4 Life-Cycle Cost Analysis, Assumptions, and Results
Throughout this study it is assumed that, for any new construction, the first 2 years are required for installation and that no maintenance costs are incurred for the first 3 years, inclusive of the installation period. Each life-cycle cost analysis was performed with the software package ECONPACK. The parameters used1 are shown in Table 1. Energy costs, including energy escalation factors, were considered incidental and were not included. Each evaluation is based on both the initial construction costs and the ongoing annual operating costs, including the effects of degradation, over a 25-yr analysis period, and all discounted back to a present value. In addition, some engineering judgments were made as to which designs are appropriate for service as a primary, secondary, or tertiary barrier.
Table 1. ECONPACK parameter descriptions and values used for life-cycle cost analyses.
Input Parameter |
Value |
Global Discounting Convention |
Middle-of-year |
Period of Analysis |
25 years |
Discount Rate |
6.585% |
Analysis Type |
Secondary |
Cost Input |
Dollars |
Report Output Type |
Current |
Project Type |
MILCON |
Inflation Index |
3.4% (flat rate over analysis period) |
Both best- and worst-case scenarios were considered for all economic analyses. For the best case scenarios, a number of design-specific and optimistic assumptions were used along with the following global optimistic assumptions:
ˇ maintenance supplies can be easily transported to the fence with only negligible additional cost
ˇ Border Patrol activity is sufficient to prevent any significant attack, or active degradation, on the secondary or tertiary fences
ˇ all needed M&R work is identified immediately and performed rapidly and completely.
Conversely, for the worst case scenarios, a number of design-specific and pessimistic assumptions were used along with the following global pessimistic assumptions:
ˇ an additional 10 percent construction cost and ongoing additional 5 percent maintenance cost are attributable to sloped and rough terrain
ˇ Border Patrol activity is insufficient to prevent active degradation of the secondary barrier, which is comparable to that suffered by the primary barrier
ˇ fence repair is only performed in "break down" situations where individual or vehicle traffic is possible, with all other maintenance being indefinitely postponed.
The hourly rate of $22.60 is a fully burdened average of two potential hourly rates; a low-end rate of $8.00 per hour, and an upper rate of $12.00 per hour. The calculation is as follows:
For the existing landing mat, there are no construction costs (materials used are surplus). For this analysis, however, a construction cost of $341,584/mile is assumed for comparative purposes. The total cost of the fence for 14 miles is $4,782,176. The cost is spread over the first 2 years; $2.5 million being accounted for in the first year and $2.3 million in the second. The maintenance costs for 14 miles of fence are assumed to consist of repairing 100 actively degraded sites per year. These acts of degradation might consist of, for example, eight breaches sufficient for human entry per month combined with one vehicle drive-through every 3 months. Material costs are assumed to cover the replacement of 50 panels and each repair is assumed to require 8 man-hours. Panels cost $68 each. At a labor cost of $22.60/man-hour, the total maintenance costs per year come to $21,480.
Construction costs are assumed to be $379,538/mile (10 percent margin increase because of terrain difficulties) for a total of $5,313,532 for 14 miles. This cost is spread over the first 2 years with $3 million being accounted for in the first year and $2.3 million in the second. The maintenance costs for 14 miles of fence are assumed to consist of repairing 1,000 actively degraded sites per year. These acts of degradation might consist of 80 breaches sufficient for human entry per month combined with 40 drive-throughs annually. Material costs are assumed to cover the replacement of 500 panels and each repair is assumed to require 8 man-hours. Panels cost $76 each ($68 plus a 12 percent increase to account for terrain difficulties). At a labor cost of $22.60/man-hour, the total maintenance costs per year comes to $218,800.
Construction costs are assumed to be $630,000/mile for a total of $8,890,000 for 14 miles. This cost is spread over the first 2 years with $5 million being accounted for in the first year and $3.89 million the second. It is assumed that no maintenance costs are incurred during the first 2 years. In the third year, the only maintenance cost consists of stockpiling approximately 5 percent (300 panels) of the total number of panels (6,160). At a per panel cost of $450, the total comes to $135,000. For years 4 and 5, maintenance consists of replacing 100 panels per year. A cost of $22.60/man-hour and 8 man-hours/panel is assumed for a total cost of $18,080. Thereafter, further stockpiling of 300 panels (material cost of $135,000) every third year (starting in year 7) and a yearly replacement of 100 panels (labor cost of $18,080) is assumed.
