DEVELOPING FINANCIAL DECISION SUPPORT FOR HIGHWAY ... · DEVELOPING FINANCIAL DECISION SUPPORT FOR HIGHWAY INFRASTRUCTURE SUSTAINABILITY By Kai Chen Goh B.Sc Construction (Hons),

DEVELOPING FINANCIAL DECISION SUPPORT

FOR HIGHWAY INFRASTRUCTURE

SUSTAINABILITY

By

Kai Chen Goh B.Sc Construction (Hons), M.Sc Construction Management (UTM)

A thesis submitted in partial fulfillment of the requirements for the

degree of

Doctor of Philosophy

SCHOOL OF URBAN DEVELOPMENT

FACULTY OF BUILT ENVIRONMENT AND ENGINEERING

QUEENSLAND UNIVERSITY OF TECHNOLOGY

2011

II

STATEMENT OF ORIGINAL AUTHORSHIP

DECLARATION

The work contained in this thesis has not been previously submitted for a degree or

diploma at any other higher education institution. To the best of my knowledge and

belief, the thesis contains no material previously published or written by another

person except where due reference is made.

Signed : _____________________

Date : _____________________

III

ACKNOWLEDGEMENTS

I wish to express my sincerest appreciation and gratitude to Professor Jay Yang for

his wisdom, patients, calmness in my PhD journey. Without his persistent support,

this thesis may never have been completed on time nor would I have survived it.

Professor Jay Yang through his mentoring enabled me with passionate and self

possessed that this journey was indeed possible to complete.

My deepest appreciation also to Dr. Johnny Wong for his invaluable help in

developing ideas, checking sources and for his great and precise attention to detail

and for willingly sharing his expertise and in-depth knowledge.

I wish to also thank my fellow PhD student colleagues Melissa Chan, Mei Yuan, Mei

Li, Hu Yuan Luo and Riduan Yunus, who have helped to make this journey

somewhat easier through their friendship, continuous encouragement, sharing of

ideas and constructive feedback. Special thanks also to my first best mates in this

journey Asrul Masrom, Tien Choon Toh, Anna Wiewiora, Zhengyu Yang and Soon

Kam Lim for their support and friendship.

I would also like to make special mention to those individuals and organisations that

benevolently contribute their support, guidance, encouragement and contribution to

this research project. My appreciation and thanks to all. Finally, I wish to

acknowledge the support and encouragement received from my wife, Nyuk Sang

Kiew, my brothers, my parents and friends throughout this course of study.

IV

ABSTRACT

The development of highway infrastructure typically requires major capital input

over a long period. This often causes serious financial constraints for investors. The

push for sustainability has added new dimensions to the complexity in the evaluation

of highway projects, particularly on the cost front. This makes the determination of

long-term viability even more a precarious exercise. Life-cycle costing analysis

(LCCA) is generally recognised as a valuable tool for the assessment of financial

decisions on construction works. However to date, existing LCCA models are

deficient in dealing with sustainability factors, particularly for infrastructure projects

due to their inherent focus on the economic issues alone.

This research probed into the major challenges of implementing sustainability in

highway infrastructure development in terms of financial concerns and obligations.

Using results of research through literature review, questionnaire survey of industry

stakeholders and semi-structured interview of senior practitioners involved in

highway infrastructure development, the research identified the relative importance

of cost components relating to sustainability measures and on such basis, developed

ways of improving existing LCCA models to incorporate sustainability commitments

into long-term financial management. On such a platform, a decision support model

incorporated Fuzzy Analytical Hierarchy Process and LCCA for the evaluation of the

specific cost components most concerned by infrastructure stakeholders. Two real

highway infrastructure projects in Australia were then used for testing, application

and validation, before the decision support model was finalised. Improved industry

understanding and tools such as the developed model will lead to positive

sustainability deliverables while ensuring financial viability over the lifecycle of

highway infrastructure projects.

Keywords: sustainability, highway, infrastructure, life-cycle costing analysis, decision support.

V

TABLE OF CONTENTS

STATEMENT OF ORIGINAL AUTHORSHIP ................................................... II

ACKNOWLEDGEMENTS ..................................................................................... III

ABSTRACT .............................................................................................................. IV

TABLE OF CONTENTS .......................................................................................... V

LIST OF ABBREVIATIONS ................................................................................. XI

DEFINITION OF TERMS ..................................................................................... XII

LIST OF FIGURES .............................................................................................. XIII

LIST OF TABLES ................................................................................................. XV

CHAPTER 1: INTRODUCTION .......................................................................... 1

1.1 Research Background .................................................................................... 11.2 Research Questions ....................................................................................... 41.3 Research Objectives ...................................................................................... 51.4 Significance of the Research ......................................................................... 61.5 Scope and Delimitation ................................................................................. 71.6 Research Framework ..................................................................................... 9

1.6.1 Stage 1 - Developing a preliminary model ............................................ 91.6.2 Stage 2 - Developing the survey .......................................................... 101.6.3 Stage 3 - Developing a decision support model ................................... 11

1.7 Thesis Organisation ..................................................................................... 141.8 Chapter Summary ........................................................................................ 15

CHAPTER 2: LITERATURE REVIEW ............................................................. 17

2.1 Introduction ................................................................................................. 172.2 Sustainability and Transport ........................................................................ 17

2.2.1 Sustainable development principles and evolution .............................. 202.2.2 Highway infrastructure development in Australia ............................... 23

2.3 Long-Term Financial Prospects in Highway Development ........................ 252.3.1 Principle of engineering economics ..................................................... 25

2.3.1.1 Benefit cost analysis ..................................................................... 25

VI

2.3.1.2 Life-cycle costing analysis (LCCA) ............................................. 262.3.1.3 Differences between BCA and LCCA .......................................... 282.3.1.4 Decision support ........................................................................... 29

2.3.2 Life-cycle costing analysis and its application in highway infrastructure ………………………………………………………………………...30

2.3.2.1 Current LCCA models and programs in highway infrastructure .. 312.3.2.2 Limitations of existing LCCA studies in adopting sustainable measures …………………………………………………………………...36

2.3.3 Significance of incorporating sustainability-related cost components in LCCA ………………………………………………………………………...38

2.4 Cost Implications in Highway Infrastructure .............................................. 402.4.1. Sustainability-related cost components in highway projects ............... 40

2.4.1.1 Agency category ........................................................................... 422.4.1.2 Social category .............................................................................. 452.4.1.3 Environmental category ................................................................ 47

2.5 Research Gap ............................................................................................... 512.5.1 Challenges to improve long-term financial decisions .......................... 512.5.2 Critical cost components in Australian highway investments ............. 52

2.6 Chapter Summary ........................................................................................ 53

CHAPTER 3: RESEARCH METHODOLOGY AND DEVELOPMENT ......... 55

3.1 Introduction ................................................................................................. 553.2 Selection of Research Methods ................................................................... 56

3.2.1. Survey ................................................................................................... 583.2.2. Case study ............................................................................................ 59

3.3 Research Process ......................................................................................... 613.3.1. Literature review .................................................................................. 63

3.3.1.1. Literature review purposes ............................................................ 633.3.1.2. Literature review development ..................................................... 64

3.3.2. Questionnaire ....................................................................................... 653.3.2.1. Purposes of questionnaire ............................................................. 663.3.2.2. Selection of questionnaire respondents ......................................... 673.3.2.3. Questionnaire development .......................................................... 683.3.2.4. Data analysis ................................................................................. 70

3.3.3. Semi-structured interview .................................................................... 733.3.3.1. Semi-structured interview purposes .............................................. 753.3.3.2. Selection of interview respondents ............................................... 75

VII

3.3.3.3. Interview development ................................................................. 763.3.3.4. Data analysis ................................................................................. 78

3.3.4. Model Development ............................................................................. 793.3.5. Case Study ............................................................................................ 81

3.3.5.1. Case study purposes ...................................................................... 823.3.5.2. Selection of case projects .............................................................. 823.3.5.3. Case study development ............................................................... 843.3.5.4. Data analysis ................................................................................. 86

3.4 Ethical Considerations ................................................................................. 873.5 Chapter Summary ........................................................................................ 87

CHAPTER 4: COST IMPLICATIONS FOR HIGHWAY SUSTAINABILITY –

SURVEY STUDIES .................................................................................................. 89

4.1 Introduction ................................................................................................. 894.2 Profile of Respondents ................................................................................ 91

4.2.1 Respondents’ profiles - questionnaire survey ...................................... 914.2.2 Respondent’s profiles - semi-structured interview .............................. 94

4.3 Results and Findings ................................................................................... 954.3.1 Questionnaire survey results and findings ........................................... 95

4.3.1.1 Sustainability-related cost components: perspective of consultants …………………………………………………………………...96

4.3.1.2 Sustainability-related cost components: perspective of contractors …………………………………………………………………...98

4.3.1.3 Sustainability-related cost components: perspective of government agencies and local authorities ...................................................................... 1004.3.1.4 Integration of sustainability-related cost components in LCCA studies ………………………………………………………………….102

a. Agency category .......................................................................................... 104

b. Social category ............................................................................................. 105

c. Environmental category ............................................................................... 106

4.3.2 Summary of the questionnaire survey results and suggestions .......... 1074.3.3 Semi-structured interview results and findings .................................. 109

4.3.3.1. Current industry practice of LCCA application .......................... 1094.3.3.2. Ways to quantify cost related to sustainable measures ............... 1174.3.3.3. Challenges in integrating costs related to sustainable measures into LCCA practice ............................................................................................. 1204.3.3.4. Suggestions for enhancing sustainability in LCCA practice ...... 121

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4.3.4 Summary of semi-structured interview results and suggestions ........ 1234.4 Chapter Summary ...................................................................................... 124

CHAPTER 5: A DECISION SUPPORT MODEL FOR EVALUATING

HIGHWAY INVESTMENT .................................................................................... 127

5.1 Introduction ............................................................................................... 1275.2 The Model Structure and Application ....................................................... 130

5.2.1. The model structure and development: stage 1 .................................. 1305.2.2. The model structure and development: stage 2 .................................. 132

5.3 The Fuzzy Analytical Hierarchy Process .................................................. 1335.3.1. Fundamentals of Fuzzy AHP ............................................................. 1355.3.2. Fuzzy AHP assessment procedure ..................................................... 136

5.4 Life-Cycle Cost Analysis ........................................................................... 1445.4.1. Life-cycle cost analysis in highway infrastructure ............................. 1445.4.2. LCCA calculation procedure .............................................................. 146

5.5 Final Decision Making Process ................................................................. 1495.6 Sensitivity Analysis ................................................................................... 1515.7 Chapter Summary ...................................................................................... 152

CHAPTER 6: MODEL APPLICATION THROUGH CASE STUDIES .......... 155

6.1 Introduction ............................................................................................... 1556.2 Selection of the Case Study Projects ......................................................... 157

6.2.1 Case study A: Wallaville bridge ..................................................... 1576.2.2 Case study B: Northam bypass ....................................................... 159

6.3 Significance of the Case Projects .............................................................. 1616.4 Model Application in Case Study A - Wallaville Bridge .......................... 162

6.4.1 Project alternatives ......................................................................... 1626.4.2 Fuzzy AHP for qualitative indicators ............................................. 163

6.4.2.1 Evaluation of criteria weight ................................................................ 163

6.4.2.2 Evaluation of alternatives ..................................................................... 166

6.4.2.3 Final scores of alternatives ................................................................... 169

6.4.3 LCCA calculation for quantitative indicators ................................. 1716.4.4 Final decision making ..................................................................... 1746.4.5 Sensitivity analysis ......................................................................... 175

6.4.5.1 Sensitivity analysis for Fuzzy AHP ...................................................... 175

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6.4.5.2 Sensitivity analysis for LCCA ............................................................. 176

6.5 Model Application in Case Study B - Northam Bypass ............................ 1786.5.1 Project alternatives ......................................................................... 1796.5.2 Fuzzy AHP for qualitative indicators ............................................. 180

6.5.2.1 Evaluation of criteria weight ................................................................ 180

6.5.2.2 Evaluation of alternatives ..................................................................... 183

6.5.2.3 Final scores of alternatives ................................................................... 186

6.5.3 LCCA calculation for quantitative indicators ................................. 1876.5.4 Final decision making .................................................................... 1906.5.5 Sensitivity analysis ......................................................................... 191

6.5.5.1 Sensitivity analysis for Fuzzy AHP ..................................................... 192

6.5.5.2 Sensitivity analysis for LCCA ............................................................. 193

6.6 Summary of Model Application ................................................................ 1956.7 Validation of the Model ............................................................................ 1966.8 Chapter Summary ...................................................................................... 197

CHAPTER 7: FINDINGS AND MODEL FINALISATION ............................ 201

7.1 Introduction ............................................................................................... 2017.2 Synthesising Phases 1 to 4 for Interpretation and Discussion ................... 2027.3 Critical Sustainability-Related Cost Components ..................................... 203

7.3.1. Agency dimension of sustainability ................................................... 2047.3.2. Social dimension of sustainability ..................................................... 2057.3.3. Environmental dimension of sustainability ........................................ 205

7.4 Enhancement of LCCA for Sustainability Measures ................................ 2067.4.1. Industry practice of LCCA ................................................................. 2087.4.2. Challenges of incorporating sustainability into LCCA ...................... 210

7.5 Model Finalisation ..................................................................................... 2127.6 Chapter Summary ...................................................................................... 217

CHAPTER 8: CONCLUSION ........................................................................... 219

8.1 Introduction ............................................................................................... 2198.2 Review of Research Objectives and Development Processes ................... 2198.3 Research Objectives and Conclusions ....................................................... 220

8.3.1. Research objective 1 .......................................................................... 2208.3.2. Research objective 2 .......................................................................... 222

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8.3.3. Research objective 3 ........................................................................... 2238.4 Research Contributions .............................................................................. 224

8.4.1. Contribution to academic knowledge ................................................. 2248.4.2. Contribution to the industry ............................................................... 225

8.5 Study Limitations ...................................................................................... 2258.6 Recommendations for Future Research ..................................................... 2268.7 Summary .................................................................................................... 227

REFERENCES ....................................................................................................... 229

APPENDIX A1: INVITATION LETTER-QUESTIONNAIRE ........................ 246

APPENDIX A2: SAMPLE OF QUESTIONNAIRE ........................................... 248

APPENDIX B1: INVITATION LETTER- SEMI-STRUCTURED INTERVIEW

.................................................................................................................................. 255

APPENDIX B2: SAMPLE OF CONSENT FORM ............................................ 257

APPENDIX B3: SAMPLE OF INTERVIEW ..................................................... 258

APPENDIX C1: INVITATION LETTER- FUZZY AHP QUESTIONNAIRE

.................................................................................................................................. 260

APPENDIX C2: SAMPLE OF FUZZY AHP QUESTIONNAIRE ................... 262

APPENDIX D: LIST OF PUBLICATIONS ........................................................ 266

XI

LIST OF ABBREVIATIONS

Austroads =

BCA

Association of Australian and New Zealand road transport and traffic authorities

= Benefit Cost Analysis BCR = Benefit Cost Ratio BTCE = BTRE

Bureau of Transport and Communications Economics = Bureau of Infrastructure, Transport and Regional Economics

Cal B/C = California Life-Cycle Benefit/ Cost CCP-PLUS = Cities for Climate Protection, Australia CCPTM = Cities for Climate ProtectionDEA

TM = Data envelopment analysis

FHWA

= Fuzzy AHP

Federal Highway Administration = Fuzzy Analytic Hierarchy Process

GEH = Great Eastern Highway HDM-4 = Highway Design and Maintenance Standards Model Version 4 HDM-III = Highway Design and Maintenance Standards Model Version III ISOHDM = International Study of Highway Development and Management IUCN = International Union for Conservation of Nature LCCA = Life-cycle cost analysis LCCOST = Pavement Life Cycle Cost Analysis Package LCCP = Life-cycle cost analysis program-Flexible Pavement LCCPR = Life-cycle cost analysis program-Rigid Pavement MCDM = Multi-Criteria Decision-Making PRLEAM = Pavement Rehabilitation Life-Cycle Economic Analysis QUT = Queensland University of Technology, Australia RTA = Road and Transport Authority, Australia UN = United Nations US = United States WCED = World Commission on Environment and Development WSM = Weighted Sum Model

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DEFINITION OF TERMS

For clearer understanding of the terms used in this research, the meanings are

extrapolates as follows:

Sustainable development – Sustainable development refers to a pattern of resource

use that aims to meet human needs while preserving the environment so that these

needs can be met not only in the present, but also for generations to come.

Life-cycle costing analysis (LCCA) - LCCA involves the analysis of the costs of a

highway infrastructure over its entire life span.

Long-term financial management – Long-term financial management means a long

term financial planning for entities providing services from infrastructure assets,

especially long lived (> 10 years) assets to assist these entities in managing service

delivery from infrastructure assets.

Cost component – Cost component involves sustainability-related cost elements

(quantifiable) and issues (qualitative), yet causing impacts to the environment,

society and economics.

Stakeholder – A stakeholder refers to a person, group, organisation, or system that

affects or can be affected by an organisation's actions.

http://en.wikipedia.org/wiki/Environment_(biophysical)�

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LIST OF FIGURES

Figure 1.1: Variances leading to a sustainability-based life-cycle cost analysis model ...................................................................................................................................... 4

Figure 1.2: Structured infrastructure investment review process (DTF 2011) ............ 8Figure 1.3: Stage 1 - Developing a preliminary model .............................................. 10Figure 1.4: Stage 2 - Surveys development ............................................................... 11Figure 1.5: Stage 3 - Developing a decision support model ...................................... 12Figure 1.6: Research plan chart .................................................................................. 13Figure 2.1: Sustainability criteria for the transport sector (Basler and Partner 1998) 18Figure 2.2: UK sustainable development indicators (Bickel et al. 2003) .................. 19Figure 2.3: The three pillars of sustainable development (Koo 2007) ....................... 21Figure 2.4: Life-cycle costing procedure ................................................................... 27Figure 2.5: Typical life cycle of a road asset (Rouse and Chiu 2008) ....................... 43Figure 3.1: Spectrum of interview types (Fellows and Liu 2008) ............................. 57Figure 3.2: Breadth vs. depth in ‘question-based’ studies (Fellows and Liu 2008) ... 57Figure 3.3: Research process ..................................................................................... 62Figure 3.4: Questionnaire research flow chart (Statpac 1997) ................................... 66Figure 3.5: Case study process ................................................................................... 85Figure 4.1: Purpose of survey in overall research aim ............................................... 90Figure 4.2: Categories of respondent in questionnaire survey ................................... 92Figure 4.3: Respondents’ utilisation of LCCA in highway projects ........................ 110Figure 4.4: Types of data utilised by respondents in highway treatments ............... 115Figure 5.1: Integration of survey findings with model development ....................... 128Figure 5.2: Development of model based on research objectives and questions ..... 129Figure 5.3: Decision support model development process ...................................... 130Figure 5.4: Proposed assessment methods for the decision support model ............. 133Figure 5.5: Proposed application of the Fuzzy AHP ............................................... 134Figure 5.6: Hierarchy map of sustainability-related cost component assessment ... 137Figure 5.7: The linguistic scale of triangular numbers for relative importance ....... 138Figure 5.8: The intersection between C1 and C2 ..................................................... 142Figure 5.9: Timing of maintenance and rehabilitation ............................................. 144Figure 5.10: Agency costs associated with construction activities .......................... 145Figure 5.11: Social and environmental costs added to agency costs associated with construction activities ............................................................................................... 146Figure 6.1: Approach to model application and overall research aim ..................... 156Figure 6.2: Wallaville Bridge in flood (BTRE 2007a) ............................................ 158Figure 6.3: Tim Fischer Bridge (BTRE 2007a) ....................................................... 159Figure 6.4: Northam Bypass (BTRE 2007b) ............................................................ 161Figure 6.5: Final decision making by WSM ............................................................ 175Figure 6.6: Sensitivity analysis for Fuzzy AHP weight factor changes ................... 176Figure 6.7: Sensitivity analysis for LCCA weight factor changes ........................... 178Figure 6.8: Alternative alignment options of Northam Bypass (EPA 1993) ........... 179Figure 6.9: Final decision making by WSM ............................................................ 191Figure 6.10: Sensitivity analysis for Fuzzy AHP weight changes ........................... 193Figure 6.11: Sensitivity analysis for LCCA weight factor changes ......................... 194Figure 7.1: Critical sustainability-related cost components in Australian highway infrastructure projects ............................................................................................... 204

XIV

Figure 7.2: Platform for developing financial decision support model in highway infrastructure sustainability ...................................................................................... 213Figure 7.3: The finalised financial decision support model for highway infrastructure sustainability ............................................................................................................. 215

XV

LIST OF TABLES

Table 2.1: Differences between BCA and LCCA ...................................................... 28Table 2.2: Existing LCCA models and programs ...................................................... 33Table 2.3: Agency impacts and costs in highway projects ........................................ 43Table 2.4: Social impacts and costs in highway projects ........................................... 46Table 2.5: Environmental impacts and costs in highway projects ............................. 48Table 2.6: Sustainability-related cost components for highway infrastructure .......... 52Table 3.1: Characteristics of questions ...................................................................... 65Table 3.2: Stages and steps in model building (Richardson and Pugh, 1981) ........... 80Table 3.3: Case projects’ fulfillment of selection criteria .......................................... 83Table 4.1: Respondents’ roles in highway projects ................................................... 93Table 4.2: Respondents’ construction industry experience ....................................... 93Table 4.3: Consultants’ rating of sustainability-related cost components ................. 97Table 4.4: Contractors’ rating of sustainability-related cost components .................. 99Table 4.5: Government agencies and local authorities’ rating of sustainability-related cost components ....................................................................................................... 101Table 4.6: Perceptions of ‘importance level’ of cost components related to sustainable measures by industry stakeholders ........................................................ 103Table 4.7: Industry validated sustainability-related cost components in highway infrastructure ............................................................................................................ 108Table 4.8: Questions to identify current industry practice of LCCA ....................... 110Table 4.9: Relevant analysis period of LCCA ......................................................... 112Table 4.10: Maintenance treatments of highway infrastructure ............................... 113Table 4.11: Ways to quantify cost related to sustainable measures ......................... 118Table 4.12: Challenges to integrating costs related to sustainable measures into LCCA ....................................................................................................................... 120Table 4.13: Stakeholders’ suggestions for enhancing sustainability in LCCA ........ 122Table 4.14: Comparison of the survey results with literature findings .................... 125Table 5.1: Sustainability-related cost components for highway infrastructure ........ 131Table 5.2: Triangular fuzzy conversion scale .......................................................... 138Table 5.3: Assessment approach of critical sustainability cost components ........... 143Table 5.4: WSM calculation table for final decision making .................................. 150Table 6.1: The fuzzy evaluation matrix with respect to the goal ............................. 165Table 6.2: The relative importance of agency cost components .............................. 165Table 6.3: The relative importance of social cost components ................................ 165Table 6.4: The relative importance of environmental cost components .................. 165Table 6.5: Composite priority weights for sustainability-related cost components evaluation criteria ..................................................................................................... 167Table 6.6: Evaluation of the alternatives with respect to material costs .................. 167Table 6.7: Evaluation of the alternatives with respect to plant and equipment costs

.................................................................................................................................. 167Table 6.8: Evaluation of the alternatives with respect to major maintenance costs 167Table 6.9: Evaluation of the alternatives with respect to rehabilitation costs .......... 168Table 6.10: Evaluation of the alternatives with respect to road accident- internal costs

.................................................................................................................................. 168Table 6.11: Evaluation of the alternatives with respect to road accident- economic value of damage ....................................................................................................... 168Table 6.12: Evaluation of the alternatives with respect to hydrological impacts .... 168

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Table 6.13: Evaluation of the alternatives with respect to loss of wetland .............. 168Table 6.14: Evaluation of the alternatives with respect to cost of barriers .............. 169Table 6.15: Evaluation of the alternatives with respect to disposal of material costs

.................................................................................................................................. 169Table 6.16: Priority weights of the alternatives with respect to agency aspects ...... 169Table 6.17: Priority weights of the alternatives with respect to social aspects ........ 170Table 6.18: Priority weights of the alternatives with respect to environmental aspects

.................................................................................................................................. 170Table 6.19: Final scores of the alternatives .............................................................. 170Table 6.20: Determination of activity timing ........................................................... 171Table 6.21: Estimated expenditures to keep old bridge open .................................. 172Table 6.22: Costs of agency and social category ..................................................... 173Table 6.23: Computation of expenditure by years ................................................... 173Table 6.24: Computation of life-cycle cost analysis ................................................ 173Table 6.25: Summary of sustainability assessment results ...................................... 174Table 6.26: Summary of normalised sustainability assessment result ..................... 174Table 6.27: Weight factors for normalised sustainability assessment results and final prioritisation ............................................................................................................. 174Table 6.28: Changes in prioritisation value by changing the Fuzzy AHP weight factors ....................................................................................................................... 176Table 6.29: Changes in prioritisation value by changing the LCC weight factors .. 177Table 6.30: The fuzzy evaluation matrix with respect to the goal ........................... 182Table 6.31: The relative importance of agency cost components ............................ 182Table 6.32: The relative importance of social cost components .............................. 182Table 6.33: The relative importance of environmental cost components ................ 182Table 6.34: Composite priority weights for sustainability-related cost components evaluation criteria ..................................................................................................... 183Table 6.35: Evaluation of the alternatives with respect to material costs ................ 184Table 6.36: Evaluation of the alternatives with respect to plant and equipment costs

.................................................................................................................................. 184Table 6.37: Evaluation of the alternatives with respect to major maintenance costs

.................................................................................................................................. 184Table 6.38: Evaluation of the alternatives with respect to rehabilitation costs ........ 184Table 6.39: Evaluation of the alternatives with respect to road accident- internal costs

.................................................................................................................................. 184Table 6.40: Evaluation of the alternatives with respect to road accident- economic value of damage ....................................................................................................... 185Table 6.41: Evaluation of the alternatives with respect to hydrological impacts .... 185Table 6.42: Evaluation of the alternatives with respect to loss of wetland .............. 185Table 6.43: Evaluation of the alternatives with respect to cost of barrier ................ 185Table 6.44: Evaluation of the alternatives with respect to disposal of material costs

.................................................................................................................................. 185Table 6.45: Priority weights of the alternatives with respect to agency aspects ...... 186Table 6.46: Priority weights of the alternatives with respect to social aspects ........ 186Table 6.47: Priority weights of the alternatives with respect to environmental aspects

.................................................................................................................................. 186Table 6.48: Final scores of the alternatives .............................................................. 187Table 6.49: Determination of activity timing ........................................................... 188Table 6.50: Costs of agency and social category ..................................................... 189Table 6.51: Computation of expenditure by years ................................................... 189

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Table 6.52: Computation of life-cycle costs ............................................................ 189Table 6.53: Summary of weighted sum assessment results ..................................... 190Table 6.54: Summary of normalised weighted sum assessment results .................. 191Table 6.55: Weight factors for normalised weighted sum assessment results and final prioritisation ............................................................................................................. 191Table 6.56: Changes in prioritisation value by changing the Fuzzy AHP weight factors ....................................................................................................................... 192Table 6.57: Changes in prioritisation value by changing the Fuzzy AHP weight factors ....................................................................................................................... 194Table 6.58: Comparison of the case study results with literature and survey findings

.................................................................................................................................. 199

Chapter 1: Introduction 1

CHAPTER 1: INTRODUCTION

1.1 Research Background

Sustainable development has gained prominence over the last few decades across

various sectors including the construction industry (WCED 1987). In the

construction industry, the practice of sustainability has faced ongoing opportunities

and challenges in this period due to the globalisation of the business environment and

climate change, new materials and technologies, information and communication

technologies, and governance and regulation (Hampson and Brandon 2004).

For the business sector to embrace sustainable development, there is a need to create

increasing economic values while using natural resources sustainably and making a

broader contribution to the community’s social aims and objectives (Bourdeau 1999).

This change extends beyond the traditional concern of business, which is about

profitability and increasing shareholder value. Consequently, there is also a great of

need for tools to enable business to monitor, manage and report performance.

Sustainable development is about making societal investments that are sensitive to

the natural environment and at the same time financially viable in the long term. In

the construction industry, the development of a project from the client perspective

needs to be consistent with the benefits produced. Over a facility lifetime, there are

many opportunities to minimise the impacts of operations on natural environment.

Therefore, it is important to examine the sustainable approaches in its design,

construction, operation, maintenance and replacement or retirement. This study aims

to investigate the financial implication of sustainability measures in infrastructure

development, with a particular focus on highway construction.

Infrastructure development plays an important role in supporting society, the

economy and the environment. In Australia, the distribution of essential public

2 Chapter 1: Introduction

services for maintaining human life, especially in dense urban environments, is

heavily dependent on infrastructure systems. According to the Northern Economic

Triangle Infrastructure Plan 2007-2012, the Queensland State Government will

invest over 82 billion Australian dollars in the next 20 years, to fund transportation,

gas delivery and water recycling projects. Some of these projects are quite large,

requiring over a billion dollars each, and will make up almost 20 billion dollars of

the $82 billion as a whole (Queensland Government 2007). Such significant

investment warrants an examination of how infrastructure can become more

sustainable. For this purpose, numerous researchers and industry professionals have

put great effort into the development of criteria, tools, concepts and assessment

systems to improve infrastructure sustainability (Dasgupta and Tam 2005; Sahely,

Kennedy and Adams 2005; Ugwu et al. 2006a, 2006b).

Recently, a significant number of research projects were initiated to investigate

sustainability issues and the built environment in general. At the broader

international level, the issues discussed include environment and industrial ecology,

group decision-making (Seager and Theis 2004; Seager 2004), sustainability

assessment (Ugwu and Haupt 2007), multi-attribute decision analysis (Rogers,

Seager and Gardner 2004; Linkov et al. 2005; Anex and Focht 2002) and

environmental management systems (Gluch and Baumann 2004). Researchers have

investigated social dimensions and partnership (Fisher 2003) and risk analysis in

environmental decision-making (Rogers, Seager and Gardner 2004; Linkov et al.

2005).

Although the application of sustainability in built assets is beneficial, it often

involves major capital investment. Costs always become the impeding factor for

stakeholders when they contemplate sustainability initiatives. Thus, it is crucial to

balance the financial benefits with sustainability deliverables in highway

infrastructure development. The determination of costs is an important aspect of

decision-making and an essential part of the development process. Life-cycle cost

analysis (LCCA) is an economic assessment approach that can predict the costs of a

facility throughout its life span. It takes into account the time, the value of money

and reduces the flow of running costs over a period to a single current value or

present worth. Life-cycle costing is a management tool to be used periodically


throughout the economic life of the asset. It is based on the different options

available to determine the alternative with the lowest costs. According to List (2007),

life-cycle cost analysis helps to ensure that these objectives are achieved. Using

LCCA, decision-makers can evaluate competing initiatives and identify the most

sustainable growth path for common infrastructure. LCCA make it possible to deal

with the challenges of competing needs in selecting relevant allocations to spend on

health care, environmental impact mitigation, national defense, transportation, and a

wealth of other programs.

Most of research on life-cycle costing methods on buildings and infrastructure focus

on the economics of a construction project (Aye et al. 2000; List 2007). Little

attention has been paid to the application of the life-cycle costing methods in

evaluating the economic aspects of sustainability in construction projects (List 2007;

Madanu, Li and Abbas 2009; Swaffield and McDonald 2008). LCCA can become a

useful approach to managing the financial aspects of the asset while emphasising

sustainability in its service life. To achieve such a balance, the construction industry

needs to predict financial, social and environmental costs and benefits in the long-

term.

Hence, ideally, the principles of sustainability should be integrated into the LCCA

concept. This is, however, complicated by the difficulties of measuring cost

components related to sustainability and the inconsistencies in measurement

approaches. Previous studies have shown unclear boundaries and ambiguities in

identifying sustainability costs and impacts of highway development (Wilde,

Waalkes and Harrison 2001; List 2007; Kendall, Keoleian and Helfand 2008; Zhang,

Keoleian and Lepech 2008). Understandably, existing LCCA approaches tend to

omit social and environmental costs given that such costs are usually difficult to

measure and the values are often disputed. Worse still, these approaches also show a

large degree of variance in the estimation methods, which has resulted in a lack of

sustainable measures in current LCCA. Figure 1.1 illustrates the variances in

traditional LCCA estimation methods, pointing to the need for a sustainability-based

LCCA model.


Figure 1.1: Variances leading to a sustainability-based life-cycle cost analysis model

This phenomenon calls for a new decision support model capable of dealing with

sustainability-related cost components and assessing long-term financial

implications. Highway stakeholders need to appreciate such a level of decision

support and act upon sustainability challenges as well as opportunities.

1.2 Research Questions

Based on the background and impetus of the research, the following questions are

posed:

RQ 1. What are the sustainability measures that have cost implications for highway

projects?

It has been argued that the growing problems of monetary turnover among highway

infrastructure investors have become the main hindrance to pursuing sustainability.

To achieve long-term financial viability for highway projects, it is essential to

understand the development of life-cycle cost analysis and how this relates to the

principle of sustainability. Identification of sustainability-related cost components in

a highway project can help to promote critical thinking to fill the gap as shown above

in Figure 1.1.

Traditional LCCA model

Sustainability-based LCCA

model Research Gap

Inconsistent estimation methods in environmental and social costs calculation

Unclear boundaries in considering sustainability impacts

Difficult to quantify sustainability related cost components

Ambiguity in identifying relevant costs for LCCA in highway projects


RQ 2. What are the specific cost components relating to sustainability measures

about which highway project stakeholders feel most concerned?

It is recognised that the complex nature of sustainability and highway infrastructure

development often causes challenges in the pursuit of long-term financial viability.

To understand this complex nature, it is important to first understand current

highway industry practice and the development of life-cycle cost analysis. Suitable

actions are needed to cope with these challenges. Identification of cost components

related to sustainable measures provides the basis to assess tangible cost components

in long-term financial decisions at the project level. In this way also, the

understanding of the sustainability foci and the realisation in long-term financial

management for the highway project can be enhanced.

RQ 3. How can long-term financial viability of sustainability measures in highway

projects be assessed?

To facilitate a smooth and practical implementation of sustainability objectives at the

project level, the critical cost components need to be thoroughly dealt with

concerning real-life projects. The solutions to measure these components provide

project stakeholders with concrete actions they can apply in their efforts to pursue

and enhance the sustainability deliverables and financial practicality in highway

infrastructure projects.

1.3 Research Objectives

The aim of this research is to develop a decision support model for evaluating long-

term financial decisions relating to sustainability for highway projects. To achieve

the research aim, the three questions presented in Section 1.2 need to be answered by

the following objectives:

1. To understand the cost implications of pursuing sustainability in highway

projects. This involves:

• Understanding global initiatives on sustainable infrastructure development,


• Understanding the context of highway infrastructure development in Australia,

• Reviewing the current LCCA model and programs on highway infrastructure,

and

• Identifying the sustainability-related cost components in highway infrastructure

projects.

2. To identify the critical cost components related to sustainable measures in

highway infrastructure investments. This involves:

• Exploring the different perceptions and expectations of various stakeholders

regardless of the current practice of life-cycle cost analysis in Australian

highway infrastructure,

• Identifying the cost components that are significant in highway infrastructure

investments, and

• Integrating the expectations of the various stakeholders that are suitable for

long-term financial management.

3. To develop a decision support model for the evaluation of long-term financial

decisions regarding sustainability for highway projects. This involves:

• Compiling the industry verified cost components into existing LCCA models

for further development,

• Developing financial decision support model for highway infrastructure

sustainability, and

• Testing and evaluating the decision support model based on the real-life

projects.

1.4 Significance of the Research

As highway infrastructure projects involve large resources and mechanisms,

financial stress is a significant challenge for investors. The concept of sustainability

is gaining popularity in the construction industry and this means achieving

sustainability not only on environmental and social scales, but also through economic


responsibility. While the sustainability concept is being emphasised in highway

infrastructure, effective financial management is crucial as highway funding at all

levels of government continues to fall short of infrastructure needs. As a result,

investors’ decisions based on experience are not performing as well, as promised

while managers are under great obligation to optimise society investments as well as

sustainability deliverables at the project level.

This study seeks to add to the existing body of knowledge by filling the gap between

sustainable development and long-term financial management in the context of

highway infrastructure. The data collected is an asset to knowledge in this area. The

research findings serve as the guidelines to encourage sustainability and long-term

financial management strategies for stakeholders. This result may directly or

indirectly contribute to measurable benefits in the form of cost efficiency, better

product quality and utility.

This study also seeks to develop a decision support model for evaluating long-term

financial management in Australian highway infrastructure. The expected model

aims to serve as a decision-making tool to aid in highway infrastructure investments.

It is also anticipated that the model may assist the stakeholders through increased

understanding of the importance of sustainability concepts and long-term financial

management in highway infrastructure. This understanding can lead to improve

competitiveness in construction markets.

1.5 Scope and Delimitation

This study was delimited to the development of a decision support model aimed at

improving long-term financial decisions in highway investment. “Delimitations” are

within the control of the researcher. The identified delimitations are discussed as

follows:

• The attention of this study is directed at public-sector evaluation in general,

and more especially with respect to highway infrastructure. The data are

collected from industry stakeholders involved in highway infrastructure

projects. The result could be generalised for the highway infrastructure


industry, but some of the identified factors may vary and not be relevant for

other infrastructures. Further improvements are necessary for application on

specific types of infrastructure.

• Research data was collected from the Australian highway infrastructure

industry, and the results are applicable to Australia only.

• This study is focused on the highway investment decisions in a financial

perspective. Due to the infrastructure investment involved several stages of

reviewing, this study is concentrating on the business case and budget

committee consideration (Point 3 and 4) as shown in Figure 1.2. The highway

investment decisions need to appropriately meet the needs of the community,

have been appropriately planned and are based on reliable cost estimates.

• The strategic assessment and options analysis as shown in Figure 1.2 includes

several criteria such as risk and sustainability benefits are part of key issues in

strategic assessment. Even though both issues are crucial in considering

project investment decisions, this study focuses purely on the financial

implication for highway infrastructure sustainability. This study aims to

provide the decision makers with a systematic project proposal and identify

the preferred selection for highway investment decisions.

Investment Concept Outline

Strategic Assessment and Option Analysis

Business Case

Budget Committee

Consideration

Interim Project Review

Post Implementation

review

Point 1 Point 2 Point 3 Point 4 Point 5 Point 6

Reason for

project proposal

Relationship to government’s

policy priorities

Benefits/ outcomes

to be achieved

Delivery Alternatives

Project Management

External conditions and critical success

Risk

Stakeholder analysis

Project proposal

cost

Market research

Timeline

Financial Implication

Figure 1.2: Structured infrastructure investment review process (DTF 2011)


1.6 Research Framework

A research framework is a systematic structure that helps to coordinate a research

project and ensures the efficient use of resources and to guide the researcher in the

use of suitable research methods through logical stages. It shows a broad picture to

the researchers to help to refine a clear connection between all the stages (King,

Keohane and Verba 1994). The probability of success in a research project is greatly

enhanced when the “beginning” is correctly defined as an accurate statement of goals

and justification. Having accomplished this, it is easier to identify and organise the

sequential steps necessary for writing a research framework and then successfully

executing a research project. This procedure creates a greater understanding of

problems or hypotheses, and makes practical applications through theories,

questioning and reasoning to achieve the research objectives, with the hope to

produce some new knowledge.

For the purpose of this study, the research framework was based on three stages to

answer the research objectives. Each of the stages is described in the following sub-

sections.

1.6.1 Stage 1 - Developing a preliminary model

This stage involves a literature review to explore the scope and issues in

sustainability-related cost components in highway construction. A preliminary model

is developed according to the sustainability-related cost components identified

through previous research and Australian project reports. Imperative aspects of the

cost components are identified and tabulated according to their significance before

incorporating these into the questionnaire for industry verification.


A summary of the Stage 1 is shown in Figure 1.3.

1.6.2 Stage 2 - Developing the survey

The focus of this research is on the stakeholders in highway infrastructure as the

primary respondents in of the surveys. Questionnaire surveys and semi-structured

interviews are conducted with the industry stakeholders. Questionnaire surveys are

administered to identify the cost components related to sustainable measures that are

significant in highway infrastructure investments. Semi-structured interviews are

conducted to have a better understanding of current highway industry practice in

long-term financial management. Both methods reveal the facts for the second

objective, which is to identify the critical cost components related to sustainable

measures in highway infrastructure investments. A summary of Stage 2 is shown in

Figure 1.4.

STAGE 1

Preliminary Model

Reviewing the Literature

Defining the Topic

Identify Source of Information

Keeping Records

Reading and Taking Notes

OBJECTIVE 1

To understand the costs implication of pursuing

sustainability in highway projects

Figure 1.3: Stage 1 - Developing a preliminary model


1.6.3 Stage 3 - Developing a decision support model

Finally, the decision support model is developed to evaluate the long-term financial

decision for highway projects by matching methods namely the Fuzzy Analytical

Hierarchy Process (Fuzzy AHP) and life-cycle cost analysis. The case study is

undertaken to apply and test the developed model in real-life projects. Further

analysis and synthesis are applied to validate and prove the model in evaluating and

comparing the highway project alternatives based on the sustainability indicators. A

summary of Stage 3 is shown in Figure 1.5.

STAGE 2

Surveys Development

Define the objective of the survey

Writing the Questionnaire

Interpretation of the Result

Determine the Sampling Group

Administering the Questionnaire

Questionnaires

Face-to-face

Telephone

Semi-structured Interviews

OBJECTIVE 2

To identify the critical cost components related to

sustainable measures in highway infrastructure

investments.

Figure 1.4: Stage 2 - Surveys development


Generally, a research framework follows certain structural stages and processes.

Each stage represents different methodologies to achieve the research objectives. In

this research, all possible methods and strategies were carefully considered before

choosing the most appropriate one. The quantitative and qualitative data is processed

and analysed using computer-assisted tools to derive meaningful results. The

implementation of the key research methodologies assists in defining appropriate

processes to answer the research questions as well as the aim. The research

framework shows the overall research design procedure, and is illustrated in Figure

1.6.

STAGE 3

Matching Methods

OBJECTIVE 3

To develop a decision support model for the evaluation of long-term financial decision for highway projects.

Case Study

Decision Support Model

Fuzzy Analytical Hierarchy Process (Fuzzy AHP)

Life-Cycle Cost Analysis (LCCA)

Figure 1.5: Stage 3 - Developing a decision support model


Figure 1.6: Research plan chart

Dat

a C

olle

ctio

n A

naly

sis

Res

ult

Lite

ratu

re R

evie

w

Industrial Feedback

Literature Review

Research Problems

Methodological Approach

Consultation with academics

Research Objectives

Industrial Feedback

Conclusions, Recommendations and Further Studies

Survey • Questionnaire-based survey based on the

literature review and preliminary model building

• Identify the cost components in LCCA that emphasise sustainability

• Semi-structured interviews undertaken to identify current industry practice of LCCA in highway infrastructure

Case Study • Apply and test the developed model in real-life

projects • Evaluate and validate the model

Research Analysis and Findings

Literature Review & Preliminary Model Development

• Refine traditional life-cycle cost analysis model.

• Identify sustainability-related cost components

Research Question Hypotheses Statements

Quantitative Method Quantitative Method

Model Development • Develop decision support model that

emphasise the sustainability context.

Stage 1

Stage 2

Stage 3


1.7 Thesis Organisation

This dissertation consists of nine chapters. A brief summary of each is outlined as

follows.

Chapter 1 comprises the introductory section that develops the direction of this

investigation. It also states the research background, problems and objectives; and

provides a brief discussion of the methodology and the thesis organisation.

Chapter 2 summarises the current state of knowledge by addressing the relevant

literature. Areas covered in this chapter include sustainable development principles

and the evolution of highway infrastructure development in Australia. The literature

review also covers the long-term financial management in highway development

which includes the principles of long-term financial management, application of

LCCA in highway projects, development of the LCCA models and programs, and the

limitation of existing LCCA studies regarding sustainability. Literature on the

responses to the sustainability challenge and cost implication in highway

infrastructure is also surveyed. Overall, this chapter identifies the research gap,

which justifies the need for this study.

Chapter 3 describes the research methodology in detail including: the research

methodology; data collection methods (namely questionnaire, interview, model

development and case studies); research information; selection of participants and

case projects; research instrumentation; data analysis and validation of results; and,

finally, guideline formulation.

Chapter 4 describes the data analysis and results of the questionnaire and semi-

structured interview. Questionnaire feedback is presented and the results tabulated in

order to answer the research questions. Sustainability-related cost components are

identified and conclusions are drawn. The data analysis and findings of the interview

results illustrate the understanding on the current industry practise of long-term

financial management in highway infrastructure. In addition, potential issues

hindering the integration of sustainability into LCCA are identified. Their conceptual

solutions are also recognised.


Chapter 5 discusses the development of a decision support model to aid stakeholders

in highway investment. This section explains the development of the model by using

one of the multi-criteria decision support approaches, Fuzzy analytical hierarchy

process (Fuzzy AHP) and integration with the traditional LCCA concept. The model

will then be tested and evaluated by industry stakeholders in real-life highway


Chapter 6 introduces the case projects, their significance to the research, and the

profile of interviewees, before case studies are undertaken to demonstrate the model

application and justify the specific cost components in long-term financial

management towards sustainable highway infrastructure.

