ways Combining Eq 2 and Eq 3:
of accomplishing the objectives. For example, alternatives for
a sanitary sewer system may include a gravity flow system
versus a gravity flow system with life stations versus a single
PV 5 A S D
11I
11i
n
(4)

force main. Identify constraints, such as maximum culvert head Eq 4 is usable, but requires assumptions of both interest and
or tail water, maximum and minimum slopes and depths of inflation rates. Although interest and inflation rates can vary
burial, installation methods, etc. widely, historical records indicate that the differential between

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 C1131 − 10´1
interest and inflation rates has been relatively stable over the of maintenance costs should be refined by omitting the costs of
long term. Therefore, by defining an inflation/interest factor, F, that maintenance cycle. Where future maintenance costs are on
as: an annual basis, the total present value of all maintenance costs
can be determined by:
F5 S D
11I
11i
(5)
M5C F 1 2 ~ F ! mn
G (9)
M
1/F 2 1
where:
F = inflation/interest factor. 4.5.5 Rehabilitation Costs—If a material, system, or struc-
ture has durability or structural problems before the end of the
Restating Eq 4:
project design life, it may be possible to extend its service life
n
PV 5 A ~ F ! (6) by rehabilitation repairs. If the extended service life does not
The inflation/interest factor is virtually constant for specific equal or exceed the project design life, the material, system, or
differentials between interest and inflation rates. Therefore, structure would probably require replacement at the end of the
utilizing the inflation/interest factor in present value calcula- extended service life. A material, system, or structure may
tions eliminates the uncertainties and distortions due to selec- require rehabilitation or replacement several times during the
tion of possibly incompatible individual interest and inflation project design life. The present value of rehabilitation costs is
rates (2). calculated by determining the future value of each cost
occurrence, discounting each to a present value and summing
NOTE 2—Table X1.1 presents the inflation/interest factor for a range of all values:
inflation rates from 4 through 18 % and differentials between interest and
inflation rates of 1 through 5 %. For different sources of financing, the
differential between interest and inflation rates significant in construction
N5 (C N Fn (10)

over a 30-year period is presented in Table X1.2. where:

4.5.3 Residual Value—If a material, system, or structure has N = present value of rehabilitation costs,
a service life greater than the project design life, it would have CN = constant dollar cost estimated for a rehabilitation
a residual future current dollar value, which should be dis- project,
counted back to a present constant dollar value and subtracted n = number of years after the project is completed that
from the original cost. Using a straight-line depreciation, the rehabilitation costs will be incurred.
present value of the residual value is: 4.5.6 Replacement Costs:
4.5.6.1 The present value of replacement costs is zero for a
S 5 C~F!n p S D
ns
n (7) material, system, or structure with a service life equal to or
where: greater than the project design life.
S = residual value, 4.5.6.2 The present value of replacement costs for a mate-
C = present constant dollar cost, rial, system, or structure with a service life less than the project
ns = number of years the material, system, or structure design life is calculated by determining the future value of each
service life exceeds the project design life, replacement, discounting each to a present value, and summing
n = service life, and all values:
np = project design life. R5 (C R Fn (11)
With a lack of data to determine the residual value, a salvage
value or cash value may be substituted or the term neglected. where:
If accounting practices dictate, another depreciation method, R = present value of replacement costs,
other than straight-line, may be used. CR = constant dollar cost of direct and indirect replacement,
4.5.4 Maintenance Costs—The present value of mainte- and
nance costs is calculated by determining the future value of n = number of years after the project is completed that
each cost occurrence, discounting each to a present value, and replacement costs are estimated to occur.
summing all the values. Maintenance costs may be on an 4.5.6.3 The future value of indirect replacement costs for a
annual basis or estimated as a total for a periodic cycle or material, system, or structure with a service life less than the
covering a certain number of years, which reduces the number project design life is calculated by determining user delays
of computations. The total present value of all maintenance during construction (3):
costs is: C R i 5 AADT 3 t 3 d ~ c p 3 v p 3 v of1c f 3 v f ! (12)
M 5 CM ( ~ Fn1F 2n …1F mn! (8) where:
where: AADT = Annual Average Daily Traffic of the roadway which
M = total present value of all maintenance costs, the culvert is being installed,
CM = constant dollar cost of a maintenance cycle, t = the average increase in delay to each vehicle per
n = number of years in maintenance cycle, and day, in hours,
m = number of maintenance cycles in project design life. d = the number of days the project will take,
If a maintenance cycle ends in a year in which rehabilitation cp = the average rate of person-delay, in dollars per hour
or replacement work is scheduled, then the total present value (4) ,

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 C1131 − 10´1

vp = the percentage of passenger vehicle traffic, 5. Keywords

vof = the vehicle occupancy factor, 5.1 acceptance criteria; concrete; costs; culvert; inflation
cf = the average rate of freight-delay, in dollars per hour rate; interest rate; least cost analysis; life cycle analysis; pipe;
(5), and procedures; project design life; sanitary sewer; service life;
vf = the percentage of truck traffic. storm sewer

APPENDIXES

(Nonmandatory Information)

