Budget

Vitter Calls for “Life Cycle Cost Analysis” in Infrastructure Projects

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Louisiana Transportation Department cites potential cost savings for taxpayers

Louisiana taxpayers could benefit from financially efficient planning if policymakers connect infrastructure projects with open and transparent accounting practices, Sen. David Vitter (R-La.) has informed constituents.

To this end, he has introduced the Fiscal Accountability and Transparency in Infrastructure Spending Act of 2011, which calls for the use of life cycle cost analysis (LCCA) for joint federal-and-state projects. The goal is to accurately account for both direct and indirect costs from initial construction, maintenance, and repair over a 50-year life cycle window whenever the federal share exceeds $5 million. Vitter also crafted his legislation to stir competition within the design and bidding process to ensure cost-effectiveness.

“Congress needs to get serious about reducing federal spending on all fronts so we can get on a different, more sustainable fiscal path,” Vitter said. “Louisiana has many vital infrastructure projects, and my bill would help make sure their budgets are open and transparent so that taxpayer money is not wasted.”

There are three tools available to policymakers as part of the “life cycle” budgeting method. They are:
1)      Transparent Life-Cycle Cost Analysis (LCCA), which requires transparency in all infrastructure investments by accounting for the direct and indirect costs incurred in initial construction, maintenance, and repair over a 50-year life-cycle window.
2)      Mechanistic Empirical Pavement Design Guide (MEPDG), which optimizes the efficiencies of structural engineering inputs based upon regional differences from the first stages of design, resulting in cost-savings and roads that last longer and require less maintenance.
3)      Alternate Design/Alternate Bid (ADAB), which creates competition and ensures that the most cost-effective project designs are considered for final selection.

Louisiana’s Department of Transportation and Development (DOTD) has already experienced more accurate estimates, rather than cost over-runs, with “life cycle” practices. ADAB project bids came in about 9 percent below estimates, while other project bids were about 20 percent above estimates, the agency reported in 2007.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and you can follow him on Twitter.

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