Chapter 7 discusses the results of the questionnaire and the interview. Subsequently,

based on the case studies, the ultimate research findings are presented in the form of

a model.

Chapter 8 reviews the research objectives and development processes; and offers

conclusions with regard to the research outcomes based on the respective research

questions, the contributions to the body of knowledge and its implications for both

the research community and the highway infrastructure industry. Finally,

recommendations for future research are proposed.

1.8 Chapter Summary

This chapter lays the foundation for the thesis. It first introduces the research

background and points to the current crux of the issue in sustainability and long-term

financial management in highway infrastructure development before presenting the

research problems and its objectives. Next, the research significance is identified

before the research scope and delimitation are drawn. Finally, the research

framework is briefly discussed, and the thesis organisation is also outlined. On this

basis, the study proceeds with a detailed description of the research and development

processes.

Chapter 2: Literature Review 17

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

This chapter presents the current state of knowledge by reviewing the literature

relevant to the research objectives set out in Section 1.3. Apart from establishing the

depth and breadth of the existing body of knowledge in the area of sustainability and

highway infrastructure development, the literature review serves to understand the

cost implications of pursuing sustainability in highway projects, thus paving the way

for questionnaires and interviews in a subsequent stage.

To begin with, the following sections present the sustainable development principles

before discussing the dynamics and application of sustainability in highway

infrastructure development generally. This is followed with an overview of the

current Australian construction industry and highway infrastructure practice. Long-

term financial management in highway infrastructure development is highlighted.

Principle of long-term financial management in highway development and the

application of life-cycle cost analysis (LCCA) in highway projects are specifically

discussed. A thorough review of current life-cycle cost analysis models and

programs in highway development, the limitation of existing LCCA studies in

adopting sustainability and the types of cost components related to sustainability

measures in the project was undertaken. Premised on these discussions, the research

gap in this research is identified, which leads to the formation of the research

questions.

2.2 Sustainability and Transport

There is an increasing demand for transport and mobility in our society. At the same

time, a desire for a clean environment, preservation of nature and concern for the

welfare of future generations is also progressively salient. Policymakers must

18 Chapter 2: Literature Review

accommodate these conflicting desires in order to balance the positive and negative

impacts of transport infrastructure.

Several research projects have been carried out to investigate a variety of topics

related to sustainability and transport. Jonsson (2008) implemented an appraisal

framework in the transportation system where the main elements of sustainability are

taken into account. In Jonsson’s study, an appraisal framework was developed to

analyse and measure the achievement of sustainability in the transport sector.

Gudmundsson (1999) found that sustainability indicators are “selected, targeted, and

compressed variables that reflect public concerns and are of use to decision-makers”.

These indicators are based on a selection of literature on social, environmental,

health and sustainability factors.

A scan of the literature by Basler and Partner (1998) shows that current research is

focusing on the sustainability indicators for the transport sector based on the three

aspects of sustainability: economy, ecology and society. These emphases in current

research are illustrated in Figure 2.1.

Figure 2.1: Sustainability criteria for the transport sector (Basler and Partner 1998)

Natural habitats & landscapes

Air pollution

Noise

Settlements/ areas Society

Individuality

Participation

Ecology

Economy

Solidarity Safety/ security

Price

Social costs

Ozone layer

Climate

Resources


Furthermore, a set of transport indicators developed by Bickel et al. (2003) provides

an overview of key sustainable development issues at the UK level as shown in

Figure 2.2.

Figure 2.2: UK sustainable development indicators (Bickel et al. 2003)

The International Council for Local Environmental Initiatives - Australia/New

Zealand has collaborated with the Australian Greenhouse Office and the Victorian

Health Promotion Foundation to deliver a resource package of tools, case studies and

financial assistance to local governments that are Cities for Climate Protection™

(CCP™) participants around Australia through the Sustainable Transport initiative.

The aim of the initiative is to accelerate the implementation of sustainable transport

systems and to demonstrate the strong and multiple benefits that arise from

implementing these actions (CCP-PLUS 2005). These indicators show that

sustainability plays an important role in the development of a transport project. In the

following sub-sections, the evolution of sustainable development principles and the

practice of highway infrastructure development in Australia are introduced, before

A SUSTAINABLE ECONOMY - Social investment as a percentage of GDP - Consumer expenditure - Energy efficiency of road passenger travel - Average fuel consumption of new cars - Sustainable tourism - Leisure trips by mode of transport - Overseas travel - Freight transport by mode - Heavy goods vehicle mileage intensity BUILDING SUSTAINABLE COMMUNITIES - Road traffic (headline) - Passenger travel by mode - How children get to school - Average journey length by purpose - Traffic congestion - Distance travelled relative to income - People finding access difficult - Access to services in rural areas - Access for disabled people - New retail floor space in town centres and

out of town - Noise levels

MANAGING THE ENVIRONMENT AND RESOURCES - Carbon dioxide emissions by end

user • Transport • Non-transport

- Concentrations of selected air pollutants • NO2, SO2, CC, Particulates • Ozone

- Emissions of selected air pollutants • CO • NOx • Particulates

- Sulphur dioxide and nitrogen oxides emissions

SENDING THE RIGHT SIGNALS - Prices of key resources fuel

• Petrol/diesel • Industrial/domestic

- Real changes in the cost of transport - Public understanding and awareness

Individual action for sustainable development


integrating both to set the scene to show the importance of sustainability in highway

infrastructure development.

2.2.1 Sustainable development principles and evolution

In the construction context, a definition of sustainability is suggested in the following

exposition:

The built environment provides a synthesis of environmental, economic and

social issues. It provides shelter for the individual, physical infrastructure for

communities and is a significant part of the economy. Its design sets the pattern

for resource consumption over its relatively long lifetime. (Prasad and Hall

2004)

Such an approach relates to the concept of sustainability to the concept of sustainable

development. These two terms are often used interchangeably, and it is worthwhile

to clarify the relationship of these two terms.

“Sustainable development is defined as “a development that meets the needs of the

present without compromising the ability of future generations to meet their own

needs” (WCED 1987). According to this definition from the World Commission on

Environment and Development, the underlying philosophy of sustainable

development is restraining the use of natural resources and materials to keep enough

for future generations to fulfill their own ambitions of living standards. In fact, the

main concerns of the contemporary construction industry are ecological impact,

economic development, and societal equity when considering sustainable

development.

Even though this definition leaves much to argue about, it is the basis for most work

on sustainable development. Koo et al. (2007) demonstrate the general concept of

sustainable development in three major aspects, namely, economic, environmental,

and social aspects. These aspects need to be considered, incorporated, and improved

to achieve a desired level of sustainable development. These aspects are illustrated as

the three pillars of sustainable development in Figure 2.3.


On the other hand, the built environment represents one of the main supports

(infrastructure, buildings) of economic development, and its construction has

significant impacts on resources (land, materials, energy, water, human and social

capital) and on the living and working environment.

Hence, the current established concept of sustainable development gives rise to many

issues regarding the physical resources required for human existence and overall

quality of life for both present and future generations. A comprehensive plan of

action, including sustainable development in the construction area, is set out in

Agenda 21, which was an outcome of the 1992 United Nations Conference on

Environment and Development. The Johannesburg Plan of Implementation, agreed at

the Earth Summit 2002, affirmed UN commitment to ‘full implementation’ of

Agenda 21. It functions as a fundamental guideline to define sustainability in many

areas, including the construction industry.

To appropriately define sustainability in the construction industry, the term

`sustainable construction’ was proposed to describe the responsibility of the

construction industry in attaining sustainability. Kibert (1994) explained that a major

FUTURE/ PRESENT GENERATION

ENHANCEMENT OF SUSTAINABILITY BY CONSIDERING THREE PILARS

ECO

NO

MY

ENV

IRO

NM

ENT

SOC

IETY

ENHANCEMENT OF SUSTAINABILITY BY CONSIDERING THREE PILARS

ECO

NO

MY

ENV

IRO

NM

ENT

SOC

IETY

• DEMANDS ON PUBLIC SERVICE • LIMITS OF RESOURCES • QUALITY OF HUMAN ENVIRONMENT, ETC…

Figure 2.3: The three pillars of sustainable development (Koo 2007)


objective of the First International Conference on Sustainable Construction (in the

United States) was to assess progress in a new discipline that might be called

“sustainable construction” or “green construction”. As the conference convener,

Kibert proposed that sustainable construction means “creating a healthy built

environment using resource-efficient, ecologically based principles”.

This very broad definition is a starting point to build a more concrete definition of

the concept of sustainable construction and begin to illustrate the stakes and issues of

sustainable development that relate to the construction sector. For this purpose, an

International Council for Innovation and Research in Building and Construction

project was launched in 1995 (Bourdeau 1999).

It is inevitable that the term “sustainable construction” will initiate a number of

semantic problems. When one considers that the International Union for

Conservation of Nature

1994

described a sustainable activity as one which can continue

forever, it is clear that a construction project cannot satisfy this criterion of

sustainable activities. To compound the problem, the term `sustainable construction’

is generally used to describe a process which starts well before construction per se

(in the planning and design stages) and continues after the construction team has left

the site. Wyatt ( ) has deemed sustainable construction to include `cradle to

grave’ appraisal, which includes managing the serviceability of a building during its

lifetime and eventual deconstruction and recycling of resources to reduce the waste

stream usually associated with demolition.

Miyatake (1996) suggests that everybody has to appreciate that to achieve

sustainable construction, the industry must change the processes of creating the built

environment. This means that the infrastructure industry has to change the way in

which all the construction activities are undertaken. They can act to realise the

sustainable construction by creating built environment, restoring damaged and

polluted environments, and improving arid environments. With this idea, it increases

the industry understanding of the sustainability concepts throughout the lifetime of a

construction project.


2.2.2 Highway infrastructure development in Australia

Although the Australian federal government has been committed to boosting the

economy through national infrastructure projects, sustainability challenges are being

taken into account. Environmental and social sustainability is a matter of

responsibility and operational practice for both industry stakeholders and

governments. Australian state and federal governments have set up various plans to

accelerate road infrastructure improvement such as the South East Queensland

Infrastructure Plan and Program

Over recent years, there has been a growing problem of financial stress confronting

highway infrastructure service providers and indeed the financial sustainability of

industry stakeholders. A significant number of providers have been deemed to be

“not financially sustainable” in the long term when the declining condition of

highway infrastructure is brought to account. This is made worse due to increasing

demand for services, rising costs, cost shifting and restricted revenue raising

capability. Several infrastructure and financial sustainability studies published in

Australia over the last few years support this fact. For example, a report prepared by

the Australian Local Government Association concluded that around 35% of

by the Queensland Government, and the 2005

Strategic Infrastructure Plan for South Australia (BTCE 2009).

Australia’s continuing prosperity is contingent upon appropriate investment in

essential community infrastructure (Laird and Bachels 2001). This includes not just

the new infrastructure development to meet the nation’s growth needs, but

significantly, the maintenance and renewal of existing infrastructure to ensure it

continues to provide optimum service delivery at minimal life-cycle cost. Highway

infrastructure is typically long lived but is expensive to build (Surahyo and El-Diraby

2009; Li and Madanu 2009; Gerbrandt and Berthelot 2007). Unless managed and

maintained, appropriately renewed, replaced and enhanced, it fails to deliver

expected levels of service and economic benefit. It is now widely recognised that

appropriate strategic asset management is fundamental to meeting community

expectations for the delivery of services at an optimal life-cycle cost (Gerbrandt and

Berthelot 2007; Winston and Langer 2006; Ugwu et al. 2005; Alam, Timothy and

Sissel 2005).


Australian councils are not financially sustainable (PriceWaterhouseCoopers 2006).

Recent natural disasters, such as the floods in Queensland and Victoria between

December 2010 and February 2011 have created significant demand for road repairs,

maintenance and upgrading.

Sustainability endeavours in highway infrastructure development often require major

capital input, which may cause concerns for the investors. Stakeholders responsible

for the management of highway infrastructure assets highlighted some significant

considerations:

1. Adequately managing the balance between the maintenance of existing highway

infrastructure and the building of new highway infrastructure is essential to

ensure sustainable outcomes and continued growth of Australia’s economic

prosperity. This should be through the development of long-term financial plans

based on highway infrastructure management plans that cover a forward planning

horizon of at least ten years (Ugwu et al. 2005; Singh and Tiong 2005; Gransberg

and Molenaar 2004; Wilmot and Cheng 2003).

2. Highway infrastructures are financially sustainable in the long term, through

appropriate annual reporting on key performance indicators (Ugwu et al. 2005).

It is important that long-term asset and financial plans are not produced for mere

compliance, but to form an essential part of management for an organisation.

3. Adequate funding levels must be assured for local government to sustainably

manage essential community infrastructure on behalf of the nation (Winston and

Langer 2006).

This local community infrastructure underpins the nation’s economy and provides

significant support for state and national infrastructure. Thus, early consideration of

long-term financial viability for highway infrastructure has become an essential

strategy for astute investors.


2.3 Long-Term Financial Prospects in Highway Development

Highway infrastructures are classified as long-lived assets. To effectively and

equitably manage the service level, a good strategy plan should set out the capital

expenditure requirements for the next 20 years. Service levels for highways need to

be based on long-term affordability. Highway maintenance and rehabilitation

decisions should be resolved through a long-term financial prospect. As a result,

there is a need for tools to assist decision-makers in preparing better long-term

financial decisions for highway investments.

2.3.1 Principle of engineering economics

Engineering economics involves benefit-cost analysis (BCA) and life-cycle cost

analysis (Lee 2002b). Both approaches are used to deal with public-sector investment

evaluation. To ensure sufficient funds are spent on highway infrastructure

development so that related services are delivered economically, these methods have

become significant methods in an attempt to meet the needs of the community into

the future. Meanwhile, these methods also help the stakeholders to achieve a balance

between competing demands with consideration towards long-term requirements and

objectives (Gluch and Baumann 2004; Lee 2002b). The demand for capital works in

many instances outstrips the funding capacity available. It is, therefore, important to

adopt robust and transparent methods to evaluate and rank projects to ensure that

new projects are prioritised objectively.

2.3.1.1 Benefit cost analysis

Benefits and costs are often articulated in money terms, and are in sync with the time

value of money, so that all flows of benefits and project costs over time are

expressed on a common basis in terms of their “present value” (Lee 2002b). Benefit

cost analysis has been widely recognised as a useful framework for assessing the

positive and negative aspects of prospective actions and policies, and for making the

economic implications' alternatives an explicit part of the decision-making process

(Jang and Skibniewski 2009; Carter and Keeler 2008). According to Carter and

Keeler (2008), benefit cost analysis compares alternatives over time as well as space,


and uses discounting to summarise its findings into a measure of net present value

(NPV). The test of NPV is a standard method for assessing the present value of

competing projects over time (Rahman and Vanier 2004). Discounting is typically

carried out using the applicable interest rate, or a target rate of return.

Benefit cost analysis is often used by governments to evaluate the desirability of a

given involvement (Lee 2002b).

2.3.1.2 Life-cycle costing analysis (LCCA)

Cost effectiveness is frequently included, and

consumer surplus is occasionally treated (Li and Madanu 2009). BCA emphasises

consequences in the form of a financial tool, whereas government sector investment

evaluation could be called a social tool (Loomis 2011; Yuan et al. 2010). The

evaluation criterion for BCA is the maximisation of net benefits, whereas the

criterion for LCCA is the minimisation of costs. All costs are assumed to be stated in

constant base year dollars, and a real (net of inflation) discount rate is used.

It is increasingly recognised that the selection of the lowest initial cost option may

not guarantee the economical advantage over other options. LCCA is a well

established economic evaluation method. LCCA seeks to optimise the cost of

acquiring, owning and operating physical assets over their useful lives by attempting

to identify and quantify all the significant costs involved in that life, using the present

value technique (Garcia Marquez et al. 2008).

Several definitions of life-cycle costing exist, as useful as any and shorter than most,

is the one by Lee (2002b) that the life-cycle cost of an item “is the sum of all funds

expended in support of the item from its conception and fabrication through its

operation to the end of its useful life”. In order to make the procedure of the life-

cycle costing to be more structured and easy to understand, a typical structure and

process flow of LCC was illustrated in Figure 2.4. Based on this systematic flow,

LCCA is applicable as investment calculus to evaluate investment decisions (Sterner

2002).


Figure 2.4: Life-cycle costing procedure

There are some literatures that focus on life-cycle costing in construction

management research, yet few researchers and practitioners give a clear definition on

it. For instance, Assaf et al. (2002) used life-cycle cost methodology to identify the

total discounted dollar cost of owning, operating, maintaining and disposing of a

building or a building system over a period of time. Furthermore, they found LCCA

as an economic evaluation technique that determines the total cost of owning and

operating a facility over its assumed life.

According to Pasquire and Swaffield (2002) the Royal Institution of Chartered

Surveyors defines the life-cycle cost of an asset as the present value of the total cost

of that asset over its operating life (including initial capital cost, occupation costs,

operating costs and the cost or benefit of the eventual disposal of the asset at the end

of its life). Additionally, it defines LCCA as a set of techniques for evaluating all

relevant costs of acquiring and operating a project, asset or product over time.

The New South Wales Department of Public Works and Services defines the life-

cycle cost of an asset as the total cost throughout its life including, planning,

designing, acquisition and support costs and any other costs directly attributed to

owning and using that asset (NSW 2001). Further, El-Diraby and Rasic (2004)


believe that, life-cycle cost is an economic assessment of an item, area, system, or

facility, considering all the significant costs of ownership over its economic life

expressed in terms of equivalent dollars. Correspondingly, Rahman and Vanier

(2004) define the life-cycle cost as the economic assessment of alternative designs,

construction or other investments considering all major costs and running over the

lifetime of each alternative expressed in equivalent economic units. In summary,

LCCA is a cost-centric approach used to select the most cost-effective alternative

that is equal to a specific level of benefits in a construction project.

2.3.1.3 Differences between BCA and LCCA

Table 2.1: Differences between BCA and LCCA

Even though both the benefit cost analysis and life-cycle cost analysis methods are

suitable for long-term financial management, studies have found that there are still

differences and limitations. Lee (2002b) explains that the idea behind LCCA is that

capital investment decisions should be based on costs over the lifetime of the

investment, while BCA is used to evaluate the desirability of transportation capital

and maintenance investments. It is concluded that LCCA typically includes related

expenditure in the overall stages in the highway infrastructure life span while BCA is

used for the denominator of a benefit cost ratio. The differences between BCA and

LCCA are summarised in Table 2.1.

Benefit cost analysis (BCA) Life-cycle cost analysis (LCCA)

Benefit over project cost with net present

value evaluation

Investment decision based on investment

lifetime

Compare benefit based on desire results

of a project

Compare project implementation

alternatives

Assessing present value of competing

projects over time

Evaluate budgets over project life span

Benefits oriented approach Cost Centric approach

Both methods have their advantages and disadvantages. However, industry has

realised the important of long-term economic advantage in highway infrastructure.


Some of these organisations have referred to LCCA as decision support tool for long-

term economic evaluation of the project scenarios they have to face.

2.3.1.4 Decision support

Decision Support is used often in different contexts related to decision making. It is a

part of decision making processes. The term Decision Support contains the word

‘support’, which refers to supporting people in making decisions. Thus, DS is

concerned with human decision making. Turskis et al. (2007) proposed the decision-

making process comprises of three main stages:

• Intelligence: Facts finding, problems analysis, and exploration.

• Design: Formulation of solutions, generation of alternatives, modeling and

simulation.

• Choice: Goal maximisation, alternative selection, decision making, and

implementation.

Decision support has been widely used in different disciplines include construction

industry (Gluch and Baumann 2004; Rahman and Vanier 2004; Šelih et al. 2008).

The decision-making process in construction industry is increasing complex due to a

high degree of inherent uncertainty. This increasing complexity illustrated the need

of decision support model, tools and system to aid the process. This need also

applied to the highway infrastructure investment. It is not possible to know exactly

how accurate a particular investment decision is, so decision support tools can help

in improving decision-making process.

According to Rahman and Vanier (2004) life-cycle cost analysis can be used as a

decision support tool to aid decision makers to propose, compare, and select the most

cost effective, alternatives for maintenance, renewal, and capital investment

programs for highway investments. Chung et al. (2006) note that life-cycle costing

studies show that the cost of owning and operating a system (ownership cost) can be

quite significant and may often exceed acquisition costs. Thus, decisions based solely

on the acquisition cost may not turn out to be the best selection in the long term, and


this method can be effectively utilised to realise the benefits of long-term cost

implications of sustainable development in infrastructure projects.

2.3.2 Life-cycle costing analysis and its application in highway

infrastructure

Since the 1960s, several studies dealing with life-cycle cost evaluation in the road

infrastructure area have been conducted. The concept of LCCA was, firstly, applied

in highway development by AASHTO “Red Book” in 1960s (Wilde, Waalkes and

Harrison 2001). Since this conception, it was not applied widely until the early 1990s

when the Federal Highway Administration (FWHA) started promoting the use of

life-cycle costs in the design and use of highway infrastructure.

The FHWA has issued guidelines about how the life-cycle cost analysis should be

conducted, especially with regard to feasibility studies on pavements. The FHWA

also requires the application of the LCCA concept in its major highway projects. The

FWHA believes that life-cycle cost analysis can help transport agency officials to

answer and exhibit their administration of taxpayer investments in highway

infrastructure. This approach was further supported by the US government’s

imposition of a new requirement making LCCA compulsory in National Highway

System projects that cost over $25 million (Chan, Keoleian and Gabler 2008). This

signified that the applications of life-cycle cost in highway infrastructure in practice

was taking shape as the stakeholders realised the importance of long-term investment

for highway infrastructure.

A few research studies have been carried out in the last decade addressing topics

related to life-cycle cost analysis in highway projects (Hawk 2003; Hegazy, Elbeltagi

and El-Behairy 2004; Persad and Bansal 2004). There are also studies that focus on

comparisons between benefit cost analysis and life-cycle cost analysis (Lee 2002a),

assessments of the current practice in the use of these tools (Ozbay et al. 2004a) and

ideas about how uncertainty should be introduced (Tighe 2001). However, these

efforts have not focused on sustainability in considering the economic benefits for

the stakeholders in highway development.


2.3.2.1 Current LCCA models and programs in highway infrastructure

A review of the literature is undertaken in this study to gain a broader understanding

of prominent life-cycle cost models in highway infrastructure. This review analyses

the elemental features of the existing models and the cost components concerned

with current LCCA practice. This review is important because, although existing

studies follow the life-cycle costing concept, they differ in their approaches and

applications to different types of projects.

Several state governments in the United States also considered the development of

LCCA model and methodologies to minimise expenditure for road infrastructure

development throughout the lifecycle. In California, the state government developed

a California Life-Cycle Benefit/Cost (Cal-B/C) Analysis Model that offers a simple

and practical method for preparing economic evaluations on prospective highway

and transit improvement projects within the State of California. The model is capable

Over the past few decades, various agencies and institutions have developed

methodologies for life-cycle cost analysis, particularly on road pavement projects.

Some of these organisations have taken a step further to develop computer programs

for their LCCA methodologies to facilitate the analysis. Organisations that have

supported the development of LCCA for pavement design and management include

institutions, state governments, construction organisations and some universities.

Table 2.2 discussed the current available LCCA models and programs in highway

infrastructure.

In early 90s, the Pavement Life-Cycle Cost Analysis Package (LCCOST) was

developed by the Asphalt Institute. It calculates pavement life-cycle costs incurred

over a selected analysis period of up to 50 years. Over two decades, The

International Study of Highway Development and Management (ISOHDM) has

extended the scope of the HDM-III model, to improve the system approach to road

management with adaptable and user friendly software tools known as (HDM-4).

This tool includes technical and economic appraisals of road projects, to prepare road

investment programmes and to analyse road network strategies (Ihs and Sjögren

2003).


of handling several general highway construction types, such as lane additions, and

more specific projects, such as high occupancy vehicle lanes, passing/truck climbing

lanes or intersections. In addition, the Pavement Rehabilitation Life-Cycle Economic

Analysis (PRLEAM) was developed by the Ministry of Transportation of Ontario

and the University of Waterloo in 1991. The immediate objective of this software

was to meet the needs of the Ministry for evaluating life-cycle costs for pavement

rehabilitation and maintenance. It can evaluate up to three rehabilitation alternatives,

each having up to six treatment cycles.

In academia, several research efforts should be noted. Since early 1990s, the

University of Maryland developed a set of life-cycle cost analysis programs that

analyse flexible and rigid pavements (Witczak and Mirza 1992b). These programs

incorporate user operating costs associated with pavement roughness among others.

These programs were also intended for project-level analysis but are considered

better suited for use in pavement management on a network level. Besides, the

University of Texas also developed a new life-cycle cost analysis methodology for

Portland cement concrete pavements that considers all aspects of pavement design,

construction, maintenance, and user impacts throughout the analysis period (Wilde,

Waalkes and Harrison 2001). This research predicts pavement performance using

state-of-the-art performance models and reliability concepts, from which it

determines maintenance and rehabilitation needs. Besides, it presents a standardised

method for considering the agency and user costs associated with pavement

performance.

Other life-cycle cost analysis models and programs from Australia (Ockwell 1990),

Canada (Rahman and Vanier 2004) and Hong Kong (Ugwu et al. 2005). However,

these methodologies and programs have not been kept up-to-date with the dynamic

changes in the construction sectors. Although an extensive literature review was

carried out regarding life-cycle cost application in highway infrastructure, no

previous research exclusively covers the life-cycle costing from a sustainability

perspective.


Table 2.2: Existing LCCA models and programs

Organisations Years Models and Programs Functions and Descriptions

Institutions

LCCOST– Asphalt Institute

1990s

•

The Asphalt Institute developed the Pavement Life-Cycle Cost Analysis Package (LCCOST) in 1991.

• It calculates pavement life-cycle costs incurred over a selected analysis period of up to 50 years.

• Five alternative pavement strategies can be considered at any one time.

•

This program considers the initial cost of construction, multiple rehabilitation actions throughout the design life, and user delay at work zones during initial construction and subsequent rehabilitation activities. In addition to these considerations, the program considers routine maintenance (optional) that will be applied each year between rehabilitation activities. Traditionally, routine maintenance has been excluded from life-cycle cost methodologies because many departments of transport do not maintain easily accessible routine maintenance records for individual highway segments. The LCCOST model also considers salvage value of the pavement and of the individual materials that make up the layers. However, the program does not consider social and environmental issues in calculating the pavement life-cycle costs. Yet both cost elements should be considered important due to the increased emphasis on sustainability by society. Therefore, the LCCOST model does not meet the need for a model that emphasises sustainability in the life-cycle cost analysis.

HDM 4– World Bank

2000s •

The Highway Design and Maintenance Standards Model (HDM-4) computer program was developed by the World Bank for evaluating highway projects, standards and programs in developing countries (Ihs and Sjögren 2003).

•

HDM-4 is designed to make comparative cost estimates and economic evaluations of alternative construction and maintenance scenarios (including alternative time-staged strategies) either for a given road section or for an entire road network. The HDM program assumes that construction costs, maintenance costs and vehicle operating costs are a



function of the vertical alignment, horizontal alignment and road surface conditions. Different types of costs are calculated by estimating quantities and using unit costs to estimate total costs.

• A major disadvantage of this model with respect to the current project is that it focus on specific costs related to social and environmental issues. This model focuses on the evaluation of the alternative construction and maintenance scenarios in detail but little consideration has been done on sustainability-related costs that are of high priority for society and governments.

State Government

Cal B/C – California Department of

Transport

1990s

The California Life-Cycle Benefit/Cost (Cal-B/C) Analysis Model offers a simple and practical method for preparing economic evaluations on prospective highway and transit improvement projects within the State of California.

• The model is capable of handling general highway projects, such as lane additions, and more specific projects, such as high occupancy vehicle lanes, passing/truck climbing lanes, or intersections.

• The model can also handle several transit modes, including passenger rail, light rail and bus. Cal-B/C was developed in a spreadsheet format (MS Excel) and is designed to measure, in real dollar terms, the four primary categories of benefits that result from highway and transit projects: travel time savings, vehicle operating cost savings, accident cost savings and emission reductions.

• Users have the option of including the valuation of vehicle emission impacts and induced demand in the analysis. In the model, the results of the analysis are summarised on a project-by-project basis using several measures: life-cycle costs, life-cycle benefits, net present value, the benefit-cost ratio (benefits/costs), rate of return on the investment, and project payback period (in years). These results are calculated over the life of the project, which is assumed to be twenty years. In addition, the model calculates and displays first year benefits.

Universities LCCP/LCCPR Maryland

1990s The University of Maryland developed a set of life-cycle cost analysis programs that analyse flexible and rigid pavements (Witczak and Mirza 1992a).



• •

This program incorporates user operating costs associated with pavement roughness, among others.

•

These programs were also intended for project-level analysis, but are considered better suited for use in pavement management on a network level. There are some limitations with this program, since it is not used to compare alternative pavement designs. It would thus require much modification and updating to develop a new model for life-cycle cost analysis.

LCCA of Portland Cement Concrete Pavement - Texas

2000s

The University of Texas developed a new life-cycle cost analysis methodology for Portland cement concrete pavements that considers all aspects of pavement design, construction, maintenance and user impacts throughout the analysis period (Wilde, Waalkes and Harrison 2001).

• This research predicts pavement performance using state-of-the-art performance models and reliability concepts, from which it determines maintenance and rehabilitation needs. It also presents a standardised method for considering the agency and user costs associated with pavement performance.

• The proposed model for the Portland cement life-cycle cost analysis represents an attempt to capture all the costs incurred by the transportation agency, by users of the facility, or by others affected by its presence. According to Wilde, Waalkes and Harrison (2001), in capturing the full impact of a highway project, the total life-cycle cost can be estimated and compared with other alternate pavement designs and configurations. In this way, the best alternative, from both the agency and user point of view, can be evaluated and selected. However, there are some limitations in this model including that it does not place a value on each of the external costs. In addition, the actual incorporation of external consequences in the Portland cement LCCA model is not sufficiently clarified.

• Although this life-cycle cost framework can predict both agency and user costs over the expected life of a project and can provide the user with an informative way of comparing the results, the final decision regarding selection of a preferred alternative must be made using engineering judgment. The framework is simply a tool with which engineers and planners can view the relative differences and similarities between alternate designs.


2.3.2.2 Limitations of existing LCCA studies in adopting sustainable

measures

Research on sustainable development in the area of highway infrastructure

development is becoming increasingly popular. A large number of research studies

have been undertaken all over the world to investigate a variety of aspects in

highway infrastructure. Specifically, a growing body of literature is found in the area

of life-cycle cost analysis in the highway infrastructure industry (Chan, Keoleian and

Gabler 2008; Garcia Marquez et al. 2008; Gerbrandt and Berthelot 2007; Hawk

2003; Hegazy, Elbeltagi and El-Behairy 2004; Hong and Hastak 2007; Lagaros

2007; Lee, Cho and Cha 2006; List 2007; Singh and Tiong 2005; Tysseland 2008;

Ugwu et al. 2005; Wilde, Waalkes and Harrison 2001).

• Starting from 2001-2002, the study of LCCA is mainly focused on pavement

(Wilde, Waalkes and Harrison 2001; Lee 2002b);

Based on the literature review, it can be concluded that current studies of LCCA are

focusing on different elements in highway infrastructure. These studies are divided

into three main categories:

• In the period 2003-2006, the studies focus mainly on highway bridges (Hawk

2003; Hegazy, Elbeltagi and El-Behairy 2004; Singh and Tiong 2005; Ugwu et

al. 2005; Lee, Cho and Cha 2006);

• From 2007 onwards, the studies shifted to the area of highway management

(List 2007; Lagaros 2007; Hong and Hastak 2007; Gerbrandt and Berthelot

2007; Tysseland 2008; Garcia Marquez et al. 2008; Chan, Keoleian and Gabler

2008)

LCCA provides a basis for contrasting initial investments with future costs over a

specific period. The future costs are discounted back in time to make economic

comparisons between different alternative strategies possible (Woodward 1997). This

method is popularly used in the mainstream construction industry and a substantial

amount of research has been carried out in recent years. However, there are limited

research projects covering the economics of the highway industry from the

sustainability point of view.


The concept of sustainability has added a new dimension to the evaluation of

highway investments. Sustainability means analysing the entire life of a facility, from

an environmental as well as economic perspective (List 2007). Keoleian et al. (2005)

developed an integrated life-cycle assessment and cost model to evaluate

infrastructure sustainability, and compared alternative materials and designs using

environmental, economic and social indicators.

Despite an increasing enthusiasm for the life-cycle cost approach in the sustainability

context, the adoption and application of LCCA in the highway infrastructure sector

still remain limited (Zhang, Keoleian and Lepech 2008; Wilde, Waalkes and

Harrison 2001; List 2007; Chan, Keoleian and Gabler 2008). Cole and Sterner (2000)

indicate that an ‘imperfect understanding’ of the merits of LCCA among

practitioners is the main cause for its limited adoption. However, there is still a gap

between theory and practice as neither of them sufficiently explains the underlying

reasons for incorporating social and environmental costs into LCCA. Moreover, the

actual incorporation of costs incurred in pursuing social and environmental matters in

the life-cycle cost approach is not sufficiently clarified. The following briefly

describe the limitations of current LCCA models are briefly described as follows:

• Focus on direct market costs: Most existing LCCA studies emphasise on the

cost allocation and investment evaluation of highway projects. These studies

are primarily concerned with direct market costs, such as road construction and

maintenance costs and crash damages and how these vary depending on

roadway conditions. They assume that the roadway conditions and

requirements do not change in a highway lifetime and so are unconcerned with

the upgrade and end-of-life costs (Quinet 2004).

• Designation of environmental impacts as external costs: Existing studies

incorporate costs incurred from environmental impacts, primarily air pollution,

noise and water pollution and various categories of land use impacts. Some

studies have only considered them as the external costs. Their results often

differ significantly, but can usually be explained by differences in their

methodology and scope (Quinet 2004).

• Unclear Boundaries: Existing studies also show unclear boundaries in

identifying costs incurred in pursuing sustainability matters in highway


infrastructure. Some models consider the global impacts of sustainability while

others only consider micro impacts (List 2007; Wilde, Waalkes and Harrison

2001; Zhang, Keoleian and Lepech 2008).

• Inconsistent estimation methods: Surahyo and El-Diraby (2009) highlighted

that the inconsistent estimation methods in current models in estimating

sustainability-related costs for highways. Some use socioeconomic approaches,

while others use technical/ engineering approaches. Due to the subjectivity of

sustainability and the soft factors of the related cost elements, it is a challenge

for current models to create consistent estimation methods.

• Different environments and problems: Highway infrastructure projects also

take place in different physical, legal and political environments, and studies

assessing and mitigating costs incurred in pursuing sustainability matters are

still evolving. Therefore, it is difficult to develop a universal standard of

estimation methods to address and forecast sustainability-related cost

components (Surahyo and El-Diraby 2009).

These limitations show the significance and necessity of incorporating costs incurred

in pursuing sustainability measures into life-cycle costing practice.

2.3.3 Significance of incorporating sustainability-related cost

components in LCCA

Realising the advantages of pursuing sustainability, a number of research projects

have attempted to investigate topics that bridge the gap between sustainability and

highway infrastructure. For example, Huang and Yeh (2008) have implemented an

assessment rating framework for green highway projects. In the study, the framework

has been developed to analyse and measure the achievement of sustainability in the

highway infrastructure by using several indicators. Ugwu et.al (2006b, 2006a) found

that there is a need for methods and techniques that would facilitate sustainability

assessment and decision-making at the various project level interfaces during the

development phases of a project.

Although the sustainability concept is essential for current Australian highway

infrastructure development, stakeholders also realise the importance of long-term


cost implications for the investments. As decisions based solely on an acquisition

cost may not turn out to be the best selection in the long run, Surahyo and El-Diraby

(2009) highlighted the need to assess both environmental and social costs in highway

construction, rehabilitation and operations phases. There is a consensus among

stakeholders that sustainability endeavours will have an impact on the developmental

costs of highway infrastructure.

While the sustainability concept is being emphasised in highway infrastructure,

effective management of highway investment has became crucial issue as highway

funding at all levels of government continues to fall short of infrastructure needs

(PriceWaterhouseCoopers 2006). In this regards, life-cycle cost analysis is applied in

highway development to explore the more efficient investments for the stakeholders.

It evaluates not only the initial construction cost of the highway infrastructure, but

also all the associated maintenance costs during its service life.

The use of LCCA in highway infrastructure seems established, but limitations in the

current LCCA models and programs still remain as these programs are not well-

established and do not cover some critical issues in highway development. Wilde et

al. (2001) reported that the consideration of social impacts of road construction,

including health impacts of pollution emission and noise was conversely independent

of other costs and the incorporation of these elements into LCCA has not been

undertaken.

The existing life-cycle costing methodologies tend to omit costs incurred for

pursuing sustainability matters in the life-cycle cost analysis calculation in highway

infrastructure projects. These sustainability-related cost components include agency,

social and environmental costs caused by the activities in highway construction and

maintenance. As stated by Singh and Tiong (2005), user costs are social costs

incurred by the highway user, and include accident costs, delay costs and vehicle

operating costs (such as fuel, tires, engine oil and vehicle maintenance). These costs

are increasingly important given that they will indirectly influence the financial

budget for a long-term investment.


This study is motivated by the realisation of the need and potential to incorporate

sustainability-related cost components into LCCA in order to capture the full costs of

highway development, under the increased pressure to achieve sustainability. The

identification of these cost components in the life-cycle financial decisions for

highway infrastructure is crucial. The detail of the cost components are discussed in

the next sections.

2.4 Cost Implications in Highway Infrastructure

Studies on sustainability-related cost components in highway infrastructure

development are evolving (Surahyo and El-Diraby 2009; List 2007). While studies

on life-cycle costing perspectives still remain limited, they at least make the

methodological issues more visible and practical rather than just a general

discussion. In this study, the existing LCCA cost allocation is studied and integrated

with the sustainability-related cost components in three main categories:

• Agency costs such as initial construction, maintenance, pavement upgrade and

end-of-life costs;

• Social costs such as vehicle operating, travel delay, social impact and road

accident cost; and

• Environmental costs such as noise, air quality, water quality, resource

consumption and pollution damage from agency activities and solid waste

generation.

2.4.1. Sustainability-related cost components in highway projects

Traditionally, life-cycle costing is used to estimate the total cost of a built system

throughout its entire life (Flanagan, Jewell and Norman 2005). In order for this type

of cost analysis to project an accurate value, the various cost components related to

planning, construction and operation should be taken into account.

In simple terms, for the purposes of this study, life-cycle costing for sustainability is

the total estimated expense of a highway through its life-cycle or until there is an


anticipated major reconstruction using materials and methods reducing the overall

environmental impact. Conducting a life-cycle cost analysis can point out economic

and financial costs. These costs account for environmental and social costs and

benefits as well as site operation, maintenance and indirect costs such as construction

equipment (Flanagan, Jewell and Norman 2005). With sustainable design the

financial cost is no longer the only factor in consideration during design and

construction. Environmental factors are now heavily weighted and taken into

consideration during the design of structures. Highway designers are beginning to

make an effort to reduce the overall impact on the surrounding environment and

communities.

Unlike the ownership of a building, most highways are owned indefinitely by

federal, state or county authorities. For buildings, life is defined as the length of time

in which the building satisfies specific requirements. The design life for highways is

viewed differently than buildings because of their basic function and nature. For the

ease of calculations the overall design life of a roadway will be assumed to be twenty

years. However, the elements that make up the roadway, such as resurfacing and

property acquisitions, may have varying life spans.

Flanagan points out that in order to conduct an accurate life cost assessment, several

different options must be researched for each aspect (Flanagan, Jewell and Norman

2005). The main points for consideration relating to costing are: the decision to

acquire land, short-term running costs, performance characteristics, reduction of

operational costs and the reliability of the costing data collected. Furthermore, an

evaluation should be done for all energy conservation investments to determine if the

added cost will be outweighed by the environmental benefits. According to Flanagan

and Jewell (2005), sustainable design includes innovative new products and

technologies where it is difficult to predict their longevity.

Based on the review of the literature on Australian road projects, a set of key LCCA

cost components related to sustainable measures is identified. These cost components

can be divided into three main cost categories of agency, social and environmental

category.


2.4.1.1 Agency category

A number of general categories that should be considered when tabulating an

estimate for initial construction, rehabilitation and annual maintenance costs. All the

cost items are viable options for construction and rehabilitation activities and should,

accordingly, be considered as agency costs in the analysis of life-cycle costs for a

highway pavement project. The initial construction items can be assigned quantities

by the engineer to represent a particular design alternative, while unit costs can be

provided for the other aspects of maintenance and rehabilitation activities.

The quantification of costs can be determined using the data available from previous

construction and maintenance projects. The initial construction, major maintenance

and rehabilitation costs are most frequently included in the life-cycle cost analysis

(Bradbury et al. 2000). Maintenance costs can be categorised as routine maintenance

and major maintenance.

Routine maintenance includes relatively inexpensive activities such as filling

potholes and performing drainage improvements. These treatments have a service

life of 1 to 4 years (Haas and Kazmierowski 1997). Major maintenance is more

substantial and is usually associated with a structure or surface improvement such as

patching or micro-surfacing. These treatments have an expected service life of 5 to

10 years (Haas and Kazmierowski 1997). Rouse and Chiu (2008) identify that the

life-cycle pattern of a highway has a limited correspondence from a pavement quality

perspective, as shown in Figure 2.5, as the quality in terms of serviceability of the

highway declines under continuous traffic, climate and geology stress. It is

recommended that only major maintenance be included in the LCCA because routine

activities tend to be consistent across pavement design types.


Rehabilitation cost can be determined from pavement performance predictions. The

initial pavement design and the maintenance activities will have a large influence on

the rehabilitation activities that are required in the future and when they will be

required (Tighe 2001). Agency cost components that are considered essential in

highway investment are categorised as initial construction costs, maintenance costs,

pavement upgrade costs and pavement end-of-life costs, as summarised in Table 2.3

Table 2.3: Agency impacts and costs in highway projects

AGENCY COST CATEGORY

FACTORS THAT LEAD TO IMPACTS AND COSTS

Initial Construction Costs

• Initial construction: As highlighted by Ugwu, Kumaraswamy, Wong, & Ng (2006a), initial construction as a sustainability indicator encapsulates sub-elements such as direct/indirect costs (which further subsumes construction/ operation costs), and other life-cycle cost elements. Direct costs during initial construction stage such as material, labour, and plant and equipment costs in the whole of life cost analysis have been derived directly from the respective unit rates data.

Maintenance Costs • Routine Maintenance: Some routine maintenance can be designed for a specific time period or number of traffic loadings. The best estimate of the life of the technique must come from field performance observations or empirical models developed from field performance data. According to Hall et al. (2003) the period of time for rehabilitation treatment is often called the performance period.

• Major Maintenance: Major maintenance activities are needed a few times throughout the life-cycle of a pavement (Wilde, Waalkes and

Figure 2.5: Typical life cycle of a road asset (Rouse and Chiu 2008)


AGENCY COST CATEGORY


Harrison 2001). Assuming good design and quality construction, a concrete pavement may require a concrete overlay in the second half of its design life to maintain ride quality and another asphalt overlay may be needed towards the end of its life. The strategy aims to perform the suitable maintenance activities at the right time on the road so as to optimise the total benefit and cost of a road over its lifetime.

Pavement Upgrade Costs

• Upgrade costs: Upgrade costs consist of cost such as rehabilitation cost, pavement strengthening cost and cost of road pavement widening.

• Rehabilitation: Rehabilitation is part of the pavement upgrading process that involves structural enhancements that extend the service life of an existing pavement and/or improve its load carrying capacity. For example, rehabilitation techniques include restoration treatments and structural overlays (Gransberg 2009).

• Pavement life-cycle: The life-cycle pattern of a road has a more limited correspondence from a pavement quality perspective, as the quality of serviceability of the road declines under continuous traffic, climate and geology stresses (Rouse and Chiu 2008).

Pavement End-of-Life Costs

• End of life costs: At the end of the life of infrastructure such as pavement, there would be certain costs involved demolish and recycle of the pavement.

• Economical and Environmental Friendliness: Pavement recycling has become more important and popular due to its resource saving and economical operation (Widyatmoko 2008; Brown and Cross 1989). Asphalt pavement recycling may be highly desirable, because it can save materials and is environmentally acceptable (Shoenberger, Vollor and LAB 1990; Aravind and Das 2007). It is based on sustainable development, by reusing materials reclaimed from the pavements and reducing the disposal of asphalt materials.

• Pavement performance: Aravind and Das (2007) found that the performance of the recycled materials was as good as that of equivalent conventional materials.

• Benefits of Recycling Pavement: Oliveira et al. (2005) identified the benefits of including recycled materials in pavement design, showing that the costs of applying a recycled mixture (with up to 50% reclaimed material) as a base or binder course were reduced by more than half, when compared with the costs of applying a new bituminous mixture, for the same expected life.


2.4.1.2 Social category

There has been a great deal of interest in the issue of the social costs in highway

infrastructure development (Levinson, Gillen and Kanafani 1998; Delucchi 1997;

Winston and Langer 2006; Gorman 2008). The passions surrounding social costs

have evoked far more shadow than light. At the centre of this debate is the question

of whether various modes of transportation are implicitly subsidised because they

generate unpriced externalities, and to what extent this biases investment and usage

decisions. On the other hand, the real social costs are typically not recovered when

financing projects and are rarely used in charging for their use.