Construction costs are assumed to be $705,555/mile for a total of $9,877,770 for 14 miles. This cost is spread over the first 2 years with $5.6 million being accounted for the first year and $4.3 million the second. It is assumed that no maintenance cost are incurred the first 2 years. In the third year, the only maintenance cost consists of stockpiling approximately 10 percent (600 panels) of the total number of panels (6,160). At a per panel cost of $474 the total comes to $284,400. For years 4, 5, and 6, maintenance consists of replacing 200 panels per year. A cost of $22.60/man-hour and 8 man-hours/panel is assumed for a total cost of $36,160. Thereafter further stockpiling of 600 panels (material cost of $284,400) every third year (starting in year 7) and a yearly replacement of 200 panels (labor cost of $36,160) is assumed.
Construction costs are assumed to be $1,667,000/mile for a total of $23,338,000 for 14 miles. This cost is spread over the first 2 years, with $13.3 million being accounted for in the first year and $10 million in the second. It is assumed that no maintenance costs are incurred for the first 3 years. For year 4 and thereafter, it is assumed that maintenance will consist of replacing 28 poles (2 poles/mile) per year. Assuming a per pole replacement cost of $500 for both labor and materials, the yearly maintenance costs come to $14,000.
Construction costs are assumed to be $1,852,225/mile for a total of $25,931,150 for 14 miles. This cost is spread over the first 2 years, with $15 million being accounted for in the first year and $10.9 million in the second. It is assumed that no maintenance costs are incurred for the first 3 years. For year 4 and thereafter, it is assumed that maintenance will consist of replacing 420 poles (30 poles/mile) per year. Assuming a per pole replacement cost of $526 for both labor and materials, the yearly maintenance costs come to $220,920.
Construction costs are assumed to be $2,083,750/mile for a total of $29,172,500 for 14 miles. This cost is spread over the first 2 years with $15.5 million being accounted for in the first year and $13.7 million the second. It is assumed that no maintenance costs are incurred for the first 3 years. For year 4 and thereafter, it is assumed that maintenance will consist of replacing 28 poles (2 poles/mile) per year. Assuming a per pole replacement cost of $625 for both labor and materials, the yearly maintenance costs come to $17,500.
Construction costs are assumed to be $2,315,280/mile for a total of $32,413,920 for 14 miles. This cost is spread over the first 2 years with $17.2 million being accounted for in the first year and $15.2 million in the second. It is assumed that no maintenance costs are incurred for the first 3 years. For year 4 and thereafter, it is assumed that maintenance will consist of replacing 420 poles (30 poles/mile) per year. Assuming a per pole replacement cost of $658 for both labor and materials, the yearly maintenance costs come to $276,360.
The optmistic and pessimistic assumptions for the bollard design (both bare and steel cased) are identical to those used for the primary barrier.
Construction costs for the first year are assumed to total $9,683,520 for 14 miles. Damage to fencing by active degradation is assumed to be negligible. Beginning in year 2, a minimal amount of maintenance of 10 man-hours per week for upkeep is assumed to be required. At a rate of $22.60/man-hour, the yearly maintenance costs come to $11,752.
Construction costs for the first year are assumed to total $10,759,467 for 14 miles. Beginning in year 2, damage to fencing is assumed to be severe and ongoing. For years 2, 3, and 4, maintenance of 80 man-hours per week is assumed. At a rate of $22.60 per man-hour, the yearly maintenance costs come to $94,016. In the fifth year (and every fourth year thereafter), a complete replacement of the fence is required.
Construction costs for the first year are assumed to total $11,679,360 for 14 miles. Damage to fencing by active degradation is assumed to be negligible. Beginning in year 2, minimal maintenance of 10 man-hours/week for upkeep is assumed to be required. At a rate of $22.60/man-hour, the yearly maintenance costs come to $11,752.
Construction costs for the first year are assumed to total of $12,977,067 for 14 miles. Beginning in year 2, damage to fencing is assumed to be severe and ongoing. For years 2, 3, and 4, maintenance of 80 man-hours/week is assumed. At a rate of $22.60/man-hour, the yearly maintenance costs come to $94,016. In the fifth year (and every fourth year thereafter), a complete replacement of the fence is required.
Construction costs total $770,000. Damage to fencing by active degradation is negligible. To offset damage caused by wind and weather, minor maintenance will be required on a periodic basis. Each year, maintenance of 5 man-hours/ week is assumed. At a rate of $22.60/man-hour, the yearly maintenance costs come to $5,876.
Construction costs total $855,555. Beginning in year 2 damage to fencing is assumed to be severe and ongoing. For years 2, 3, and 4, maintenance of 40 man-hours/week is assumed. At a rate of $22.60/man-hour, the yearly maintenance costs come to $47,008. In the fifth year (and every fourth year thereafter), a complete replacement of the fence is required.
Construction costs total $622,500. Damage to fencing by active degradation is negligible. To offset damage caused by wind and weather, minor maintenance will be required on a periodic basis. Each year, maintenance of 5 man-hours/ week is assumed. At a rate of $22.60/man-hour, the yearly maintenance costs come to $5,876.