X1. INFLATION/INTEREST FACTOR

X1.1 History—The use of the inflation/interest factor to TABLE X1.1 Inflation/Interest Factor Values
simplify life-cycle cost estimation was first proposed by the Jet F = (1 + I)/(1 + i )
(i − I ) %
Propulsion Laboratory of California Institute of Technology Maximum Minimum Average
under a contract with the National Aeronautics and Space 1 0.9916 0.9905 0.991
Administration (2). Kerr/Ryan proposed the concept for pipe- 2 0.9833 0.9811 0.982
3 0.9752 0.9720 0.974
line installations (6, 7), and developed the concept that the 4 0.9672 0.9630 0.965
differential between interest and inflation rates for projects 5 0.9593 0.9541 0.957
involving state or local funding should be determined using the
municipal bond rate average, projects involving federal fund-
ing should be determined by the treasury bill rate average, and factor is virtually constant for specific differentials between the
projects involving private funding should be determined by the rates. Values for inflation rates or differentials not shown in the
prime lending rate. Subsequently, the American Concrete Pipe table can be easily calculated.
Association sponsored development of a comprehensive LCA X1.2.2 Table X1.2 presents 30-year averages of the
microcomputer program, which is available from McTrans (8) inflation/interest factor and corresponding interest/inflation
. The rehabilitation and replacement sections of LCA were rate differential for municipal bonds, treasury bills, and the
developed primarily from Federal Highway Administration prime rate (7). Users of this practice can prepare similar tables
information on risk analysis, accidents, injuries, and deaths as desired to update the factors, extend the 30-year period, or
related to such projects (9, 10). use indicators rather than municipal bonds, treasury bills, or the
prime rate.
X1.2 Inflation/Interest Factor Values:
TABLE X1.2 Inflation/Interest Factor 30-Year Averages
X1.2.1 Table X1.1 presents the maximum, minimum, and
average values for the inflation/interest factor, F, as defined by Funding Source (User) F = (1 + I)/(1 + i ) Differential (i − I ) %

Eq 5, for inflation rates ranging from 4 through 18 % and Municipal Bonds (State and Local) 0.9953 0.52
Treasury Bills (Federal Agency) 0.9853 1.66
differentials between interest and inflation rates ranging from 1 Prime Rate (Private Investment) 0.9749 2.86
through 5 %. The calculations show that the inflation/interest

X2. EXAMPLE CALCULATIONS

X2.1 Given—A 75-year design life has been assigned to a has been estimated at $5000/year. Planning and design costs
storm sewer project with an AADT of 10 000 vehicles. Two applicable to all alternatives are $150 000. Based on historical
alternative pipe materials are included in the bid documents. data, a 5% inflation rate and 7.15% interest (discount) rate is
X2.1.1 Material A, with an “in ground” cost of $300 000, appropriate for this project.
has been assigned a 50-year service life with an annual
maintenance cost of $6000/year. To meet the project design X2.2 Find—The most cost effective material with the low-
life, a replacement cost will have to be incurred at the end of est LCA.
the 50-year service life. Estimated lane closures will occur for
60 days with delays of 30 min on average. X2.3 Solution —Summary:
X2.1.2 Material B has an “in ground” cost of $345 000 with
a 100-year projected service life. The annual maintenance cost

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 C1131 − 10´1

General Material A Material B

Project Design Life Service Life Service Life

— 75 years — 50 years — 100 years
Inflation Rate Bid Price Bid Price
— 5% — $300 000 — $345 000
Interest (Discount Replace Cost Replace Cost
Rate) — $300 000 + — $0
— 7.15% indirect
Inflation/Interest Maintenance Cost Maintenance Cost
Factor — $6000/year — $5000/year
— 1.05/1.0715 =
0.98

Table X2.1 summarizes the calculations and costs.

TABLE X2.1 Calculations and Costs

Material A Description and Calculations Material B
$150 000 Planning and Design Cost $150 000
$300 000 Bid Price $345 000
$229 390 Maintenance Cost† $191 158
(6000)/year (5000)/year
1 2 F n 1 2 0.9875
M 5 CM 5
1 1
21 21
F 0.98

$2 923 066 Replacement Cost $0

Direct
5C R D F n 5 $300 000 3 0.9850 5 $109 251

Indirect
5C R i F n 5 f AADT 3 t 3 d s c p 3 v p 3 v of1c f 3 v f d g F n

C R i 5 f 10 000 3 0.5 3 60 s 18.62 3 0.97 3 1.2152.86 3 0.03d g 3 0.9850

C R I 5 $2 813 815

$0 Residual Value† ($18 955)

S 5 C s F n pd S D
ns
n
5 345 000 3 0.9875
25
100 S D
5 18 955

$3 602 456 Total Cost $667 203

Answer: Material B is more cost effective since the present value is almost $3 million less than Material A.

†Editorially corrected.

REFERENCES

(1) Producer Price Index, Annual Averages, U.S. Department of Labor, (6) Kerr, W. O., and Young, A., Interest and Inflation Factors in Least
Bureau of Labor Statistics. Cost Analysis, published by American Concrete Pipe Association,
(2) “Simplified Life-Cycle Cost Estimation,” National Aeronautics and Vienna, VA, 1985.
Space Administration, NASA Tech Brief, Vol 7, No. 1, Item 88, (7) Kerr, W., and Ryan, B. A., “Taking the Guesswork Out of Least Cost
January 1983. Analysis,” Consulting Engineer, March 1986.
(3) Perrin, J. Jr., and Jhaveri, C., “The Economic Costs of Culvert (8) LCA diskette, User Manual and Supplemental Documentation, Mc-
Failures, ” prepared for the Transportation Research Board, November Trans, University of Florida, Center for Microcomputers in Transpor-
2003. tation, Gainesville, FL 36210.
(4) Bureau of Labor Statistics (BLS), Consumer Price Index, All Urban (9) “The Design of Encroachments on Flood Plains Using Risk Analy-
Consumers—(CPI-U). sis,” Federal Highway Administration, HEC No. 17, 1980.
(5) National Compensation Survey: Occupational Wages in the United (10) “Sensitivity of Resource Allocation Models to Discount Rate and
States, Department Labor Statistics, United States Department of Unreported Accidents,” Federal Highway Administration, FHWA/
Labor, July 2002. RD-85/092, July 1985.

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 C1131 − 10´1
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