For example, road space is a scarce resource. Apart from a few new toll roads and

some on-road parking, users are not charged a price for its use. Demand for the use

of roads is therefore rationed only by the generalised cost of travel: vehicle operating

costs and travel time. In many metropolitan areas, traffic congestion is the inevitable

result. Road users considering whether to join a congested traffic stream would

normally take account of the generalised travel cost that they would expect to incur.

These are the private costs against which they would weigh the benefits of travel.

However, road users do not take account of the fact that their decisions to travel

increase congestion and impose additional (public) costs on other road users.

However, social cost can be reduced to economically efficient levels by making road

users take into account the costs that they impose on other road users when

undertaking a trip.

Social cost components that are considered essential in highway investment can be

categorised as vehicle operating costs, travel delay costs, social impact influence and

accident cost. A brief outline of each category is given in Table 2.4.


Table 2.4: Social impacts and costs in highway projects

SOCIAL CATEGORY


Vehicle Operating Costs

• Vehicle Operating Costs include direct user expenses to own and use vehicles (plus incremental equipment costs for mobility substitutes such as telework). These indicate the savings that result when vehicle ownership and use are reduced. These can be divided into fixed (also called ownership) and variable (also called operating, marginal or incremental) costs, as indicated below. Variable costs increase with vehicle mileage, while fixed costs do not. Some costs that are considered fixed are actually partly variable. Variable costs increase with vehicle use, and decline when vehicle travel is reduced.

Travel Delay Costs • The Value of Travel Time refers to the cost of time spent on transport, including waiting as well as actual travel. It includes costs to consumers of personal (unpaid) time spent on travel, and costs to businesses of paid employee time spent in travel. The Value of Travel Time Savings refers to the benefits from reduced travel time. Travel time is one of the largest categories of transport costs, and time savings are often the greatest benefit of transport projects such as new and expanded roadways, and public transit improvements. Factors such as traveller comfort and travel reliability can be quantified by adjusting travel time cost values.

Social Impact Influence

• Community Cohesion: Automobile-oriented transport tends to result in development patterns that are suboptimal for many social goals. Wide roads and heavy traffic tend to degrade the public realm (public spaces where people naturally interact) and in other ways reduce community cohesion (Litman 2007).

• Economic vulnerability: Dependence on imported petroleum makes a region vulnerable to economically harmful price shocks (sudden price increases) and supply disruptions. For example, the last three major oil price shocks were followed by an economic recession.

• Higher world oil prices: High US demand increases international oil prices (the elasticity of world oil price with respect to US demand is estimated at 0.3 to 1.1), imposing a financial cost on all oil consumers (Smith 2009).

Accident Cost • Crash Costs are the economic value of damages caused by vehicle crashes (also called accidents or incidents). Injuries and fatalities refer to the extent of damage caused by a crash. Typical road users include pedestrians, cyclists and motorcyclists.

• Types of Crash Cost Costs: Internal costs are injuries and hazards to the individual who travel by vehicle mode. While for external cost, it refers to the uncountable damages and dangers caused by an


SOCIAL CATEGORY


individual on other people.

• Crash costs include internal costs (damages caused by an individual), external (risks caused by other road users) and insurance compensation (accident damages compensated by insurance companies).

• External Costs: Elvik (1994) clarifies three types of costs implies to crash activities such as accident damage costs impose on society, cost of injuries contributed by larger vehicles to smaller vehicles and the changes in traffic density that contribute to the marginal changes in crash risk.

Jansson (1994) emphasises external costs crashes imposed on “unprotected road users” (pedestrians, cyclists and motorcyclists), and damage costs borne by society. Some existing studies also emphasise the costs motor vehicle risk may also be contributed by pedestrians and cyclists (Davis 1992). The results also supported by James (1991) indicate that such accidents are undervalued because of those incidents are not recorded.

2.4.1.3 Environmental category

Environmental issues in the current construction industry lead to an unforeseen

capital investment for built assets. One problem is the complexity of these issues,

which leads to unpredictable investment decisions among the investors.

In identifying environmental costs in highway investment, two situations are of

particular significance for LCCA: one is the estimation of the full life-cycle cost of a

project or decision, and the other is the attempt to increase production efficiency and

focus on cost components related to the environment. In the first case, only

downstream costs are of interest. In the second case, all costs components related to

environmental are of interest. When deciding upon which environment-related costs

to include in the study, there are borders that need to be taken into account.

Environment-related cost components that are considered essential in highway

investment can be categorised into noise pollution, air pollution, resource

consumption, pollution damage from agency activities, solid waste generation cost,

and water pollution and hydrologic impacts, as shown in Table 2.5.


Table 2.5: Environmental impacts and costs in highway projects

ENVIRONMENTAL CATEGORY


Noise Pollution • Type of vehicle: Motorcycles, heavy vehicles (trucks and buses), and vehicles with faulty exhaust systems tend to produce high noise levels.

• Traffic speed, stops and inclines: Lower speeds tend to produce less engine, wind and road noise. Engine noise is greatest when a vehicle is accelerating or climbing an incline. Aggressive driving, with faster acceleration and harder stopping, increases noise.

• Pavement condition and type: Rougher surfaces tend to produce more tire noise, and certain pavement types emit less noise (Ahammed and Tighe 2008).

• Barriers and distance: Walls and other structures such as trees, hills, distance and sound-resistant buildings (e.g., double-paned windows) tend to reduce noise impacts.

Air Pollution

• Mobile Emission: It is difficult to control mobile emission given the reason that motors are numerous and dispersed, and have relatively high damage costs because motor vehicles operate close to people.

• Transportation: Transportation is a major contributor of many air pollutants. These shares are even higher in many areas where people congregate, such as cities, along highways and in tunnels.

Resource Consumption

• Energy Security: Energy security includes economic and military costs associated with protecting access to petroleum resources. For example, US national security costs associated with defending petroleum supplies in the Middle East region are estimated to range from $6 to $60 billion annually (Romm and Curtis 1996).

• Economic vulnerability: Dependence on imported petroleum makes a region vulnerable to economically harmful price shocks (sudden price increases) and supply disruptions. For example, the last three major oil price shocks were followed by an economic recession.

• Higher world oil prices: High US demand increases international oil prices (the elasticity of world oil price with respect to US demand is estimated at 0.3 to 1.1), imposing a financial cost on all oil consumers (Smith 2009).

Pollution Damage from Agency Activities

• Roadkills: Motor vehicles are a major cause of death for many large mammals, including several threatened species.

• Road Aversion and other Behavioural Modifications: Animals behaviour and movement patterns are affected by roads; animals




become accustomed to roads, and are therefore more vulnerable to harmful interactions with humans.

• Population Fragmentation and Isolation: By forming a barrier to species movement, roads prevent interaction and cross breeding between population groups of the same species. This reduces population health and genetic viability.

• Exotic Species Introduction: Roads spread exotic species of plants and animals that compete with native species. Some introduced plants thrive in disturbed habitats along new roads, and spread into native habitat. Preventing this spreading is expensive.

• Pollution: Road construction and use introduce noise, air and water pollutants.

• Impacts on Terrestrial Habitats: Road construction can cause habitat disruption and loss.

• Impacts on Hydrology and Aquatic Habitats: Road construction changes water quality and water quantity, stream channels, and groundwater.

• Access to Humans: Roads increase the access of humans including hunters, poachers, and irresponsible visitors.

• Sprawl: Increased road accessibility stimulates development, which stimulates demand for urban services, which in turn stimulates more development, leading to a cycle of urbanisation.

Solid Waste Generation Cost

• Damage costs: Damagin solid waste is created by the inappropriate disposal of used tires, batteries, junked cars, oil and other harmful materials resulting from motor vehicle production and maintenance.

• Construction and Demolition Wastes: Damaging solid waste is created by surplus materials arising from land excavation or formation, civil construction, roadwork, pavement maintenance or demolition activities.

• Waste from Motor Vehicles: Motor vehicles produce various harmful waste products that can impose externalities. Motor vehicle wastes are the major source of moderate-risk wastes produced in typical jurisdictions (Giannouli et al. 2007).

• Waste Management: Planning for waste management is process that involves many complex interactions such as transportation systems, land use, public health considerations and interdependencies in the system such as disposal and collection methods.




Water Pollution and Hydrologic Impacts

• Impacts from motor vehicles, roads and parking facilities: These impacts impose various costs including polluted surface and groundwater, contaminated drinking water, increased flooding and flood control costs, wildlife habitat damage, reduced fish stocks, loss of unique natural features, and aesthetic losses.

• Hydrologic Impacts: Roads concentrate stormwater, causing increased flooding, scouring and siltation, reduced surface and groundwater recharge which lowers dry season flows, and creates physical barriers to fish.

• Improper vehicles leak hazardous fluids: Lubricating oils used in automobiles are burned in the engine or lost in drips and leaks onto the ground or into sewers, leading to the destruction of many aquatic species.


2.5 Research Gap

The literature review reported in the previous sections suggests that industry

stakeholders need to pay attention to two key issues in order to incorporate the

sustainability concept into the life-cycle cost analysis. First, they need to understand

the evolving needs and challenges to improve long-term financial decisions. Second,

there is a need for clearer understanding of critical cost components related to

sustainable measures in Australian highway investments. As such, the complexity of

incorporating sustainability into LCCA must be addressed. These two issues are

interrelated and are further discussed in the following sub-sections.

2.5.1 Challenges to improve long-term financial decisions

Sustainability has become one of the prime issues that the current construction

industry needs to respond to. Although the application of sustainability in built assets

is beneficial, it often involves major capital investment. Costs always become the

impeding factor for stakeholders when they contemplate sustainability initiatives in

highway projects. While profit is still the main concern in highway investment, there

is increasing social awareness of concerns relating to global warming and climate

change. Thus, highway industry stakeholders are responsible for ensuring the balance

between the financial benefits and sustainability deliverables in highway

investments.

This study has identified that LCCA is an effective economic assessment approach

that is able to evaluate financial benefits in the long-term. However, the review of the

literature has found that there are many limitations in current LCCA models

concerning sustainability (as discussed in section 2.3.2.2). To overcome these

limitations, it is important to understand the Australian industry practice of LCCA

and the expectations of various stakeholders in improving long-term financial

decisions while considering sustainability in highway projects. This is one of the

gaps that the current research aims to bridge.


2.5.2 Critical cost components in Australian highway investments

There is an increasing number of studies on sustainability-related cost components in

highway development (Surahyo and El-Diraby 2009; List 2007). A review of the

literature has managed to identify 42 cost components related to sustainable

measures (Table 2.6). However, the literature shows that highway projects often take

place in different physical, legal and political environments; therefore, it is a

challenge to apply these cost component suites for all highway projects.

Table 2.6: Sustainability-related cost components for highway infrastructure

Sustainability Criteria

Sustainable Cost Components (Main Factors)

Sustainable Cost Components (Sub Factors)

Agency Category

Initial Construction Costs Labour Cost Materials Cost Plants and Equipments Cost

Maintenance Costs Major Maintenance Cost Routine Maintenance Cost

Pavement Upgrading Costs Rehabilitation Cost Pavement Extension Cost

Pavement End of Life Costs Demolition Cost Disposal Cost Recycle and Reuse Cost

Social Category

Vehicle Operating Costs Vehicle Elements Cost Road Tax and Insurance Cost

Travel Delay Costs Speed Changing Cost Traffic Congestion Cost


Cost of Resettling People Property Devaluation Reduction of Culture Heritages and Healthy Landscapes Community Cohesion Negative Visual Impact

Accident Costs Economy Value of Damages Internal Cost External Cost

Environmental Category

Solid Waste Generation Costs Cost of Dredge/Excavate Material Waste Management Cost Materials Disposal Cost

Pollution Damage by Agency Activities

Land Use Cost Distraction to Soil Extent of Tree Felling Habitat Disruption and Loss Ecology Damage Environmental Degradation

Resource Consumption Fuel Consumption Cost Energy Consumption Cost



Sustainable Cost Components (Main Factors)

Sustainable Cost Components (Sub Factors)

Noise Pollution

Cost of Barriers Tire Noise Engine Noise Drivers’ Attitude

Air Pollution Effects to Human Health Dust Emission CO2 Emission

Water Pollution Loss of Wetland Hydrological Impacts

In order to fit the Australian context, these cost components need to be examined and

verified by industry stakeholders involved in highway development. This is another

gap that the current study aims to bridge, by identifying the critical cost components

related to sustainable measures with which highway project stakeholders are most

concerned.

2.6 Chapter Summary

This chapter highlighted findings from the literature review conducted as part of the

first stage of the research framework (as discussed in section 1.6.1. Specifically, it

answered the first research question, that is, What are the sustainability measures

that can have the cost implications in highway projects? The findings supported the

view of the global initiatives on sustainable infrastructure development and the

context of highway infrastructure development in Australia. The push towards

sustainability has added new dimensions to the complexity of financial evaluation in

highway projects. Life-cycle costing analysis is generally recognised as a valuable

tool in dealing with this evaluation.

However, to date, existing LCCA models appear to be deficient in dealing with

sustainability-related cost components due to their inherent focus on the economic

issues alone. The two main barriers preventing the advancement of the sustainability

concept in the life-cycle costing analysis in Australian highway investments are the

need for stakeholders to understand the industry challenges and improve long-term

financial decisions, and the need for clearer understanding of critical cost

components related to sustainable measures, as discussed in section 2.5.


To overcome these barriers, there is a need to identify the substantial cost

components in long-term financial decision at the project level. This allows the

industry stakeholders to appreciate the cost components are significant in highway

infrastructure investments. In addition, this study examines the different perceptions

and expectations of the industry stakeholders regarding the current practice of life-

cycle cost analysis in Australian highway infrastructure. This will allow all parties

involved to understand the industry needs in achieving the goal of maximising

sustainability deliverables while ensuring financial viability over highway

investment. The following chapter will further discuss the suitable methodology

options to investigate the key research questions of this study.

Chapter 3: Research Methodology and Development 55

CHAPTER 3: RESEARCH METHODOLOGY AND

DEVELOPMENT

3.1 Introduction

According to Creswell (2003), methodology is necessary to ensure that a research

project compressively addresses the research questions. To meet these objectives, a

research study should have a detailed research design that can be used as a blueprint

for collecting observations and data that are connected to the research questions.

According to Simister (1995), the research design should:

• Make explicit the questions the researcher should answer

• Provide hypotheses or propositions about these questions

• Develop a data collection methodology, and

• Discuss the data in relation to the initial research questions and hypotheses or

propositions.

This chapter outlines the methodologies used to guide this research, which aims to

develop a decision support model for evaluating long-term financial decisions for

highway projects. With consideration of these objectives, the research is positioned

as mixed methods research that uses complementary quantitative and qualitative

paradigms. The inquiry is based on the assumption that collecting different types of

data best provides an understanding of a research problem and the necessary

ingredients of the final product.

The research began with a quantitative phase (questionnaire survey) with both open

and closed questions. A review of the literature was undertaken to help establish a

rationale for the research questions and to establish the extent and depth of existing

knowledge on cost components related to sustainable measures in highway projects

and the development of existing life-cycle cost analysis models. The literature was

56 Chapter 3: Research Methodology and Development

used as a basis for advancing the research questions (Creswell and Clark 2007). The

qualitative phase then followed, which involved the conduct of explanatory in-depth

semi-structured interviews and case studies.

This chapter is organised as follows. The specific mixed methods employed in this

study are outlined in Section 3.2. This section describes the specific research

methodologies for this study. Section 3.3 presents the overall stages and the

involvement of the methodologies within the study. In Section 3.4, the ethical

considerations for this study are explained. Finally, Section 3.5 summarises the

important points discussed in the chapter.

3.2 Selection of Research Methods

According to Fellow and Liu (2003), data collection is a communication process. It

involves the transaction of data between the providers (respondents) to the collectors

(researchers). In this research, several research methods were involved to aid the

researcher to create this communication link with the respondent. This chain of

communication helps the researcher to understand the current practice of the industry

stakeholders as well as the needs of industry towards improvement of highway asset

management.

Methods of collecting data, generally, can be categorised as either one-way or two-

way communications. In this research, one-way methods require either acceptance of

the data provided or their rejection. Clarification or checking are possible only rarely.

One-way communication methods include questionnaires. Two-way methods such as

semi-structured interviews, permit feedback and the gathering of further data via

probing. One-way communication methods may be regarded as linear data collection

methods while two-way communication methods are non-linear. Based on Fellow

and Liu (2008), the spectrum of interview types related to the nature of the questions

are shown in Figure 3.1.


Given that there is a restricted amount of resources and time available for carrying

out the field work, choosing the most suitable research method is necessary. The

choice is affected by consideration of the scope and depth required. The choice is

between a broad but shallow study at one extreme, and a narrow and deep study at

the other, or an intermediate position – as shown in Figure 3.2.

Figure 3.1: Spectrum of interview types (Fellows and Liu 2008)

Figure 3.2: Breadth vs. depth in ‘question-based’ studies (Fellows and Liu 2008)


This study employs the research methods that provide breadth to depth to generate

holistic and meaningful findings and results. Therefore, the data collected needs to be

maximised to ensure its accuracy and the usability in the research. Fellow and Liu

(2003) suggest that the methods employed in research need to be pre-determined in

order to identify what data is critical, and to ensure the validity of respondents

selection and the right sampling number to bring a good representation of the

population to the study. This research selects several research methods that are

suitable for the research purposes, such as survey and case study. Each method is

further discussed and justified in the following sections.

3.2.1. Survey

A survey is "gathering information about the characteristics, actions, or opinions of a

large group of people, referred to as a population" (Dillman 2007). It consists of

cross sectional and longitudinal methods to collect data. The data collection and

measurement processes include surveys; questionnaire-based surveys, marketing

surveys, opinion surveys and political polls are some of the most common.

This method produces observations that are constructed in a specific manner.

Surveys have advantages that they do not require as much effort from the questioner

as verbal or telephone surveys, and often have standardised answers that make it

simple to compile data. However, this method is quite difficult to develop fresh

perspectives or to come up with new ways of interpreting the researched phenomena.

Usually, standardisation answers may cause frustration to the users. Surveys are also

limited in that respondents must be able to read the questions and respond to them.

Thus, the researchers must have a reasonably clear idea of the hypotheses they want

to test and the preset responses they will set out before the surveys are even started

(Alasuutari 2004).

Surveys are conducted to produce quantitative descriptions of some characteristics of

the study population. Survey analysis is mainly concerned on the relationships

between variables, or with projecting findings descriptively to a predefined

population (Fowler 2009). Survey research can be conducted by quantitative and

qualitative methods. This requires standardised information from the subjects being


studied. The subjects studied might be individuals, groups, organisations or

communities. There are several ways to conduct a survey such as collecting

information by asking people with structured and semi-structured questions. Their

answers are referring to themselves or some other unit of analysis, which constitute

the data to be analysed. The sample of a survey needs to be large enough to allow

extensive statistical analyses.

To achieve the second objective of this research, information relevant to

sustainability-related cost components in highway projects is collected through

surveys (quantitative method). The literature findings have demonstrated the lack of

effective ways to quantify cost components related to sustainable measures as well as

the limitations of current LCCA models in handling these costs in highway

investment. Thus, understanding the needs and overall situation of the current LCCA

practice in the Australian highway industry would require a realistic survey

(qualitative method).

In light of the small body of literatures relating to the research context, a survey of

industry practice is essential to identify and develop effective approaches. The

survey can provide both information as facts about the practice and opinions from the

professional experience. The information can be the initial source for the further

knowledge base formulation along with the decision support model development to

achieve the goals of this study. To gain an understanding of the status of the current

Australian highway industry in handling highway investment, the industry

stakeholders are the major subjects. The industry survey is carried out in the major

capital cities of Australia.

3.2.2. Case study

Case study is a research methodology that explores a single entity (the case) by using

a variety of data collection methods during a sustained period of time. Case study

method excels at bringing researchers to an understanding of a complex issue or

object and can extend experience or add strength to what is already known through

previous research. Case study emphasises detailed contextual analysis of a limited

number of events or conditions and their relationships.


Researcher Robert K. Yin defines the case study method as an empirical inquiry that

investigates a contemporary phenomenon within its real-life context; when the

boundaries between phenomenon and context are not clearly evident; and in which

multiple sources of evidence are used (Yin 1989). Critics of the case study method

believe that the study of a small number of cases can offer no grounds for

establishing reliability or generality of findings. Some dismiss case study method as

useful only as an exploratory tool. Yet researchers continue to use the case study

research method with success in carefully planned and crafted studies of real-life

situations, issues, and problems. Reports on case studies from many disciplines are

widely available in literature.

To fulfill the research objectives proposed by this study, a descriptive case study was

employed. Case study uses a variety of data collection methods during a specific

period an effort to study each single case. Case study is used widely in social science

as well as the practice-oriented fields in construction engineering, science

management and education. According to Yin (1989), case study is the preferred

strategy when "how" and "why" questions being posed, when there is little control

over events, and when the focus is on contemporary phenomenon within real-life

context.

The objective of applying the case study method was first, the developed model

needs to be applied to cases so it picks up real-life problems solving and decision-

making routines. This will help complete the model development by embedding

realistic and practical procedures to test and evaluate the decision support model

based on the real-life projects. More specifically, this study seeks to answer specific

research question of how can long-term financial viability of sustainability measures

in highway projects be assessed. Given the "how" nature of this study's research

question, a case study approach provides a useful methodology for answering them.

Yin cites several advantages to the case study approach. Case study is useful when an

'investigator' has an opportunity to observe and analyse a phenomenon previously in

accessible to scientific investigation (Yin 1989). Given the limited real-life projects

that are available, two case projects are selected for the researcher to develop insight

into the application of an emerging of decision support model.


However, Yin notes, "The case study has long been stereotyped as a weak sibling

among social science methods. Investigators who do case study are regarded as

having deviated from their academic disciplines; their investigations, as having

insufficient precision (that is quantification), objectivity and rigor". Summarising the

work of others, he concludes that the strength of a case study is dependent upon the

development of an explicit research design, and the use of several methods for data

collection (Yin 2003).

3.3 Research Process

This section seeks to integrate the preceding discussion into a research

methodological framework to illustrate how the different research elements are

developed in this research. There are four distinct phases in conducting this research

which includes (1) literature review (2) survey development (3) decision support

model development (4) case study. The research process is illustrated in Figure 3.3.


• What is a semi-structured interview?

• Why a semi-structured interview?

• What is the sample? • How to conduct a

semi-structured interview?

• How to analyse the data?

• What is a questionnaire Survey?

• Why a questionnaire Survey?

• What is the sample? • How to conduct a

questionnaire Survey? • How to analyse the

data?

Survey

Research Problems

Questionnaire Survey

• What is model development? • Why model development? • How to conduct model development? • How to analyse the data?

• What is a case study? • Why a case study? • What is the sample? • How to conduct a case study? • How to analyse the data?

Understand concept of sustainability & LCCA

Identify research

gaps Literature Review

Semi-Structured Interview

Model Development

Case Study

Phase 1

Phase 4

Phase 3

Phase 2

Figure 3.3: Research process


3.3.1. Literature review

The literature review was conducted to identify how the knowledge developed to

date impacts on the problem. According to the research problem, the literature is

crucial for this research. Literature reviews inform researchers of the background to

their research projects and provide context and ideas for their studies. There are good

reasons for spending time and effort on a review of the literature before embarking

on a research project. These reasons include:

• To identify the gaps in the literature,

• To avoid reinventing the wheel (at the very least this will save time and it can

stop the research from making the same mistakes as others),

• To carry on from the point others have already reached (reviewing the field

allows the research to build on the platform of existing knowledge and ideas),

• To identify other people working in the same fields,

• To identify information and ideas that may be relevant to the research, and

• To identify methods that could be relevant to the research.

3.3.1.1. Literature review purposes

The literature review was to define the initial research questions and to develop a

general understanding for this study. This study carried out several steps to conduct

the review of the literature and highlighted three main topics based on the first

research question (as discussed in Section 1.2):

• The sustainability development principles and evolution of highway

infrastructure development in Australia.

• The principle of engineering economics, LCCA application, current LCCA

models and their limitations in adopting sustainable measures in highway

infrastructure.

• Cost components related to sustainable measures in highway infrastructure.


The literature reviewed on these three topics provided a theoretical background for

the study. Through the literature review, a clear picture was formed for the researcher

to identify the cost components related to sustainability measures and the limitations

of existing LCCA approaches to adopting sustainability.

3.3.1.2. Literature review development

This study has obtained most of the books and journal articles through libraries and

electronic databases. The published literature can be retrieved through the existence

of computer databases, computerised catalogues and searches on the internet. The

researcher has identified several ways to explore important sources of written

information. One of the most effective ways to obtain the literature is to ask for key

readings from an acknowledged expert. This expert is able to provide guidance to the

‘specialised’ material, the latest findings and journals, and perhaps to unpublished

material and other useful contacts.

This study is also identifying and locating the material for a review. It is necessary

to keep full and accurate bibliographic details, including information on the location

of materials so that they can found again quickly. The researcher in this study

employed a computer-based record system “Endnote”, which is a user-friendly and

powerful application to cross-reference, and to attach fields for notes to the

bibliographic details.

All the written materials have been read fully and reflectively. The review of

literature is focusing on the patterns, arguments, new ideas, methodology, and areas

of further enquiry. The information gathered was systematically transferred into

notes by classifying it under headings. The clearly presented tables were used to

record a large amount of quantitative information, whereas reviews of qualitative

materials were noted in text.

Based on these steps, the preliminary model is developed and cost components

related to sustainability in highway infrastructure were identified. The next

procedures are the re-evaluation and selection of the definitive cost components to be

evaluated by industry stakeholders using survey methods.


3.3.2. Questionnaire

This study used questionnaire-based surveys as the method to identify the critical

cost components in life-cycle cost analysis that emphasise sustainability in highway

infrastructure. The questionnaire surveys was selected because questionnaire surveys

are effective in gathering information about the characteristics, actions or opinions of

a large group of people (Creswell 2009).

The questions that were designed for this questionnaire occur in two forms- open and

closed. As shown in Table 3.1, open and closed questions have some different

characteristics. According to Fellow and Liu (2008), careful consideration of the type

of questions used in a questionnaire is essential so that researchers can get good

responses. A well-designed questionnaire that is used effectively can gather relevant

information on the sustainability-related cost components and also the comments of

related factors that influence the application of sustainability in LCCA practice.

Table 3.1: Characteristics of questions

Open Question Closed Questions • Easy to ask • Informative • Difficult to answer • Never full / complete

• A set of number of responses - Likert scale

• Less informative • No bias. • Easier and quicker to answer

It is important to remember that a questionnaire should be viewed as a multi-stage

process beginning with a definition of the aspects to be examined and ending with an

interpretation of the results. Every step needs to be designed carefully because the

final results are only as good as the weakest link in the questionnaire process.

Questionnaire research design proceeds in a systematic and precise manner, as

illustrated in Figure 3.4. Each item in the figure needs to be well planned and

organised to conduct a comprehensive questionnaire survey.


3.3.2.1. Purposes of questionnaire

From the literature findings, an online questionnaire was conducted for the following

research purposes:

• To identify the importance of sustainability-related cost components,

• To explore barriers associated with quantifying cost related to sustainability

measures,

• To identify different perspectives of industry stakeholders towards cost

components related to sustainable measures, and

• To explore the industry stakeholders’ opinions of the future prospects in

integrating sustainability into long-term financial management for highway

projects.

In the questionnaire survey, the stakeholders (namely, local and state government

officers, project managers, engineers, quantity surveyors, planners, civil contractors

and subcontractors) were asked to rate the cost components based on their experience

in highway projects. These cost components are incorporated into the proposed

Prepare Report

Define Goals and Objectives Design Methodology Determine

Feasibility

Select Sample Develop

Instruments Conduct Pilot Test

Revise Instruments

Analyse Data Conduct Research

Figure 3.4: Questionnaire research flow chart (Statpac 1997)


conceptual model for further development. Semi-structured interviews were

employed to explore the current practice of long-term financial management and the

calculation methods to quantify the costs related to sustainable measures in highway

development.

3.3.2.2. Selection of questionnaire respondents

The questionnaire used in this research was based on the combination of the literature

review on contemporary LCCA models, preliminary model development, and also

the identification of sustainability-related cost components in highway infrastructure.

Unless a study is quite narrowly construed, researchers cannot study all relevant

circumstances, events or people intensively and in-depth; samples must be selected

(Bernard 2006). For this research, three main construction industry players involved

in highway projects, namely, consulting companies, contractors and government

agencies from Australia were included. The respondents include senior practitioners

and stakeholders who have substantial working experience in highway infrastructure

projects. They play an important role in the construction industry because they are the

decision-makers in highway investments. Consequently, these stakeholders also have

more concerns about the economic dimension of highway construction projects.

To ensure that holistic views were collected, targeted stakeholders included government

or client representatives, builders, designers, project managers, quantity surveyors,

planners, contractors and subcontractors involved in highway projects. The questionnaire

respondents were selected from the last updated databases available in:

1. The National Innovative Contractors Database by the Cooperative Research

Centres

2. Directories from the Australian Institute of Quantity Surveyors.

for Construction Innovation.

3. Directories from Association of Consulting Engineers Australia.

Samples chosen from these databases are a good representative of the Australian

construction industry stakeholders. Through the questionnaire, the opinions and

comments by these senior stakeholders represent the current industry’s perceptions of


the importance of sustainability-related cost components in highway projects in

particular.

3.3.2.3. Questionnaire development

The questions in the questionnaire focus on the level of importance of three groups

of sustainability-related cost components: agency, social, and environmental cost

components. The questions were designed to identify the importance of these three

categories of cost components in long-time financial management as highlighted in

the literature review.

The three sections focus on different aspects of sustainability-related cost

components when selecting a highway infrastructure project and making highway

investment decisions. The agency, social, environmental cost components sections

aim to explore the perspective of industry stakeholders’ regarding the level of

importance of these costs in highway investment. Meanwhile, the open questions

seek to explore the comments and opinions of the stakeholders towards

implementation of sustainability-related cost components in highway long-term

financial management. The supplement at the end of the questionnaire is designed to

gather information about the participants’ background for statistical purposes.

The questionnaire was developed using a multiple-choice format. Some of the

multiple-choice questions include answers to be solicited on a 5-point Likert scale

with 1 representing the “not important” and 5 the “very important”, while others are

designed with several pre-described answers. The questionnaire also includes one

open-ended question to allow the respondents with relevant experience in highway

development to write down the comments and problems they have come across in the

long-term financial management of highway projects. The specific content of the

questionnaire is presented in Appendix A2.

Before the questionnaire was distributed to the respondents, it was initially been

piloted by a small sample of respondents. Fellow and Liu (2003) argue that piloting

will evaluate the questions to ensure they are intelligible, easy to answer and

unambiguous, and to test the structure of the questionnaire design. The feedback


obtained from the pilot respondents will help the researcher to improve the

questionnaire. This research undertook the pilot questionnaire with academic and

industry experts. This resulted in improving the questionnaire, filling in gaps, and

determining the time required for, and ease of, completing the exercise. In addition,

the ability to achieve the research objectives was a significant consideration in the

piloting process. This process can improve the understanding of the researcher so

that they would be able to analyse the results and findings well.

As mentioned above, the questionnaire aims to explore the issues raised in the

literature review. The design of the questions was based on those issues. The

appropriateness and adequacy of the proposed questions were justified through the

pilot study, which was carried out from April 2009 to June 2009. In the pilot study,

the preliminary version of the designed questionnaire was sent to three academic

staff in this field at the Queensland University of Technology and two industry

practitioners at the Queensland Department of Public Works to test whether the

questions were intelligible, easy to answer and unambiguous, and to seek possible

improvement. A series of discussions were held separately with each of the persons

involved. The results of the discussions proved to be useful and led to minor

refinements of the questionnaire in the following aspects:

• Present an extra choice of “others” in most questions in order to allow

respondents to add any possible answers which are not given in the

questionnaire;

• Shorten the questionnaire length and make it more succinct and clear;

• Revise the rating scales for the importance level of cost components related to

sustainable measures.

Following these suggestions, the questionnaire development was finalised and tested

again with two of the above five participants, making sure that all the issues had been

clarified and resolved. By April 2009, the questionnaire was ready to be

disseminated to the industry stakeholders.

The questionnaire was administered by email with on-line link to the web-based

questionnaire to respondents due to the geographical limitations. A commercial


survey provider, Survey Monkey (http://www.surveymonkey.com/), administrated

the web-based questionnaires used in this research. Subsequently, the author

approached the participants through emails to seek their consent to participate in this

research. Before participating in the questionnaire survey, participants were given the

following information by email and ordinary mail:

1. Cover letter;

2. Consent form for research project ;

3. Participant information for QUT research projects; and

4. Questionnaire survey sheets.

In order to improve the response rate, the questions were designed to be

unambiguous and easy to answer by the respondents. Fellow and Liu (2003) suggest

that the questions in a questionnaire should not request unnecessary data; questions

need to be clear, concerning one issue only and the questions should be presented in

an ‘unthreatening’ form appropriate to the research. Dillman (2007) also argues that

questionnaires by email or web need to have a user-friendly design because any

complexity will prevent some respondents from receiving and responding to the

questionnaire.

3.3.2.4. Data analysis

All the data collected from the questionnaires was recorded into the Survey Monkey

web survey tool. From the tool, the role data, which is the inputs from the

respondents were retrieved and analysed using a software program. Sekaran and

Bougie (2003) suggested that data analysis should be done with the aid of software

programs. In this research, Microsoft Excel and SPSS were employed to analyse the

data. Microsoft Excel was suitable for conducting statistical analysis to display the

analysis in chart and graph format, while SPSS was used to transform the data into

information such as the t-test analysis as SPSS offers more comprehensive statistical

analysis. Microsoft Excel is also used to store and organise information as well as

reordering records according to a numeric field. Both software programs play an

important role in analysing statistical data gathered from the questionnaire survey.

http://www.surveymonkey.com/�


This study commenced two methods data analysis to identify the related importance

of cost components related to sustainable measures in highway projects in Australia.

Mean indexing and t-test are widely used in presenting exploratory and descriptive

data analysis and can provide support to the criticality index in this research. Among

many others, Yang and Peng (2008) used the mean index to discuss the importance

of the evaluation factors for customer satisfaction in project management. Ahuja et.al

(2009) used the standard deviation and mean in evaluating the issues of ICT

adoption for building project management in the Indian construction industry. Shehu

and Akintoye (2010) used mean to ‘support criticality index to rate the major

challenges’. This research also used the same approach to support criticality index to

rate the cost components related to sustainable measures.

The level of importance was based on their professional judgment on a given five-

point Likert-scale from 1 to 5 (where 1 is not important at all and 5 is very

important). Higher mean scores reflect responses that indicate the higher importance

of the respective cost components. The critical rating was fixed at scale ‘3.75’ since

ratings above ‘3’ represent ‘moderate important’, ‘4’ represent ‘important’, and ‘5’

represent ‘most important’ according to the scale. Likert scales facilitate the

quantification of responses so that statistical analysis could be taken and observed

the perceptions of differences between participants. This study also employed

descriptive statistics to analyse the survey results on the critical cost components.

The mean scores ratings of all proposed cost components were calculated using (Eq.

1):

a =

1(n1) + 2(n2) + 3(n3) + 4(n4) + 5(n5)(n1 + n2 + n3 + n4 + n5)

(1)

where “a” is the mean importance rating of an attribute and n1, n2, n3, n4, and n5,

represent the number of subjects who rated the cost components as 1, 2, 3, 4 and 5,

respectively. The data from the survey was analysed using mean and standard


deviation to rate the cost components. The t-test analysis was employed to identify

‘importance’ cost components to be considered in long-term investment for highway

infrastructure. Prior to proceeding with the analysis, a Cronbach α reliability analysis

was conducted. The result of the test proves the reliability of the data is α ≥ 0.7 as

recommended (Chan, Chan et al. 2010; Yip Robin and Poon 2009). Yang and Peng

(2008) suggests that in the early stages of research on predictor tests or hypothesised

measures of a construct, reliability of α ≥ 0.7 or higher will suffice. In this case, α =

0.948.

The t-test analysis has been used by past studies in identifying the relative important

indicators (Ekanayake and Ofori 2004; Wong and Li 2006; Shehu and Akintoye

2010). It can also provide support to the important cost factors in this research. The

rule of t-test of this survey sets out that the cost factors which value larger than 3.75

were considered to be critical. The null hypothesis (H0: μ1<μ0) against the

alternative hypothesis (H1: μ1>

μ0) were tested, where μ1 represents the mean of the

survey sample population, and μ0 represents the critical rating above which the

indicators considered as ‘important’. The value of μ0 was fixed at ‘3.75’because it

represents ‘important’ and ‘most important’ factors. The decision rule was to reject

H0 when the result of the observed t-values (tO) (Eq. (2)) was larger than the critical

t-value (tC) (Eq. (3)) as shown in Eq. (4).

to =x� − μ0SD

√n� (2)

tc = t(n−1,α) (3)

to > 𝑡𝑡𝑡𝑡 (4)


where �̅�𝑥 is the sample mean, SD/ √𝑛𝑛 is the estimated standard error different mean

score (𝑆𝑆𝑆𝑆 is the sampled standard deviation of difference score in the population, n is

the sample size which was 62 in this study), n-1 represents degree of freedom, and α

represents the significant level which was set at 5% (0.05).

The criticality of cost components in this study was examined using Eqs. (3) and (4).

If the observed t-value is larger than the critical t-value to > tc, 𝑡𝑡(61,0.05)= 1.671 at

95% confidence interval, then H0 that the indicator was ‘moderate important’, ‘less

important’ and ‘not important’ rejected, and only the H1 was accepted. If the

observed t-value of the mean ratings weighted by the respondents was less than the

critical t-values (tO< tC), the H0 that was ‘less important’ and ‘not suitable’ only was

accepted.

3.3.3. Semi-structured interview

In general, there are three types of interview, namely, unstructured, semi-structured

and structured types. Unstructured and semi-structured interviews are often referred

to as qualitative research interviews (King 2004). Unstructured interviews are

informal and are conducted in order to explore some preliminary issues so that the

researcher can determine what variables need further in-depth investigation. Semi-

structured interviews are designed to have a list of themes and questions prepared in

advance; however, such prepared questions are relatively open and flexible in

relation to the research topic. This means that subsequent interviewer questions can

be modified and question wording can be changed, omitted or added based on the

needs of the situation in advance (Robson 2002). However, interview questions must

be improvised in a careful and theorised way (Wengraf 2001). Structured interviews

are based on an identical set of questions. Those questions are designed usually with

pre-coded answers and are also referred to as quantitative research interviews

(Saunders, Lewis and Thornhill 2009). The researcher has a list of predetermined

questions to be asked of the respondents either personally, on the telephone, or

through the medium of a computer (Sekaran and Bougie 2003).

Each interview method has advantages and disadvantages. Semi-structured

interviews can be easily controlled based on what the interviewer expects to enquire


about, as compared to unstructured interviews. In this case, the semi-structured

interview allows the researcher to ask specific questions that are relevant to the

interviewees’ understanding of and opinions on the current practice of long-term

financial management and cost components related to sustainability measures in

highway infrastructure project. Moreover, the flexibility in semi-structured

interviews enables the researcher to keep the interviewees on track regarding the

topic of discussion, and in the meantime to express their views freely. As for

structured interviews, the questions are focused on a predetermined set. The

interviewer is totally in control over the interviewees who are given a subordinate

role in this context. This does not allow respondents to express their opinions freely

(Saunders, Lewis and Thornhill 2009). Burgess (1988) argued that the structured

interview is defined as a data collection device involving situations where the

interviewer merely poses questions and records answers in a set pattern. The lack of

flexibility in structured interviews is unlikely to bring forth opinions from the

respondents for the purpose of this research.

Based on the above argument, the semi-structured interview approach was adopted

for this research. In order to have a better understanding of the current practice of

long-term financial management and cost components related to sustainable

measures in highway projects, the interview questions were prepared in three main

sections along with a few other sub-questions. This strategy helped to ensure the

questions would be well understood by the interviewees, and simultaneously, helped

the researcher to extract meaningful data. Practically, the researcher was able to ask

and guide the conversation and focus on the relevant questions in order to have a

clearly understanding before the interviewee starts answering. This process guided

the interviewees, and at the same time enabled them to develop their ideas and share

their experiences and perceptions on the current practice of long-term financial

management and the calculation of cost components related to sustainable measures

in highway projects.


3.3.3.1. Semi-structured interview purposes

The semi-structured interview was aimed to achieve the following three purposes:

• To identify the current industry practice on LCCA applications for highway

infrastructure projects;

• To identify ways to integrate cost components related to sustainability

measures into LCCA practice and the enhancement of the sustainability

concept into LCCA practice in highway projects; and

• To obtain the industry practitioners’ recognition of the challenges of

integration sustainability-related cost components into LCCA practice in

order to clarify the many uncertainties exposed by the earlier questionnaire

survey.

The interview presented all the cost components identified from the questionnaire to

the respondents and asked them to comment on these components. Interviewees were

also encouraged to propose possible solutions and considerations to deal with these

sustainability-related cost components. The data collected was analysed in the same

sequence as the pre-described questions in the interview.

3.3.3.2. Selection of interview respondents

Sekaran and Bougie (2003) suggest that while choosing the sample for interview,

those interviewed should be representative of the group who are attempting to make

inferences about. The specific target groups should also be the holders of the desired

information and able to answer research questions. For this research, the eligible

participants for the interviews were selected based on their substantial working

experience in highway infrastructure projects. These stakeholders and practitioners

usually have 15 to 20 years of experience and still practise in this industry.

Targeted stakeholders in this interview included government representatives,

environmentalists, engineers, project managers, financial representatives (specifically

in infrastructure management) and academics. From the respondents of the

questionnaire survey, 20 practitioners who fit this criteria were invited to participate


in this research. As some of the practitioners were retired recently, changed job scope

or unable to cope with their schedule, 15 practitioners agreed to be involved in this

interview. The response rate shows a significant interest from the industry. The

comments from these practitioners represent the perceptions of the current practice of

long-term financial management and deal with the sustainability-related cost

components in highway projects.

3.3.3.3. Interview development

Semi-structured interviews can be conducted in many situations, such as face-to-

face, telephone, internet and intranet mediated interviews (Saunders, Lewis and

Thornhill 2009). The face-to-face and telephone interview approach was employed in

this study. Face-to-face interview was adopted for the interviewees who were

contactable in Brisbane, Queensland. On the other hand, due to the geographical

limitations, telephone interviews were employed for the interviewees outside the

Brisbane, Queensland area. In this case, the interviewer managed to control the pace

of both interview approaches and record any data that was forthcoming.

The face-to-face and telephone interview approaches were employed in this research

in the following contexts and stages:

• After the questionnaire survey stage, the interview was conducted, which

aimed to identify the different perceptions and expectations of various

stakeholders regarding the current practice of long-term financial management

and.

• The interview also served to understand the determination and calculation of

sustainability-related cost components in highway projects in Australia; and

• In relation to case studies at a later stage to elicit information from case study

projects.

The questionnaire survey identified differences in the various stakeholders’

perceptions of cost components related to sustainability measures in highway

projects. Accordingly, the semi-structured interviews that were conducted at the

middle stage of data collection after the questionnaire survey uncovered the in-depth


understanding and perceptions of the current practice of long-term financial

management of the different interviewees, and enable the researcher to determine

how the sustainability-related cost components are calculated and which un-

quantified variables needed further in-depth investigation. Furthermore, the

interviews adopted in the case study phase helped the researcher to evaluate and

improve the proposed model.

As per the questionnaire findings, the industry stakeholders generally agreed that the

consideration of sustainability-related cost components is essential and must be

integrated into long-term financial management for highway investment decisions.

Based on the questionnaire, many potential issues were identified for the exploration

of the current practice of long-term financial management as well as potential ways

to quantify these cost components in real money figures. Hence, the semi-structured

interviews were employed to: (1) explore the current industry practice regarding

LCCA application in highway projects; (2) identify the ways of integrating cost

components related to sustainable measures into LCCA practice; and (3) explore the

challenges of integrating cost components related to sustainable measures into LCCA

practice.

In response to the interview purposes, the pre-described interview questions

consisted of three sections. Section 1 presented the current industries practice of

Life-cycle costing analysis (LCCA) in determining pavement type for highway

infrastructure. The interviewees were also encouraged to express their comments on

the types of highway maintenance activities, period of maintenance throughout its

lifetime. Before they move into next section, there is a question, which explores their

comments about the importance of integrated sustainability-related costs in your

analysis. Section 2 consisted of three parts namely agency, social and environmental

cost components which further identify the ways of measuring these costs in

highway development. This section was employed to identify various calculation

approaches used by current industry to quantify these components into real costs and

the limitation of quantifying certain components into real costs. Section 3 included

the potential problems that can occur in quantifying sustainability-related cost

components and explored their comments in improving the problems faced by the


industry in dealing with the problems. Again, the interviewees were encouraged to

propose other issues, which had not been listed in the predefined questions.

Thirteen interviews were conducted between February and April 2010. With the

assistance of the industry contacts, an appointment was made with each participant.

