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HDM-4 Introduction to Program Analysis

HDM-4 Introduction to Program Analysis. Objective. To Prioritize candidate road sections in each year within the budget constraints. Procedure. Select road sections Determine maintenance / improvement options Specify the budget limits and budget periods Optimize using selected objective

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HDM-4 Introduction to Program Analysis

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  1. HDM-4Introduction to Program Analysis

  2. Objective • To Prioritize candidate road sections in each year within the budget constraints.

  3. Procedure • Select road sections • Determine maintenance / improvement options • Specify the budget limits and budget periods • Optimize using selected objective • Produce the final list of projects for the budget period

  4. Multi-year Program • Method: • Life cycle analysis • Budget period analysis • Objective function: • Maximize NPV • Maximize road network condition

  5. Budget allocation • Routine maintenance costs are based on road lengths. • Recurrent costs are based on pavement surface condition. • Periodic maintenance are based on economic indicators. • Improvement needs are based also on economic indicators.

  6. Budgeting Procedure • When sufficient budget is available: • Select all independent projects with NPV>0 • Select mutually exclusive project alternative with the highest NPV. • When there is budget constraints: • Select the independent project using the highest NPV/Cost ratio • Select mutually exclusive projects using the incremental NPV/Cost

  7. Prioritization Project Cost NPV NPV/Cost Rank A 150,000 35,000 0.233 2 B 150,000 45,000 0.300 1 C 200,000 40,000 0.200 3 D 250,000 37,000 0.150 6 E 500,000 70,000 0.140 7 F 500,000 77,000 0.154 5 G 500,000 78,000 0.156 4

  8. Incremental Analysis Project Cost NPV NPV/Cost Rank A 20,000 4,869 0.2435 2 B 30,000 240 0.0080 8 C 20,000 5,184 0.2592 1 D 20,000 210 0.0105 7 E 40,000 6,401 0.1600 4 F 35,000 4,497 0.1285 5 G 20,000 1,200 0.0600 6 H1 80,000 15,000 0.1875 3 H2 100,000 16,829 0.1683

  9. Definition • Program analysis is concerned with the preparation of single or multi-year work program for the road network by maximizing the economic return (INPV/Cost) subject to budgetary constraints.

  10. Thank You

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