Description of some items

Initial installation costs

• Initial costs for trackworks usually do not include the land acquisition as the land usually belongs to the authority.
• All direct costs: 
  • Design specification and Procurement of all materials 
  • Checking testing and commissioning of all materials 
  • All installation works 
  • Survey, quality control and quality assurance of the works 
  • Testing and commissioning of the system are usually within the scope of works of the contractor.
• Sometimes the contractor is also in charge of the indirect costs:
  • Relocation of utilities 
  • Traffic diversion management 
  • Compensation for commercial losses of shops 
  • …..
• In case of the latter this responsibility has to be specified in the contract.

Operation, maintenance and repair costs

• The operational costs of a trackwork system are in general inexistent for the contractor unless it is differently specified in the contract. 
• The preventive and curative maintenance in the contrary is very important and cost intensive and is heavily influenced by the choice of materials and systems and installation techniques , by the type of usage of the system and by the type and condition of the operators materials. 
• For repair costs the figure derived from the Reliability Availability, Maintainability and Safety study (RAMS) are giving important information. 
• It is obvious that the costs for the activities mentioned above are defined during the design process and that it is necessary to develop different alternatives.

Replacement costs

• Depending on the duration of the contract it is possible that a number of components have to be replaced during the contract. 
• It is very important to schedule these replacement during the design stage as the costs involved are high and indirect costs could be applicable as there is loss of revenue for the operator. 
• As mentioned above the quality of the components and the quality of installation has a major impact on the need for replacement.

Disposal Cost

• If it is required in the contract to restore the initial situation at the end of the contract it is certainly needed to consider the disposal cost as such costs are these days quite high.

Other costs

• It is important to consider also the financing cost of the system as there can be a considerable delay between the expense date and the payment date.

Net present value analysis

• As the contract duration usually runs over a number of years it is necessary to make all calculations time related. 
• Conventional formulas are applied in this case for discount rates ,inflation rates and prise escalation values.

Life Cycle Cost Calculation

• After identifying all costs by year and amount and discounting them to present value they are added to arrive at total life cycle cost for each alternative.

LCC =

I + REP – RES +O&M/R +O

LCC	total LCC in present value money of a given alternative
I	present value investment costs
REP	capital replacement costs
RES	residual value less disposal costs
O&M/R	present value of operation, maintenance and repair costs
O	present value of other costs

Risk analysis

• As in every analysis there is uncertainty in the LCCA assessment 
• These risks can be split in two parts:
  • Financial risk
  • Technical risk

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