Due to geographical reason, some of the interview sessions were conducted by

telephone. Before the interview, each interviewee was given the following

information, electronically:

1. Cover Letter

2. 'Participant Information for QUT Research Project' and

3. Interview Questions Sheet.

Each interview began with the author explaining to the interviewees the specific

objectives of the interview, and the overall research objective. To ensure that they

understood the intended meanings, any queries were clarified. Each interviewee was

then asked to confirm that they truly understood each of the interview questions and

the interview objectives. Ample time was given to all interviewees to elaborate their

answers to the questions. All of the verbal answers were recorded in a digital voice

recorder.

Considering the time limit and the numbers of questions, the researcher allowed the

interviewees to give their comments in section 2 based on their understanding of

each cost components. Interviewees were also encouraged to present their opinions

on how to solve the cost issues appropriately in the real projects. Each interview was

expected to last 45 minutes to 1.5 hours. The specific content of the semi-structured

interview is presented in Appendix B3.


During the interviews, the answers and opinions of the interviewees were recorded.

Subsequently, the responses were transcribed into text documents, with the aid of

software and Microsoft Word. In order to improve the accuracy of the transcriptions,

the comments from the interviews were first transcribed by software called


Macspeech Scribe Version 1.1. Once the transcription was finished, the researcher

listened to the transcriptions again and filled in the gaps and checked for any

mistakes made by the software. Once finished editing the transcription, the

researcher listened to the recorded interview again, checking on the consistency

between the transcription and the comments and opinions of the interviewees. Next,

the responses were categorised and grouped under different headings. This allowed

systematic and thorough analysis of the respondents’ comments on the current

practice of long-term financial management in highway projects, their perceptions of

integrating and quantifying costs related to sustainable measures into highway

infrastructure investments, and their expectations and suggested improvements for

long-term financial management in highway projects. The results are discussed

accordingly in Chapter 4.

3.3.4. Model Development

Model development is an approach that improves productivity as it is able to transfer

previous modelling experience to the construction of new models. It is a process-

oriented approach to model reusability where the transfer of previous modelling

experience is captured by concept for formation of a model domain as well as the

modelling process (Binbasioglu 1994)

Based on this approach, preliminary model development was carried out to identify

the cost components in traditional life-cycle cost analysis models and in the

sustainability context. In addition, the traditional LCCA models were refined and

transformed into a new model. However, traditional LCCA concepts were used as

the model domain for the new model with an emphasis on the sustainability context.

In order to achieve the research objective, a new model was developed based on the

five stages in model building: problem identification and definition, system

conceptualisation, model formulation, analysis and evaluation of model behaviour,

policy analysis, and model use or implementation (Richardson and Pugh 1997).

Table 3.2 summarises the steps and stages in model building.


Table 3.2: Stages and steps in model building (Richardson and Pugh, 1981)

Stage Steps Problem Define time horizon

Identify reference modes

Define level of aggregation

Define system boundaries

Conceptualisation Establish relevant variables

Determine important stocks and flows

Map relationships between variables

Identify feedback loops

Generate dynamic hypotheses

Formulation Develop mathematical equations

Quantify model parameters

Analysis/ evaluation Check model for logical values

Conduct sensitivity analyses

Validate model

Policy analysis Conduct policy experiments

Evaluate policy experiments

As can be seen from Table 3.2, the process of model building involves a wide variety

of conceptual activities. These range from 'brainstorming' variables to be included or

excluded from the model's boundary to determining specific parameter values to

identifying the important feedback loops within the model. However, the stages

commonly distinguish between three general types of tasks: eliciting information,

exploring courses of action and evaluating situations (Hackman 1968; Sidowski

1966; Bourne and Battig 1966; Simon 1960). Different phases of the modelling

process emphasise different combinations of these three types of tasks.

The purpose of conducting model development in this research is to develop a

decision support model for the evaluation of long-term financial decisions regarding

sustainability for highway projects. The model presents a series of Fuzzy AHP and

LCCA evaluation methods in dealing with the critical cost components related to

sustainable measures that were identified from the questionnaire. Chapter 6 explains

the overall model development process and highlights the detail of incorporating

Fuzzy AHP and LCCA analysis into the model. The developed model can serve as a

decision support tool for the industry stakeholders to assess the long-term financial


viability of sustainability measures in the highway projects. This model is tested and

evaluated by case projects, which are further be discussed in Chapter 7.

3.3.5. Case Study

The case study approach is ideal when a holistic, in-depth investigation is needed

(Feagin, Orum and Sjoberg 1991; Guba and Lincoln 1989; Patton 2002). Merriam

(1988) cites qualitative case study research as the preferred choice for those

researchers who are seeking insight, discovery and interpretation (rather than

hypotheses testing) and where there is a desire for holistic description and

explanation. A case study is a detailed examination of an event (or a series of

events). Yin (2003) defines a case study as an objective, in-depth examination of a

contemporary phenomenon where the investigator has little control over events. The

case study also allows an investigation to retain the holistic and meaningful

characteristics of real-life events – such as individual life-cycle, organisational and

managerial processes, neighbourhood change, international relations, and the

maturation of industries (Yin 2003). It is an examination of specific phenomenon

such as a program, an event, a person, a process, an institution, or a social group

(Merriam 1988).

In order to test and validate the proposed decision support model, the case study

approach was used. As highlighted by Stake (2005), the data derived from qualitative

case studies is more concrete, contextual and further developed through the

researcher’s own experiential understanding, combined with the findings. Previously

unknown relationships and variables could be expected to emerge from case studies,

leading to a rethinking of the phenomenon being studied (Stake 2005). This is what

is expected to occur in this research where deep insights and understandings of the

proposed decision support model can be applied in highway projects. In this

research, the case study method is needed for a better understanding of the

stakeholders’ requirements and comments on the model. Meanwhile, several case

studies are used to test and validate the model to ensure that it is able to improve the

decision-making process in highway projects along with the consideration of

sustainability factors. Several approaches were employed in the case study stage.

This included interview and documentary analysis. These different data collection


techniques help the researcher to ensure validity and create discrete dimensions in

the data collected.

3.3.5.1. Case study purposes

The case study is conducted to achieve the following two purposes:

• To integrate the industry-verified cost components into existing LCCA models

for further development.

• To apply, adapt, then complete the proposed decision support model through

testing and evaluating the model on the real-life projects.

The case study serves to compile all the critical cost components identified from the

questionnaire and integrated these into a decision support model. This study employs

two real-life highway projects to test and evaluate the model. Participants involved in

the projects were encouraged to criticise the model and propose suggestions for its

improvement.

3.3.5.2. Selection of case projects

The selection of case projects is a process that needed attention by the researcher to

maximise the data collected as well as lessons learned in the research period (Tellis

1997). The selection of methods and cases for the case study will significantly affect

the overall result of the research. Yin (2003) suggests that the selection of case

projects needs to relate to the research problem and questions and identify the

attributes that are most likely to yield relevant data. For this reason, this research has

identified certain criteria and considered the suitability of selected case studies. To

have a meaningful result for this research, the case projects were selected based on

the following criteria:

1. The case project must have been completed in a specific timeframe (around 8-

15 years prior to 2010) during which life-cycle costing anaylsis (LCCA) have

been undertaken,


2. The case project must recently have gone through economic evaluation by the

Australian government, and

3. The case project site should be in Australia and accessible to the researcher.

The criterion that the case project must be gone through economic evaluation by

Australian government is significant because the data of the project can be used by

the researcher to develop and evaluate the proposed model for long-term financial

decision in Australian highway infrastructure projects as the final outcome. The

researcher also consulted with several industry practitioners based on the selection

criteria to select the most suitable case projects. This process helped the researcher to

select the two most relevant case projects namely, the Wallaville Bridge

(Queensland) and the Northam Bypass (Western Australia). The two case projects

fulfill the following criteria as shown in Table 3.3.

Table 3.3: Case projects’ fulfillment of selection criteria

Case Project Criterion Wallaville Bridge Northam Bypass

Located in Australia Queensland Western Australia Completed in 8-15 years ago (from 2010)

15 years ago 8 years ago

Post-Economic Evaluation by Government

Yes Yes

Highway Infrastructure Highway Bridge Highway

The number of case projects was a main concern in this study. There is rarely a

specific number of cases that needs to be used in a case study (Yin 2003). However,

previous studies have recommended that two to four cases are the minimum, and 10-

15 are the maximum (Perry 1998). In this research, the selection of the number of

cases was based on the relevant data in the industry as well as the justification of the

time, funding and resources constraints. Based on the factors highlighted, two

highway infrastructure projects were chosen as the case projects in this study.

The two case projects are considered to be representative of Australian highway

infrastructure projects given the fact that:


1. They were based on the same Australian economic, social and political

conditions, and way of life. Thus, they have very similar highway infrastructure

development processes, requirements and expectations.

2. They are both funded and approved by the Australian Commonwealth

Government and carried out according to the Commonwealth standards

applicable to all states in Australia and,

3. These two case projects cover the main elements of highway infrastructure as

they include bridges and highway pavements.

As shown in Table 3.4, the case projects were both completed in the range of 8-15

years prior to 2010. The reason for selecting projects of this age is because they have

gone through a certain life span. Both projects were also recently post-economic

evaluated by the Australian government so relevant data and information is available

for use in this study. For example, the cost data for both projects is used to conduct

the life-cycle cost analysis (LCCA). These data is then tested and integrated into the

proposed model for further validation.

3.3.5.3. Case study development

This research used a combination of quantitative and qualitative methods in the case

studies to derive information that is complex or probing. Gable (1994) suggests that

the case studies should include a combination of qualitative and quantitative analyses

to seek in-depth understanding of a certain problem. In this case, the case study

process can be divided into two stages. The first stage involved the application of the

developed decision support model. The Fuzzy AHP and LCCA methods were

employed to test and evaluate highway alternatives based on the data from the real-

life case projects. The second stage included semi-structured interviews with the

participants involved in the highway projects to probe into the validity of the

developed decision support model and any further improvements needed. Both stages

of the case study are outlined in Figure 3.5.


In Stage 1, the combination of two evaluation methods, Fuzzy AHP and life-cycle

cost analysis are used to test the model. Triangular fuzzy numbers are employed to

represent the respondents’ comparisons by linguistic terms. The comparison of the

importance of main criteria of cost components, sub-criteria of cost components and

alternative t can be done with the help of the questionnaire (Appendix C2). The data

collected from the questionnaires are the input to the Fuzzy AHP and LCCA

Analysis. Fuzzy AHP is employed to analyse the weights of the criteria and

alternatives based on the data from the questionnaire. The weight vectors are

calculated based on this approach. Then, the normalised weight vectors are

determined. As a result, the final set of scores of highway alternatives are obtained

by the evaluation matrices. The detail calculation method of priority weights of the

different highway alternatives by Fuzzy AHP is further explained in Chapter 7.

Simultaneously, document analysis that covers project documents, industry

publications and reports was also used to identify the related cost components that

can be applied for LCCA calculation. These related costs, project activity timing,

discount value and evaluation timeframes were identified and incorporated into the

LCCA calculation. Based on this method, the final sets of costs of highway

alternatives are calculated. Finally, weighted sum model was employed to combine

both results and identify the most suitable alternative based on ion value.

Stage 1

• Model application based on two real-life projects.

• Integration of Fuzzy AHP and LCCA evaluation methods.

• Involvement of data input from questionnaire and document analysis.

Stage 2

• Semi-structured interview – validate and gain suggestions to improve the model.

• Respondents (projects participants) suggest the limitations and improvements for the model.

CASE STUDY

Figure 3.5: Case study process


In Stage 2, semi-structured interviews were conducted to validate and gain

suggestions to improve the model. Yin (2003) observes that the central tendency of

all types of a case study is to illuminate a decisions by considering why they were

taken, how they were implemented and with what results. Thus, this case study aims

to identify how this developed model can aid stakeholders in dealing with real-life

projects. Their decisions served to clarify the way in which each critical cost

component could be addressed in the model. To validate the model, the interviewees

were requested to answer the following questions based on their project experience

in either the Wallaville Bridge (Case A) or Northam Bypass (Case B) projects:

1. What are the problems arising from the model?

2. How can these problems be addressed?

3. What actions are necessary to improve the model?

Since both case projects were selected for economic evaluation, it is implied that

both cases were rich in data and could provide meaningful data input to the study.

The data collected from the case projects paved the way for the final step of the

research: the development of a decision support model that aids the stakeholders to

improve financial investment decisions for highway infrastructure development.


Correspondingly, recorded interviews from the case studies were transcribed into text

documents using the software package as discussed above. Each interviewee gave

their comments and opinions based on the selected projects. They identified the

related important cost components that needed to be considered in long-term

financial management of highway investment. Each input was analysed using Fuzzy

AHP and life-cycle costing calculations. To ensure the meaningful research

outcomes, these results were discussed with a number of industry stakeholders

involved in the case projects. From this process, as the outcome of the research, a

model for achieving long-term financial decision support with consideration of

sustainability could be developed.


3.4 Ethical Considerations

The ethical considerations of this study involved protecting the rights and welfare of

participants in the questionnaire, semi-structured interview and case study. This

study serves to achieve outcomes that are beneficial to the Australian highway

industry and stakeholders on highway projects in Australia. In doing this, the

research aims to preserve the truthfulness of research, the integrity of the individual

researcher, the reputation of the organisations responsible for research, and the

responsibility of the researcher to both the general community and to specific groups

that have an interest in this research.

This research project followed guidelines provided by the QUT Research Ethics

Committee in line with requirements by the Faculty of Built Environment and

Engineering. This involved the ascertaining of approval and clearance for the

research topic, the data collection methods, the instruments, materials used, the site

and location, the sample population, information required, treatment of data, the

methods of analysis, confidentiality issues, dissemination of information and results,

and intellectual property and copyright issues.

Covering letters were attached to the questionnaires explaining the purpose of the

research, giving assurance of confidentiality, outlining the benefits of the study and

soliciting voluntary participation by the sample population. In addition, optional

consent forms for voluntary participation were provided to the potential interviewees

(see Appendix B2). Each individual and organisation was required to understand and

agree with the terms and conditions before participating in the session. Fulfillment

with other requirements was confirmed in consultation with the individual

participants, and with the guidance and advice of the principal research supervisor.

3.5 Chapter Summary

This chapter presented the relevant methodological issues and described the research

methods employed in this study. Generally, the research procedure followed certain

structural phases. These phases and processes are as shown in Figure 3.3. This study

employs four distinctive data collection methods namely, questionnaires, interviews,


model development and case studies. Each research method was justified to achieve

the research objective before considering the selection of respondents as well as case

projects. Research development and data analysis processes are also clearly defined

in this chapter. All of these form a comprehensive of the results that derived from

data collected in questionnaires, semi-structured interviews and case studies. These

provided a strong platform for the development of a long-term financial decision

support model incorporating sustainability measures in highway projects. Through

comparison with experience in real-life case projects, industry stakeholders can

evaluate and validate the model.

This study collected relevant data through a range of appropriate research methods,

and the extensive results and findings are presented in Chapters 4, 5, 6 and 7. The

next chapter discusses the questionnaire data analysis and findings.

Chapter 4: Cost Implications for Highway Sustainability – Survey Studies 89

CHAPTER 4: COST IMPLICATIONS FOR HIGHWAY SUSTAINABILITY – SURVEY STUDIES

4.1 Introduction

This chapter reports the findings from phase 2 of the research process discussed in

the previous chapter (Section 3.3). It presents the results through the mixed method

strategy that analysed predominantly quantitative data. Phase 2 involved the survey

methods namely questionnaires and semi-structured interviews. The questionnaire

survey was administered as a means of intervention to identify the critical cost

components related to sustainable measures in highway infrastructure investments.

Semi-structured interviews aim to explore the different perceptions and expectations

of various stakeholders regarding the current practice of life-cycle cost analysis with

a view to integrating their expectations into a model that suitable for the long-term

financial management of Australian highway infrastructure. Figure 4.1 shows the

results from both methods that answer the second research question: What are the

specific cost components relating to sustainability measures about which highway

project stakeholders feel most concerned?

This chapter has four main sections. Section 4.2 provides a brief description of the

respondents. Next, Section 4.3 discusses the results and findings obtained through

both methods. This core process is necessary to convert the results into the

development of a decision support model for the evaluation of highway investment.

Section 4.4 provides a summary of the findings in this chapter.

90 Chapter 4: Cost Implications for Highway Sustainability – Survey Studies

3. Developing a decision support model

• Integrating the industry verified cost components with decision support model.

• Testing and evaluating the decision support model

1. Understanding cost implications of pursuing sustainability

• Understanding global initiatives on sustainable infrastructure development

• Understanding the context of highway infrastructure development in Australia

• Reviewing current LCCA model and programs

• Identifying sustainability-related cost components in highway infrastructure projects

What are the sustainability measures that have cost implications in highway projects?

Chapter 2

Literature Review

2. Identifying sustainability-related cost components that project stakeholders concerned with

• Exploring current practice of life cycle cost analysis in Australian highway infrastructure

• Identifying critical sustainability-related cost components in highway infrastructure investments

• Integrating various stakeholders’ expectation of sustainability enhancement in LCCA

What are the specific cost components relating to sustainability measures about which highway project stakeholders feel most concerned?

Chapter 4

Cost Implications for Highway Sustainability

How to access the long-term financial viability of sustainability measures in highway project?

Chapter 5 & 6


Development and Model Application

Chapter Research Objectives Research Questions

Figure 4.1: Purpose of survey in overall research aim


4.2 Profile of Respondents

Research projects take place in contexts that impact on the research and results. This

context includes the sample group characteristics (Fellows and Liu 2008). Having an

understanding and an awareness of the characteristics of the sample population helps

focus the analysis and put the results into perspective. The following sub-sections

discuss the profile of the respondents who participated in the questionnaire survey

and interviews in this study.

4.2.1 Respondents’ profiles - questionnaire survey

The questionnaire survey was administered in June 2009 by an online questionnaire

survey tool. A total of 150 questionnaires were delivered to survey participants with

a cover letter explaining the purpose of the study and providing an assurance of

anonymity. The selection criteria for the participants are based on the requirements

as explained in Section 3.3.2.2. Participants include staff from local authorities and

government officers from the public sectors. Participants from the private sectors

include project managers, engineers, quantity surveyors, planners, contractors and

subcontractors involved in highway projects in Australia. Their expertise in highway

infrastructure development strengthens the validity of the data. They hold positions

at middle and higher management levels. This helps to ensure the credibility of the

data collected. The participants represent more than 70 organisations throughout

Australia selected for their recent involvement in highway development. A good

level of support from stakeholders in the industry led to a response rate of 41%.

Out of the 150 questionnaires sent out, 71 questionnaires were returned including

nine that had not been completed in full. As a result, the useable response rate was

41% (62 questionnaires). Ahuja et al. (2009) and Love and Smith (2003) state that a

response rate of 30% to 40% for a questionnaire survey in the construction industry

can be considered satisfactory. Participants were asked to rate the importance of each

cost component in life-cycle cost considerations in their highway projects. Although

10 pilot studies had been completed prior to the final distribution of the

questionnaires, they are not considered in the questionnaire analysis.


Nearly half of the participants in the survey were working in government agencies,

which reflects the public sector nature of highway development projects. Most

participants have more than 20 years of experience in highway construction. Base on

the type of their organisation, participants were divided into three groups: client

representatives (government agencies); project management and design consultants

(consultants); and construction contractors (contractors), as shown in Figure 4.2. The

majority of participants were involved in highway design and construction activities.

A small number of participants were also involved in maintenance and extension

works for highway infrastructure; others were involved in construction, extension

and maintenance works. Most of the participants were at the project management

level and expressed their interest in sustainability concepts in LCCA practice.

Figure 4.2 summarise the background details of the questionnaire participants. The

representative distribution of the respondents by categories shows that the largest

number was from government agencies and local authorities (53%), and the

remainder were contractors (24%) and consultants (23%). This means the

respondents participated in this study in the ratio of Consultants 1: Contractors 1:

Government Agencies and Local Authorities 2.

Figure 4.2: Categories of respondent in questionnaire survey

53%

24%

23%

Respondents Categories

Government Agencies and Local Authorities

Contractors

Consultants


The participants are all stakeholders in highway projects. Most of them hold

professional positions at middle and higher management levels. They are the

decision makers in highway development, so they have more experiences about the

economic dimension of highway projects. As shown in Table 4.2, almost half of the

participants work in government agencies and most have more than 20 years of

experience in highway projects. This background ensures that they can clearly

understand the questionnaire survey and are able to answer the questions without the

need for further assistance from the researcher.

Table 4.1: Respondents’ roles in highway projects

Project role CR PMC DC CC Total

Highway design and construction 6 11 10 4 31

Highway maintenance 3 3 1 5 12

Highway construction and extension 1 4 1 0 6

Highway construction and maintenance 2 2 0 1 5

Highway construction, extension and maintenance 2 5 0 1 8

Total 14 25 12 11 62

Notes: CR – client representative; PMC – project management consultants; DC – design consultants; CC/S – construction contractors/ specialist

Table 4.2: Respondents’ construction industry experience

Years of experience Category of respondents

Consulting Contractor Government

Agency Total

No. % No. % No. % No. %

1-5 years 2 14 1 7 2 6 5 7

6-10 years 0 0 5 33 4 12 9 15

11-15 years 4 29 1 7 4 12 9 15

16-20 years 5 36 3 20 1 3 9 15

Above 20 years 3 21 5 33 22 67 30 48

Total 14 100 15 100 33 100 62 100

All the participants had experience working in highway projects. It can be seen from

Table 4.1 that the majority of the participants were involved in highway design and

construction activities. A small number of participants were also involved in


maintenance works and extension works for highway infrastructure; others were

involving in construction, extension and maintenance works. Other respondents were

in roles such as client representatives, design consultants and construction

contractors in an equal number of participation.

4.2.2 Respondent’s profiles - semi-structured interview

Thirteen targeted senior practitioners from the highway infrastructure industry in

Australia were interviewed. Specifically, there were eight interviewees from

government departments, two from private companies and three from research or

academic institutions. A majority of these (10, or 77%) held senior to top

management positions and decision-making roles in their respective organisations,

while others (3, or 23%) are senior researchers in this area.

The professions of the respondents are classified into three categories: government

officers (46%); researchers (23%); and consultants (15%) and contractors (15% and

15% respectively). The government officers include managers in selected disciplines

such as asset strategies, asset and network performance and road transport policy and

investment. The researcher category encompasses the professors and senior research

fellows involved in highway infrastructure research. The consultants and contractors

category covers senior civil engineers, builders and network managers involved in

highway design and transportation management.

Meanwhile, since the questionnaire covered several main states in Australia, the

interviews were organised in the city of Sydney, Melbourne, Perth and Brisbane. In

particular, five interviews were conducted in Brisbane and eight were conducted in

regions outside Brisbane. It is noted that 13 rather than 14 interviews were conducted

in total because one of the 14 interviews was conducted with two respondents at the

same time. Prior to the interviews, the interview questions were sent to them by

email for their early perusal and preparation.


4.3 Results and Findings

Chapter 3 described in detail the development process and the data analysis methods

utilised in this research, particularly the rationale for their use. The procedures

involved in their application were presented in that chapter. Here, the results from

their application to the analysis process are presented. The administered

questionnaire survey consisted of four main parts, each with a specific purpose and

utilising a particular ordinal scale. Hence, the approach to analysing the results is

divided into those four parts. The semi-structured interview also consisted of four

main areas. The findings from the analysis of the interview data are framed around

the core and the key cost components that satisfy the aims and objectives of this

study while synthesising the need to address the research questions. Significant

findings from the analysis of the quantitative and qualitative data are highlighted.

The overall interpretation and discussion of these results is carried out later in

Chapter 7, where the data of this study is integrated. However, the results from the

analysis of the questionnaire survey and semi-structured interview are briefly

highlighted in this section to address the research questions, with special attention

given to those that yielded significant values.

4.3.1 Questionnaire survey results and findings

The survey focused on the identification of critical cost components related to

sustainable measures that industry stakeholders believed to be necessary to

incorporate into highway investment decisions. The respondents were asked to

indicate the extent of the importance of statements on a five-point rating scale. The

different stakeholders’ perspectives of the importance of these cost components are

presented in Tables 4.3 to 4.5. The overall rates of the respondents are combined in

Table 4.6 for ease of reference and to facilitate interpretation. The following sections

contain only the salient information to avoid information ‘congestion’ and the use of

many large tables in the main text.


4.3.1.1 Sustainability-related cost components: perspective of consultants

The results are set out in Table 4.3 indicate that the importance level of

sustainability-related cost components according to the consultants are relatively

different compared to other stakeholders. The highest rated costs for consultants are

material costs (mean = 4.57), plant and equipment costs (mean = 4.36) and labour

costs (mean = 4.07) in the agency category. The vehicle operation costs (mean =

3.79), traffic congestion (mean = 3.79) and road accident - economic value of

damage (mean = 3.71) are the highest rated in the social category. The waste

management (mean = 3.93), ground extraction (mean = 3.86), disposal of material

costs (mean = 3.86) and hydrological impacts (mean = 3.86) are rated the highest in

the environmental category.

In the agency category, the results revealed that the consultants were more concerned

with the initial construction costs in highway development. They rated the material,

plant and equipment and labour costs as the highest in importance. Generally, the

consultants focused on the initial costs rather than on the life-cycle benefits for

highway operation and maintenance. Conversely, consultants were not very

interested in the pavement extension and demolition costs in the LCCA for highway

projects. They believed that by the pavements’ end of life, major rehabilitation works

are usually employed to improve the pavement.

In the social category of cost components, vehicle operation costs and traffic

congestion were the top two highly important item among the consultants. They

considered that those costs indirectly influenced the overall cost of a highway

throughout its lifetime. They highlighted that these costs should be taken into

account in LCCA in highway project. These costs are incurred by the road users but

are directly caused and attributable to the presence of a work zone and the

construction activities undertaken by the local governments. Widle et al. (2001) also

highlighted the costs occurred in lost travel time may sometimes exceed the agency’s

construction costs by a substantial amount, particularly in urban areas. The survey

results imply that the consultants were taking into consideration the vehicle operation

costs and traffic congestion in long-term financial decisions.


In the environmental category of cost components, waste management costs were

rated as significant by the consultants. Waste management is an important cost

component in project management. Based on the comments from the consultants,

waste management costs were usually generated during the construction,

maintenance and rehabilitation stages of highway infrastructure. This cost is

significant because engineers take early decisions on design configurations,

construction methods/processes and material specifications. Such decisions have

very significant impacts on the overall highway project cost including the wastes

generated throughout the project life-cycle including its whole life cost. Thus, it is

important to ensure resource optimisation through reuse, recycling and innovation in

terms of materials, construction methods and processes.

Table 4.3: Consultants’ rating of sustainability-related cost components

Sustainability indicators

Sub-cost components Consultants (N =14)

Mean Standard Deviation

Rate

Agency category

Material costs 4.57 0.65 1 Plant and equipment costs 4.36 0.63 2 Labour costs 4.07 0.83 3 Major maintenance costs 4.00 0.96 4 Rehabilitation costs 3.93 1.00 5 Routine maintenance costs 3.86 1.10 6 Dispose asphalt materials costs 3.50 1.02 7 Recycle costs 3.43 1.34 8 Pavement extension costs 2.86 0.95 9 Demolition costs 2.86 1.41 9

Social category Vehicle operation costs 3.79 0.89 1

Traffic congestion 3.79 1.42 1 Road accident- economic value of damage

3.71 0.99 3

Reduce speed through work zone 3.64 1.34 4 Road accident- internal costs 3.64 1.22 5 Resettling cost 3.43 0.94 6 Road accident- external costs 3.43 1.28 6 Reduction of culture heritage 3.29 1.07 8 Negative visual impact 3.29 0.99 8 Community cohesion 3.14 1.35 10 Road tax and insurance 2.86 1.10 11 Property devaluation 2.79 0.70 12

Environmental category

Waste management costs 3.93 1.14 1 Ground extraction costs 3.86 1.10 2 Disposal of material costs 3.86 1.23 3 Hydrological impacts 3.86 0.95 3



Sub-cost components Consultants (N =14)


Rate

CO2 emission 3.79 1.25 5 Land use 3.71 0.99 6 Loss of wetland 3.71 0.91 6 Dust emission 3.71 1.07 8 Soil disturbance 3.64 0.93 9 Extent of tree felling 3.64 0.74 9 Cost of barriers 3.64 0.93 9 Habitat disruption 3.57 0.94 12 Ecological damage 3.50 0.94 13 Air pollution effects on human health 3.29 1.14 14 Environmental degradation 3.21 0.89 15 Rough surface produce more tyre noise 3.21 1.19 15 Fuel consumption 3.07 1.27 17 Vehicle engine acceleration noise 3.07 1.21 18 Energy consumption 2.71 1.20 19 Driver attitudes 2.50 1.40 20

4.3.1.2 Sustainability-related cost components: perspective of contractors

For contractors, the most important cost components are those that threaten their

profit level, with material (mean = 4.50), plant and equipment (mean = 4.19),

rehabilitation (mean = 3.94) and recycling costs (mean = 3.94) rated in importance in

the agency category. The road accident- internal costs (mean = 4.25), traffic

congestion (mean = 4.00) and external costs (mean = 3.88) were rated the most

significant in the social category. The disposal of materials (mean = 4.13), ground

extraction (mean = 4.06) and waste management costs (mean = 4.00) were classified

as critical in the environmental category.

In regards to agency costs, contractors considered rehabilitation activities as the third

main cost component in this category. Rehabilitation activities are important to

ensure the optimisation of the performance of each highway pavement (Chung et al.

2006). Meanwhile, rehabilitation activities usually involve huge amount of costs

throughout the highway life span, so contractors can apply relevant techniques to

rehabilitate the highway infrastructures. Road accident costs are also highly rated by

contractors as they placed these in the top and the third most important rating in the

social category. They reported that highway safety is one of the major concerns in

highway development. Wilde et al. (2001) found that the roadway factors and

conditions directly influence the rates and types of accidents. Relevant rehabilitation


activities are needed to not only improve the pavement quality, but also the highway

safety.

Table 4.4: Contractors’ rating of sustainability-related cost components


Sub-cost components Contractors (N =15)


Rate

Agency category

Material costs 4.50 0.65 1 Plant and equipment costs 4.19 0.91 2 Rehabilitation costs 3.94 1.17 3 Recycle costs 3.94 1.23 3 Labour costs 3.88 1.29 5 Major maintenance costs 3.81 0.91 6 Dispose asphalt materials costs 3.63 1.12 7 Routine maintenance costs 3.44 1.09 8 Pavement extension costs 3.00 1.00 9 Demolition costs 3.00 1.12 9

Social category Road accident- internal costs 4.25 0.97 1

Traffic congestion 4.00 1.18 2 Road accident- external costs 3.88 1.00 3 Road accident- economic value of damage

3.81 1.00 4

Vehicle operation costs 3.75 1.2 5 Reduce speed through work zone 3.56 1.33 6 Resettling cost 3.44 1.09 7 Community cohesion 3.38 0.94 8 Negative visual impact 3.25 0.51 9 Property devaluation 3.06 0.92 10 Reduction of culture heritage 3.06 0.83 10 Road tax and insurance 3.00 1.24 12


Disposal of material costs 4.13 0.97 1 Ground extraction costs 4.06 0.86 2 Waste management costs 4.00 0.97 3 Dust emission 3.94 0.86 4 Energy consumption 3.88 0.39 5 CO2 emission 3.88 1.04 5 Loss of wetland 3.88 0.92 5 Fuel consumption 3.81 0.66 8 Soil disturbance 3.75 0.88 9 Habitat disruption 3.69 0.7 10 Cost of barriers 3.69 0.95 10 Extent of tree felling 3.63 0.97 12 Hydrological impacts 3.63 0.8 12 Air pollution effects on human health 3.56 1.08 14 Rough surface produce more tyre noise 3.5 0.94 15 Ecological damage 3.44 0.85 16 Land use 3.38 0.94 17 Environmental degradation 3.38 0.94 17



Sub-cost components Contractors (N =15)


Rate

Vehicle engine acceleration noise 3.25 0.93 19 Driver attitudes 3.25 1.09 19

4.3.1.3 Sustainability-related cost components: perspective of government

agencies and local authorities

For government agencies and local authorities, the ten costs rated highest in

importance were those in the category of agency costs, namely, material (mean =

4.30), major maintenance (mean = 4.24) and rehabilitation costs (mean = 4.21). In

the social category, road accident costs, namely, internal (mean = 4.45), external

costs (mean = 4.39) and the economic value of damage (mean = 4.00) were rated

highest in the importance. In the environmental category, hydrological impacts

(mean = 4.36), loss of wetland (mean = 4.24) and cost of barriers (mean = 4.21) were

the most important.

In the agency category, the respondents from government agencies and local

authorities rated major maintenance and rehabilitation costs as the second and third

important costs. Due to the limited funds in government allocations, the greatest task

in managing highway infrastructure is the prioritisation of maintenance and repair

expenditure. As highway infrastructures approach the end of their design lives, there

is an increasing demand for new construction, rehabilitation, maintenance and repair

projects to create and/or extend the design life so that the potential for loss of

function or downtime can be minimised. To accomplish the difficult task of efficient

allocation of funds, it is necessary to develop decision support tools to handle the

priorities for these expenditures (Chouinard, Andersen and Torrey Iii 1996).

In the social category of cost components, road accident costs were rated as the

priorities for the respondents in the government agency and local authority group.

Similar to the contractors’ perspective, the respondents in this group are also

concerned about road safety. As mentioned by one of the respondents, the main

reason for highway infrastructure development is to improve the mobility of the

community and the road safety. This statement is supported by the result in


Gregersen et al. (1996) which found that consideration of factors such as wider

pavements can significantly reduce the rate of road accidents.

Table 4.5: Government agencies and local authorities’ rating of sustainability-related

cost components


Sub-cost components

Government Agencies and Local Authorities (N =33)


Rate

Agency category

Material costs 4.30 0.81 1 Major maintenance costs 4.24 0.83 2 Rehabilitation costs 4.21 0.65 3 Plant and equipment costs 4.09 0.77 4 Routine maintenance costs 4.06 1.00 5 Labour costs 3.82 0.77 6 Demolition costs 3.24 1.12 7 Recycle costs 3.21 0.99 8 Pavement extension costs 3.09 1.07 9 Dispose asphalt materials costs 3.00 1.00 10

Social category Road accident- internal costs 4.45 0.79 1

Road accident- economic value of damage

4.39 0.79 2

Road accident- external costs 4.00 1.12 3 Reduction of culture heritage 3.82 1.16 4 Vehicle operation costs 3.67 1.11 5 Resettling cost 3.58 1.30 6 Traffic congestion 3.55 1.23 7 Community cohesion 3.48 1.28 8 Negative visual impact 3.39 1.09 9 Reduce speed through work zone 3.18 1.26 10 Property devaluation 3.12 1.11 11 Road tax and insurance 2.79 1.17 12


Hydrological impacts 4.36 0.82 1 Loss of wetland 4.24 0.83 2 Cost of barriers 4.21 0.96 3 Land use 4.06 0.97 4 Rough surface produce more tyre noise 4.00 1.00 5 Dust emission 4.00 1.12 5 Disposal of material costs 3.97 1.02 7 Habitat disruption 3.97 0.92 8 Environmental degradation 3.88 1.05 9 Ground extraction costs 3.85 0.87 10 Extent of tree felling 3.85 1.00 11 Ecological damage 3.85 1.06 11 Soil disturbance 3.82 0.85 13 Air pollution effects on human health 3.79 1.22 14 CO2 emission 3.73 1.15 15



Sub-cost components

Government Agencies and Local Authorities (N =33)


Rate

Waste management costs 3.70 1.10 16 Vehicle engine acceleration noise 3.52 1.28 17 Fuel consumption 3.33 1.16 18 Energy consumption 3.30 0.95 19 Driver attitudes 3.15 1.30 20

The survey result shows that practitioners in government agencies and local

authorities are most concerned about the highway investment. This is likely to be due

to the reason that they usually are the key drivers in highway development. As shown

in Tables 4.3 to 4.5, the survey results provide a means of identifying overall the cost

components that are critical to highway investment decisions among the three groups

of respondents.

4.3.1.4 Integration of sustainability-related cost components in LCCA studies

Table 4.6 shows the overall rating for the most significant sustainability-related cost

components in highway infrastructure projects. A general observation of the results

in Table 4.6 is that the cost components rated most highly by the respondents tended

to be those that are paramount to their particular business objectives. Based on the

analysis of the results, the ratings of importance in Table 4.6 reveal that the most

important cost components are centred on three major sustainability aspects of

agency, social and environmental issues. The following sections elaborate on these

findings in detail.


Table 4.6: Perceptions of ‘importance level’ of cost components related to sustainable

measures by industry stakeholders


Sub-cost components

Rating All

Consultants Contractors Government

Agencies t-value

Agency category

Material costs 1 1 1 1 *6.9164 Plant and equipment costs

2 2 2 4 *4.1927

Major maintenance costs

3 4 6 2 *2.7426

Rehabilitation costs 3 5 3 3 *2.8057 Labour costs 5 3 5 6 1.0383 Routine maintenance costs

6 6 8 5 0.6685

Recycle costs 7 8 3 8 -2.1226 Dispose asphalt Materials costs

8 7 7 10 -3.3851

Demolition costs 9 9 9 7 -4.1372 Pavement extension costs

10 9 9 9 -5.6353

Social category Road accident- internal costs

1 5 1 1 *3.7016


2 3 4 2 *3.2568

Road accident- external costs

3 6 3 3 0.7091

Vehicle operation costs

4 1 5 5 -0.3318

Traffic congestion 4 1 2 7 -0.2826 Resettling cost 6 6 7 6 -1.4152 Reduction of culture heritage

7 8 10 4 -1.6068

Community cohesion

8 10 8 8 -2.0669

Reduce speed through work zone

9 4 6 10 -2.3109

Negative visual impact

10 8 9 9 -3.0861

Property devaluation

11 12 10 11 -5.7471

Road tax and insurance

12 11 12 12 -6.1330


Hydrological impacts

1 3 12 1 *2.9528

Loss of wetland 2 6 5 2 *2.6843 Disposal of material costs

3 3 1 7 *1.8748

Cost of barriers 4 9 10 3 *1.8670 Dust emission 5 8 4 5 1.4248 Ground extraction 6 2 2 10 1.4550



Sub-cost components

Rating All

Consultants Contractors Government

Agencies t-value

costs Waste management costs

7 1 3 16 0.6501

Land use 7 6 17 4 0.7231 Habitat disruption 7 12 10 8 0.8053 Soil disturbance 10 9 9 13 0.3620 CO2 emission 10 5 5 15 0.2763 Extent of tree felling

12 9 12 11 0.1693

Rough surface produce more tyre noise

13 15 15 5 -0.1472

Ecological damage 14 13 16 11 -0.4772 Environmental degradation

15 15 17 9 -0.9264

Air pollution effects on human health

15 14 14 14 -0.8076

Fuel consumption 17 17 8 18 -2.4828 Vehicle engine acceleration noise

18 18 19 17 -2.5144

Energy consumption

19 19 5 19 -3.3523

Driver attitudes 20 20 19 20 -4.2399 Note: * = t-value which is higher than the cut off t-value (1.6710) indicating the significance of the

indicators.

a. Agency category

Agency costs consist of all costs generated by the highway agencies’ activities over

the overlay system lifetime. These typically include construction and preservation

costs such as material costs, plant and equipment costs and labour costs. As

highlighted by the participants, material costs (mean = 4.40) and plant and equipment

costs (mean = 4.16) are the most important cost categories rated by the stakeholders.

This finding is consistent with the dominant view in the literature (Ugwu et al. 2005;

Singh and Tiong 2005; Tighe 2001). These costs are selected because of the huge

amount of capital needed to address the aspects of concern during the construction

stage.

The survey participants also reported that major maintenance costs and rehabilitation

costs (mean = 4.06) are the third most important in highway investment. They


explained that rehabilitation activities are important to preserve the effectiveness of

transportation, safety of road users and economic development. As stated by Rouse

and Chiu (2008), the quality of roads deteriorates over time. Hence, proper

maintenance of a highway system is necessary to maintain its serviceability and

structural reliability. Since highways have a long-term life span, maintenance

activities need to be considered from a life-cycle perspective. An optimal balance

between benefits and costs is crucial to achieving long-term financial viability while

ensuring the best service to road users.

Some factors are more important than others according to different stakeholders. For

example, pavement recycling costs were rated as the third most important cost

according to contractors. According to Widyatmoko (2008), recycled materials are

more cost effective compared to conventional materials. Recycled materials also

provide similar performance to pavement. Thus, contractors are increasingly

concerned with sustainable development, place an emphasis on material conservation

and re-use such as the recycling of pavement during highway maintenance and

rehabilitation activities.

b. Social category

Road accident cost components have emerged as the most important theme in the

category of social aspects. These costs refer to the economic value of damages (mean

= 4.10) caused by vehicle crashes, which includes internal costs (those incurred due

to damages and risks to the individual travelling in a particular vehicle), and external

costs (such as uncompensated damages and risks imposed by an individual on other

people) (Partheeban, Arunbabu and Hemamalini 2008). Road accident costs -

internal (mean = 4.23) were rated as the most important criteria because highway

safety is becoming a main priority. Highway construction needs to improve general

access for the community while highway upgrades, maintenance and rehabilitation

also help in improving road safety for users. Often decisions regarding highway

design selection are based not only on the development of the financial budget, but

also on the design safety for road users. Thus, road accident costs are a primary

concern in the social aspects of LCC analysis for highway projects.


Traffic congestion (mean = 4.00, 3.79) receives a high importance rating among

social category by the contractors and consultants. Heavy traffic tends to degrade the

public realm (public spaces where people naturally interact) and in other ways

reduces community cohesion (Litman 2007). Highway traffic certainly involves

traffic delay costs to users who have been mathematically modeled and evaluated

based on simplifying assumptions (Jiang and Adeli 2003). Respondents comment

that the design and construction of highway infrastructure are critical because of the

natural increase and interstate migration that influence the growth of traffic in are

such as South East Queensland. This situation puts significant pressure on highway


Nevertheless, due to increasing usage of highway infrastructure, renewal works are

needed for highway infrastructure at some points in time. Surplus funds may be

needed to ensure that renewal or extension works take place during the highway life

span. It is a challenge for the stakeholders to optimise the desired service levels while

minimising life-cycle costs for highway infrastructure.

c. Environmental category

Highway systems produce a mixture of impacts on the environment, and costs

involved in environmental issues also vary depending on the situation and the nature

of the project (Surahyo and El-Diraby 2009). Water pollution, such as hydrological

impacts (mean = 4.36), and loss of wetland (mean = 4.24), are rated as the most

important costs by the participants in government agencies and local authorities.

They highlighted that these impacts impose various costs including those related to

polluted surfaces and groundwater, contaminated drinking water, increased flooding

and flood control costs, loss of unique natural features, and aesthetic losses.

Quantifying these costs is challenging. It is difficult to determine how many motor

vehicles contribute to water pollution problems since impacts are diffuse and

cumulative.

Ground extraction costs, disposal of material costs, and waste management costs are

the top three environmental cost components rated as significant by the contractors

and consultants in managing highway infrastructure. Solid waste is usually generated


during the construction, maintenance and rehabilitation stages of highway

infrastructure. This waste imposes a variety of environmental, human health,

aesthetic, and financial costs. Some legislation and policies are designed to ensure

that the disposal of materials is properly managed (Hao, Hills and Huang 2007).

Therefore, legislation makes it mandatory for the stakeholder to prepare a relevant

budget for managing the disposal of solid waste.

The survey respondents highlighted that construction and demolition waste

management activities exist through the whole life-cycle of a construction project

from the initial design until demolition, which is consistent with the viewpoint in the

literature (Shen et al. 2005). Planning for waste management is a process that

involves many complex interactions such as transportation systems, land use, public

health considerations and interdependencies in the system such as disposal and

collection methods.

4.3.2 Summary of the questionnaire survey results and suggestions

The results of the questionnaire survey revealed three themes that can be outlined as

following:

1. There are similarities and differences between industry stakeholders

regarding the importance of sustainability-related cost components.

• The perception between the consultants and contractors are relatively

similar. (e.g. material, plant and equipment costs are classified as the

top main cost components in highway investment).

• Some differences of the importance level of cost components were

found between the groups of stakeholders (e.g. the government

agencies and local authorities have slightly differing opinions

compared to other groups as they are the main investors in public

highway infrastructure).

• Different organisations have their own goals and needs.

Organisational differences affect the consideration of these cost

components in highway investment decisions.


2. The sustainability-related cost components in highway investment are

important.

• Most of the survey participants agreed that sustainability-related cost

components are vital in highway investment decisions.

• The consideration of these costs is essential and must be integrated

into LCCA for highway investment decisions.

3. The results on critical cost components are indicated by the t-value which is

higher than the cut-off t-value (1.6710) offering supporting evidence for the

importance of cost components related to sustainable measures in highway

infrastructure investments. These top ten rated cost components were

identified and validated by industry stakeholders as shown in Table 4.7.