Construction costs total $691,667. Beginning in year 2, damage to fencing is assumed to be severe and ongoing. For years 2, 3, and 4, maintenance of 40 man-hours/week is assumed. At a rate of $22.60/man-hour, the yearly maintenance costs come to $47,008. In the fifth year (and every fourth year thereafter), a complete replacement of the fence is required.
Each primary barrier was investigated as a possible alternative using the ECONPACK software package. Figures 5 through 82 illustrate the net present values (NPVs) of each of the options described below.
The landing mat fence returned a 25-yr cumulative NPV of $4.7 million in the optimistic case. Because of the assumptions used, the NPV remained relatively flat over the range of the study. Conversely, the pessimistic case yielded a 25-yr cumulative NPV of $7.3 million. This value increased quadratically over the range, as depicted in Figure 6.
The pre-cast concrete panel fence design returned a 25-yr cumulative NPV of $9.0 million in the optimistic case. Because of the assumptions used, the NPV remained relatively flat over the range of the study. Conversely, the pessimistic case yielded a 25-yr cumulative NPV of $10.7 million. This value increased linearly over the range, as depicted in Figure 7.
The bare bollard fence design returned a 25-yr cumulative NPV of $22.2 million and the steel bollard produced $27.6 million in the optimistic case. Because of the assumptions used, the NPV remained relatively flat over the range of the study. Conversely, the pessimistic case yielded a 25-yr cumulative NPV of $26.6 million for the bare design and $33.2 million for the steel reinforced design. These values increased linearly over the range, as depicted in Figure 8.
Figure 5. Primary barrier net present value (NPV) comparison.
Figure 6. Landing mat barrier NPV comparison.
Figure 7. Pre-cast concrete panel barrier NPV comparison.
Figure 8. Bollard fence barrier NPV comparison.
Secondary Barrier Results
Each secondary barrier was investigated as a possible alternative using the ECONPACK software package. The bollard fence results are the same as summarized in the previous section. The Sandia fence returned a 25-yr NPV of $9.7 million in the optimistic case. Because of the assumptions used, the NPV remained relatively flat over the range of the study. Conversely, the pessimistic case yielded a 25-yr cumulative NPV of $54.2 million. This value increased stepwise as depicted in Figure 9.
The First DeFenceŽ barrier returned a 25-yr cumulative NPV of $11.7 million in the optimistic case. Because of the assumptions used, the NPV remained relatively flat over the range of the study. Conversely, the pessimistic case yielded a 25-yr cumulative NPV of $65.1 million. This value increased stepwise as depicted in Figure 10.
Figure 9. Sandia fence NPV comparison.
Figure 10. First DeFenceŽ NPV comparison.
Tertiary Barrier Results
Both tertiary barriers were investigated as possible alternatives using the ECONPACK software package. The 6-ft chain link fence returned a 25-yr cumulative NPV of $0.7 million in the optimistic case. Because of the assumptions used, the NPV remained relatively flat over the range of the study. Conversely, the pessimistic case yielded a 25-yr cumulative NPV of $4.0 million. This value increased stepwise as shown in Figure 11.
The 10-ft chain link fence returned a 25-yr cumulative NPV of $0.9 million in the optimistic case. Because of the assumptions used, the NPV remained relatively flat over the range of the study. Conversely, the pessimistic case yielded a 25-yr cumulative NPV of $4.8 million. This value increased stepwise as shown in Figure 11.
Complete NPV reports, as generated by ECONPACK, are included in Appendix C. Table 2 summarizes equipment and maintenance assumptions for the various barrier designs.
Figure 11. Tertiary barrier NPV comparison.
Table 2. Summary of barrier options with approximate installation costs.
Barriers |
Price ($/mile) |
Special Equipment |
1 Day Repair |
Landing Mat |
26,400 |
welding rig |
yes |
(NO material costs) |
|||
Steel Panel |
235,840 |
welding rig |
yes |
Bollard Design |
1,667,000 |
forms |
no |
Cast in Place Concrete |
2,030,000 |
forms/scaffolding |
yes |
Pre-Cast Concrete |
630,000 |
crane (5 ton min.) |
yes |
Sandia Design |
691,680 |
yes |
|
First DeFenceŽ (*) |
834,240 |
no |
|
* Improvements in the Sandia design have been applied to the First DeFenceŽ design and the adjustment in costs are reflected in the state value. Specifically added to the $124/lin.ft First DeFenceŽ design are: 10-ft x 9-in. galvanized metal to cover joints...........$7.05/lin.ft.
| |||
1 As provided by the Corps of Engineers, Fort Worth District.
2 OPT/PES = optimistic and pessimistic assumptions, respectively; LDMT = landing mat barriers; PCCON = pre-cast concrete panels; BRBOL = bare bollard fencing; STBOL = steel bollard fencing.
