Civil Engineering Reference
In-Depth Information
rehabilitation, the bridge should last over a century. Observe carefully: we've
paid just 63 percent more for the bridge, but it will last more than three
times as long. That should be a great deal. To check, let's examine table
7.4, which calculates the NPV for the 100 year bridge.
First note (see the net cash flow column) that, in years when no reha-
bilitation occurs, the receipts steadily outweigh operations and maintenance
costs by $2.1 million. This bridge income remains steady over 100 years of
service. Now follow the column for the 3.5 percent discount rate starting
from the top. As the years pass, the annual net cash flow of $2.1 million is
worth less and less in present-value terms. By the hundredth year of service
life (103 years from the project start), the present value of the cash flow is
Table 7.4. Costs and Benefits of Long-Lasting New Bridge in Constant
$1000
Net Cash
Present Value
Present Value
Year
Costs
Benefits
Flow
@ 3.5%
@ 5.0%
1
-18,000
0
-18,000
-17,391
-17,142
2
-18,000
0
-18,000
-16,803
-16,326
3
-18,000
0
-18,000
-16,234
-15,549
4
-400
2,500
2,100
1,830
1,727
5
-400
2,500
2,100
1,768
1,645
Years 6-95 not shown…….
96
-400
2,500
2,100
77
19
97
-400
2,500
2,100
74
18
98
-400
2,500
2,100
72
17
99
-3,400
2,500
-900
-29
-7
100
-400
2,500
2,100
67
15
101
-400
2,500
2,100
65
15
102
-400
2,500
2,100
62
14
103
-400
2,500
2,100
60
13
-118,000
250,000
132,000
-3,147
-16,239
100 YEAR SERVICE LIFE
Discount Rate at 3.5% or 5%
PV=Present Value
NPV: Appears in two rightmost cells in bottom row
Note 1:
Bridge project cost is up 66.6% (over the shorter-lasting bridge) from $27 to $45
million. Road and ramp work up from $6 to $9 million. Project cost of $54 million is distributed
over a three year construction period.
Note 2:
Rehabilitation work every 12 years until 99
th
year.
Note 3:
NPV is shown in bold in two bottom right cells.