Table 4.7: Industry validated sustainability-related cost components in highway

infrastructure

Sustainability Criteria Main Cost Components

Agency category

Material costs Plant and equipment costs Major maintenance costs

Rehabilitation costs

Social category Road accident- internal costs



Hydrological impacts Loss of wetland

Disposal of material costs Cost of barriers

The revelation of cost components as shown in Table 4.7 have achieved one of the

sub-objectives, which is to identify the cost components that are significant in

highway infrastructure investment. The results from the questionnaire survey also

raised a number of issues extending the quantitative data. These issues generated the

following questions.

• What is the current industry practice in applying LCCA?

• What are the ways to quantify cost components related to sustainable

measures in highway investments?


• What are the challenges of integrating these cost components into LCCA

practice?

• What are the actions needed to enhance sustainability in LCCA practice?

These questions influence the identification of the critical cost components related to

sustainable measures in highway infrastructure investments. They helped shape the

semi-structured interview of this study covered in next section.

4.3.3 Semi-structured interview results and findings

The current construction industry faces many challenges of integrating cost

components related to sustainable measures in LCCA for highway infrastructure, as

indicated by the comments from participants in the questionnaire survey and in the

literature. These issues might be due to the current industry practices and the ways of

quantifying these costs. Prior to the analyses of the feedback on these potential

issues, the interviewees’ perspective and comments on current industry practice on

LCCA and the ways to deal with these cost components are studied to determine the

reality of industry experience.

This section reports on the results and findings of the second part of the survey. It

demonstrates the in-depth understanding of these cost components through the semi-

structured interviews with a number of construction industry practitioners and

researchers. The following sections are organised as follows. Section 4.3.3.1 begins

with the identification of current industry practice in applying LCCA. This is

followed by an overview of the ways of quantifying sustainability-related cost

components in section 4.3.3.2. Section 4.3.3.3 discusses the challenges of integrating

cost components related to sustainable measures. Finally, Section 4.3.3.4 presents the

interviewees’ suggestions for enhancing sustainability in LCCA practice.

4.3.3.1. Current industry practice of LCCA application

In order to identify the current industry practice of applying LCCA for highway

infrastructure projects, six main questions were presented to the interviewees as

shown in Table 4.8.


Table 4.8: Questions to identify current industry practice of LCCA

No. Question

1 Does your organisation currently apply LCCA in determining pavement type for highway infrastructure?

2 Does you organisation plan to utilise LCCA in determining pavement type for highway projects in future?

3 How long do you think is relevant for the analysis period of LCCA?

4 What discount rate do you utilise?

5 Please list the highway maintenance treatments that you will consider in LCCA evaluation and at which year(s) during the analysis period do you assume they will occur: (i.e. fog sealing @ year 6, milling with overlay @ year 12, etc.).

6 Based on the current practice or your experience, what are the types of data (Historical and Theoretical Data) are used to determine the type and frequency of the highway maintenance treatments?

For Question 1, the current utilisation of LCCA in determining pavement type for

highway infrastructure is summarised in Figure 4.2. Almost 62% of the interviewees

reported that their organisations utilise LCCA practice in highway infrastructure

project. They highlighted that new major highway projects usually applied LCCA in

practice. In a typical example, one respondent stated that:-

“Yes, LCCA usually applied for major highway infrastructure projects.”

Figure 4.3: Respondents’ utilisation of LCCA in highway projects

Yes; 62%

No; 38%


However, 38 % of the respondents reported that they did not apply LCCA in their

highway projects due to the fact that they deal with maintenance and upgrading

works in the regional areas. It is understandable that only recent large highway

infrastructure projects would apply LCCA. These respondents did, however, mention

about the utilisation of benefit cost analysis in their highway planning in regional

level.

Question 2 examined the future plans of the agency to apply LCCA in determining

highway infrastructure projects. All the respondents highlighted that they planned to

utilise LCCA in highway infrastructure development. They also stated that there is a

need to do so because there are too many uncertainties occuring in highway

infrastructure development. Government agencies face challenges to ensure

sufficient funds are spent on renewing highway infrastructure so that related services

are delivered economically and sustainably to meet the needs of the community into

the future. This position is also supported by Chan et al. (2008) who highlighted that

effective highway investment has become crucial as highway funding continues to

fall short of infrastructure needs. Therefore, the interviewees agreed that LCCA is a

useful tool to assist them to adopt robust and transparent methods to evaluate and

rate projects to ensure that renewal and new highway projects are prioritised

objectively.

Highway infrastructure typically has a long-term life span, and is usually designed to

a life-cycle period of 50 years (Gerbrandt and Berthelot 2007). In life-cycle cost

assessment, the analysis period depends on the nature of the project. Some studies

stated that 20 to 30 years analysis periods are necessary for pavement (Haas and

Kazmierowski 1997) while others suggest an analysis period of more than 35 years

to include at least one major rehabilitation event for each alternative being

considered (Walls Iii and Smith 1998). In this study, interviewees were asked about

the relevant analysis period of LCCA for highway infrastructure (Question 3). Based

on their experience and knowledge, the relevant periods of LCCA analysis are in the

range of 30-50 years depending on pavement types and conditions as shown in Table

4.9.


Table 4.9: Relevant analysis period of LCCA

Question 3

How long do you think is relevant for the analysis period of LCCA?

Interviewee Annotation

H1, H2, H4,

H12, and H13

Usually for highway pavement, we take into account relevant analysis period of 30 years.

H3, H5, H6,

H7 and H8

Highway pavement maybe in the range of 30-40 years, however for bridges, it can last for 50 years or more.

H9, H10 40-50 years depend on types of highway infrastructure.

The discount rate is another concern in LCCA calculation as the discount rate may

significantly influence the overall cost in the long term. In Question 4, interviewees

were asked to explain the employment of discount rates in LCCA calculation in

practice. The discount rate is one of the variables necessary to calculate net present

value (NPV). It is used to reduce future expected expenditures to present day terms

and is one of the most controversial variables in the NPV equation (Tighe 1999). The

discount rate (true interest rate) is determined using the inflation rate (annual

compound rate of increase in the cost of pavement construction) and the interest rate

associated for the agency borrowing money (market interest rate). The discount rate

should also reflect historical trends over long periods of time. Historically, nominal

discount rates over an extended period of time have been 3 to 4 percent (Kerr and

Ryan 1987).

A typical response is that:-

“In Australia, values of up to 10 percent have been used, but a range of 4 to 8

percent is more common.” (H5)

Meanwhile, interviewees H10 and H13 stated that:

“We recommended that constant dollars and real discount rates be used.”( H10,

H13)


The use of real discount rates eliminates the need to estimate and include the

premiums for both cost and discount rates. Real discount rates are recommended

over nominal discount rates (inflation) because they reflect the true value of money

over time with no inflation premiums and should be used in conjunction with non-

inflated dollar cost estimates. The analysis period is the length of time selected for

the life-cycle cost, and it should not extend beyond the period of reliable forecasts.

At the discount rate used by most agencies (generally ranging from 4% to 8%), any

expenditures or benefits in the order of 30 years or more represent a small present

worth value (Haas, Tighe and Falls 2006).

Table 4.10: Maintenance treatments of highway infrastructure

Question 5

Please list the highway maintenance treatments that you will consider in LCCA evaluation

and at which year(s) during the analysis period do you assume they will occur: (i.e. fog

sealing @ year 6, milling with overlay @ year 12, etc.).

Interviewee Annotation

H1, H9, H11 “Every year we allocate $2000 every kilometer for day to day maintenance and routine maintenance. Maintain road sign…. Including day to day activities.” (H1)

“Again, after 5 years, we have all seal roads here, aggregate sealing. Every 5 years sealing, 10mm aggregate sealing. We need to allocate money for that. After 20 years, we need to rehabilitate the highway pavement. We usually design the pavement for 20 years life span. When 20 years, we believe pavement crack, determinate, we need to plan for major rehabilitation, add more gravel and compact and double sealing but after 20 years.” (H9)

“Usually, current available budget for maintenance from states government is not enough because of the more than expected vehicles which may reduce the quality of the pavement. For example more vehicles and other industrial vehicles may significantly reduce the pavement quality and significantly increase the maintenance cycle.” (H11)

H2, H8 “… we would normally reseal the pavement 10-14 years but some are earlier than others depend on the conditions.” (H2)

“...maintenance for asphalt pavements and intersection would be 15-20 years …” (H8)

H3 “Is done with BCR [Benefit Cost Ratio] for overlays and pavement at the same time, sealing was at 7 years and is pushed out pending funding.” (H3)

H4, H7 “The principle seems to be that the number of treatment needed. In that life-cycle of highway infrastructure, for example for 40 years life, 8 years


fog sealing.” (H4)

“The resurfacing program which was automatically topping up for improving, for example 6 years or 8 years or 12 years. You simply see the number of treatment in that period, you are looking at both material and construction cost also the risk and the interruption of heavy load traffics in certain areas.”(H7)

H5 “It depends on the projects and the nature of the environment,” (H5)

Table 4.10 shows the maintenance treatments that are undertaken by highway

industry stakeholders in practice. From their feedback, maintenance costs can be

categorised as routine maintenance and major maintenance. Routine maintenance

includes relatively inexpensive activities such as filling potholes and performing

drainage improvements. These treatments have a service life of 1 to 4 years (Haas

and Kazmierowski 1997). Major maintenance is more substantial and is usually

associated with structure or surface improvement such as patching or microsurfacing.

These treatments have an expected service life of 5 to 10 years (Haas, Tighe and

Falls 2006; Haas and Kazmierowski 1997). It is recommended that only major

maintenance be included in the LCCA because routine activities tend to be consistent

across pavement design types.

Question 6 investigates the types of data (Historical and Theoretical Data) are used in

current industry to determine the type and frequency of the highway maintenance

treatments. The results of this question are summarised in Figure 4.4.


Figure 4.4: Types of data utilised by respondents in highway treatments

Almost 69% of the interviewees reported that their organisations utilise both

historical and theoretical data in evaluation of highway maintenance treatments. As

some of the interviewees highlighted, in planning highway maintenance, general

principles and theoretical principles are important in planning the type and frequency

of the highway maintenance treatment.

A typical example came from interviewee H12 who stated that:-

“We actually applied are based on local data and also experience whether those

theoretical numbers should be adjusted in reality. Based on theoretical principles,

we do need to undertake major maintenance for pavement around 8-12 years.

Sometimes, the engineers who in charge in the region will consider other factors

such as the traffic condition and weather conditions that may reduce the

performance in a shorter period. As a result, the experiences turn out to be the great

reference in managing highway maintenance treatment.”(H12)

Another example is from interviewee, H5 who stated that:

“It is a bit of both. In the sense of theoretical data, for example, when we built

certain highway, we are expected certain maintenance and certain rehabilitation

activities throughout the phase, we would use theoretical such as we use program or

model. However, it depends on the situation and the condition of the pavement. If let

69%

31% Theoretical and Historical Data

Historical Data


say in theoretical, we need to reseal this road after 7 years but due to the pavement

conditions, it needs to be reseal in 3 years, so certain adjustment is important.

Overall, the use of theoretical is to have a broad understanding; however, historical

data is more applicable in practice.”(H5)

On the other hand, 31% of the interviewees highlighted that they only use historical

data as the priority. They adopted the historical data as their guide to planning the

maintenance treatment and reported that this is because the historical data are

statewide averages and are well documented in their organisations.

It can be concluded that in highway infrastructure management, both historical and

theoretical data are important for stakeholders in managing the highway maintenance

treatment. This is consistent with the result from Ugwu et al. (2005) stating that the

recurrent highway maintenance treatments are often computed using historical cost

data and unit rates that are determined by theoretical principles such as the highway

features (e.g., running surface of vehicular structure, pedestrian structure, roadside

slope and noise barrier).

Based on the overall results for Questions 1 to 6, it can be concluded that long-term

financial management is important in highway infrastructure management. Although

some of the regions apply LCCA and some regions apply BCA, the stakeholders

have some general understanding of the details of each application and details of life-

cycle cost assessment. Their opinions have direct connection to their profession and

organisation. However, they do agree that the incorporation of sustainability

concepts into long-term financial management is important to deal with highway

investment in the future. It is essential to improve current calculation methods in

dealing with sustainability-related cost components. The following sections provide

more details on how the industry currently deals with these cost components in

highway infrastructure.


4.3.3.2. Ways to quantify cost related to sustainable measures

Question 7 examined that the future plans of the respondent’s agency to take

sustainability-related cost components into consideration in highway infrastructure

projects. All the respondents reported that they do not consider it at the moment but

they are on the way to working on it. They stated that there is a need to do so because

of uncertainties, environmental pressures, and limited funding from governments to

preserve the infrastructure in the long run.

Typical examples are from interviewees, H7, H10, H13 who stated that:

“Sustainability is also about sustaining the highway infrastructure networks and

dollars is an important part of it.” (H7)

“We don't do at the moment but in future we hope to. Right now not every project is

considering social and environmental issues.” (H10)

“We do need strategy level but not every project. Some can quantitative can be

difficult to quantitative comparison for environmental assessment methods based on

Austroad’s guideline. We don't do quantitative on environmental cost right now.”

(H13)

Based on these statements, we can see that the industry stakeholders plan to integrate

sustainability costs and issues into highway infrastructure investment consideration.

Due to the lack of quantitative methods to transfer social and environmental issues

into real costs, industry stakeholders are hindered in their intentions to integrate these

issues into current LCCA practice. Table 4.11 outlines current industry practice

regarding their routines to integrate and quantify several costs related to sustainable

measures in LCCA practice for highway projects.


Table 4.11: Ways to quantify cost related to sustainable measures

Question 7.1

And if so, please briefly explain how agency cost is determined and calculated based on the

list below.

Agency cost categories Annotations

Initial construction costs Yes from all the interviewees

“Initial Construction done on model estimation.” (H3)

“…We probably use unit rates to try to work on…” (H5) Maintenance costs Yes from all the interviewees

“Maintenance Costs off historical data.” (H4) Pavement upgrading

costs

Yes from all the interviewees

“Pavement Upgrading costs off historical data.” (H4) Pavement end-of-life

costs

50%Yes and 50% No from interviewees

“We don't take into account recycling. It all depending on the current situation.” (H11)

“End-of-life, would be considered but it probably small cost as it discounted for 50-60 years, it turn out to be smaller costs based on future cost.” (H5)

Question 7.2

And if so, please briefly explain how social cost is determined and calculated based on the

list below.

Social cost categories Annotations

Vehicle operating costs “We use external factors if they have been published such as travel time delay, we have a standard way to calculate those cost but we have not a standard which published.” (H10)

“We used guidelines from the Austroads to quantify the Vehicle Operating costs.” (H4)

Travel delay costs

Social impact influence 23% Yes and 77% No from interviewees.

“We do part of it. We don’t do for we do need to have some social factors. We do it on much larger and strategitic projects.” (H1)

“Some of establish priority but sometime it depend on convert into value level.” (H2)

Accident cost “We do have factors like safety and do consider road safety as a part of evaluation.”(H11 and H13)


Question 7.3

And if so, please briefly explain how environmental cost is determined and calculated based

on the list below.

Solid waste

generation cost

46 % Yes and 54% No from interviewees

“We consider these costs in the construction stage which involve waste management.”H10

“Environmental Impact assessments is part of our environmental evaluation process that we need to consider before construction activities” H4

“Part of the construction cost, which link together. Pollution implication, that's we reference the Austroads requirement.” H3

Pollution

damage by

agency

activities

Resource

consumption No from all the interviewees

Noise pollution 15% Yes and 50% No from the interviewees.

Noise pollution, could be referencing Austroad, we just based on guidelines from Austroads which they really take into account certain environmental factors. (H11)

It is consider as an external costs which we usually make it as a wrap up cost. (H12)

Air pollution

Water pollution

The feedback from the interviewees indicates that in terms of agency cost categories,

they are able to quantify these costs based on the existing models and programs.

Meanwhile, they also use historical data as a guideline in dealing with these costs.

The social and environmental costs are still not very clear in the estimation methods.

Some of the interviewees mentioned that they use a wrap up cost, some mentioned

using the environmental impact assessment as their guideline, and some mentioned

that it is very hard to convert each of the components into real costs money. From all

of these responses, it can be concluded that the current industry lacks knowledge and

methods to deal with the social and environmental costs in highway infrastructure. In

the following section, the limitations of integrating sustainability-related cost

components into LCCA are further discussed.


4.3.3.3. Challenges in integrating costs related to sustainable measures into

LCCA practice

Despite the existence of models and guidelines that are able to calculate agency costs

in highway infrastructure, there are still challenges in integrating costs related to

sustainable measures into real cost value. Table 4.12 outlines the major clarifications

provided by the various stakeholders on the challenges to emphasising costs related

to sustainable measures into LCCA practice for highway project.

Table 4.12: Challenges to integrating costs related to sustainable measures into LCCA

Question 9

What are the difficulties to emphasise sustainability-related cost components in LCCA

practice for highway infrastructure project?

Interviewee Annotations

H11 and H6 “Obvious limitation is a way to quantify and compare the social and environmental cost options depend on different design options, we are working to plug the hole on this.” (H11)

“Limitation comes to the quality of assumption and the quality of data. We need to use knowledge and experience.” (H6)

H1, H7, H9 and

H12

“Economical value is still very limitation on determine and measurable and a lot we are not too sure.” (H1)

“Yes, not everything can be quantified into real dollar.” (H7)

“We can quantify to a cost, green house components for pavement options can be quantified into ton for CO2, sometime, like other sustainability cost such as water quality, and sometimes it is hard to value.” (H12)

“Sometimes, we are looking on the willingness to pay and clean up options, that doesn't really reflect environmental value, but it's comes out into economic and we don't know what they going to be able to know what is the long- term effect to the environment.”(H9)

H3 “Information can be used in a certain point in time and this could significantly change with vehicle usage/population growth in a later period.” (H3)

H5 “Sustainability is something that we are conscious of but it is very difficult to put a dollar figure around. We mostly consider the sustainability factors and impacts based on our experience.” (H5)


The feedback from the interviewees as summarised in the table reveals that there are

two main domains identified which contribute to the different challenges to

emphasise sustainability-related cost components into LCCA practice. They are:

The omission of social and environmental costs in LCCA: This omission is caused

by the difficulty of putting a dollar figure on each factors, the difficulty of

quantifying social and environmental related costs and unclear impacts on the social

and environmental issues.

Uncertainty environment: Uncertainty is caused by the lack of data in these areas;

especially in identifying real cost values for the sustainability-related cost

components, the assumptions needed in calculating and identifying these cost

components, uncertainties of the future social and environmental impacts caused by

highway infrastructure development, dynamic changes in the environment, the lack

of techniques or models in evaluation sustainability-related costs, and changes in the

government policies and guidelines.

Based on the overall results highlighted in this section, it can be concluded that there

are challenges in applying sustainability concepts in long-term financial

management. Although some efforts have been done to consider sustainability

impacts on the highway infrastructure, the stakeholders report that more work needs

to be done to deal with this uncertainty and also to improve the decision making

process in highway investments. The following sections discuss in more detail the

suggestions from industry stakeholders about how to enhance sustainability-related

considerations in LCCA for highway infrastructure projects.

4.3.3.4. Suggestions for enhancing sustainability in LCCA practice

Based on the results outlined in the previous section, it is concluded that there are

many challenges in enhancing sustainability in LCCA practice. The industry

stakeholders do believe that improvements can be made in current LCCA practice.

Table 4.13 outlines the suggestions made by the various stakeholders about how to

enhance sustainability in LCCA practice for highway projects.


Table 4.13: Stakeholders’ suggestions for enhancing sustainability in LCCA

Question 10

What is your suggestion to improve the measurement methods of social and environmental

costs and to enhance sustainability in LCCA for highway projects?

Interviewee Annotations

H3 “Full costs can’t be accurately determined, public survey may assist with

attaining some information.” (H3)

H5 “Not everything can be quantified; the use of multi-criteria evaluation

methods may help in considering social and environmental impacts in

highway projects.” (H5)

H7 “Even though it is hard to put all these factors into real dollar, our

experience and knowledge may also significantly contribute to the

enhancement of sustainability.” (H7)

H8 “…Engineering input is still a valuable part of the process…” (H8)

H11 “It would be good if we got our initial estimate and it was our plan to

develop a database that stores the initial estimated and the quality

impact. We have a sort of data. Resources to check back the assumption.”

(H11)

H12 “It is really hard and we just based on experience, we rely on people with

experience and we are model driven, and we still need expert input to

improve on it.” (H12)

The feedback from the interviewees indicates that there are still areas for

improvement in current long-term financial management. In order to employ

sustainability in long-term financial management, there is a need for tools that are

not only able to evaluate real cost data but also able to evaluate the importance of

sustainability-related issues and impacts on the highway infrastructure investment

decisions.


4.3.4 Summary of semi-structured interview results and suggestions

The results and findings of the semi-structured interviews can be summarised as four

themes as follows:

1. The overall scenario of current highway industry in LCCA application.

• Understanding of the LCCA concept is still evolving and the

stakeholders have some general ideas of this concept but little

assistance is done in current industry practice.

• LCCA is usually only applied in large and new highway infrastructure

projects.

• The current industry is actively promoting the application of LCCA in

enhancing long-term financial management in highway infrastructure.

2. The ways to quantify sustainability-related cost components in highway

investment.

• The organisations employed existing models and software in

quantifying the agency-related cost components (e.g. the application

of Highway Design and Maintenance standard model Version 4

(HDM4) to quantify costs associated with construction and

maintenance activities.)

• There is a lack of standard calculation methods for social- and

environmental-related cost components. The current industry faced

some issues in quantifying these cost components.

- There are no published models and calculation methods in

dealing with these cost components.

- These costs are difficult to convert into real dollar value.

- These costs are classified as external costs or wrap up costs.

(e.g. Waste management costs are part of the construction

costs).

3. The challenges to integrate sustainability-related cost components into LCCA

practice.


• There are limitation in the methods and models in quantifying cost

components related to sustainable measures.

• There is a poor quality of assumptions and data in dealing with these

costs.

• It is difficult to examine the long-term effects and costs associated to

with communities and environments.

4. The suggestions to enhance sustainability in LCCA practice.

• The application of multi-criteria evaluation methods may help in

considering social and environmental effects in highway infrastructure

projects.

• Industry experience and knowledge may significantly contribute to

the enhancement of sustainability in LCCA.

• There is a need to improve the existing models to cope with industry

highway projects.

• There is a need of tools to improve the financial decision-making

process in highway investments.

Thus, this section has achieved another two sub-objectives, which are to explore the

different perceptions of various stakeholders regarding the LCCA practice and to

explore the industry expectation about enhancing sustainability for life-cycle cost

analysis in Australian highway infrastructure.

4.4 Chapter Summary

This chapter reported the findings from phase 2 of the research process that involved

two survey methods. The findings from both the questionnaire survey and semi-

structured interview answered the second research question: What are the specific

cost components relating to sustainable measures about which highway project

stakeholders feel most concerned?

The conclusions drawn from the questionnaire survey and semi-structured interview

results have verified the findings from the literature. Their comparison is illustrated

in four relevant subjects as shown in Table 4.14.


Table 4.14: Comparison of the survey results with literature findings

Research Objective Relevant Subjects Literature Findings Survey Findings

To identify the critical cost components

related to sustainable measures in highway

infrastructure investments.

Industry status and LCCA application in highway infrastructure

• Existing studies has highlighted several LCCA models and programs for highway infrastructure

• LCCA concepts are evolving in highway infrastructure industry

• Different environments and problems associated with highway infrastructure projects

The scenario is based on the Australian highway industry:

• Applied in large and new highway infrastructure development

• Promoting LCCA application in highway infrastructure

• Understanding of the LCCA concept is still evolving

Critical sustainability-related cost components in highway infrastructure

• Literature review has identified 42 cost components related to sustainable measures in highway projects

The questionnaire surveys indicate the following result:

• Ten critical cost components related to sustainable measures in highway infrastructure investments

Challenges of integrating sustainability-related cost components in LCCA

• Social and environmental costs are considered as the external costs

• Unclear boundaries in considering sustainability-related costs (e.g. some researchers focus on the global impacts of sustainability in highway projects)

The interviews indicates the following results.

• Limitation in the methods and models in dealing with cost components related to sustainable measures.

• Lack of quality assumptions and data to deal with these costs

• Employ multi-criteria evaluation methods in analysis of sustainability-related cost components

• Need to improve the existing models

The needs for the decision support models to assist in highway investment decisions

• There are still limitations in the current LCCA model that emphasises sustainability.

126 Chapter 5: A Decision Support Model for Evaluating Highway Infrastructure Projects Investment

From the comparison as set out in Table 4.14, the questionnaire survey has verified

the critical cost components related to sustainable measures in highway

infrastructure. The semi-structured interview has identified the challenges to improve

long-term financial decisions in the current industry. All these results and findings

guide the researcher to the next stage of the research work. This involves the

development of a decision support model to assist the stakeholders in dealing with

highway investment decisions. Chapters 5 and 6 will introduce and present the

decision support model and present a case study for in-depth application and

verification.

Chapter 5: A Decision Support Model for Evaluating Highway Investment 127

CHAPTER 5: A DECISION SUPPORT MODEL FOR EVALUATING HIGHWAY INVESTMENT

5.1 Introduction

This chapter reports the process of model development in detail. It presents a series

of Fuzzy Analytical Hierarchy Process (Fuzzy AHP) and Life-cycle cost analysis

(LCCA) evaluation methods in dealing with the sustainability-related cost

components validated by industry stakeholders. The findings of the questionnaire

survey in Chapter 4 identified the ten most critical cost components in highway

investment. The semi-structured interview results also identified the industry

challenges and suggestions to integrate of sustainability concepts in LCCA practice.

As a baseline of this study, the analysis of the survey indicates the need to develop a

decision support model in dealing with the long-term financial decisions in highway

projects. Figure 5.1 illustrates that the findings from the survey serve as the platform

for the development of decision support model.

This chapter discussed work that has achieved one of the purposes in the third

objective, which is to apply the industry verified cost components and identified the

industry challenges and suggestions of integration of sustainability concepts to

develop a decision support model. The links between the research objectives,

research questions and the development of the model are set out in Figure 5.2. The

model development considered three essential requirements. Firstly, the model

should be applicable regardless of the project size and type. Secondly, the modelling

result should be convincing in order to enable practitioners to adopt a final decision,

which is selecting the most sustainable project alternative. Thirdly, the model should

effectively assess the ten sustainability-related cost components in the early stage of

the project development. The overall concept of the model is intended to be tested

and evaluated in real case scenarios in which multiple alternatives are proposed.

128 Chapter 5: A Decision Support Model for Evaluating Highway Investment

This chapter has seven sections. Section 5.2 provides a brief description of the model

structure and application. Next, Section 5.3 discusses the assessment procedure of

the Fuzzy AHP method. This is followed by Section 5.4, which explores the

application of LCCA in highway infrastructure and assessment procedures. Section

5.5 then discusses the final decision process that includes the combinations of the

weighted values for both the Fuzzy AHP and LCCA assessment. Finally, Section 5.6

explains the sensitivity analysis for the proposed model. Finally, Section 5.7

discusses the model validation process, and Section 5.8 provides a summary of this

chapter.

Industry Challenges

Industry Suggestions

Agency Category • Material costs • Plant and equipment costs • Major maintenance costs • Rehabilitation costs

Social Category • Road accident - internal costs • Road accident- economic

value of damage

Environmental Category • Hydrology impacts • Loss of wetland • Disposal of material costs • Cost of barriers

Industry Validated Sustainability Related Cost Components

Development of a decision support model for dealing with long-term financial decisions in highway projects

Figure 5.1: Integration of survey findings with model development



• Integrating the industry verified cost components with decision support model



• Understanding the global initiatives on sustainable infrastructure development


• Reviewing current LCCA models and programs

• Identifying sustainability-related cost components in highway infrastructure projects


Chapter 2

Literature Review

3. Identifying sustainability-related cost components that project stakeholders are concerned about:

• Exploring current practice of life cycle cost analysis in Australian highway infrastructure


• Integrating various stakeholders’ expectations of sustainability enhancement in LCCA


Chapter 4


How to assess the long-term financial viability of sustainability measures in highway projects?

Chapters 5 & 6

Decision Support Model Development

and Model Application


Figure 5.2: Development of model based on research objectives and questions


5.2 The Model Structure and Application

This section presents the overall structure and development of a conceptual model in

order to effectively assist industry stakeholders in dealing with complex highway

investment decisions. The model development consists of two stages, as shown in

Figure 5.3. The first stage identifies the sustainability-related cost components in

highway projects through a review of literature and industry reports. The second

stage develops the decision support model by the adoption of Fuzzy AHP and

LCCA, integrating industry verified cost components as well as industry problems

and suggestions extracted from the survey of industry practitioners.

5.2.1. The model structure and development: stage 1

The literature review in Chapter 2 served to understand the extent of the

sustainability-related cost components in highway infrastructure. An extensive

literature review and evaluation of project reports from previous highway projects

Literature Industry Reports

Sustainability-Related Cost Components in Highway Infrastructure

Agency Social Environmental

Ten Critical Cost Components in Highway Infrastructure


Industry Suggestions

Life-Cycle Cost Analysis

Concept

Industry Problems

Fuzzy Analytical Hierarchy Process

Stage 2

Stage 1

Figure 5.3: Decision support model development process


was first conducted to reveal all potential cost components. Forty-two imperative

aspects of these cost components were identified. .These cost components are

grouped in three main categories as shown in Table 5.1.

Table 5.1: Sustainability-related cost components for highway infrastructure


Sustainability-Related Cost Components Main Factors Sub Factors

Agency Category

Initial Construction Costs Labour Cost Materials Cost Plants and Equipments Cost



Pavement End-of-Life Costs Demolition Cost Disposal Cost Recycle and Reuse Cost

Social Category




Cost of Resettling People Property Devaluation Reduction of Culture Heritage and Healthy Landscapes Community Cohesion Negative Visual Impact

Accident Costs Economy Value of Damages Internal Cost External Cost


Solid Waste Generation Costs Cost of Dredging/Excavating Material Waste Management Cost Materials Disposal Cost




Noise Pollution

Cost of Barriers Tyre Noise Engine Noise Drivers’ Attitudes

Air Pollution Effects to Human Health Dust Emission CO2 Emission



In addition, the contemporary LCCA models in the evaluation of road infrastructure

were reviewed. None of these methods or programs highlights social and

environmental aspects, nor do they provide the means to add future components.

Followed by the questionnaire surveys and semi-structured interviews as discussed in

chapter 4, this study managed to identify ten most critical cost components in

highway investments with sustainability objectives. These top ten rated cost

components were validated by industry stakeholders as shown in Table 4.7 in section

4.3.2. These critical cost components reveal the common opinions of Australian

highway industry stakeholders in both theory and practice of highway infrastructure

development in Australia.

Although many of these cost components are neither fully understood nor easy to

calculate, an attempt to quantify and evaluate each aspect should be made in

developing a comprehensive financial decision support tool. Therefore, this research

employed the Fuzzy AHP and the LCCA approaches to develop the decision support

model. Both methods were selected to deal with quantitative and qualitative

sustainability-related cost components.

5.2.2. The model structure and development: stage 2

This section presents the integration of the Fuzzy AHP approach and the life-cycle

costing analysis (LCCA) concept to develop the decision support model. This study

found that the issue with traditional LCCA model is focusing on quantifiable agency

cost components. There is a lack of systemical evaluation of soft factors such as

social and environmental costs, which are characterised as qualitative, intangible, and

informal cost components. The Fuzzy AHP was selected in this study because of its

ability to provide quantitative measures for soft factors by using the same scale.

To effectively employ these two concepts in the model development, the researcher

firstly needed to understand these concepts. It was also necessary to identify ways to

effectively integrate these concepts into development of the model. To accomplish

the design of the whole model, the industry problems in LCCA application and the

challenges of integrating sustainability-related cost components in LCCA were


extracted from the semi-structured interviewed of practitioners as reported in Chapter

4.

Two assessment methods were employed to evaluate the industry verified

sustainability-related cost components as shown in Figure 5.4. These modules

include Fuzzy AHP and LCCA. Single assessment method was not a realistic option

for assessing these cost components as all them have multi-criteria characteristics.

For this reason, the qualitative cost components were assessed by Fuzzy AHP

method that is able to deal with soft factors. On the contrary, quantitative cost

components were assessed by LCCA method. The application of each assessment

method is explained in detail in the next section.

5.3 The Fuzzy Analytical Hierarchy Process

The Fuzzy Analytic Hierarchy Process is a method of multi-criteria decision-making

(MCDM) and is considered to be a descriptive approach to decision-making (Lee and

Chan 2008; Nobrega et al. 2009; Jaskowski, Biruk and Bucon 2010; Peihong and

Jiaqiong 2009). According to Cho (2003), the MCDM method deals with decisions

involving the choice of a best or appropriate alternative from several potential

‘candidates’, subject to several criteria or attributes. However, the current

Sustainability Highway Infrastructure Assessment

Fuzzy Analytical Hierarchy Process

Assessment Methods for Qualitative Cost Components

Life Cycle Costing Analysis

Assessment Methods for Quantitative Cost

Components

Figure 5.4: Proposed assessment methods for the decision support model


construction industry’s problems are becoming more complex and it is more difficult

for the stakeholders to reach a precise decision in these complex situations. To deal

with an MCDM problem, Fuzzy AHP methodology is used as a decision support tool

in this study. The Fuzzy AHP methodology is intended for alternative selection by

integrating the concept of fuzzy set theory and hierarchical structure analysis. The

application of fuzzy methodology enables the decision makers evaluate the decisions

based on both qualitative and quantitative data. For this reason, it improves the level

of confident of decision makers in giving interval judgments rather than fixed value

judgments. In this approach, triangular fuzzy numbers are employed for evaluating

the preferences of one criterion over another. Then, by using the extent analysis

method, the synthetic extent value of the pairwise comparison is calculated. The

proposed fuzzy AHP approach does not merely constitute a technical solution for an

isolated problem, but rather represents a comprehensive concept of the entire

selection process.

The model involves the benefit evaluation of alternatives. It passes through the stages

in fuzzy AHP principles as illustrated in Figure 5.5. It addresses a multi-criteria

decision making problem, where there are a number of significant criteria that need

Hierarchy Revision

Qualitative cost components in the evaluation of highway infrastructure projects using Fuzzy AHP

Hierarchy construction with soft factors

Pairwise comparison for all sets of factors

Calculation of priority factors

Scoring of alternatives

Aggregate the relative weights

Calculate the total score for each alternative

Select the alternative that has the highest total score

Figure 5.5: Proposed application of the Fuzzy AHP


to be considered in the selection process. The related important factors and criteria

require the prioritisation or weighting of some factors to be identified. Those factors

or criteria with high ratings are said to be critical. To perform the operation

successfully, the decision maker must first organise and prioritise the problem. It

then requires an effective decision making technique to systematically evaluate the

selection process, which, in this case, will help the individual practitioner to select

the most appropriate choice for highway infrastructure projects based on

sustainability indicators. The fuzzy AHP was chosen for this research to provide the

decision maker with a logical framework to model a complex decision scenario,

which can integrate perceptions, judgments and experiences into a hierarchy. It

therefore allows a better understanding of the problem, its criteria and possible

choices.

5.3.1. Fundamentals of Fuzzy AHP

The Fuzzy AHP began with the basic concept of the Analytical Hierarchy Process

(AHP). AHP was developed by Saaty (1980) in the early 1970s to help individuals

and groups deal with decision making problems. Saaty (1980) first introduced AHP

as a new approach to dealing with complex economic, technological, and socio-

political problems, which often involve a great deal of uncertainty. However, due to

the complexity of current problems, the fuzzy concept was employed to be integrated

with AHP methods to handle more complex decisions.

The earliest work in integrating between Fuzzy Logic and AHP concepts appeared in

the early 1980s, with several researchers working on the concepts and starting to

determine fuzzy priorities of comparison ratios by using the geometric mean

(Boender, de Graan and Lootsma 1989; Buckley 1985; Van Laarhoven and Pedrycz

1983). In the 1990s, studies in Fuzzy AHP became more popular and several

improvements on the methods were developed (Deng 1999; Chang 1996; Ruoning

and Xiaoyan 1992). Chang (1996) introduced triangular fuzzy numbers for pairwise

comparison scales of Fuzzy AHP and the use of the extent analysis method for the

synthetic extent values of the pairwise comparisons. Zhu et al. (1999) investigated

the extent analysis method and applied some practical examples of Fuzzy AHP.


Recently, Fuzzy AHP has been extensively applied in the literature. In the

construction industry, the application of Fuzzy AHP is becoming popular because it

aids industry stakeholders in dealing with complex decisions. Several research

studies have proved the efficacy of the method. For example, Pang (2008) proposes

the Fuzzy AHP in selecting a suitable bridge construction method. Peihong and

Jiaqiong (2009) apply Fuzzy AHP methods to risk assessment in an international

construction project. Jaskowski et al. (2010) assess contractor selection with Fuzzy

AHP in a group decision environment. Based on these studies, it can be concluded

that Fuzzy AHP is a practical approach in dealing with complex decisions in the

construction industry.

This research proposes the use of the Fuzzy AHP model to evaluate highway

infrastructure projects by comparing alternative choices based on the sustainability-

related cost components. The proposed Fuzzy AHP model does not merely provide a

technical solution for an isolated problem, but rather represents a comprehensive

concept of the entire selection process.

5.3.2. Fuzzy AHP assessment procedure

The first step in the Fuzzy AHP assessment procedure is establishing a hierarchical

structure. The Fuzzy AHP is a part of the model assessment process. The purpose of

applying the Fuzzy AHP is to assess ten industry verified cost components in a

systemic manner. The Fuzzy AHP results will be integrated with other estimation

results in the final decision making process to determine the most sustainable

alternative of highway infrastructure projects.

Figure 5.6 illustrates the Fuzzy AHP hierarchy structure. The first sets of layers are

the agency, environmental, and social aspects described as the first level. The second

level consists of three (3) groups. The three groups represent the triple bottom-line

approach of the Fuzzy AHP hierarchy. Four (4) qualitative indicators are grouped

under the agency aspect. Another four (4) qualitative indicators are categorised under

the environmental aspect. A remaining two (2) qualitative indicators are grouped

under the social aspect. The third level is the number of proposed alternatives subject

to assessment of each qualitative indicator in the second level.


In order to perform a pairwise comparison among the parameters, the triangular

numbers and fuzzy conversion scale are employed based on the Fuzzy scale used in

existing studies (Aya and Özdemir 2006; Fu et al. 2008; Peihong and Jiaqiong 2009;

Perçin 2008). Figure 5.7 shows the linguistic scale for the triangular numbers. The

fuzzy conversion scale are shown in Table 5.2. Throughout this study, the

importance of the benefits of information-sharing criteria and sub-criteria are

evaluated by five main linguistic terms. The terms are:

• “EI: equally important”,

• “WMI: weakly more important”,

• “SMI: strongly more important”,

• “VSMI: very strongly more important” and

• “AMI: absolutely more important”.

Qualitative Sustainability Benefits Assessment

Importance of Economic Aspect

Importance of Environmental Aspect

Importance of Social Aspect

Group of cost components from Economic Aspect

Group of cost components from

Social Aspect

Group of cost components from

Environmental Aspect

Alternative “n” per each cost

component in economic aspect

Alternative “n” per each cost component

in environmental aspect

Alternative “n” per each cost

component in economic aspect

Aggregate hierarchy value to make a final

prioritisation

LEVEL 1 Focus

LEVEL 3 Sub Criteria of

Desired components

LEVEL 4 Alternatives

LEVEL 2 Sustainability

Criteria

Figure 5.6: Hierarchy map of sustainability-related cost component assessment


This study has also considered the respondents’ reciprocals:

• “ALI: absolutely less important”,

• “VSLI: very strongly less important”,

• “SLI: strongly less important” and

• “WLI: weakly less important”.

By using the linguistic terms, decision makers will feel more comfortable using such

terms in highway investment assessments. For example, someone may consider that

cost components i is “absolutely important” compared with the component j under

certain criteria; decision makers may set 𝑎𝑎𝑎𝑎𝑎𝑎 = (5/2,3, 7/2). If element j is thought

to be “absolutely less important” than element i, the pair wise comparison between j

and i could be presented by using fuzzy number, 𝑎𝑎𝑎𝑎𝑎𝑎 = (1/𝑢𝑢_1 ,1/𝑚𝑚_1 ,1/𝑙𝑙_1 ) =

2/7,1/3,2/5.

Table 5.2: Triangular fuzzy conversion scale

Linguistic scale for importance Triangular fuzzy scale Triangular fuzzy reciprocal scale

Equal important (EI) (1/2, 1, 3/2) (2/3, 1, 2)

Weakly more important (WI) (1, 3/2, 2) (1/2, 2/3, 1)

Fairly more important (FI) (3/2, 2, 5/2) (2/5, 1/2, 2/3)

Very strongly more important (VSI)

(2, 5/2, 3) (1/3, 2/5, 1/2)

Absolutely more important (AI) (5/2, 3, 7/2) (2/7, 1/3, 2/5)

1/2 1 3/2 2 5/2 3 7/2

1.0 EI WI FI VSI AI µRI

RI

Figure 5.7: The linguistic scale of triangular numbers for relative importance


To generate pairwise comparison matrices, a group of 5 respondents from each case

projects were interviewed. Then the fuzzy evaluation matrix relevant to the goal of

each case projects was obtained with the consensus of the respondents. Their

feedback was then be recorded in the form of linguistic expressions and analysed in a

spreadsheet.

The outlines of the extent analysis method on Fuzzy AHP (Zhu, Jing and Chang

1999; Chang 1996; Ruoning and Xiaoyan 1992) can be summarised as follows:

Let x = {x1, x2, … , xn} be an object set, and u = {u1, u2, … , un} be a goal set.

According to Chang’s extent analysis method, each object is taken and extent

analysis for each goal 𝑔𝑔𝑎𝑎 is performed, respectively. Therefore, the C extent analysis

values for each object can be obtained and shown as follows:

𝐶𝐶𝑔𝑔𝑎𝑎1 ,𝐶𝐶𝑔𝑔𝑎𝑎 ,…,2 𝐶𝐶𝑔𝑔𝑎𝑎𝑚𝑚 , 𝑎𝑎 = 1,2, … , 𝑛𝑛 (1)

where all the Cgij (j = 1, 2, … , m) are triangular fuzzy numbers (TFNs) whose

parameters are l, m and u. They are the least possible value, the most possible value,

and the largest possible value, respectively. A TFN is represented as (l, m, u). The

steps of the extent analysis method can be given as follows (Büyüközkan et al.

2004):

Step 1: The value of fuzzy synthetic extent with respect to the 𝑎𝑎𝑡𝑡ℎ object is defined

as:

Si = �Cgi

jm

j=1

⊗ ��Cgij

m

j=1

n

i=1

�

−1

(2)


To obtain ∑ Cgijm

j=1 , this study performs the fuzzy addition operation of m extent

analysis values for a particular matrix such that:

�Cgi

j =m

j=1

�� lij ,�mij ,�uij

m

j=1

m

j=1

m

j=1

� (3)

and to obtain �∑ ∑ Cgijm

j=1ni=1 �

−1, this study performs the fuzzy addition operation of

Cgij (j = 1, 2, … , m) values such that:

where,

��Cgij =

m

i=1

n

i=1

�� lij ,�mij ,�uij

m

i=1

m

i=1

m

i=1

�

li = � ly , mi = �mij , ui =m

j=1

m

j=1

�uij

m

j=1

(4)

Then, the inverse of the vector in equation (5) is computed as:

��Cgi

jm

j=1

n

i=1

�

−1

= �1

∑ uini=1

,1

∑ mini=1

,1

∑ lini=1

� (5)

Where ∀ ui, mi, li > 0

Finally, to obtain the 𝑆𝑆𝑎𝑎 in equation (2), we perform the following multiplication:


Si = �Cgi

jm

j=1

⊗ ��Cgij

m

j=1

n

i=1

�

−1

= ��×1

∑ mini=1

, lij ,m

j=1

�uij

m

j=1

×1

∑ lini=1

� (6)

Step 2: The degree of possibility of 𝐶𝐶2 = (𝑙𝑙2,𝑚𝑚2,𝑢𝑢2) ≥ 𝐶𝐶1 = (𝑙𝑙1,𝑚𝑚1,𝑢𝑢1) is defined

as:

V(C2 ≥ C1) = sup �miny≥x

�μM2 (y)�� (7)

This can be expressed equivalently as follows:

V(C2 ≥ C1) = hgt(C1 ∩ C2) = μC2 (d) = �

10

(l1 − u2)(m2 = u2)− (m1 = u1)

� ,if M2 ≥ M1if M2 ≥ M1otherwise

(8)

where d is the ordinate of the highest intersection point D between μM1 and μM2 . To

compare 𝐶𝐶1and 𝐶𝐶2, both the values of V(C1 ≥ C2) and V(C2 ≥ C1) are needed. The

intersection between 𝐶𝐶1 and 𝐶𝐶2, is shown in Figure 5.8.

Step 3: The degree possibility for a convex fuzzy number to be greater than k convex

fuzzy numbers mi(i = 1,2, … , k) can be defined by:

V(C ≥ C1, C2, … , Ck) = V[(C ≥ C1and C ≥ C2 and … and C ≥ Ck)]

= min V(C ≥ Ci) , i = 1,2, … , k

(9)


Assume that:

D′(Si) = min V ( Si ≥ Sk) (10)

For = 1,2 … , n; k ≠ i . Then the weight vector is given by:

W′ = D′((S_1 ), D^′ (S_2 ), … , D′(S_n ))T (11)

where 𝑆𝑆𝑎𝑎(𝑎𝑎 = 1, 2, … ,𝑛𝑛) are n elements

Step 4: After normalisation (the elements of each column are divided by the sum of

that column the elements in each resulting row are added and this sum is divided by

the number of elements in the row), the normalised weight vectors are obtained as

follows:

W = (D(S1), D(S2), … , D(S1)T (12)

µC

1 C1 C2

D

0 C

V(C1 ≥ C2)

l1 m1 l2 d u1 m2 u2

Figure 5.8: The intersection between C1 and C2


The issue of consistency in Fuzzy AHP is another subject that needs to be examined.

The consistency index (CI) and consistency ratio (CR) are calculated as follows:

CI =

(λmax − n)(n − 1)

(13)

where λmax is the largest eigenvalue of the comparison matrix, n is the number of

items being compared in the matrix, and RI is a random index. If the CR is less than

0.10, the comparisons are acceptable, otherwise not. The decision maker has to make

the pairwise judgments again (Saaty 1990, 1980).

By applying Fuzzy AHP assessment procedure, it allows all aspects of the cost

components-related to sustainable measures in highway infrastructure to be evaluated

in order to elicit meaningful data. Subsequently, this provides a platform for the

model development based on ten industry verified sustainability-related cost

components. Table 5.3 summarises how these critical cost components could be

meaningfully investigated by the fuzzy AHP and LCCA methods.

Table 5.3: Assessment approach of critical sustainability cost components

Main Criteria Sub-Criteria Investigation Methods Agency category Material costs LCCA + Fuzzy AHP

Plant and equipment costs LCCA + Fuzzy AHP

Major maintenance costs LCCA+ Fuzzy AHP

Rehabilitation costs LCCA + Fuzzy AHP

Social category Road accident- internal costs LCCA + Fuzzy AHP


Fuzzy AHP


Hydrological impacts Fuzzy AHP

Loss of wetland Fuzzy AHP

Disposal of material costs Fuzzy AHP

Cost of barriers Fuzzy AHP


5.4 Life-Cycle Cost Analysis

Life-cycle cost analysis (LCCA) is one of the decision support tools employed in the

model development. As shown in Table 5.3, LCCA approach is ideal to evaluate cost

components that are able to convert into monetary value. Life-cycle cost calculation

will handle existing cost components such as agency and some social cost

components, while Fuzzy AHP will deal with the unquantified factors such as some

social and environmental cost components. In this research, the life-cycle cost

calculation is based on real case data; it involves components such as the agency

costs for the maintenance activities.

5.4.1. Life-cycle cost analysis in highway infrastructure

The LCCA will be calculated and entered for the appropriate year depending on the

highway maintenance strategy selected and also the life span of the highway

infrastructure. The timing of all construction activities are recorded, with the timing

then used in calculating the agency costs associated with a project. This timing of

events is illustrated in Figure 5.9, which shows a conceptual diagram of pavement

performance, with corresponding marks on the horizontal axis indicating the year in

which the work will be performed.

The combined agency costs for each event will be entered in the life-cycle cost

analysis at the predicted age of the pavement. The total cost calculated for each year

is then discounted to the present time to obtain its present value, for comparison.

Condition

Time

Figure 5.9: Timing of maintenance and rehabilitation


Using the economic analysis strategies, the total life-cycle costs of each alternate

design were analysed and rated. The conceptual graph in Figure 5.10 shows the

agency costs associated with each construction activity over the life of the highway

project.

In Figure 5.11, the dotted arrows represent the social and environmental costs, which

are associated with construction activities every time a construction work zone is in

place. These costs are in addition to all agency costs that are incurred because of the

construction activities. Social and environmental costs vary greatly, depending on the

number of vehicles passing through the work zone, but can easily be much greater

than the total cost of the actual construction activities. The essence of life-cycle

costing is to capture all predictable costs that may have an impact on the economy or

society that could be affected by the highway pavement project under consideration.

Cost

Year (i)

Initial Cost

Maintenance 1

Maintenance 2

Rehabilitation 1

Maintenance n

Maintenance n

Rehabilitation n

Figure 5.10: Agency costs associated with construction activities


5.4.2. LCCA calculation procedure

This research attempts to provide a means for identifying and estimating all costs that

may have an effect on these entities involved in the construction and use of the

highway section. Out of ten sustainability-related cost components, five are a part of

the LCCA assessment because they are considered as quantitative factors that can be

estimated in terms of monetary value.

Most conventional LCCA methodologies, such as the Federal Highway

Administration model, adopts the present value method that brings the future value

back to the base year. Future value is defined as any capital investment requirement

scheduled after the base year. Future costs need to be discounted to take into account

the time value of the money. Ockwell (1990) introduced two approaches in LCCA

calculations. The first approach considers simultaneously both the inflation rate and

the nominal discount rate, as shown in Equations 14, and 15.

FV = $const .(1 + i)n (14)

Cost

Year (i)

Initial Cost

Maintenance 1

Maintenance 2

Rehabilitation 1

Maintenance n

Maintenance n

Rehabilitation n

Figure 5.11: Social and environmental costs added to agency costs associated with construction activities


PV =FV

(1 + dn)n (15)

The second approach uses the real discount rate. The real discount rate takes into

account only the real earning potential of money over time. Equation 16 can

calculate the real discount rate. The present value is calculated by multiplying the

constant dollar value and the discount factor, using the real discount rate as shown in

Equation 17.

dr =

1 + dn

1 + i− 1

(16)

PV = $const . × DF, DF =1

(1 + dr)n (17)

where

FV = future current dollar value

PV = present constant dollar value,

DF = discount factor,

$const= constant dollar value,

i = inflation rate,

dn = nominal discount rate

dr = real discount rate, and

n = number of years in the future at which costs are incurred.


Since the constant dollar value at the base year can be estimated, the selection of the

discount rate and the application of the discount factor significantly control the

overall performance of the LCCA and the effective long-term economical judgment

between comparable alternatives. The present value is significantly decreased by a

high discount factor, especially for an extremely long life-cycle. The discount factor

is a function of two factors - time and the discount rate. From the broader point of

view of road users and the wider community, economic analysis suggests the net

present value at a 7% real discount rate will achieve a positive economic. A real

discount rate of 7% is based on the guidance recommended by Austroads and the

Road and Transport Authority (RTA), Australia. It is extremely difficult to predict

the future discount rate because economic fluctuation is influenced by too many

external factors. If present value is used for real cost estimation, discount factor

simulation that takes multiple discount rates is recommended to minimise

misinterpretation in the life-cycle cost analysis.

In summary, decision makers should assess the benefit of future savings between

proposed alternatives. Decision makers should not underestimate the future cost

implications by using an unrealistic discount rate because a significant reduction of

present value makes the future investment insignificant. When using a real cost

estimation method, decision makers should consider this tendency in conventional

LCCA models. The future economical benefit should be carefully assessed by not

only including the present value of future cost, but also by considering the realistic

monetary value of the future task.

These cost components represent quantitative indicators in economical assessment.

Discount factors can be applied to all cost components except initial cost

components. Real cost estimation analysis should include not only the total sum of

costs, but also effectiveness of each cost component between proposed alternatives.

All other qualitative economical indicators are assessed as a part of Fuzzy AHP

evaluations. The combination of the two separate results will be done during the final

decision making process.

The summation of all quantitative cost items is expressed in Equation 18.


Real costs ($) = �(Ci) (18)

where Ci= quantitative sustainability indicators for cost estimation

5.5 Final Decision Making Process

The final decision is based on two modular results from the overall sustainability

assessment processes, as shown in Table 5.4. The two modular results have different

dimensional (criteria) values. Another MCDM is required to integrate both values

into a single uniform process (the first MCDM used in this model is Fuzzy AHP for

qualitative indicator assessment). The simplest and most effective MCDM method

for a single level of decision making is the Weighted Sum Model (WSM)

(Triantaphyllou et al. 1997).

Normalisation requires consideration of different characteristics for each modular

result. High values are preferred for these results. For example, Fuzzy AHP and

LCCA provide high value preferred results. Equation 19 calculates the normalised

values of modular results. Symbol (ahigh i

) is used for the normalisation of high value

preferred results.

ahigh i = �Ri

∑ (Ri)ni=1

� (19)

where

Ri

The relative importance of each modular result is expressed as an interval value from

0 to 1. The sum of the relative importance must be equal to one. This relative

= a result corresponding to an alternative from each modular assessment, and

n = number of alternatives.


importance is used as a weight factor 𝑊𝑊𝑎𝑎 in Equation 20, which is used to calculate

the overall sustainability 𝑆𝑆 of each alternative. The sum of the weighted normalised

values of all alternatives in Table 5.3 must be equal to one. Subsequently, the sum of

𝑆𝑆𝑎𝑎 values must also equal one. The highest 𝑆𝑆 value represents the most sustainable

alternative method.

𝑆𝑆𝑎𝑎 = �𝑎𝑎𝑎𝑎𝑎𝑎𝑊𝑊𝑎𝑎

𝑚𝑚

𝑎𝑎=1

(20)

where,

Si

Table 5.4: WSM calculation table for final decision making

= relative sustainability of alternative A (e.g. Alt 1, Alt 2, Alt i), and

m = number of module results (1-2).

Modular Results Weight Factor Alternative 1 Alternative 2 Alternative i

Fuzzy AHP W Fuzzy AHP -

Alt 1 1 Fuzzy AHP -

Alt 2

Fuzzy AHP -

Alt i

LCCA W $ - Alt 1 2 $ - Alt 2 $ - Alt i

Weighted Sum Value W i S=1 S1 S2 i

The relative importance of each modular result can be decided by the subjective and

intuitive assessment of decision makers and other stakeholders. Therefore, sensitivity

tests are required to determine if the final decision requires changing the relative

importance of each modular result. Sensitivity analysis for this study adopts

proportional changes of weight factors by the given magnitude of the weight factor.

For example, when a weight factor for Fuzzy AHP is changed, all other weight

factors are changed proportionally from their original values. Therefore, a higher

weight factor value is changed proportionally higher than for a lower weight factor.

An equation detailing this sensitivity analysis is presented in Chapter 6 along with a

case study.


The last step of the decision support model application is to approve the final result

from the WSM. If the final prioritisation result is not approved by the decision

maker, then the modelling process should be repeated. This looping function should

include cancellation of the project development and modification of alternatives of

the projects.

5.6 Sensitivity Analysis

Sensitivity analysis was conducted to verify the vulnerability of final result reversion

by changing the weight factors of Weighted Sum Model (WSM). The analysis was

conducted as part of the final decision-making process. All two weight factors are

applied to the sensitivity analysis. The sensitivity analysis results provide a range of

weight factors that can make a difference in the outcome of the final decision

making. Therefore, when a specific weight factor is an issue and it is significant to

the overall sustainability, sensitivity analysis can demonstrate ‘what-if’ scenarios by

applying different weight factors.

There are various approaches to sensitivity analysis. Changing the weight factors

used for WSM is considered as the most appropriate method for two reasons: 1)

weight factors can be decided by the subjective judgments of decision makers, which

may cause conflict between stakeholders; and 2) all previous assessment outcomes

(two modular results) can be treated as non-negotiable results in order to improve the

consistency of the model application. Two sensitivity analyses and the output data

are presented in the following sections.

The selected calculation process for the sensitivity analysis is based on changing a

weight factor, which is subject to the analysis. When a value of a weight factor is

changed by the sensitivity analysis, other weight factors are decreased or increased

by proportional changes of the weight factor. Then, these adjusted weight factors and

changed weight factor are multiplied by the normalised assessment results. The total

sum of the two weight factors is always equal to one (1). Proportional adjustments

for other weight factors are calculated by Equation 21.


𝑊𝑊𝑊𝑊𝑎𝑎𝑎𝑎𝑎𝑎 .𝑎𝑎 =

�𝑊𝑊𝑊𝑊𝑡𝑡ℎ𝑛𝑛𝑔𝑔 .𝑎𝑎 − 𝑊𝑊𝑊𝑊𝑎𝑎 ��1 −𝑊𝑊𝑊𝑊𝑎𝑎 �

×𝑊𝑊𝑊𝑊𝑎𝑎 (21)

where,

𝑊𝑊𝑊𝑊𝑎𝑎𝑎𝑎𝑎𝑎 .𝑎𝑎= adjusted other weight factors except sensitivity analysis weight

factor,

𝑊𝑊𝑊𝑊𝑡𝑡ℎ𝑛𝑛𝑔𝑔 .𝑎𝑎= changed weight factor of sensitivity analysis,

𝑊𝑊𝑊𝑊𝑎𝑎= originally given weight factor of sensitivity analysis, and

𝑊𝑊𝑊𝑊𝑎𝑎= original weight factors except sensitivity analysis weight factor.

5.7 Chapter Summary

This chapter provided a detailed methodology and illustration of the proposed

decision support model for long-term financial investments in highway

infrastructure. The preliminary model effectively assesses various aspects of cost

components related to sustainability measures. This also helps to enhance the

sustainability of the highway project. The model focuses on project level application

and assessing the relative sustainability of proposed alternatives in the feasibility

stage of the project development. Finally, it helps decision makers facing an

investment decision to select the most sustainable and the most financially viable

alternative for the project.

For development of the model, temporal and spatial boundaries of the model specify

the area and range of the assessment process. Ten (10) industry validated cost

components related to sustainable measures constituted the model. The model

provides two modules for the assessment process: (1) the Fuzzy Analytic Hierarchy

Process, and (2) life-cycle cost analysis. Each assessment module produces a

different attribute (criterion) of the result. Each criterion was considered as an

independent attribute. The weighted sum model, one of the methods of multi-criteria

decision making, is proposed for the final decision making process.


A preliminary model is designed to be applied regardless of the project size and type

in the area of highway infrastructure development. The model requires real world

scenario application and validation from senior decision makers in the industry. The

implementation, verification and validation of the model are reported through case

studies in the next chapter.

Chapter 6: Model Application Through Case Studies 155

CHAPTER 6: MODEL APPLICATION THROUGH CASE STUDIES

6.1 Introduction

Conclusions from the data explored in the previous chapters have highlighted the

need to improve current life-cycle cost analysis (LCCA) models so that practitioners

are able to deal with sustainability issues in highway infrastructure projects. The

improvements include:

• incorporating the industry verified sustainability-related cost components into

current LCCA models for highway infrastructure projects; and

• developing a benchmarking model to improve the long-term financial

investment decisions for highway infrastructure development.

To address these necessary improvements, Chapter 5 discussed the overall

development of the proposed model to deal with long-term financial decisions as

well as sustainability-related cost components. This chapter aims to answer the third

research question: How to assess the long-term financial viability of sustainability

measures in highway project? This can be achieved through application of the

preliminary model. The process included applying and validating the model in real

case projects. The links between the research objectives and research questions and

the process for testing and evaluating the model are set out in Figure 6.1.

The development of this model includes the combination of two methodologies,

namely the Fuzzy Analytical Hierarchy Process (Fuzzy AHP) method and life-cycle

costing analysis. Sustainability-related cost components that cannot be quantified

into real cost data were evaluated by the Fuzzy AHP method while LCCA was used

to analyse the real cost data that can be quantified in highway infrastructure projects.

To have a better understanding of this model application, two highway infrastructure

projects were employed. The industry stakeholders involved in the projects were

interviewed based on the case projects characteristics and needs.

156 Chapter 6: Model Application Through Case Studies

This chapter discusses application and validation of the model in handling long-term

financial decision support and sustainability benefits based on two highway

infrastructure projects. The chapter is divided into seven sections. Section 6.2

discusses the characteristics of Case Projects A (Wallaville Bridge) and B (Northam


• Integrating the industry verified cost components with decision support model.



• Understanding the global initiatives on sustainable infrastructure development


• Reviewing current LCCA model and programs

• Identifying sustainability related cost components in highway infrastructure projects


Chapter 2

Literature Review

5. Identifying sustainability-related cost components that project stakeholders are concerned with:

• Exploring current practice of life-cycle cost analysis in Australian highway infrastructure


• Integrating various stakeholders’ expectations of sustainability enhancement in LCCA


Chapter 4


How to assess the long-term financial viability of sustainability measures in highway project?

Chapters 5 & 6

Decision Support Model Development

and Model Application


Figure 6.1: Approach to model application and overall research aim


Bypass) in detail. It outlines the background, key milestones and major events of the

projects. The significance of these cases to the research project is further justified in

Section 6.3. Based on the real case projects, this research tests the proposed model as

well as evaluates these two projects in Sections 6.4 and 6.5. The application of the

Fuzzy AHP and LCCA is demonstrated. Section 6.6 validates the application of the

model. Industry stakeholders were interviewed to gather their comments and

opinions on improving the model. A summary of the findings is provided in Section

6.7.

6.2 Selection of the Case Study Projects

Both case study projects fulfilled the selection criteria, as set out earlier in the thesis

(Section 3.4.5.2). The background information about the projects has been sourced

from interviewee accounts, project documentations and government reports.

6.2.1 Case study A: Wallaville bridge

The Wallaville Bridge formed part of the Bruce Highway until it was replaced by the

Tim Fischer Bridge in July 1999 at a cost of $28.3m. The project involved

construction of a new 8.3 km section of the Bruce Highway at Wallaville, 40 km

southwest of Bundaberg, including a 307 metre bridge across the Burnett River and

two smaller bridges—240 metres and 95 metres long respectively—over the

floodway channels on the approach road network. The construction of the new bridge

started in December 1997, and replaced a narrow and poorly aligned bridge (located

5 km downstream from the new one) built during World War II and constructed at a

cost of $50,000 (Figure 6.2). The new 307 metre bridge was opened to the public for

use on 5 July 1999 under the name, Tim Fischer Bridge (Figure 6.3).


Figure 6.2: Wallaville Bridge in flood (BTRE 2007a)

The replacement of the old bridge did not become a priority for the Federal

Government until a weir was proposed in the mid-1990s across the Burnett River, 11

km downstream of the old bridge. The traffic on the Wallaville Bridge section of the

Bruce Highway was less than 1800 vehicles per day in 1992. Although the old bridge

was a structure of between Q2 and Q3.51 with an average closure time of 52.3 hours

during floods, the availability of alternative route through Bundaberg meant that the

bridge upgrade was not regarded as a high priority project by the Department of

Transport at that time. The Walla Weir (now called Ned Churchward Weir) was

planned to be constructed in two stages, the first of which would increase the time of

closure due to flooding and the second of which would result in the inundation of the

old bridge. However, due to unexpectedly prolonged drought conditions, the planned

stage two construction of the weir did not occur. This meant that the old Wallaville

Bridge would not be inundated by higher water levels and would not be lost as a road

asset as originally expected.


Figure 6.3: Tim Fischer Bridge (BTRE 2007a)

There would also be a cost penalty attributable to constructing across ponded water

after the weir was built. The new bridge has provided improved flood immunity,

safety and road alignment compared with the level crossing.

In November 1997, the Federal Government approved $24.4m for the construction.

6.2.2 Case study B: Northam bypass

Northam is a town on the Great Eastern Highway (GEH), approximately 97 km east

of Perth. Northam has a population of around 7000 and is a major service and


administration centre for the Western Australia Central Wheat Belt Region. Prior to

the Northam Bypass being built, the GEH passed through the centre of the town with

heavy vehicles having to negotiate the main shopping area, including two railway

crossings, four right angle turns and many busy intersections. These vehicles

included B-Doubles and truck/trailer combinations up to 67.5 tonnes. The primary

aim of the bypass was to divert through-traffic away from the townsite, thus

overcoming the difficulties and dangers of heavy vehicles using the pre-existing

route through built-up areas as well as improving the safety and amenity of the major

streets of Northam.

The Northam Bypass involved construction of a new road approximately 14.9 km

long including eight bridges - 2 over rivers, 2 over railways and 4 over existing roads

(Figure 6.4). The bypass starts from the old GEH to the west of Northam near the

entrance to the Army camp. Passing north-east, it crosses the Northam-Toodyay

Road via an overpass north-west of the Colebatch Road intersection and follows an

alignment between the town wastewater treatment ponds and the cemetery. It is then

carried on a 230-metre bridge over the standard gauge railway line, Avon River and

Katrine Road. From Katrine Road, the bypass continues in a north-easterly direction,

passing over the Irishtown Road before heading east to cross over the Northam-

Pithara Road to the north of the airstrip. From the Northam-Pithara Road back to the

existing GEH, the bypass follows a south-easterly alignment, passing north of the

racecourse and a road train assembly area. The bypass route connects with the pre-

existing highway east of the Katrine Highway.


Figure 6.4: Northam Bypass (BTRE 2007b)

The total budgeted cost for the project was estimated to be $47m (in 1998 prices) in

the Stage 3 Project Proposal Report. Australian Federal Government funding was

capped at $40m. The State Government was committed to bear any additional cost in

excess of $40m. The actual project cost was $49.4m (nominal).

The project commenced in January 2001 and was completed in May 2002.

6.3 Significance of the Case Projects

The case projects were selected based on the criteria as stated in Section 3.3.5.2.

They are significant because both cases have completed in around 8-15 years prior to

2010, so they have relevent data to carry out life-cycle costing anaylsis. The Bureau

of Transport and Regional Economics, Australia has evaluated both case projects

under the economic evaluation of the National Highway Project. This shows the

reliability of the information from both projects. Both projects were used to apply,

test and evaluate the proposed decision support model. Although the evaluation

provides some useful cost data, the complex nature and difficulties in both case

projects were thoroughly examined.


6.4 Model Application in Case Study A - Wallaville Bridge

This case study illustrates the importance of three base case specifications when

there is interdependency between two projects: in this case, the Ned Churchward

Weir and the Tim Fischer Bridge. It also provides an example of how to undertake a

complex road closure/flooding plus diverting evaluation.

6.4.1 Project alternatives

According to the industry report, the case project considered three alternatives as

follows:

Alternative 1 (A1): This alternative assumed that the weir will be constructed stage

2 with a height of 21m. During construction of the new bridge,

the removal of the existing bridge would also commence.

Without access to the old Wallaville Bridge all Bruce Highway

traffic would divert to a longer route via Bundaberg,

Queensland. This base case can be defined as the ‘no bridge’

option.

Alternative 2 (A2): This alternative base case assumes stage 1 construction of the

weir as a certainty, with stage 2 construction of the weir

uncertain. Therefore, the old Wallaville Bridge would be open

for light vehicle traffic only until the stage 2 construction of the

weir or the end of the physical life of the old bridge (say 2010).

From this time all light vehicles would have to diver through

Bundaberg. All heavy vehicles would have to divert through

Bundaberg from the start of the evaluation period for safety

reasons. This base case can be defined as the 'bridge partially

open’ option.

Alternative 3, (A3): The old Wallaville Bridge remains open for the entire evaluation

period for all vehicles. A minimum capital expenditure of $5

million is required to ensure the serviceability of the old bridge

for highway traffic. This base case can be labelled as the 'bridge

open’ option.


6.4.2 Fuzzy AHP for qualitative indicators

To create pairwise comparison matrices, a group of five stakeholders involved in this

project was interviewed. Then, the fuzzy evaluation matrix relevant to the goal was

obtained with the consensus of the stakeholders.

6.4.2.1 Evaluation of criteria weight

Some examples of decision makers’ answers in the form of linguistic expressions

about the importance of the sustainability-related cost components were given in

Appendix C2. The consistency of the pairwise comparison matrices were examined

and it was determined that all the matrices were consistent.

By applying formula (2) given in Step 1:

SACI = (3.0, 4.0, 5.0) ⊗�1

12.5,

19.33

,1

7.17�

= (0.24, 0.44, 0.70 )

𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 = (2.0, 2.67, 3.5) ⊗�1

12.5,

19.33

,1

7.17�

= (0.16, 0.29, 0.49 )

𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 = (2.17, 2.67, 4.0) ⊗�1

12.5,

19.33

,1

7.17�

= (0.17, 0.29, 0.56 ) are obtained.


Using these vectors and formula (8), the following values are calculated:

𝑉𝑉 (𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 = 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆) = 1.00,𝑉𝑉 (𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = 1.00,𝑉𝑉 (𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = 1.00

𝑉𝑉 (𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 = 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆) = 1.00,𝑉𝑉 (𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆) = 0.64,𝑉𝑉 (𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 = 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆) = 0.69

Finally, by using formula (10), the following results are obtained:

𝑆𝑆′𝐴𝐴𝐶𝐶𝑆𝑆 = 𝑉𝑉(𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 ≥ 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 ,𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = min(1.00, 1.00)

= (1.00 )

𝑆𝑆′𝑆𝑆𝐶𝐶𝑆𝑆 = 𝑉𝑉(𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆 ≥ 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 , 𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆) = min(0.64, 1.00)

= (0.64)

𝑆𝑆′𝐸𝐸𝐶𝐶𝑆𝑆 = 𝑉𝑉(𝑆𝑆𝐸𝐸𝐶𝐶𝑆𝑆 ≥ 𝑆𝑆𝐴𝐴𝐶𝐶𝑆𝑆 , 𝑆𝑆𝑆𝑆𝐶𝐶𝑆𝑆) = min(0.69, 1.00)

= (0.69 )

Therefore, the weight vector is calculated as W′ = (1.00, 0.63, 0.69)T . After

normalisation, the normalised weight vectors of objective with respect to the cost

components criteria ACI, SCI and ECI from Table 6.1 are obtained as WObjective =

(0.43, 0.27, 0.30)T. According to the answers by the decision makers, it is concluded


that the agency and environmental category are more important than the social

category in this project.

Table 6.1: The fuzzy evaluation matrix with respect to the goal

ACI SCI ECI

Agency category (1,1,1) (1, 3/2, 2) (1, 3/2, 2)

Social category (1/2, 2/3, 1) (1,1,1) (1/2,1,3/2)

Environmental category (1/2, 2/3, 1) (2/3,1,2) (1,1,1)

Table 6.2: The relative importance of agency cost components

MC PEC MMC RC

Material costs (1,1,1) (1, 3/2, 2) (3/2, 2, 5/2) (1, 3/2, 2)

Plant and equipment costs (1/2, 2/3,1) (1,1,1) (1, 3/2, 2) (1/2, 1, 3/2)

Major maintenance costs (2/5, 1/2, 2/3) (1/2, 2/3, 1) (1,1,1) (1/2, 1, 3/2)

Rehabilitation costs (1/2, 2/3, 1) (2/3, 1, 2) (2/3, 1, 2) (1,1,1)

Table 6.3: The relative importance of social cost components

RA-IC RA-EVD

Road accident- internal costs (1,1,1) (1, 3/2, 2)

Road accident- economic value of damage (1/2, 2/3, 1) (1,1,1)

Table 6.4: The relative importance of environmental cost components

HI LW DMC CB

Hydrological impacts (1,1,1) (1, 3/2, 2) (1/2, 1, 3/2) (3/2, 2, 5/2)

Loss of wetland (1/2, 2/3, 1) (1,1,1) (1/2, 1, 3/2) (1, 3/2, 2)

Cost of barriers (2/3, 1, 2) (2/3, 1, 2) (1,1,1) (1, 3/2, 2)

Disposal of material costs (2/5, 1/2, 2/3) (1/2, 2/3, 1) (1/2, 2/3, 1) (1,1,1)

From Table 6.2, the weight vectors were calculated as SMC = (0.19, 0.35, 0.59) ,

SPEC = (0.13, 0.25, 0.43) , SMMC = (0.10, 0.19, 0.33) , SRC = (0.12, 0.22, 0.47) ,

V (SMC ≥ SPEC ) = 1.00, V (SMC ≥ SMMC ) = 1.00 , V (SMC ≥ SRC ) = 1.00 ,

V (SPEC ≥ SMC ) = 0.69 , V (SPEC ≥ SMMC ) = 1.00 , V (SPEC ≥ SRC ) = 1.00 ,


V (SMMC ≥ SMC ) = 0.44 , V (SMMC ≥ SPEC ) = 0.77 , V (SMMC ≥ SRC ) = 0.87,

V (SRC ≥ SMC ) = 0.67 , V (SRC ≥ SPEC ) = 0.92 , V (SRC ≥ SMMC ) = 1.00. Then the

normalised weight vector from Table 6.2 is calculated as

WACI = (0.36, 0.25, 0.16, 0.24). Based on these results, it is concluded that in the

agency cost components, the material, plant and equipment and rehabilitation costs

appear to be more important than the rehabilitation costs in highway investment

decisions. The other two matrices relevant to pairwise comparisons of the sub-

criteria of social and environmental cost components and the relative importance of

each matrix are given in Table 6.3 and Table 6.4, respectively.

The normalised weight vector from Table 6.3 is calculated as WSCI = (0.68, 0.32)T .

It is observed that for the social cost components in highway infrastructure, road

accident- internal costs play a much more important role than other criteria.

The normalised weight vector from Table 6.4 is calculated as

WECI = (0.33, 0.25, 0.14, 0.28)T . From this result it is deduced that the most

important criteria for the environmental cost components in highway investment

decisions in this project are hydrological impacts, disposal of material costs and loss

of wetland. Table 6.5 presents the composite priority weights obtained by the

evaluation of the significance of sustainability-related cost components in highway

infrastructure investments with respect to the main criteria and sub-criteria.

6.4.2.2 Evaluation of alternatives

In the following step of the evaluation procedure, the alternatives in the case project

were compared based on three main highway bridge design alternatives with respect

to each of the sub-criteria separately. These results in the matrices are shown in

Tables 6.6 to 6.15. Alternative 1 except for three sub-criteria with respect to major

maintenance costs, rehabilitation costs and hydrological impacts, shows a good

performance in terms of all criteria. Alternative 3 is the weakest except for the three

sub-criteria in which it shows the highest performance level. This means that

industry stakeholders in this project consider the Alternatives 1 and 2 as being more

satisfactory than Alternative 3 in considering long-term highway infrastructure

sustainability.


Table 6.5: Composite priority weights for sustainability-related cost components

evaluation criteria

Main Criteria Local weights

Sub-criteria Local weights

Agency category 0.43 Material costs 0.36

Plant and equipment costs 0.25

Major maintenance costs 0.16

Rehabilitation costs 0.24

Social category 0.27 Road accident- internal costs 0.68

Road accident- economic value of damage 0.32


0.30 Hydrological impacts 0.33

Loss of wetland 0.25

Cost of barriers 0.14

Disposal of material costs 0.28

Table 6.6: Evaluation of the alternatives with respect to material costs

A1 A2 A3 WMC

Alternative 1 (1,1,1) (1,3/2,2) (2,5/2,3) 0.60

Alternative 2 (1/2,2/3,1) (1,1,1) (3/2,2,5/2) 0.37

Alternative 3 (1/3,2/5,1/2) (2/5,1/2,2/3) (1,1,1) 0.04

Table 6.7: Evaluation of the alternatives with respect to plant and equipment costs

A1 A2 A3 WPEC

Alternative 1 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.52

Alternative 2 (1/2,2/3,1) (1,1,1) (3/2,2,5/2) 0.39

Alternative 3 (2/5,1/2,2/3) (2/5,1/2,2/3) (1,1,1) 0.08

Table 6.8: Evaluation of the alternatives with respect to major maintenance costs

A1 A2 A3 WMMC

Alternative 1 (1,1,1) (2/5,1/2,2/3) (2/5,1/2,2/3) 0.12

Alternative 2 (3/2,2,5/2) (1,1,1) (2/5,1/2,2/3) 0.30

Alternative 3 (3/2,2,5/2) (3/2,2,5/2) (1,1,1) 0.58


Table 6.9: Evaluation of the alternatives with respect to rehabilitation costs

A1 A2 A3 WRC

Alternative 1 (1,1,1) (2/5,1/2,2/3) (1/3,2/5,1/2) 0.04

Alternative 2 (3/2,2,5/2) (1,1,1) (1/2,2/3,1) 0.37

Alternative 3 (2,5/2,3) (1,3/2,2) (1,1,1) 0.60

Table 6.10: Evaluation of the alternatives with respect to road accident- internal costs

A1 A2 A3 WRA-IC

Alternative 1 (1,1,1) (1,3/2,2) (1,3/2,2) 0.46

Alternative 2 (1/2,2/3,1) (1,1,1) (3/2,2,5/2) 0.42

Alternative 3 (1/2,2/3,1) (2/5,1/2,2/3) (1,1,1) 0.12

Table 6.11: Evaluation of the alternatives with respect to road accident- economic value of damage

A1 A2 A3 WRA-EVD

Alternative 1 (1,1,1) (1/2,2/3,1) (1,3/2,2) 0.35

Alternative 2 (1,3/2,2) (1,1,1) (1,3/2,2) 0.47

Alternative 3 (1/2,2/3,1) (1/2,2/3,1) (1,1,1) 0.18

Table 6.12: Evaluation of the alternatives with respect to hydrological impacts

A1 A2 A3 WHI

Alternative 1 (1,1,1) (1/2,2/3,1) (1/3,2/5,1/2) 0.30

Alternative 2 (1,3/2,2) (1,1,1) (2/5,1/2,2/3) 0.14

Alternative 3 (2,5/2,3) (3/2,2,5/2) (1,1,1) 0.55

Table 6.13: Evaluation of the alternatives with respect to loss of wetland

A1 A2 A3 WLW

Alternative 1 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.56

Alternative 2 (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.34

Alternative 3 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.09


Table 6.14: Evaluation of the alternatives with respect to cost of barriers

A1 A2 A3 WCB

Alternative 1 (1,1,1) (1,3/2,2) (1/2,1,3/2) 0.38

Alternative 2 (1/2,2/3,1) (1,1,1) (1/2,1,3/2) 0.28

Alternative 3 (2/3,1,2) (2/3,1,2) (1,1,1) 0.34

Table 6.15: Evaluation of the alternatives with respect to disposal of material costs

A1 A2 A3 WDMC

Alternative 1 (1,1,1) (3/2,2,5/2) (1,3/2,2) 0.55

Alternative 2 (2/5,1/2,2/3) (1,1,1) (1,3/2,2) 0.29

Alternative 3 (1/2,2/3,1) (1/2,2/3,1) (1,1,1) 0.16

6.4.2.3 Final scores of alternatives

In Tables 6.16 to 6.19, this research presents the last computations in order to obtain

the alternative priority weights of alternatives. This is done by gathering the weights

over the hierarchy for each alternative. To achieve this, the weights of each criterion

are multiplied to a decision alternative, and then those results are summed up over all

the different pathways to that decision alternative. By combining the weights for the

sub-criteria and alternatives, the priority weight of each alternative is calculated in

(Büyüközkan et al. 2004). The final score results can be ascertained from the final

priority weights presented in Table 6.19.

Table 6.16: Priority weights of the alternatives with respect to agency aspects

MC PEC MMC RC Alternative Priority Weights

Weights 0.36 0.25 0.16 0.24

Alternative 1 0.60 0.52 0.12 0.04 0.37

Alternative 2 0.37 0.39 0.30 0.37 0.36

Alternative 3 0.04 0.08 0.58 0.60 0.27


Table 6.17: Priority weights of the alternatives with respect to social aspects

RA-IC RA-EVD Alternative Priority Weights

Weights 0.68 0.32

Alternative 1 0.46 0.35 0.43

Alternative 2 0.42 0.47 0.43

Alternative 3 0.12 0.18 0.14

Table 6.18: Priority weights of the alternatives with respect to environmental aspects

HI LW CB DMC Alternative Priority Weights

Weights 0.33 0.28 0.14 0.28

Alternative 1 0.30 0.56 0.38 0.55 0.45

Alternative 2 0.14 0.34 0.28 0.29 0.25

Alternative 3 0.55 0.09 0.34 0.16 0.30

Table 6.19: Final scores of the alternatives

ACI SCI ECI Alternative Priority Weights

Weights 0.43 0.27 0.30

Alternative 1 0.37 0.43 0.36 0.41

Alternative 2 0.36 0.43 0.22 0.35

Alternative 3 0.27 0.14 0.14 0.24

The main result is that Alternatives 1 and 2 are the preferred key decisions. It appears

all stakeholders would agree that these cost components are important in this

highway infrastructure investment. Moreover, based on the final scores in Table

6.19, it can also be concluded that Alternative 3 has a relatively low score in overall

design alternatives based on the sub-criteria. In order to have more holistic results in

terms of financial benefit, the next section discusses the life-cycle cost calculation

and selects the most economical alternative.


6.4.3 LCCA calculation for quantitative indicators

Five available cost components, including construction, materials, major

maintenance, rehabilitation and road accident costs, are estimated using the LCCA

process. This process treats these costs as resources of a highway infrastructure

structure. The magnitude of the required amount of the costs represents the economic

efficiency of a project development. Assuming that all future costs and temporal

intervals for maintenance, operation, and rehabilitation are equivalent, the future

costs are significant enough to enable relative comparisons to be made in this case

study. There are three alternatives to be compared. The future opportunity costs were

evaluated and acquired from various sources such as industry published reports and

project reports. However, the costs of the construction method and material are

significantly variable depending on specific project requirements, complexity of the

project, capability of the contractor, market conditions, and all other unexpected

risks. Therefore, the reasonable judgment of the decision maker is required to make a

sensible comparison of these cost items.

As shown in Table 6.20, the deterministic LCCA computes three alternatives project

strategies. The discount rate used in this analysis is 4 percent, and a 28-year analysis

period is used.

Table 6.20: Determination of activity timing

Year Alt. 1 Alt. 2 Alt. 3 0 Initial Construction Initial Construction Major Maintenance 12 Maintenance costs for

12 years (per annum) Maintenance costs for 12 years (per annum)

20 Major rehabilitation 8 years annual maintenance, Stage 2 Construction

5 years annual maintenance, Major rehabilitation

28 End-of-life of existing bridge and new construction needed

35 End of Analysis Period

Alternative 1 is characterised by few construction and rehabilitation activities

compared to Alternatives 2 and 3, but the activities require more extensive and costs

compared to the others. Alternative 2 requires two stages of construction and requires


more frequent use of rehabilitation activities to maintain the service level of the

highway infrastructure compared to Alternative 1. Meanwhile, in Alternative 3, there

is no initial construction but several huge maintenance and rehabilitation activities

are needed to maintain the services of the existing highway infrastructure compared

to Alternatives 1 and 2.

The expenditure on maintenance activities is necessary to keep old Wallaville Bridge

open. Maintenance costs are estimated in short-, medium- and long-term options, as

shown in Table 6.21. The estimated costs for providing services to local traffic

ranged from $36,000 to $231,000 depending on how long the bridge would remain in

service.

Table 6.21: Estimated expenditures to keep old bridge open

Items Maintenance Costs ($) Short

term

(2 years)

Medium term

(7 years)

Medium- long term

(15 years)

Long term

(20 years)

Guardrail repair/ replacement 20,000 20,000 20,000 20,000 Alkali- aggregate reaction monitoring

16,000 56,000 70,000 79,000

Ongoing maintenance 26,000 42,000 Fixed joint repairs 4,000 4,000 4,000 Expansion joint repairs 6,000 6,000 6,000 Replacement of superstructure elements

80,000

Total 36,000 86,000 126,000 231,000

Agency and social costs for each activity are in constant, base year dollars. Social

costs are based upon average accident costs. Costs to year 28 reflect the value of the

remaining service life for each alternative in that year. Based on the data reported in

Table 6.22 and Table 6.23, due to the uncertain life span of the existing bridge for

Alternative 3, the bridge was assumed to reach the end of life at year 28. During that

stage, construction costs were three times higher based on the existing capital costs

of Alternative 1. This value was calculated based on the future value with the

consideration of 4% interest. As a result, the value for construction costs was turned

out to be $73,168,361.


Table 6.22: Costs of agency and social category

Cost Items Alt. 1 Alt. 2 Alt. 3 Capital costs ($’000) 24,400 18,090 5000 Maintenance cost ($’000 per annum) 52 52 52 Additional expenditure for old bridge open N/A 126,000 231,000 Salvage value ($’000) N/A 500 500 Average accident cost ($) 64,000 64,000 64,000

Table 6.23: Computation of expenditure by years

Year Alt. 1 Alt. 2 Alt. 3 0 24,400,000 18,090,000 5,000,000 12 624,000 624,000 20 231,000 18,321,000 5,231,000 28 73,168,361

End of Analysis Period

Using the discount factor, with the interest rate of 4%, the present value is calculated

using Equation 15, for each of the agency and social costs. Based on the results

shown in Table 6.24, Alternative 1 has the lowest combined agency and social costs,

where as Alternative 2 has the lower initial construction. However, Alternative 3 has

no initial construction costs but more construction costs are needed in year 28.

Table 6.24: Computation of life-cycle cost analysis

Year Discount Factor Alt. 1 ($) Alt. 2 ($) Alt. 3 ($)

0 1.0000 24,400,000 18,090,000 5,000,000

12 0.6246 0 389,749 389,749

20 0.4564 57,505 8,361,465 2,387,360

28 0.3335 0 0 24,400,000


Total Cost (PV) 24,457,505 26,841,214 32,177,109

Based on the information alone, the decision makers could lean toward either

Alternative 1 (based on overall costs) or Alternative 2 (due to its lower initial

construction costs). Alternative 3 turns out to be the worse choice as more overall

cost is needed at year 28. However, more analysis might improve the accuracy of the

decision. The following section explains in detail the weighted sum model (WSM) to

combine both results generated from Fuzzy AHP and LCCA.


6.4.4 Final decision making

The weight sum model is used to obtain final the decision. The summary of the two

modular results are presented in Table 6.25. The WSM process is based on higher

value preferred normalised results. The weight factors were calculated based on

Equation 19.

Table 6.25: Summary of sustainability assessment results

Items Alt 1 Alt.2 Alt.3 Fuzzy AHP 0.41 0.35 0.24 LCCA Calculation ($) 24,457,505 26,841,214 32,177,109

Table 6.26 presents the summary of the normalised two modular results. The sum of

each row is equal to one and the total sum of all values is equal to the number of

modular results. The relative importance of each result is expressed in weight factors

for WSM as shown in Table 6.27 and Figure 6.5. The summation of each column

yields prioritisation of sustainability and long-term financial assessment by selecting

a particular alternative. In this case, Alternative 1 was selected as the main priority

compared to the other two alternatives in this project.

Table 6.26: Summary of normalised sustainability assessment result

Assessment Items Alt. I Alt. II Alt. III Total Fuzzy AHP 0.409 0.350 0.241 1.000

LCCA 0.591 0.409 0.000 1.000 Total 1.000 0.758 0.241 2.000

Table 6.27: Weight factors for normalised sustainability assessment results and final

prioritisation

Assessment Items Weight Factor Alt. I Alt. II Alt. III Fuzzy AHP 0.5 0.204 0.175 0.121

LCCA 0.5 0.296 0.204 0.000 Total 1 0.500 0.379 0.121

Prioritisation

1 2 3


Figure 6.5: Final decision making by WSM

6.4.5 Sensitivity analysis

Sensitivity analysis serves to verify the weakness of final result reversion by

changing the weight factors of WSM. The selected calculation process for the

sensitivity analysis is based on changing a weight factor, which is subject to the

analysis. When a value of a weight factor is changed by the sensitivity analysis, other

weight factors are decreased or increased by proportional changes of the weight

factor. Then, these adjusted weight factors and changed weight factor are multiplied

by the normalised assessment results. The total sum of the two weight factors is

always equal to one. Proportional adjustments for other weight factors are calculated

by Equation 21.

6.4.5.1 Sensitivity analysis for Fuzzy AHP

Weight factors for AHP raging from 0.1 to 0.9 are applied to perform sensitivity

analysis, as shown in Table 6.28. The sensitivity analysis result shows that there is a

reversion of the decision making by changing the weight factor of Fuzzy AHP which

is originally 0.5. As indicated in Figure 6.6, the gap between the three alternatives

reduces as the Fuzzy AHP weight factor increases. In conclusion, there is a

possibility to change the final decision making by increasing or decreasing the

significance of the Fuzzy AHP. However, for this analysis, it is shown that any

00.10.20.30.40.50.60.70.80.9

1

AHP Cost Total

WF Alt. I Alt. II Alt. III


changes in the Fuzzy AHP weight factors cannot possibly reverse the most

sustainable alternative selection, which is Alternative 1.

Table 6.28: Changes in prioritisation value by changing the Fuzzy AHP weight factors

Fuzzy AHP Weight Changes Alt. I Alt. II Alt. III 0.1 0.57 0.40 0.02 0.2 0.56 0.40 0.05 0.3 0.54 0.39 0.07 0.4 0.52 0.39 0.10 0.5 0.50 0.38 0.12 0.6 0.48 0.37 0.15 0.7 0.46 0.37 0.17 0.8 0.45 0.36 0.19 0.9 0.43 0.36 0.22

Figure 6.6: Sensitivity analysis for Fuzzy AHP weight factor changes

6.4.5.2 Sensitivity analysis for LCCA

Weight factors for life-cycle cost analysis, ranging from 0.1 to 0.9, are applied to

perform sensitivity analysis as shown in Table 6.29. The sensitivity analysis result

0.01

0.11

0.21

0.31

0.41

0.51

0.61

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Fina

l Res

ult C

hang

es

Fuzzy AHP Weight Factor ChangesAlt. I Alt. II Alt. III


shows that there is no reversion of the decision-making by changing the weight

factor of the life-cycle cost component, which is originally 0.5. As indicated in

Figure 6.7, the gap between the three alternatives is getting wider as the LCC weight

factor increases. As a result, there is no possibility to change the final decision by

increasing or decreasing the significance of LCC impacts in this case study.

Therefore, any potential disagreement between industry stakeholders regarding to the

LCC is unlikely.

The model application in Case A has drawn several achievements and

recommendations that should be considered by the researcher. The summary of the

model application is further explained in Section 6.6.

Table 6.29: Changes in prioritisation value by changing the LCC weight factors

LCC Weight Changes Alt. I Alt. II Alt. III 0.1 0.43 0.36 0.22 0.2 0.45 0.36 0.19 0.3 0.46 0.37 0.17 0.4 0.48 0.37 0.15 0.5 0.50 0.38 0.12 0.6 0.52 0.39 0.10 0.7 0.54 0.39 0.07 0.8 0.56 0.40 0.05 0.9 0.57 0.40 0.02


Figure 6.7: Sensitivity analysis for LCCA weight factor changes

6.5 Model Application in Case Study B - Northam Bypass

The Great Eastern Highway presently runs through the town of Northam (Figure

6.8). This current alignment has inherent problems for local traffic in terms of

congestion and the frequency of accidents. Further problems include noise and visual

pollution caused by traffic, particularly heavy vehicles. To alleviate these problems,

three different alignments and alternatives around the town have been proposed.

0.01

0.11

0.21

0.31

0.41

0.51

0.61

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Fina

l Res

ult C

hang

es

LCCA Weight Factor Changes

Alt. I Alt. II Alt. III


Figure 6.8: Alternative alignment options of Northam Bypass (EPA 1993)

6.5.1 Project alternatives

According to the project report, three alternatives were considered in the case

project:

• Route 9 (R9): after the common staring point, Route 9 traverses an area

through rural farming land requiring bridges over the railway, Avon River,

Katrine Road and Irishtown Road. Route 9 then passes over the Northam-

Pithara Road, behind the Doctors Hill locality and to the north of the

Northam racecourse to finally link up with the existing Great Eastern

Highway. In 1993 terms, the Route 9 alignment would cost approximately

$32 million to construct. Main Roads propose to construct the bypass in two

stages. Stage 1 will involve the construction of a single carriageway with land

acquisitions and road reserves capable of eventually accommodating the

second (stage 2) carriageway. Overall, the final dual carriageway bypass

including median strip and road reserve will be approximately 33 metres

wide, with its length dependent upon the chosen alternative route.

• Route 6 (R6): from the common starting point (88.9 km from Perth) this route

then traverses the railway line and Avon River requiring bridges for both


crossings. The alignment then continues along the northern bank of the Avon

for approximately 2 kilometres, passing the Northam Cemetery and then

through the Doctors Hill locality. The Doctors Hill portion of this route

requires extensive cut and fill to achieve required gradients and some noise

minimisation. Finally, Route 6 crosses the Mortlock River and another

railway line before running behind the Northam Racecourse and linking up

with the existing Great Eastern Highway. In 1993 terms, the Route 6

alignment would cost approximately $38 million to construct.

• Route 6A (R6A): after the common staring point Route 6A crosses the

railway line and Avon River then continues in a wide arc around the Northam

Cemetery requiring some degree of cut and fill. The route then continues in

an easterly direction and travels along the northern bank of the A von until it

links up with the same alignment as Route 6 to eventually re-join the existing

Great Eastern Highway. In 1993 terms, the Route 6A alignment would cost

just over $40 million to construct.

6.5.2 Fuzzy AHP for qualitative indicators

To create pairwise comparison matrices, a group of five stakeholders involved in this

project was interviewed. Then, the fuzzy evaluation matrix relevant to the goal was

obtained with the consensus of the stakeholders.

6.5.2.1 Evaluation of criteria weight

As set out earlier in Section 6.4.2.1, the decision makers in this project commented in

the form of linguistic expressions about the importance of the sustainability-related

cost components in highway infrastructure (Appendix C2). The consistency of the

pairwise comparison matrices were examined and it was determined that all the

matrices were consistent. By applying formula (2), (8) and (10), the weight vector is

calculated as W′ = (1.00, 0.63, 0.69)T . After normalisation, the normalised weight

vectors of the objective with respect to the cost component criteria ACI, SCI and ECI

from Table 6.30 are obtained as WObjective = (0.43, 0.27, 0.30)T .


The answers from the decision makers indicate that the agency and environmental

categories are more important than the social category in long-term financial

management for highway infrastructure investment. As a consequence, the

consideration of agency and environmental categories can result in much greater

efficiency for highway infrastructure investment decisions. In a similar pattern, the

sub-criteria with respect to the main criteria are compared, beginning with, the sub-

criteria of agency cost components. Table 6.31 presents the results for the relative

importance of agency cost components in sub-criteria.

The normalised weight vectors for Table 6.31 are calculated based on formula (2),

(8) and (10) as shown in Section 5.3.2 and the results are shown as WACI =

(0.29, 0.25, 0.25, 0.21). From these results, it is concluded that agency cost

components such as the material, plant and equipment, and major maintenance costs

appear to be more important than the rehabilitation costs in highway investment

decisions. The other two matrices relevant to pairwise comparisons of the sub-

criteria of social and environmental cost components and, the relative importance of

each matrix are given in Table 6.32 and Table 6.33, respectively.


Table 6.30: The fuzzy evaluation matrix with respect to the goal

ACI SCI ECI

Agency category (1,1,1) (1, 3/2, 2) (1, 3/2, 2)

Social category (1/2, 2/3, 1) (1,1,1) (1/2,1,3/2)

Environmental category (1/2, 2/3, 1) (2/3,1,2) (1,1,1)

Table 6.31: The relative importance of agency cost components

MC PEC MMC RC

Material costs (1,1,1) (1/2, 1, 3/2) (1, 3/2, 2) (1, 3/2, 2)

Plant and equipment costs (2/3, 1, 2) (1,1,1) (1/2, 1, 3/2) (1/2, 1, 3/2)

Major maintenance costs (1/2, 2/3, 1) (2/3, 1, 2) (1,1,1) (1, 3/2, 2)

Rehabilitation costs (1/2, 2/3, 1) (2/3, 1, 2) (1/2, 2/3, 1) (1,1,1)

Table 6.32: The relative importance of social cost components

RA-IC RA-EVD

Road accident- internal costs (1,1,1) (1, 3/2, 2)

Road accident- economic value of damage (1/2, 2/3, 1) (1,1,1)

Table 6.33: The relative importance of environmental cost components

HI LW CB DMC

Hydrological impacts (1,1,1) (1/2, 1, 3/2) (3/2, 2, 5/2) (1, 3/2, 2)

Loss of wetland (2/3, 1, 2) (1,1,1) (3/2, 2, 5/2) (1, 3/2, 2)

Cost of barriers (2/5, 1/2, 2/3) (2/5, 1/2, 2/3) (1,1,1) (2/5, 1/2, 2/3)

Disposal of material costs (1/2, 2/3, 1) (1/2, 2/3, 1) (3/2, 2, 5/2) (1,1,1)

The normalised weight vector from Table 6.32 is calculated as 𝑊𝑊𝑆𝑆𝐶𝐶𝑆𝑆 = (0.68, 0.32)𝑇𝑇 .

It is observed that the social cost components, namely road accident - internal costs,

play a much more important role than road accident - economic value of damage.


The normalised weight vectors from Table 6.33 are calculated as WECI =

(0.34, 0.34, 0.26, 0.06)T. From this result, it is deduced that the most important

criteria for this project base on the environmental cost components in highway

investment decisions are hydrological impacts and loss of wetland. Table 6.34

presents the composite priority weights obtained by the evaluation of the significance

of sustainability-related cost components in highway infrastructure investments with

respect to the main criteria and sub-criteria.

6.5.2.2 Evaluation of alternatives

In the following step of the evaluation procedure, the alternatives in the case projects

were compared based on three main highway bridge design alternatives with respect

to each of the sub-criteria separately. The results in the matrices are shown in Tables

6.35 to 6.44. Route 9 shows a good performance in terms of all criteria. Route 6 is

the weakest among the three alternatives except for rehabilitation costs and cost of

barriers in which it shows a higher performance level compared to Route 6A. This

means that industry stakeholders in this project consider the Route 9 option to be

satisfactory than Route 6A and Route 6 in long-term financial management for

highway infrastructure taking into account the sustainability objectives.

Table 6.34: Composite priority weights for sustainability-related cost components evaluation criteria

Main Criteria Local Weights

Sub-Criteria Local Weights

Agency category 0.43 Material costs 0.29

Plant and equipment costs 0.25

Major maintenance costs 0.25

Rehabilitation costs 0.21

Social category 0.27 Road accident- internal costs 0.68

Road accident- economic value of damage 0.32


0.30 Hydrological impacts 0.34

Loss of wetland 0.34

Cost of barriers 0.26

Disposal of material costs 0.06


Table 6.35: Evaluation of the alternatives with respect to material costs

R9 R6A R6 WMC

Route 9 (1,1,1) (3/2,2,5/2) (3/2,2,5/2) 0.51

Route 6A (2/5,1/2,2/3) (1,1,1) (1/2,2/3,1) 0.31

Route 6 (2/5,1/2,2/3) (1,3/2,2) (1,1,1) 0.19

Table 6.36: Evaluation of the alternatives with respect to plant and equipment costs

Table 6.37: Evaluation of the alternatives with respect to major maintenance costs

Table 6.38: Evaluation of the alternatives with respect to rehabilitation costs

R9 R6A R6 WRC

Route 9 (1,1,1) (1,3/2,2) (1,3/2,2) 0.45

Route 6A (1/2,2/3,1) (1,1,1) (1/2,1,3/2) 0.26

Route 6 (1/2,2/3,1) (2/3,1,2) (1,1,1) 0.29

Table 6.39: Evaluation of the alternatives with respect to road accident- internal costs

R9 R6A R6 WRA-IC

Route 9 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.60

Route 6A (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.35

Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.05

R9 R6A R6 WPEC

Route 9 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.58

Route 6A (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.35

Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.08

R9 R6A R6 WMMC

Route 9 (1,1,1) (1,3/2,2) (1/2,1,3/2) 0.38

Route 6A (1/2,2/3,1) (1,1,1) (1,3/2,2) 0.34

Route 6 (2/3,1,2) (1/2,2/3,1) (1,1,1) 0.29


Table 6.40: Evaluation of the alternatives with respect to road accident- economic

value of damage

R9 R6A R6 WRA-EVD

Route 9 (1,1,1) (1,3/2,2) (1,3/2,2) 0.47

Route 6A (1/2,2/3,1) (1,1,1) (1/2,2/3,1) 0.18

Route 6 (1/2,2/3,1) (1,3/2,2) (1,1,1) 0.35

Table 6.41: Evaluation of the alternatives with respect to hydrological impacts

R9 R6A R6 WHI

Route 9 (1,1,1) (3/2,2,5/2) (3/2,2,5/2) 0.71

Route 6A (2/5,1/2,2/3) (1,1,1) (1,3/2,2) 0.28

Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.02

Table 6.42: Evaluation of the alternatives with respect to loss of wetland

R9 R6A R6 WLW

Route 9 (1,1,1) (1,3/2,2) (3/2,2,5/2) 0.71

Route 6A (2/5,1/2,2/3) (1,1,1) (1,3/2,2) 0.28

Route 6 (2/5,1/2,2/3) (1/2,2/3,1) (1,1,1) 0.02

Table 6.43: Evaluation of the alternatives with respect to cost of barrier

R9 R6A R6 WCB

Route 9 (1,1,1) (2,5/2,3) (3/2,2,5/2) 0.80

Route 6A (1/3,2/5,1/2) (1,1,1) (1/2,1,3/2) 0.02

Route 6 (2/5,1/2,2/3) (2/3,1,2) (1,1,1) 0.18

Table 6.44: Evaluation of the alternatives with respect to disposal of material costs

R9 R6A R6 WDMC

Route 9 (1,1,1) (1,3/2,2) (1,3/2,2) 0.55

Route 6A (1/2,2/3,1) (1,1,1) (1/2,1,3/2) 0.29

Route 6 (1/2,2/3,1) (2/3,1,2) (1,1,1) 0.16


6.5.2.3 Final scores of alternatives

Tables 6.45 to 6.48 present the last computations to obtain the priority weights of

these project alternatives. This is accomplished by aggregating the weights over the

hierarchy for each decision alternative. The evaluation process are similar as

discussed in Section 6.4.2.3. These weight values represent the overall score result,

as shown in Table 6.48.

Table 6.45: Priority weights of the alternatives with respect to agency aspects

MC PEC MMC RC Alternative Priority Weights

Weights 0.29 0.25 0.25 0.21

Route 9 0.51 0.58 0.38 0.45 0.48

Route 6A 0.31 0.34 0.34 0.26 0.31

Route 6 0.19 0.08 0.29 0.29 0.21

Table 6.46: Priority weights of the alternatives with respect to social aspects

RA-IC RA-EVD Alternative Priority Weights

Weights 0.68 0.32

Route 9 0.60 0.47 0.56

Route 6A 0.35 0.18 0.30

Route 6 0.05 0.35 0.14

Table 6.47: Priority weights of the alternatives with respect to environmental aspects

HI LW CB DMC Alternative Priority Weights

Weights 0.34 0.34 0. 26 0.06

Route 9 0.71 0.71 0.80 0.45 0.72

Route 6A 0.28 0.28 0.02 0.26 0.21

Route 6 0.01 0.01 0.18 0.29 0.07


Table 6.48: Final scores of the alternatives

ACI SCI ECI Alternative Priority Weights

Weights 0.43 0.27 0.30

Route 9 0.48 0.56 0.63 0.57 Route 6A 0.31 0.30 0.17 0.28 Route 6 0.21 0.14 0.14 0.15

Route 9 is the preferred option in this project, and all stakeholders agreed that the

cost components in this option are important in this highway infrastructure

investment. It also concluded that the Route 6 option has a relatively low score in

overall design alternatives based on the sub-criteria. The next section discusses the

real cost calculation and select the most economical option to generate a more

holistic result in terms of financial benefit.

6.5.3 LCCA calculation for quantitative indicators

Three available cost items, including construction, maintenance and rehabilitation

costs, are estimated for the LCCA cost estimation process. Construction costs are

acquired from current industry reports such as the survey from bid schedules and

published reports. Maintenance and rehabilitation costs are based on the construction

cost references and expert interviews. The LCCA cost estimation process treats costs

as resources of a highway infrastructure. Assuming that all future costs and temporal

intervals for maintenance, operation and rehabilitation are equivalent, the future costs

are significant enough to enable relative comparisons in this case study. There are

three alternatives (Route 9, Route 6 and Route 6A) to be compared in this case. The

future opportunity costs were evaluated and acquired from various sources such as

industry published reports and project reports. However, the cost of the construction

method and material costs is changeable depending on specific project requirements,

density of the project, capability of the contractor, market conditions, social and

environmental effects, and all other unexpected risks. Therefore, the reasonable

judgment of the decision maker is required to make a sensible comparison of these

cost items.


The LCCA computes three alternatives project strategies. The discount rate used in

this analysis is 4 percent, and a 28-year analysis period is used. Table 6.49 presents

the LCCA comparison of three alternative project strategies. Each alternative

supplied the same level of performance or benefit, so the application of LCCA is

appropriate. In this case, Route 9 is characterised by an initial construction and one

rehabilitation activity in 20 years compared to Route 6 and 6A which have similar

construction costs, but are more focused on major maintenance activities every eight

years. R6 and R6A require three stages of major maintenance and require a more

frequent use because the R6 and 6A pass through the town centre of Northam, so

there is a significant volume of vehicles and more intersections in between. More

maintenance activities are needed to maintain the level of service of the highway

infrastructure compared to R9.

Table 6.49: Determination of activity timing

Year Route 9 (R9) Route 6 (R6) Route 6A (R6A) 0 Initial Construction Initial Construction Initial Construction 12 Maintenance one (8-

year service life) Maintenance one (8-year service life)

20 Rehabilitation one (20-year service life)

Maintenance two (8-year service life)

Maintenance two (8-year service life)

28 Maintenance three (8-year service life)

Maintenance three (8-year service life)


The LCCA costs for each activity are constant. Table 6.50 shows all the activities

associated with the alternative routes. The total sum of R9 turns out to be the highest

compared to other routes, which is $47 million considering several activities

throughout its life span. Meanwhile, R6 has a lower overall cost which is $39.872

million compared to R6A at $41.872 million. Table 6.51 computes all the

expenditures for the three routes based on the costs to year 28. This reflects the value

of the remaining service life for each alternative in year 28. This value was

calculated based on the future value with the consideration of 4% interest.


Table 6.50: Costs of agency and social category

Cost items R9 R6 R6A Construction Costs ($’000) 32,000 38,000 40,000 Maintenance Cost One ($’000 per annum) 624 624 Maintenance Cost Two ($’000 per annum) 624 624 Maintenance Cost Three ($’000 per annum) 624 624 Rehabilitation Cost ($’000 per annum) 15,000 Total 47,000 39,872 41, 872

Table 6.51: Computation of expenditure by years

Year R9 R6 R6A 0 32,000,000 38,000,000 40,000,000 12 624,000 624,000 20 15,000,000 624,000 624,000 28 624,000 624,000

End of Analysis period

Using the discount factor, with the interest rate of 4%, the present value is calculated

using Equation 15, for each of the agency and social costs.

Table 6.52: Computation of life-cycle costs

Year Discount Factor R9 ($) R6 ($) R6A ($) 0 1.0000 32,000,000 38,000,000 40,000,000

12 0.6246 0 389,749 389,749

20 0.4564 6,845,804 284,785 284,785

28 0.3335 0 208,090 208,090


Total Cost (PV)

38,845,804 38,882,624 40,882,624

Based on the results shown in Table 6.52, R9 has the slightly lowest present value on

the overall cost after computing the present value calculation. R6 has the lower initial

costs but in terms of the present value, it is slightly higher than R9. R6A has lower

initial construction costs but ends up being the highest after calculating the present

value for 28 years. Based on the information alone, the decision maker could lean

toward either R9 (based on overall costs throughout its life span) or R6 (due to its

lower initial costs). However, more analysis might improve the accuracy of the


decision. The following section explains in details the Weighted Sum Model (WSM)

to combine the results generated from the Fuzzy AHP and LCCA.

6.5.4 Final decision making

As discussed in Section 6.4.4, WSM serves to obtain a final decision which changes

the two modular results into weighted factors that are standardised to be calculated.

The summary of the two modular results are presented in Table 6.53. The WSM

process is based on higher value preferred normalised results. The weight factors

were calculated based on Equation 19.

Table 6.53: Summary of weighted sum assessment results

Items R9 R6 R6A Fuzzy AHP 0.57 0.28 0.15 LCCA Calculation ($)

38,845,804 38,882,624 40,882,624

Table 6.54 presents the summary of the normalised two modular results. The sum of

each row is equal to one and the total sum of all values is equal to the number of

modular results. The relative importance of each result is expressed in weight factors

for WSM as shown in Table 6.55 and Figure 6.9. The summation of each column

yields prioritisation of sustainability and long-term financial assessment by selecting

a particular alternative. In this case, R9 was selected as the main priority compared to

the other two alternatives in this project.


Table 6.54: Summary of normalised weighted sum assessment results

Assessment Items R9 R6 R6A Total Fuzzy AHP 0.572 0.278 0.151 1.000

LCCA 0.505 0.495 0.000 1.000 Total 1.076 0.773 0.151 2.000

Table 6.55: Weight factors for normalised weighted sum assessment results and final

prioritisation

Assessment Items Weight Factor R9 R6 R6A Fuzzy AHP 0.5 0.286 0.139 0.075

LCCA 0.5 0.252 0.248 0.000 Total 1 0.538 0.386 0.075

Prioritisation

1 2 3

Figure 6.9: Final decision making by WSM

6.5.5 Sensitivity analysis

As discussed in Section 6.4.5, sensitivity analysis are conducted through the process

as stated in Section 5.6. Equation 21 calculates proportional adjustments for other

weight factors. The total sum of the two weight factors in this case is always equal to

one. The following sections demonstrate the sensitivity analysis for the model.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

AHP Cost Total

WF R9 R6 R6A


6.5.5.1 Sensitivity analysis for Fuzzy AHP

Weight factors for Fuzzy AHP ranging from 0.1 to 0.9 are applied to perform

sensitivity analysis as shown in Table 6.56. The sensitivity analysis result shows that

there is a reversion of the decision making by changing the weight factor of Fuzzy

AHP, which is originally 0.5. As indicated in Figure 6.10, the gap between R9 and

R6 widens while the gap between R6 and R6A reduces as the Fuzzy AHP weight

factor increases. In conclusion, there is a possibility to change the final decision by

increasing or decreasing the significance of the Fuzzy AHP. However, for this

analysis, it is shown that any changes in Fuzzy AHP weight factors cannot possibly

reverse the most sustainable and cost viability selection, which is Route 9.


Fuzzy AHP Changes R9 R6 R6A 0.1 0.511 0.474 0.015 0.2 0.518 0.452 0.03 0.3 0.525 0.43 0.045 0.4 0.531 0.408 0.06 0.5 0.538 0.386 0.075 0.6 0.545 0.365 0.091 0.7 0.551 0.343 0.106 0.8 0.558 0.321 0.121 0.9 0.565 0.299 0.136


Figure 6.10: Sensitivity analysis for Fuzzy AHP weight changes

6.5.5.2 Sensitivity analysis for LCCA

Weight factors for, life-cycle cost analysis ranging from 0.1 to 0.9, are applied to

perform sensitivity analysis as shown in Table 6.57. The sensitivity analysis result

shows that there is no reversion of the decision-making by changing the weight

factor of LCC, which is originally 0.5. As indicated in Figure 6.11, the gap between

R9 and R6 reduces while the gap between R6 and R6A widens as the LCC weight

factors increases. As a result, there is no possibility to change the final decision by

increasing or decreasing the significance of LCC impacts in this case study.

Therefore, a potential disagreement between industry stakeholders regarding the life-

cycle cost analysis is unlikely.

The model application in Case B has drawn several achievements and

recommendations that should be considered by the researcher. The summary of the

model application is further explained in Section 6.6.

0.01

0.11

0.21

0.31

0.41

0.51

0.61

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Fina

l Res

ult C

hang

es

AHP Weight Factor ChangesR9 R6 R6A



LCC Weight Changes R9 R6 R6A 0.1 0.565 0.299 0.136 0.2 0.558 0.321 0.121 0.3 0.551 0.343 0.106 0.4 0.545 0.365 0.091 0.5 0.538 0.386 0.075 0.6 0.531 0.408 0.06 0.7 0.525 0.43 0.045 0.8 0.518 0.452 0.03 0.9 0.511 0.474 0.015

Figure 6.11: Sensitivity analysis for LCCA weight factor changes

0.01

0.11

0.21

0.31

0.41

0.51

0.61

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

Fina

l Res

ult C

hang

es

LCC Weight Factor Changes

R9 R6 R6A


6.6 Summary of Model Application

Based on the model application in Case A and B, it concluded that the integration of

Fuzzy AHP and LCCA into the proposed model has generated systematic and

informative assessment approaches to deal with highway investment decisions. This

model proved its capability to evaluate sustainability-related cost components, which

is one that cannot be done by existing tools. This study has gone a step further by

incorporating Weighted Sum Model (WSM) and sensitivity analysis into the model.

WSM generates normalised value for the assessments and sensitivity analysis deals

with uncertainty decisions before decision makers obtain final decision.

Implementation of the decision in both case studies resulted in several lessons that

could enhance the outcomes of future applications. The model process needs to be

facilitated to be truly effective. In Case A, an introduction to the model and several

examples of Fuzzy AHP and LCCA assessment were provided (similar to the process

used on Case B) however, there was still some confusion, specifically pertaining to

identifying an appropriate base case and how to interpret the definitions.

There are several lessons learned specific to the application of the model in the case

projects. The researcher has evaluated the alternatives based on the projects and then

introduced the model. In Case A and B, the process was facilitated and many of the

unclear items or interpretations were clarified as several iterations were undertaken.

It appears several iterations and feedback loops to facilitate a common understanding

of the definitions and evaluation indicates that there is a learning curve associated

with the model application.

This is to be expected as it is a new decision support tool. Since all the performance

categories are not used in typical day-to-day industry practice, additional time is

required to work with the definitions in order to fully understand them. Some

components will be more valuable to certain projects depending on the scenario and

requirement of the projects. This provided a clear understanding about the model

application so participants can evaluate alternatives in a systematic and effective

manner in the future. This is an important element to consider when applying it in

future projects.


6.7 Validation of the Model

The model was applied in real highway infrastructure projects through case studies.

To enrich the findings of a finalised model, a discussion was conducted with the

industry stakeholders involved in the case studies. Their respective professional

backgrounds, experiences and also their involvement in the case projects makes them

best fit to test and validate the proposed model. The discussions revealed some of the

industry feedback and comments that could enhance the model and make it more

applicable and user friendly for industry practice.

The process of model validation starts with first, once the preliminary model was

developed, the researcher made a separate appointment with each participant. The

objective of the session was explained. These application and enhancement processes

were conducted through the discussion sessions which focused on the following

areas of investigation:

1. The application of the proposed preliminary model in real case projects.

2. The problems associated with the proposed preliminary decision support

models in handling highway investment.

3. The extent to which the proposed model are consistent with good practice in

the highway industry in dealing with highway investment decisions.

4. The success of the developed model and the practitioners’ comments and

opinions about the improvement of the model.

The comments and opinions of the participants were recorded for later editing. The

participants were asked about their satisfaction with the research findings. The

results indicated the two case projects’ members were satisfied with the model in

general. The results from the case studies demonstrate three supportive feedback

from the decision makers to the model:

• The proposed model is capable of actually assess qualitative factors

(environmental and partial social cost components) and quantify quantitative

factors (agency and partial social cost components) of a highway

infrastructure project. Five out of ten quantitative and qualitative cost


components related to sustainable measures were actually evaluated through

Fuzzy AHP and LCCA assessment approaches that were actually

implemented on the two case study projects.

• The decision makers agreed that the evaluation decisions can enhance

sustainability performance on highway infrastructure projects. By using

Fuzzy AHP to evaluate the qualitative factors, stakeholders may able to rate

the importance of the related cost components based on the scenario of the

projects as well as the requirement of the projects. This shows that unquantify

factors can also be assess with suitable assessment tools while quantify

factors can convert into real cost data.

• The model shows that sensitivity analysis can be adapted to aid stakeholders

in dealing with uncertainty future decision.

The senior decision makers of both projects proposed that the platform for

developing decision support model should be added into the model for better

understanding on its function in dealing with highway investment decisions.

Reviewing the model development and testing has proven the validation of the

model. Overall, the model has achieved the objective that it can assist industry

stakeholders to evaluate highway infrastructure projects and compare alternative

choices based on the sustainability indicators. The positive and supportive feedback

from the industry stakeholder representatives encourages the consideration of further

improvement to the preliminary proposed model. These comments are considered to

revise the model and finalise it in the following chapter.

6.8 Chapter Summary

This chapter reported the findings from phase 4 of the research process that involved

the case study method. The findings from the case study answered the third research

question: How to assess the long-term financial viability of sustainability measures

in highway projects?

The conclusions drawn from the case study results have verified the findings from

the literature (Chapter 2) and survey (Chapter 4). This chapter has outlined findings

regarding the application of the model and the data analysis from the case study.


Specifically, it demonstrates the model application and also how it supports decision

making for stakeholders. Two highway infrastructure case projects were selected to

test and evaluate the model. Based on both case projects, three alternatives from each

project were used to test and evaluate the model. The alternatives were evaluated by

using Fuzzy AHP and LCCA approaches to identify the most suitable alternative in

terms of long-term highway infrastructure investment. As summarised in the

comparison as in Table 6.58, the industry stakeholders agreed that the proposed

model is useful in supporting the decision-making process. Accordingly, the results

on this model pave the way for further discussions on findings and model finalisation

of the overall research to be reported in more detail in the following chapter.


Table 6.58: Comparison of the case study results with literature and survey findings

Research Objective

Relevant Subjects Literature Findings

Survey Findings Case Study Findings

To develop a decision support

model for the evaluation of long-

term financial decisions regarding

sustainability for highway projects

Industry status and LCCA application in highway infrastructure

Refer to Table 4.14 for details

The scenario is based on the Australian highway industry:

• Applied in huge and new highway infrastructure development

• Promoting LCCA application in highway infrastructure

• Understanding of the LCCA concept is still evolving

Both highway infrastructure projects were used to demonstrate the application of the decision support model. The case studies indicate the following results:

• The model employs multi-criteria evaluation method (Fuzzy AHP) to analyse sustainability-related cost components.

• The model can employ industry stakeholders’ experiences and knowledge as an input for the model evaluation process.

• This model improves the existing models by integrating Fuzzy AHP with the LCCA method to develop a new decision support model.

Critical sustainability-related cost components in highway infrastructure

The questionnaire survey indicates the following result:

• Ten critical cost components related to sustainability measures in highway infrastructure investments.

Challenges of integrating sustainability-related cost components in LCCA

The interviews indicate the following results:

• Limitations methods and models in dealing with cost components related to sustainability measures.

• Lack of quality assumptions and data to deal with these costs

• Employ multi-criteria evaluation methods in analysis of sustainability-related cost components

• Need to improve the existing models

The needs for a decision support model to assist in highway investment decisions

Chapter 7: Findings and Model Finalisation 201

CHAPTER 7: FINDINGS AND MODEL FINALISATION

7.1 Introduction

This chapter integrates the quantitative (questionnaire survey) and qualitative (semi-

structured interview and case Studies) data of the mixed methods. Integration of the

quantitative and qualitative data provides a mechanism to further explain the results

and findings of the main issues arising out of this study and in the context of the

literature review as reviewed in Chapter 2. The analysis and discussion of the results

and findings are centred on the interpretation of the quantitative and qualitative data

contained in Chapter 4 (questionnaire survey and semi-structured interviews),

Chapter 5 (model development) and Chapter 6 (case studies), and the insights with

the concepts identified in the literature review. This chapter is designed as an

opportunity to address the aim, objectives and questions of the research. The main

conclusion drawn from this integration process is presented in the next chapter.

The analysis, interpretation and literature review support the findings which

crystallised into the formation of the decision support model. The development of the

model has enabled the author to accomplish the overall aim of this research, that is,

to develop and recommend a decision support model for handling long-term financial

decisions in Australian highway projects.

This chapter is divided into seven sections. The first section concentrates on

synthesising phases 1 to 4 for interpretation and discussion. The next section

discusses the critical sustainability-related cost components in highway

infrastructure. This section discusses the three dimensions of sustainability and the

framework of the industry verified cost components. Next, the sustainability

enhancement for LCCA is outlined. This section is followed by a discussion on

industry practice of LCCA and the challenges of incorporating sustainability into

LCCA. Subsequently, the long-term financial management in highway infrastructure

and model finalisation is then presented, followed by a summary of this chapter.

202 Chapter 7: Findings and Model Finalisation

7.2 Synthesising Phases 1 to 4 for Interpretation and Discussion

Four phases of this study were implemented to address the research questions. The

literature review in Phase 1 was aimed at gaining a broad spectrum of the cost

implications of pursuing sustainability in highway projects. Based on the review of

literature, this study managed to identify 14 main and 42 sub-cost components

related to sustainable measures (as shown in Table 5.1 in Chapter 5) for the in-depth

investigation into the subject of the research. The questionnaires and interviews in

Phase 2 focused specifically on the highway infrastructure industry in Australia to

identify the critical cost components related to sustainable measures. In this phase,

the quantitative and qualitative findings were used to assist in explaining,

interpreting and extending the results. Phase 3 of this study involved model

development, which identified the industry verified cost components in existing

LCCA models for further development. The case studies in Phase 4 concentrated on

the application and verification of the decision support model for evaluating the

long-term financial decisions regarding sustainability in highway projects.

Four main areas are discussed as follows:

• Critical sustainability-related cost components - the discussion and

interpretation in this section integrates quantitative data (questionnaire

survey). These data emanated from the current industry practice of LCCA,

industry verified cost components related to sustainable measures and

challenges of enhancing sustainability in LCCA practice in the context of

highway infrastructure (addresses Research Question 2).

• Sustainability enhancement for LCCA practice - the discussion and

interpretation in this section integrates critical factors from the interview

findings (addresses Research Questions 2).

• Long-term financial management in highway investment - the discussion

and interpretation in this section involve the integration of quantitative data

and results as well as critical factors from the interview data and model

development (addresses Research Questions 2 and 3).


• Model Finalisation - the discussion and interpretation in this section involve

the integration of quantitative and qualitative data and results as well as

critical factors from the model development and case study data (addresses

Research Question 3).

The questionnaire, interview and case study data suggest that a fuller understanding

and a holistic view of developing a decision support model for long-term financial

investments in Australian highway projects are possible. The overwhelming amount

of evidence collected from the literature review, questionnaires, interviews and case

studies across the range of highway industry practice gave a strong indication of the

validity. One obvious factor from the evidence is that the development of a decision

support model for highway investment with sustainability objective is not as straight-

forward as giving a ‘how?’ answer but it is necessity to provide the ‘what?’,

‘where?’, ‘who?’, ‘when?’ and ‘why?’ components of that answer. Answering the

question ‘How to assess the long-term financial viability of sustainability measures

in the highway project?’ is considered within all the categories and sub-categories

that encapsulate this study’s aim and objectives and therefore, need to be considered

as a whole.

7.3 Critical Sustainability-Related Cost Components

Premised on the sustainability-related cost components from the review of literature,

the study employed questionnaire survey advanced into its subsequent stage –

identifying the most critical cost components in highway investments with

sustainability objectives. Figure 7.1 shows an expanded view of the industry verified

sustainability-related cost components in highway infrastructure. These critical cost

components reflect the consensus opinions of a group of experienced highway

industry stakeholders in both theory and practice of highway infrastructure

development. The discussions are further interpreted in the following sections.


7.3.1. Agency dimension of sustainability

Highway infrastructure development usually involves huge capital. Agency cost is an

important consideration over the highway’s lifetime. The findings from the

questionnaire indicated that the material, plant and equipment costs are the main cost

criteria that considered in highway investment. These costs significantly influence

the overall profit margin of the highway investment. This is consistent with Wilde,

Waalkes and Harrison (2001) who found that agency cost is still a major cost that

needs to be included into the highway investment and design decision process.

Major maintenance and rehabilitation costs were also highly rated by industry

stakeholders in the questionnaire. These costs usually contribute to the annual cost as

the maintenance and rehabilitation activities are applied in a given year to improve

the highway pavement. However, the strategies of maintenance and rehabilitation

depend on the predicted pavement condition as well as the real condition of the

highway infrastructure. This finding is also supported by the observation by Widle,

Waalkes and Harrison (2001) that the pavement is evaluated at the end of each year

by the performance models, and the distress levels are evaluated by the strategies’

modules. These models and modules are able to assist the stakeholders in identifying

an appropriate maintenance and rehabilitation strategy for a highway infrastructure

project.

Agency Cost Components

Social Cost Components

Environmental Cost

Components

Material Plant and Equipment

Major Maintenance

Rehabilitation

Hydrological impacts

Loss of wetlands

Disposal cost of materials

Cost of barriers

Road Accident- internal cost

Road accident - economic value

of damage

Figure 7.1: Critical sustainability-related cost components in Australian highway

infrastructure projects


7.3.2. Social dimension of sustainability

One of the interesting points of the social dimension of sustainability in the highway

infrastructure investment is related to health and safety impacts. Stakeholders

considered internal, external or economic value of damage as the most important

components compared to other cost components in highway investment. Highway

accident costs comprise a huge portion of costs over overall highway investment.

The general high rating indicates very high levels of awareness about health and

safety-related matters in highway infrastructure development and the wider society.

Meanwhile, the results from the questionnaire and interviews also highlighted that

improving highway performance and quality is one of the factors to improve

highway health and safety. Tighe et al. (2000) who found that the incidence of road

accidents has a strong relationship with the pavement condition. Another study also

found that traffic accident frequencies are based on different pavement conditions

(Chan, Huang et al. 2010). It is of interest that all stakeholders’ were aware of the

need to consider accident costs as part of overall highway investment costs.

7.3.3. Environmental dimension of sustainability

Differences of the importance level of cost components were found between groups

of stakeholders. Government agencies and local authorities rated hydrological

impacts as the most important factors in highway investment decisions, where as

consultants rated it as the third most important and contactors rated it as the twelfth

most important factor in environmental category. These differences suggest a general

understanding among government agencies and consultants that government

statutory instruments are effective in controlling water quality and minimising

pollution that often emanates from highway infrastructure development. On the other

hand, the questionnaire results also indicate that contractors are not really concerned

about the hydrological impacts as long-term impacts. The reason for this may be that

contractors have no liability after projects are finished, as highlighted by Tighe

(2001).


Based on the questionnaire findings, the cost of the disposal of materials is another

environmental cost that stakeholders are concerned about. Contractors rated it as the

most important component in highway investments, consultants rated it as the third

most important, while government agencies rated it at seventh among all the

environmental cost components. This result indicates that contractors are more

concerned about the direct waste generation costs occur in highway infrastructure

construction. In contrast, government agencies are less concerned about the cost of

material disposal because contractors are the key players in waste management in

highway construction. This result is supported by Lingard, Graham and Smithers

(2000) who found that contractors are responsible for the waste management, the

fees for which represent a significant cost to them. Waste management involves

many complex interactions such as transportation systems, land use, public health

considerations and interdependencies in the system such as disposal and collection

methods. A well managed plan is needed to prevent over-expenditures in these

activities.

7.4 Enhancement of LCCA for Sustainability Measures

Making highway investment decisions is complex. Several tools currently available

aim to structure, simplify this complexity, and support the decision maker in a

highway infrastructure investment situation. However, as indicated by the findings

from the semi-structured interviews, several of these tools are insufficient for the

problems faced in highway investment decision-making. To solve some of these

problems, the results from the interview suggested future efforts in the development

of decision support tools in the following areas:

(1) Further development of tools that integrate social, environmental and micro-

economic dimensions. This approach follows the ‘a little is better than

nothing’ advice and is foremost supported by the decision makers’ familiarity

with economic units. It is advocated by the work of Epstein (2008).

(2) Improve the understanding of socially and environmentally-related decision-

making and use of tools such as the multi-criteria decision support approach.

This approach acknowledges that individuals in making decisions use

cognitive skills, which are influenced by both personal values and perceived


benefits. Recognising the decision maker’s behaviour, an extended approach

and a way forward is to develop and use decision strategies that also consider

cognitive aspects.

(3) Extend the system boundaries by complementing LCC-oriented tools with

tools that focus on physical measures, for example LCCA and Fuzzy AHP

methods in this study. This combination of analysis methods is also supported

by Koo, Ariaratnam and Kavazanjian (2009) and recognises the social and

environmental aspects more extensively. The interview findings also revealed

that the recognition of the decision maker’s cognitive skills is essential to

deal with highway investment decisions.

The development of a decision support model for this study builds upon the findings

from the literature, questionnaires and interviews revealing a range of issues related

to adopting sustainability-related cost components into LCCA, including the

following obstacles:

• Lack of data,

• Lack of contractual agreements, and

• Lack of standardisations.

A life-cycle perspective is important since it extends the system boundaries and

incorporates some costs that are incurred in the future. Using a multi-criteria decision

support approach, such as Fuzzy AHP, in making investment decisions both long-

term economic values as well as social and environmental cost components are

considered. In contrary, Gluch and Baumann (2004) argue that life-cycle cost

analysis is an imperfect theoretical base as its limitation in quantifying social and

environmental-related cost components must be recognised. This issue was also

acknowledged in this study. The interview findings reveal that decision makers use

decision support tools to rationally evaluate options (alternatives) to make an optimal

decision.

Another interesting finding is a change towards more socially and environmentally

responsible behaviour in the highway infrastructure industry which requires a wider

understanding of the decision maker’s situation and behavior. This recognises the


importance of other decision processing aspects in addition to making a rational

choice among alternatives in highway investment decisions.

As a result, the extended perspective of the decision-making context gives rise to a

focus in this research on stakeholders from different backgrounds who should

cooperate. The outcome of this research is the development of a model that involves

people in the decision process, such as brainstorming about the sustainability issues

and about decision options based on financial consideration.

7.4.1. Industry practice of LCCA

This study provided evidence that LCCA is acknowledged as a robust evaluation

technique for choosing between different types of pavements for highway

infrastructure. The potential benefits of the LCCA and the applicability of this

technique to evaluate highway investment is recognised by the industry stakeholders.

This is supported by the work of Ozbay et al. (2004b) and Gluch and Baumann

(2004).

The interview results confirmed that highway infrastructure projects are of

considerable importance to politicians and individual interest groups. This study

showed that the governmental guidelines and reports on LCCA (or any evaluation

technique) could significantly influence its actual implementation. Any guidance

must be even-handed and based on proven scientific research. For example, the

Association of Australian and New Zealand Road Transport and Traffic Authorities

(

Government agencies are usually required to prepare a highway construction and

planning program that highlights the activity in the long-term. Therefore, a

construction program needs to be closely monitored. Any government departments

involved are likely to be queried and must be prepared to defend the situation

publicly as well as in the legislature. Typically, when projects are priced, their costs

are estimated in term of the current cost of the projects, and this estimate is not

Austroads) has developed a guideline for the discount rate value, the analysis

period, the inclusion of the user delay cost during rehabilitation activities, and the

intention of adopting the probabilistic approach.


adjusted to fit the future situation. These cost increases can be amplified at a higher

rate in the near future. This significantly affects the overall cost of an investment.

Stakeholders are able to estimate future funding and project costs by life-cycle cost

analysis. This was also evident in the study conducted by Wilmot and Cheng (2003)

who found that future funding is obviously never known and involves a great deal of

uncertainty. In contrast to the work of Gerbrandt and Berthelot (2007), LCCA is able

to guide the decision makers in forecasting future funding and reducing the risk of

project investments.

This study found that the industry stakeholders rely on their expert opinion and past

practices to establish the life-cycle strategies for the alternatives, which specify the

timing of rehabilitation, upgrading and reconstruction. An asset forecast life is a

major influence on life-cycle analysis (Woodward 1997). An error in forecast may

cause a huge difference when predicting the costs for an asset such as highway

infrastructure with a 50 to 60 year life span. To minimise the errors, the utilisation of

theoretical and historical data in life-cycle cost analysis becomes crucial in long-term

highway investment. This finding is also supported by Hastak, Mirmiran and Richard

(2003) and Arja, Sauce and Souyri (2009), but is contrary to Carroll and Johnson

(1990) who observed that descriptive decision-making studies have shown that

individuals are not making rational decisions, especially when uncertainty is

involved because of complex and long-term consequences, which is typical for

highway investment decisions.

An appropriate discount rate is a crucial decision in a life-cycle cost analysis. The

industry stakeholders in dealing with LCCA evaluation use specific discount rates.

Usually the discounted rates are based on the Austroads standard; however, an

appropriate adjustment is needed to suit the project’s environment. Therefore, this

study shows that theoretical and historical data are significantly important for

decision makers to evaluate competing initiatives and find the most sustainable

growth path for the highway infrastructure.


7.4.2. Challenges of incorporating sustainability into LCCA

The interview results brought to light the general tendency of Australian highway

industry to exclude some cost components encountered by communities and

environments (especially during normal operations) from the LCCA of transportation

projects based on the assumption that such costs are common to all alternatives.

The inclusion/ exclusion of social and environmental costs: Research on how to

quantify and monetise such costs – vehicle operating costs, comfort, risk and

reliability, noise and health effects – continues to grow as these cost components are

proven to be significant based on years of empirical and theoretical research results.

More importantly, in considering social and environmental costs, industry

practitioners tend to exclude these costs in their analysis based on the unfounded

argument that these components are not real costs, let alone the difficulty in

monetising these externalities (Surahyo and El-Diraby 2009).

A monetary value: ‘Sustainability’ LCCA aims at translating social and

environmental problems into a one-dimensional monetary unit. However, this study

found that the attempts of life-cycle cost analysis to translate these problems into a

monetary unit may oversimplify reality. Neoclassical economic theory presupposes

that all relevant aspects have a market value, that is, a price. The interview findings

showed that there are items that are not possible to price. This leads to monetary

calculations being incomplete with regard to socially and environmentally-related

cost components. Many economic theorists suggest different ways to put a price on

social environmental items, for example through taxes (Pearce and Turner 1990;

Hanley, Shogren and White 1997; Turner, Pearce and Bateman 1994), but this study

argues that it is impossible to catch all relevant aspects of these complex problems

into one monetary figure. A similar finding was drawn from the research conducted

by Surahyo and El-Diraby (2009). The monetarism of LCC consequently results in

loss of important details which in turn limits the decision maker’s possibility to

obtain a comprehensive view of these problems.

Decision-making under uncertainty situation: This research observed that industry

stakeholders usually have overlooked the uncertainty factor when applying LCCA.


The social and environmental consequences of a highway investment decision often

occur long after the decision was made, and not necessarily in the same location.

Furthermore, these decisions have cumulative effects on social and ecological

systems, which are difficult to detect (Arja, Sauce and Souyri 2009; Gilchrist and

Allouche 2005; Yu and Lo 2005). A similar finding was drawn from the semi-

structured interviews, in which interviewees agreed that issues that are not

considered as problems today may well be in the future. In the same way, today’s

social and environmental problems were not anticipated yesterday. Long-term

investment decisions with large social and environmental impacts therefore are

characterised by considerable uncertainty at all stages of the decision-making

process, such as the problem definition, possible outcomes and probabilities of the

outcomes (Arja, Sauce and Souyri 2009).

Business and Political influences: The questionnaire and interview results show

that investment decisions for a highway infrastructure are affected by business,

physical and institutional uncertainties, this findings also highlighted by Alam,

Timothy and Sissel (2005); Chou et al. (2006); Gerbrandt and Berthelot (2007) and

Gransberg and Molenaar (2004). Physical risks are often due to uncertainty about a

highway infrastructure’s design or a material’s functional characteristics and

performance change during its lifetime. Such uncertainty may involve the material

being found unsuitable through new scientific evidence has become unsuitable.

Business uncertainty is connected to unpredictable fluctuations in the market and

institutional uncertainties reflected in the effect of changing regulations on

infrastructure development. Many political decisions can instantly change the “rules

of the game”. It is also easy to predict that materials and components that are

difficult to recycle will be expensive to dispose of in the future both for technical

reasons and due to increasing disposal taxes. This study revealed that the political

decisions, external market factors, institutional regulations and environmental

changes may also lead to changing conditions.

Irreversible decisions: Another interesting finding from the interviews is that

analysis that relies on estimation and valuation of uncertain future incidents and

outcomes (social and environmental cost components) is problematic. There are

numerous techniques available that attempt to decrease the uncertainty of future


consequences, for example scenario forecasting, sensitivity analysis, probability

analysis, decision trees and Monte Carlo simulation (Hastak, Mirmiran and Richard

2003; Hong, Han and Lee 2007; Tighe 2001). However, these techniques presuppose

that decision makers are aware of the nature of the uncertainties that can be expected

during the highway’s lifetime. A study of risk management (Li and Madanu 2009)

revealed that stakeholders when conducting a sensitivity analysis of life-cycle cost

analysis only considered tangible aspects such as interest rate. Furthermore, when

estimating social and environmental cost components, the stakeholders relied more

often on their intuition and rules of thumb than on techniques, such as sensitivity

analysis.

7.5 Model Finalisation

Based on all the findings discussed above relating to the critical sustainability-related

cost components and sustainability enhancement for LCCA practice, a platform of

overall scenario of long-term financial management with sustainability objective in

highway infrastructure development has been established. The platform, illustrated in

Figure 7.2 summarises and provides an overall picture of the current industry’s

practice, challenges and perspectives on sustainability enhancement for current

LCCA in the context of highway infrastructure development.

The framework clearly outlines the links between current industry practices on

LCCA, challenges of integrating sustainability-related cost components into LCCA

and the various stakeholders’ perceptions of sustainability enhancement as identified

in the interviews. In addition, the questionnaire findings also encapsulated the ten

critical sustainability-related cost components pertinent to the highway infrastructure

project.

The platform serves as a clear picture for understanding the current industry practice

and general perceptions held by the various stakeholders in long-term highway

infrastructure investment with the sustainability objective.


Challenges of integrating cost related to sustainability measures

• The inclusion/ exclusion of social and environmental costs

• A monetary value • Decision-making under uncertainty

situation • Business and political influences • Uncertainties evaluation techniques • Irreversible decisions

Industry practice of LCCA application

• Industry recognition of LCCA

• The theoretical and historical data of LCCA

• Government guidelines and reports

Sustainability enhancement for LCCA practice • Further development of tools that integrate social, environmental and

micro-economic dimensions • Extend the system boundaries by complementing LCC-oriented tools • Improve the understanding of socially and environmentally related

decision-making through multi-criteria decision support approach.

Sustainability-related cost components in highway infrastructure development

Social Category • Road Accident -

Internal Cost • Road Accident -

Economic Value of Damage


• Hydrological impacts

• Loss of wetlands • Disposal of

material • Cost of barriers

Agency Category • Material • Plant and Equipment • Major Maintenance • Rehabilitation

Questionnaire Results and Findings Interview Results and Findings

Development of Decision Support Model for Highway Investment Decisions

Figure 7.2: Platform for developing financial decision support model in highway infrastructure sustainability


By knowing the overall status and challenges that the industry is currently facing,

strategies to improve and encourage the industry stakeholders to enhance life-cycle

cost analysis with sustainability objective can be better organised and articulated. By

closely monitoring of the implementation of sustainability measures against LCCA,

this study ensures that assessing highway investment can be more informative and

systematic, therefore resulting in better decisions for overall sustainability


Premised on this platform, the research advanced into its subsequent stage – the

development of the decision support model, the application in real case projects and

the evaluation through the case studies. Based on the findings of these last

development steps, the proposed decision support model was finalised with minor

improvements. The finalised decision support model is shown in Figure 7.3 and

revealed the suggestion from the participants to incorporate the platform into the

model to generate a clear picture on the functions of the model in dealing with

highway investment decisions.


PLATFORM FOR DEVELOPING DECISION SUPPORT MODEL

Agency Category

Social Category


Sustainability- Related Cost Components

Sustainability enhancement for LCCA practice

Industry practice of LCCA application

Challenges of integrating sustainability-related costs

Qualitative Quantitative

Assessment Methods for Cost Components

Fuzzy Analytical Hierarchy Process (Fuzzy AHP)

• Evaluation of criteria weight

• Evaluation of alternatives • Final score of alternatives

Life-Cycle Cost Analysis (LCCA)

• Determination of activity timing

• Computation of expenditure by year

• Compute of life-cycle cost analysis

Final Decision Making Process • Applying weight sum model to total up final scores

Fuzzy AHP LCCA

Sensitivity Analysis

• Changes in prioritisations value by changing the Fuzzy AHP weight factors

• Changes in prioritisations value by changing the LCCA weight factors

Model Validation • Application of the proposed preliminary model in real case

projects • Problems associated with the proposed model • Comments and opinions to improve the model

FINANCIAL DECISION SUPPORT MODEL FOR HIGHWAY INFRASTRUCTURE

SUSTAINABILITY Applying in real

case projects

Enh

anci

ng th

e m

odel

Feedback from project stakeholders

Figure 7.3: The finalised financial decision support model for highway infrastructure

sustainability


Results of the propositions analysed in the validation phase demonstrate that the

decision support model successfully performed the intended functions:

• The ability of the model to emulate a systematic evaluation process was

satisfied.

• The rating system provides a comprehensive fuzzy value to be evaluated and

analysed in the model.

• The results show that it identifies significant project decisions and the

appropriate timing on a project.

• The ability of the model to generate new and innovative solutions was also

demonstrated.

In total, the above four aspects in the validation phase were satisfied, which provide

sufficient evidence to validate the functionality of the model to perform as intended.

Results from the numerical phase demonstrate the alternatives selected in the study

are consistent with an independent review of historical data and therefore are

accurate and reliable. Since the result in the numerical phase was satisfied, this

provides strong evidence to support the numerical validation of the model. The

interviewed project stakeholders acknowledged that the model could improve

investment decisions in the highway infrastructure projects.

The case studies demonstrate that the model is capable to evaluate quantitative as

well as qualitative cost components. However, based on the study conducted by

(Surahyo and El-Diraby 2009), there is a clear inconsistency in the evaluation

methods used by researchers and practitioners to estimate these costs. This study

proved that with the application of Fuzzy AHP and LCC approach, these cost

components can be consistently evaluated based on the weighted factors.

One other noteworthy observation is the influence of decision-making process of the

stakeholders in evaluating highway investment decisions. The systematic nature of

evaluation process shows the ability of Fuzzy AHP to define the linguistic scale of

decision into fuzzy value. The results from the Fuzzy AHP demonstrated the

systematic evaluation process, illustrating its ability to efficiently convert human


linguistic idea into value that follow the scientific method when evaluating highway

infrastructure alternative solution.

Additionally, the cost data that can be retrieved from the case projects also provides a

mechanism to define value on a project team decisions. The value generated from

Fuzzy AHP and LCCA assessment is explicitly tailored to the projects with the

model weighting factors. The resulting weighted factors objectively define the value

on the project and are used to determine how well aligned each alternative is with the

specified project priorities and scenario. This function was applied during the model

application on two real case studies to assist the decision makers in determining

which alternatives to implement in the projects.

7.6 Chapter Summary

This chapter discusses the results from the questionnaires, interviews, model

development and case study findings, concerning chapters 4, 5 and 6. Firstly, the

critical cost components related to sustainable measures in highway infrastructure

development were discussed. These components included the various stakeholders’

perceptions of the cost components that are crucial in highway investment decisions.

Following the industry verification, the cost components were consolidated into ten

main sustainability-related cost components, which constitute the critical cost

components for Australian highway infrastructure investments. It is crucial to further

investigate the current industry practice, how these cost components are quantified

and the challenges to incorporating these cost components.

Therefore, the major contributions from the interviews include the identification of

current industry practice in life-cycle cost assessment, the challenges of integrating

sustainable measures into LCCA practice and the stakeholders’ perspectives on

sustainability enhancement for LCCA. These findings were used to formulate the

overall scenario of long-term financial management in highway infrastructure which

served as a preliminary model for subsequent investigation. The conclusion of the

questionnaires and interviews paved the way and lead to the development of the

model. This model was tested and evaluated through the case studies. The model


were tested and evaluated by industry stakeholders based on two real highway


The derived findings from the three unique research approaches were included in the

establishment of the decision support model to assist industry stakeholders in

investment decisions for Australian highway infrastructure projects as the outcome

of this research.

Chapter 8: Conclusion 219

CHAPTER 8: CONCLUSION

8.1 Introduction

Australia is putting a great emphasis on the development and rejuvenation of

highway infrastructure because of the recent resource boom and regional economic

growth. Stakeholders of these highway projects need to respond to the sustainability

challenge while ensuring the associated financial implications and risks are dealt

with and in control. This calls for a better decision support tool to help with reaching

investment decisions among the complex sets of issues and agenda. This study

developed a decision support model in dealing with highway investment decisions

with sustainability objectives.

This chapter presents the achievement of the research through the review of research

objectives and development processes in Section 8.2, prior to the presentation of the

conclusions to the research objectives in Section 8.3. Research contributions are

discussed in Section 8.4, the study limitations in Section 8.5, and the

recommendations for future research in Section 8.6.

8.2 Review of Research Objectives and Development Processes

The research objectives were established when the research gap was identified

through a review of literature (Chapter 2). This review was undertaken in

consultation with the industry practitioners and academics.

Specifically, this research sought to achieve the following objectives:

• To understand the cost implications of pursuing sustainability in highway

projects.

• To identify the critical cost components related to sustainable measures in

highway infrastructure investments.

220 Chapter 8: Conclusion

• To develop a decision support model for the evaluation of long-term financial

decisions regarding sustainability for highway projects.

The objectives provided a clear direction upon which the research advanced with

confidence. Three interrelated but distinctive approaches to data acquisition were

selected and adopted in this research, namely:

1) Questionnaires distributed to industry stakeholders to confirm the cost

components related to sustainable measures that are significant in highway

infrastructure investments.

2) Semi-structured interviews among experienced practitioners and academics to

explore the current practice of life-cycle cost analysis, challenges to enhance

sustainability in the life-cycle cost analysis and the suggestions of the various

stakeholders towards financially sustainability in Australian highway

infrastructure.

3) Case studies conducted to apply proposed decision support model based on real

case scenarios and collect expert opinions as well as real-life project information

to enhance and validate the model.

8.3 Research Objectives and Conclusions

Three objectives were posed to address the aim of this research. The following sub-

sections revisit the research objectives and present the conclusions and key findings from

the interpretation and discussion of the results reported in the previous chapters.

8.3.1. Research objective 1

RO 1. To understand the cost implications of pursuing sustainability in highway

projects.

The literature review (Chapter 2) found that public awareness and the nature of

highway construction works demand that sustainability measures are put on top of

the development agenda. There are some stakeholders who consider sustainability as

extra work that costs extra money. However, stakeholders in general have realised


the importance of pursuing sustainability in infrastructure development. They are

keen to identify the available alternatives and financial implications on a life-cycle

basis. Due to the complex nature of decision making in highway infrastructure

development, expertise and tools to aid the evaluation of investment options, such as

provision of environmentally sustainable features in roads and highways, are highly

desirable.

Benefit-cost analysis (BCA) and life-cycle cost analysis (LCCA) are generally

recognised as valuable approaches for long-term financial investment decision

making for construction works. However, LCCA applications in highway

development are still limited. This is because the current models focus on economic

issues alone and are not able to deal with sustainability factors, which are more

difficult to quantify and encapsulate in estimation modules. Based on the literature

review, the limitation of current LCCA models and programs can be summarised as

follows:

1. inconsistent estimation method in environmental and social costs calculation,

2. unclear boundaries in considering sustainability impacts,

3. difficult to quantify sustainability-related cost components, and

4. ambiguity in identifying relevant costs for LCCA in highway projects.

While sustainability and long-term financial management are the logically linked to

highway infrastructure projects, past research for this industry sector mainly focused

on traditional LCCA methods. Little has been done to incorporate sustainability-

related cost components into LCCA practice, especially in highway infrastructure.

There is a need to find effective ways to enhance sustainability foci in LCCA, along

with the development of long-term financial decision support methods. The gap must

be closed between the traditional LCCA practice and the need for a new decision

support model capable of taking account into financial sustainability assessment.

Thus, the identification of sustainability-related cost components for assessing

highway investments is becoming imperative.

This research addressed these problems by identifying the relative importance of the

various costs components in highway infrastructure projects. A set of key cost


components related to sustainable measures in highway infrastructure projects was

produced as listed in Table 2.6 in Chapter 2. There are three main cost categories

based on the study of previous Australian highway infrastructure projects:

• Agency category,

• Social category, and

• Environmental category.

These cost categories are expanded into 14 main factors with 42 sub factors for in-

depth investigation (see Table 2.6). This achieved the first objective of the research

and paved the way for the pursuit of the second objective.


RO 2. To identify the critical cost components related to sustainable measures in

highway infrastructure investments.

The industry practitioners, based on their perceptions and experience, evaluated these

identified cost components through questionnaire surveys (in Chapter 4). The most

critical industry verified cost components in highway investments in the Australian

context were therefore revealed. These ten critical cost components were ascertained

against the proposed decision support model.

The interviews with senior industry stakeholders found that LCCA practice has

increasing recognition in the contemporary industry. Government agencies are

putting a significant emphasis on early identification of the financial outlook when

contemplating highway infrastructure investment. With improving social awareness,

they will also need to overcome the traditional imbalance between sustainable

measures and project budgets. Meanwhile, government reports provided by agencies

and associations also significantly impact on the LCCA implementation. The

Australian industry stakeholders rely on these reports, their expert opinion and past

practices to establish the life-cycle strategies for the highway infrastructure

alternatives. This inclusion of theoretical and historical data is significant for


decision makers to evaluate competing initiatives and find the most sustainable

growth path for highway infrastructure.

The above findings provide a platform for the formulation of a preliminary decision

support model capable of embedding sustainability objectives and considerations for

highway investment decisions. Thus, it provides a holistic industry perception of

enhancing sustainability in LCCA and critical cost components related to sustainable

measures in the context of highway infrastructure development. This view allows the

formulation of a decision support model. This helped to achieve the second objective

and provide an imperative next step towards developing of a decision support model

to aid decision makers in highway investment.


RO 3. To develop a decision support model for the evaluation of long-term financial

decisions regarding sustainability for highway projects.

Ten most important cost components related to sustainable measures were

determined against the proposed model. There is a need of multi-criteria decision

support approaches to evaluate the model. Fuzzy AHP, LCCA, Weighted Sum

Model (WSM) and sensitivity analysis were employed to develop the model. At this

point, the researcher evaluated the proposed decision support model with integrated

procedures of application and evaluation (as mentioned in Chapter 5) through case

studies (as documented in Chapter 6). Two highway infrastructure projects were

selected to apply, test and evaluate the model based on the project alternatives.

The model provides project stakeholders with guided decision-making assistance

when contemplating alternatives. This process also demonstrates that, a systematic

model in dealing with highway investment decisions. This confirms the findings

from previous empirical case studies in Chapter 6 that the validation of the model

should focus on the comments and suggestions from project stakeholders. Therefore,

a finalised financial decision support for highway infrastructure sustainability has

been developed (refer to Chapter 7). The formulation of the decision support model

achieved the third objective of this study.


8.4 Research Contributions

This research has contributed the knowledge and understandings of life-cycle cost

analysis in highway infrastructure in the context of maximising sustainability

initiatives and potentials. The specific contribution is according to two different

perspectives: the contributions to academic knowledge and to the infrastructure

industry.

8.4.1. Contribution to academic knowledge

Contributions of this research to academic knowledge about the link between

infrastructure and sustainability are:

1. Integrated approaches to evaluating financial decisions for highway

infrastructure investment with sustainability objectives and action plans

This research promotes multi-criteria decision support and life-cycle cost analysis

approaches in proposed decision support model when performing highway

investment evaluation. Cost components related to sustainable measures and industry

suggestion of enhancing sustainability for life-cycle cost analysis practice established

the platform for the researcher to develop this model. This model not only provides a

decision support tool for agency costs; it also allows industry stakeholders to

consider the impacts of specific design alternatives on the community.

2. Filling a knowledge gap in the evaluation of highway alternatives through a

systematic decision-making process.

The proposed model provides a structured and systematic approach to evaluate

alternatives for highway infrastructure projects through the economical and

sustainability consideration. Following the scientific method, a solid yet flexible

model is developed to continuously identify ways to evaluate alternative solutions

before implementing the projects. This model is significant as it provides a process to

continuously generate new and innovative solutions that improve highway

investment decision and increase levels of sustainability.


8.4.2. Contribution to the industry

Contributions are made to industry practice in the following ways:

1. A practical tool for highway investment decisions with sustainable goals.

The proposed decision support model provides industry stakeholders with a practical

tool that helps facilitate highway investment decisions with sustainable goals. This

model is much needed by practitioners to optimise highway investments and to

maximise the value of the assets over their life cycles. It will ensure the highway

investment can be more informative and systematic in dealing with better decision in

overall highway infrastructure development.

2. Decision support model improves the awareness of industry stakeholders in

sustainability.

The decision support model raised the awareness of industry stakeholders in

considering sustainability while making investment decisions. This was done by

integrating industry verified sustainability-related cost components into the model

and ’guide’ stakeholders to think. The gauging of the practical issues encouraged

their sustainability-related endeavours and exploration of thoughts for future research

and development.

8.5 Study Limitations

The research has developed a model with the ability to improve investment decisions

and promote higher levels of sustainability achievement in highway infrastructure.

This research is limited in two aspects:

• The findings and views presented in the model are more reflective of

highway infrastructure projects such as highway bridges and bypass rather

than other types of road infrastructures. Undoubtedly, a wider coverage of

other types of road infrastructures namely rural and urban arterial roads, and

rural and urban local roads would add and enrich the findings. However, this


was not the focus or ambit of this research. To this end, this research is more

about developing methodology and application prototype. Nevertheless, some

enhancements are needed to the proposed model to deal with investment

decisions with sustainability objectives for other types of road infrastructure.

• Given the fact that the participating respondents and the case projects are

from Australia, the models developed are specifically applicable to the

Australian highway infrastructure context rather than to that of other regions

in the world. This is because different regions or countries have different

legal, cultural and political environments, which might be unique or specific.

Nevertheless, the learning from this study can provide a good source of

reference to the industries in other regions with slightly modification needed

to fit to the needs of the particular region.

8.6 Recommendations for Future Research

This study presented a model for performing financial decision support for highway

infrastructure sustainability. As sustainable highway infrastructure developments

continue to mature, new ways to achieve sustainability objectives while improving

the financial decision-making process must be discovered. Further studies could

consider the following approaches and issues:

• This study focuses only on the Australian highway infrastructure context. It

will be valuable for future researchers to cover other regions of the world by

considering different legal, cultural and political environments that are

specific to local conditions.

• The enrichment of data is also important to improve the accuracy of the

prediction model. A major improvement would be the ability to automatically

calibrate the performance models using local condition survey data. This

could be accomplished by allowing the industry stakeholders to enter relevant

information along with historical environmental and as-built construction

data. In addition to this information, variability in construction aspects, such

as pavement strength and thickness and the surface roughness, should be used

to calibrate the models.


• Due to time constraints and different focus, it was not possible for this

research to generate a computer package to further aid stakeholders in dealing

with highway investment. From the ease of operation point of view, a

computerised procedure and package could have been more user friendly.

Future research may develop a computerised version of the derived model.

• This study focuses purely in financial implication for highway infrastructure

sustainability. This could also be extended to include risk assessment method

to evaluate the variability of critical input variables in cost estimation

(litigation, cost overruns, contingencies, etc.). The types of analysis that can

be considered are:

1. Establish probability risk assessment that include quantitative analysis

of risk.

2. Conduct the empirical study by using statistical analysis to obtain

critical factor of risks as the output of life-cycle cost estimation.

In these ways, future researcher should look into these aspects in order to further

improve and refine the research findings.

8.7 Summary

The push for sustainability has added new dimensions to the evaluation of highway

infrastructure projects, particularly on the cost front. The incorporation of

sustainability-related cost components in highway investment decisions is a crucial

step to ensure that the projects are economically feasible, socially viable and

environmentally responsible in the societal investment. Understanding the current

industry practice in life-cycle cost analysis, recognising the challenges faced by the

current industry in incorporating sustainability-related cost components into

consideration, and gathering suggestions to formulate a tool to enhance sustainability

in life-cycle cost analysis for highway infrastructure, are major endeavours to

generate a clear picture of highway infrastructure practice and needs.

Accordingly, this research has moved a step further in developing a decision support

model with sustainability objectives in evaluating highway infrastructure investment.

The proposed model will help promote a more systematic, comprehensive and


promising approach among key stakeholders in the process of highway investment

decision-making. It will enhance the viability of the financial considerations and

respond positively to sustainability concerns in highway infrastructure projects in

Australia.

Appendices 229

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Appendices 245

LIST OF APPENDICES APPENDIX A: Questionnaire

A1: Invitation Letter - Questionnaire

A2: Sample of Questionnaire

APPENDIX B: Semi-structured Interview

B1: Invitation Letter - Semi-structured Interview

B2: Sample of Consent Form

B3: Sample of Semi-structured Interview

APPENDIX C: Case Study

C1: Invitation Letter – Fuzzy AHP Questionnaire

C2: Sample of Fuzzy AHP Questionnaire

APPENDIX D: List of Publications

246 Appendices

APPENDIX A1: INVITATION LETTER-QUESTIONNAIRE

Invitation to Questionnaire Survey Sustainability Based Life-Cycle Costing Analysis (LCCA) for Highways

TO WHOM IT MAY CONCERN Dear Sir/Madam I am a doctoral candidate in the School of Urban Development, at Queensland University of Technology (QUT). Currently, I am doing a research that aims to develop the life-cycle cost analysis (LCCA) model to measure the benefit of sustainability versus financial viability in highway infrastructure project management. I am looking for the expertise of construction stakeholders in highway and road infrastructure development such as local authorities and government agencies, contractors, specialist contractors in highway development, project managers, quantity surveyors, engineers, planners and developers. Your relevant experience and expertise in highway infrastructure is valuable and you are invited to participate in a questionnaire. If you agree, you will be sent the questionnaire. We will highly appreciate, if you could forward this request to your colleagues and staffs involved in this project and highway infrastructure development, where applicable. Details of the questionnaire and how to participate can be found by clicking on the following link: http://www.surveymonkey.com/s.aspx?sm=Sw5Qal3Cvibf_2bHDvz_2bx3qg_3d_3d Password: 82105 This questionnaire is divided into 6 sections and will take about 10-15 minutes to complete. This questionnaire serves to identify the cost elements in life-cycle costing analysis, particularly those construction stakeholders use when making decisions and selecting highway infrastructure projects. Please note there is no expected right or wrong answer for each question. I am seeking your expert comments. All the answers will remain confidential, and all the information will be analysed in general, without reference to specific individuals (See the back of this letter for more details). If you have any queries about this project, please contact me or my Principal Supervisor, Prof. Dr Jay Yang on (07)31381028 or QUT Research Ethic office on (07)31382340 for further information about the ethical conduct of the project. Your contribution towards this study is greatly appreciated! Yours sincerely Kai Chen Goh Postgraduate Candidature School of Urban Development Faculty of Built Environment & Engineering Queensland University of Technology Australia Tel : +61 (07)3138 2105

+61 (07)3138 7647 Mobile : +61 (0)433902219 Email : [email protected]

[email protected]

http://www.surveymonkey.com/s.aspx?sm=Sw5Qal3Cvibf_2bHDvz_2bx3qg_3d_3d�

mailto:[email protected]�


Appendices 247

QUT is committed to researcher integrity and the ethical conduct of research projects. However, if you do have any concerns or complaints about the ethical conduct of the project you may contact the QUT Research Ethics Officer on 3138 2340 or

Additional Information Participation Thank you for your time to consider this survey. Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT. Please note that it will not be possible to withdraw, once you have submitted the questionnaire.

Risks There are no risks beyond normal day-to-day living associated with your participation in this project.

Confidentiality All comments and responses are anonymous and will be treated confidentially. The names of individual persons are not required in any of the responses.

Consent to Participate The return of the completed questionnaire is accepted as an indication of your consent to participate in this project.

Questions / further information about the project Please contact the researcher team members named above to have any questions answered or if you require further information about the project.

Concerns / complaints regarding the conduct of the project

[email protected]. The Research Ethics Officer is not connected with the research project and can facilitate a resolution to your concern in an impartial manner.


248 Appendices

APPENDIX A2: SAMPLE OF QUESTIONNAIRE

Survey Time frame: Please take approximately 10-15 minutes to complete the questionnaire.

SUSTAINABILITY BASED LIFE-CYCLE COSTING (LCC) ANALYSIS IN HIGHWAY PROJECT

Background: With increasing pressure to provide environmentally responsible infrastructure products and services, stakeholders are focusing on the early identification of financial viability and outcome of infrastructure projects. Traditionally, there has been an imbalance between sustainable measures and project budget. However, industry is under pressure to continue to return profit, while better adapting to current and emerging global issues of sustainability. For the highway infrastructure sector to contribute to sustainable development in Australia, it needs to address relevant sustainability criteria while ensuring financial viability and efficiency. This research aims to further develop the life- cycle cost analysis (LCCA) model to measure the benefit of sustainability versus financial viability in highway infrastructure project management. Objective: This questionnaire aims to identify the various categories of cost elements that are related to life-cycle costing analysis (LCCA) and at the same time complement the concept of sustainability. Once these cost elements are identified, they will be used to further develop the LCCA model to facilitate decision making in highway project management. Private and Confidential: All responses will be kept strictly confidential and will only be used for research purposes.

Private and Confidential: No information provided here will be used to identify any individual respondent in either the analysis of results or dissemination of findings. 1. How do you classify your company?

2. Your experience in the construction industry is (years)?

Consulting Contractor Developer Government Agency Other (Please Specify)

1-5 6-10 11-15 16-20 Above 20

SECTION 1: COMPANY’S TECHNICAL EXPERTISE

Appendices 249

3. Please indicate the type of road infrastructure project do you mostly undertaken by ticking the appropriate boxes.

4. Please indicate your role in highway projects?

Road and highway construction Road and highway extension works Road and highway maintenance works Other (Please Specify)

Local Authority and Government Agency Project Manager Designer/ Engineer Quantity Surveyor Planner Contractor Specialist/ Subcontractor Developer Other (Please Specify)

250 Appendices

INSTRUCTION FOR SECTION 2

Based on your experience, please rate the significance of the cost elements listed in order to make the life-cycle cost analysis (LCCA) more sustainable in highway projects.

How important are each of the following sustainability-related cost elements and issues when selecting a highway infrastructure projects? (Please tick level of importance)

i. Agency Cost and Issues

Categories Description Level of Importance Low ---------High 1 2 3 4 5 Initial Construction Costs

Labour costs including cost allocation of workers in highway projects.

Material costs including materials needed for highway construction.

Plant and equipment costs including plant and machinery used in highway construction.

Other cost elements and issues considered important in highway projects based on this category (please specify)

1 2 3 4 5 Maintenance Major maintenance activities are necessary only a few

times throughout the design life of a highway to distress and maintain its quality

Routine maintenance normally undertaken either annually for minor level distresses and maintenance of the pavement quality.


1 2 3 4 5 Pavement Upgrading Costs

Rehabilitation costs including structural enhancements that extends the service life of an existing pavement and/or improve its load carrying capacity.

Pavement extension costs including extension for driveways in highway projects.


1 2 3 4 5 Pavement End-of-Life Costs

Cost allocation for demolition activities on the pavement layer together with the road elements.

Cost to recycle and reuse materials reclaimed from pavements and to reduce disposal of asphalt materials.

Disposal costs including managing cost of disposing asphalt and other excavated materials.


SECTION 2: SUSTAINABILITY RATING COST ELEMENTS

Appendices 251

ii. Social Cost and Issues

Categories Description Level of Importance Low -------High 1 2 3 4 5 Vehicle Operating Costs

Elements of vehicle operation including cost for fuel and oil consumption, tyre wear, vehicle maintenance, vehicle depreciation and spare parts.

Road tax and insurances including costs for users due to policies and regulations.


1 2 3 4 5 Travel Delay Costs

Reduced speed through work zone increases the value of time spent on the journey to the destination.

Traffic congestion increases the value of time spent on the road and results in vehicle idling and produces high levels of emissions.


Categories Description Level of Importance Low -------High 1 2 3 4 5 Social Impact Influence

Cost of resettling people when land is resumed for highway infrastructure project.

Property devaluation caused by increased traffic creating additional pollution.

Reduction of cultural heritage and healthy landscapes due to highway construction impacting on tourism industry.

Community cohesion decreases when highway construction directly influences housing diversity, social alienation, social interaction and exacerbated urban problems.

Negative visual impact due to highway construction reducing recreational land and landscape beauty.


1 2 3 4 5 Accident Cost Economic value of damage to vehicles and road

infrastructures; crash prevention and protection expenditures.

Internal costs when victims suffer injuries or lose quality of life and medical treatment costs.

External costs of unemployment and uncompensated grief and lost companionship to crash victim’s family and friends.


252 Appendices

iii. Environmental Cost and Issues

Categories Description Level of Importance Low ---------High

1 2 3 4 5 Solid Waste Generation

Dredged or excavated material including cost of extracting ground material such as excavation or rock blasting.

Waste management including cost of planning and monitoring of waste materials.

Disposal of material costs including cost of handling, transporting, disposal platform and special treatment of waste.


1 2 3 4 5 Pollution Damage cause by Agency Activities

Land use including cost of using native land and land development.

Disturbance and importing of soil material including the cost allocation for the use of plant and machinery.

Extent of tree felling especially on hillsides due to disturbance of soil structure reducing its strength.

Habitat disruption and loss due to use of land for highway construction.

Ecological damage with animals killed directly by motor vehicles; animal behaviour and movement patterns are affected by roads.

Environmental degradation due to increase road accessibility stimulating development, demand for urban services, which stimulates more development and cycle of urbanization.


1 2 3 4 5 Resource Consumption

Fuel consumption including cost of natural resources in the production and operation of motor vehicles.

Cost of energy consumption for equipment during construction and maintenance of road; followed by usage of roadway services.


Appendices 253

5. Do you think the sustainability-related cost elements discussed above will influence the decision of selecting a highway project?

Categories Description Level of Importance Low ---------High

1 2 3 4 5 Noise Pollution

Cost of barriers including walls and other structures, trees, hills, distance and sound- resistant buildings (e.g., double-paned windows) to reduce noise impacts.

Rougher surfaces tend to produce more tyre noise, and certain pavement types emit less noise.

Vehicles with faster acceleration, harder stopping and faulty exhaust systems tend to produce high engine noise levels.

Driver attitude and vehicle congestion produce disturbance noises such as horns.


1 2 3 4 5 Air Pollution Effects on human health due to highway construction

including long term diseases and health problems.

Dust emission created during road construction process and road maintenance.

CO2 emission causes green house problem and global warming


1 2 3 4 5 Water Pollution

Loss of wetland due to pavement construction which reduces flows, plant canopy and surface and groundwater recharge.

Hydrological impacts including stormwater problems that increase impervious surfaces, concentrated runoff and flooding.


Yes No (please specify)

254 Appendices

6. Do you have any other comments about this project either relating to the previous questions, or otherwise?

Thank you for completing this questionnaire. Your time and cooperation is greatly appreciated as your effort will contribute to the development of a new and practical model for stakeholders to evaluate investment decisions and reach an optimum balance between financial viability and sustainability deliverables in highway infrastructure project management.

Please complete the following personal details for contact purposes only (confidential):

Your Name : Company Name : Email Address : Phone Number : Would you like a copy of our research findings? Yes No

Please save it and send it back to

[email protected] Thank you


Appendices 255

APPENDIX B1: INVITATION LETTER- SEMI-STRUCTURED INTERVIEW

Invitation for Interview Participation

TO WHOM IT MAY CONCERN Dear Sir/Madam I am a doctoral candidate in the School of Urban Development, at Queensland University of Technology (QUT). My research aims to develop the life-cycle cost analysis (LCCA) model to measure the benefit of sustainability versus financial viability in highway infrastructure project management.

Sustainability Based Life-Cycle Costing Analysis (LCCA) for Highways

I am looking for the expertise of construction stakeholders in highway and road infrastructure development such as local authorities and government agencies, contractors, specialist contractors in highway development, project managers, quantity surveyors, engineers and planners. Your relevant experience and expertise in highway infrastructure is valuable and you are invited to participate in this interview. If you agree, please email me at: [email protected] or [email protected]. We can arrange the time that suits to your schedule to conduct this interview. This interview will take about 30-45 minutes to complete. The interview serves to seek for comments and perspectives on how the sustainable related cost elements and issues can be measured in life-cycle costing analysis, particularly those construction stakeholders concern when making decisions and selecting highway infrastructure projects. Please note there is no expected right or wrong answer for each question. I am seeking your expert comments. All the answers will remain confidential, and all the information will be analysed in general, without reference to specific individuals (See the below of this letter for more details). If you have any queries about this project, please contact me or my Principal Supervisor, Prof. Dr Jay Yang on (07)31381028 or QUT Research Ethic office on (07)31382340 for further information about the ethical conduct of the project. Your contribution towards this study is greatly appreciated!

Yours sincerely

Kai Chen Goh

Postgraduate Candidature School of Urban Development Faculty of Built Environment & Engineering Queensland University of Technology Australia Tel : +61 (07)3138 2105


[email protected]





256 Appendices

Additional Information Participation Thank you for your time to consider this interview. Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT. Please note that it will not be possible to withdraw, once you have submitted the questionnaire.









Appendices 257

APPENDIX B2: SAMPLE OF CONSENT FORM

CONSENT FORM for QUT RESEARCH PROJECT

“Sustainability Life-Cycle Costing Analysis (LCCA) in Road

Infrastructure Project”

Statement of consent

By signing below, you are indicating that you:

• have read and understood the information document regarding this project

• have had any questions answered to your satisfaction

• understand that if you have any additional questions you can contact the research team

• understand that you are free to withdraw at any time, without comment or penalty

• understand that you can contact the Research Ethics Officer on 3138 2340 or [email protected] if you have concerns about the ethical conduct of the project

• agree to participate in the project

Name

Signature

Date / /


258 Appendices

APPENDIX B3: SAMPLE OF INTERVIEW

1. Does your organisation currently apply LCCA in determining pavement type for highway infrastructure?

Interview Questions

2. Does you organisation plan to utilise LCCA in determining pavement type for highway projects in future?

3. How long do you think is relevant for the analysis period of LCCA? 4. What discount rate do you utilise? 5. Please list the highway maintenance treatments that you will consider in

LCCA evaluation and at which year(s) during the analysis period do you assume they will occur: (i.e. fog sealing @ year 6, milling with overlay @ year 12, etc.).

6. Based on the current practice or your experience, what are the types of data (Historical and Theoretical Data) are used to determine the type and frequency of the highway maintenance treatments?

7. In life-cycle cost analysis (LCCA), will you include sustainability-related costs in your analysis?

7.1. And if so, please briefly explain how agency cost is determined and calculated based on the list below.

Initial Construction Costs Labours Cost Materials Cost Plants and Equipments Cost



Pavement End-of-Life Costs Demolition Cost Disposal Cost Recycle and Reuse Cost

7.2. And if so, please briefly explain how social cost is determined and calculated based on the list below.




Cost of Resettling People Property Devaluation Reduction of Culture Heritages and Healthy Landscapes Community Cohesion Negative Visual Impact

Accident Cost Economy Value of Damages Internal Cost External Cost

7.3. And if so, please briefly explain how environmental cost is determined and calculated based on the list below.

Appendices 259

Solid Waste Generation Cost

Cost of Dredge/Excavate Material Waste Management Cost Materials Disposal Cost




Noise Pollution

Cost of Barriers Tire Noise Engine Noise Drivers’ Attitude

Air Pollution

Effects to Human Health Dust Emission CO2 Emission


8. What are the limitations in the estimation and calculation methods for the social and environmental cost and issues in current LCCA practice?

9. What are the difficulties to emphasise sustainability-related cost elements in LCCA practice for highway infrastructure project?

10. What is your suggestion to improve the measurement methods of social and environmental costs and to enhance sustainability in LCCA for highway projects?

260 Appendices

APPENDIX C1: INVITATION LETTER- FUZZY AHP QUESTIONNAIRE

Invitation for Fuzzy AHP Questionnaire Participation

TO WHOM IT MAY CONCERN Dear Sir/Madam This research study intends to investigate and evaluate the highway infrastructure projects by comparing alternatives based on the sustainability- related cost components. Previous survey (Questionnaire Survey) was designed to extract a group of sustainability-related cost components to assess the critical cost factors in highway investment decision. In this survey (Fuzzy AHP Questionnaire), this study aims to prioritise these critical components by pair-wise comparison, and to investigate the interdependent relationship between the alternatives and the sustainability indicators of the highway infrastructure in this project.

Sustainability Based Life-Cycle Costing Analysis (LCCA) for Highways

Your inputs are greatly valuable and we do hope that you can participate in this final survey. Your relevant experience and expertise in highway infrastructure is valuable and you are invited to participate in this survey. If you agree, please email me: [email protected]. We can arrange the time that suits to your schedule to conduct this survey. This survey will take about 30 minutes to complete. All the answers will remain confidential, and all the information will be analysed in general, without reference to specific individuals (See below of this letter for more details). If you have any queries about this project, please contact me or my Principal Supervisor, Prof. Dr Jay Yang on (07)31381028 or QUT Research Ethic office on (07)31382340 for further information about the ethical conduct of the project. Your contribution towards this study is greatly appreciated! Yours sincerely Kai Chen Goh Postgraduate Candidature School of Urban Development Faculty of Built Environment & Engineering Queensland University of Technology Australia Tel : +61 (07)3138 2105


[email protected]




Appendices 261


Additional Information Participation Thank you for your time to consider this survey. Your participation in this project is voluntary. If you do agree to participate, you can withdraw from participation at any time during the project without comment or penalty. Your decision to participate will in no way impact upon your current or future relationship with QUT. Please note that it will not be possible to withdraw, once you have submitted the questionnaire.








262 Appendices

Instruction Each section in this survey consists of a number of question sets. Each question within a question set asks you to compare two factors/criteria at a time (i.e. pair-wise comparisons) with respect to a third factor/criterion. Please read each question carefully before giving your opinions/answers, and answer according to the following rating scale:

APPENDIX C2: SAMPLE OF FUZZY AHP QUESTIONNAIRE

Linguistic Scale for importance Abbreviation Absolutely More Important AMI

Very Strong More Important VSMI Strong More Important SMI Weakly More Important WMI

Equal Important EI Weakly Low Important WLI Strong Low Important SLI

Very Strong Low Important VSLI Absolutely Low Important ALI

Example If a sustainability indicator on the left is more important than the one on the right, put cross mark ‘‘X’’ to the left of the ‘‘Equal Importance’’ column, under the importance level (column) you prefer. On the other hand, if a on the left is less important than the one on the right, put cross mark “X” to the right of the equal important “EI” column under the importance level (column) you prefer based on the project preference. Q1. How important is the agency costs and issues when it is compared to social costs and issues? Q2. How important is the agency costs and issues when it is compared to environmental costs and issues? Q3. How important is the environmental costs and issues when it is compared to social costs and issues? Answers to some of the sample questions from the questionnaire Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Q1 X Q2 X Q3 X

Appendices 263

Section 1: Relative importance of the following sustainability-related cost components with the respect to the projects

Q1. How important is the agency cost components when it is compared to social cost components? Q2. How important is the agency cost components when it is compared to environmental cost components? Q3. How important is the environmental cost components when it is compared to social cost components? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Q1 Q2 Q3

The relative importance of agency cost components sub criteria Q4. How important is the material cost components when it is compared to plant and equipment cost components? Q5. How important is the material cost components when it is compared to major maintenance cost components? Q6. How important is the material cost components when it is compared to rehabilitation cost components? Q7. How important is the plant and equipment cost components when it is compared to major maintenance cost components? Q8. How important is the plant and equipment cost components when it is compared to rehabilitation cost components? Q9. How important is the major maintenance cost components when it is compared to rehabilitation cost components? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Q4 Q5 Q6 Q7 Q8 Q9

The relative importance of social cost components sub criteria Q10. How important is the road accident- internal cost components when it is compared to road accident- economic value of damage cost components? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Q10 The relative importance of environmental cost components sub criteria Q11. How important is the hydrological impacts when it is compared to loss of wetlands?

264 Appendices

Q12. How important is the hydrological impacts when it is compared to cost of barriers? Q13. How important is the hydrological impacts when it is compared to disposal of material costs? Q14. How important is the loss of wetlands when it is compared to cost of barriers? Q15. How important is the loss of wetlands when it is compared to disposal of material costs? Q16. How important is the cost of barriers when it is compared to disposal of material costs? Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Q11 Q12 Q13 Q14 Q15 Q16

Section 2: Relative importance of the following sustainability-related cost components with the respect alternative to the projects The relative importance of agency category

Agency category

Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Material Costs ALT 1 ALT 2 ALT 3

Plant and Equipment

Costs

ALT 1 ALT 2 ALT 3

Major Maintenance

Costs

ALT 1 ALT 2 ALT 3

Rehabilitation Costs

ALT 1 ALT 2 ALT 3

The relative importance of social category

Social category

Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Road Accident –

Internal Costs

ALT 1 ALT 2 ALT 3

Road Accident – Economic Value of Damage

ALT 1 ALT 2 ALT 3

Appendices 265

The relative importance of environmental category Environmental

category Answer AMI VSMI SMI WMI EI WLI SLI VSLI ALI

Hydrological Impacts

ALT 1 ALT 2 ALT 3

Loss of Wetland

ALT 1 ALT 2 ALT 3

Cost of Barriers

ALT 1 ALT 2 ALT 3

Disposal of Material Costs

ALT 1 ALT 2 ALT 3

All collected data will be kept strictly confidential and anonymous, and they will

be used for academic research purposes ONLY.

Thank you for completing the questionnaire. We appreciate your time.

~End~

266 List of Publications

Goh, K. C. and Yang. J. 2009a. "Extending life-cycle costing (LCC) analysis for sustainability considerations in road infrastructure projects." In Proceedings of 3rd CIB International Conference on Smart and Sustainable Built Environment, SASBE2009, Aula Congress Centre, Delft, Amsterdam, edited.

Goh, K. C. and Yang. J. 2010a. "Measuring costs of sustainability issues in highway infrastructure: perception of stakeholders in Australia, edited, 428-434: Faculty of Construction and Land Use, The Hong Kong Polytechnic University.

Goh, K. C. and Yang. J. 2010b. "Responding to Sustainability Challenge and Cost Implications in Highway Construction Projects." In CIB 2010 World Congress, Conseil International du Bâtiment (International Council for Building), The Lowry, Salford Quays. , edited, 102.

Goh, Kai Chen and Yang. Jay 2010c. "The importance of environmental issues and costs in Life Cycle Cost Analysis (LCCA) for highway projects." In The 11th International Conference on Asphalt Pavement, , Nagoya Congress Center, Aichi, edited, 228-235: International Society for Asphalt Pavements (ISAP).

Goh, Kai Chen and Yang. Jay 2010d. "Incorporating sustainability measures in life-cycle financial decision making for highway construction." In New Zealand Sustainable Building Conference - SB10, Te Papa, Wellington, edited.

Goh, Kai Chen and Yang. Jay 2009b. "Developing a life-cycle costing analysis model for sustainability enhancement in road infrastructure project." In Rethinking Sustainable Development : Planning, Infrastructure Engineering, Design and Managing Urban Infrastructure, Queensland University of Technology, Brisbane, edited, 324-331.

Yang, Jay and Goh. Kai Chen 2009. "Developing a Life-cycle Costing Analysis Model for Sustainable Highway Infrastructure Projects " In Proceedings of the 14th International Symposium on Construction Management and Estate (CRIOCM2009), Nanjing, edited, 2460-2465.

APPENDIX D: LIST OF PUBLICATIONS

Documents

DEVELOPING FINANCIAL DECISION SUPPORT FOR HIGHWAY ... · DEVELOPING FINANCIAL DECISION SUPPORT FOR HIGHWAY INFRASTRUCTURE SUSTAINABILITY By Kai Chen Goh B.Sc Construction (Hons),