Designation: A930 − 09 (Reapproved 2014)Standard Practice forLife-Cycle Cost Analysis of Corrugated Metal Pipe Used forCulverts, Storm Sewers, and Other Buried Conduits1This standard is issued under the fixed designation A930; the number immediately following the designation indicates the year oforiginal adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. Asuperscript epsilon (´) indicates an editorial change since the last revision or reapproval.1. Scope*1.1 This practice covers a procedure for using life-cycle cost(LCC) analysis techniques to evaluate alternative drainagesystem designs using corrugated metal pipe that satisfies thesame functional requirements.1.2 The LCC technique measures the present value of allrelevant costs of installing, operating, and maintaining alterna-tive drainage systems, such as engineering, construction,maintenance, rehabilitation, or replacement, over a specifiedperiod of time. The practice also accommodates any remainingresidual or salvage value.1.3 Using the results of the LCC analysis, the decisionmaker can then identify the alternative(s) with the lowestestimated total cost based on the present value of all costs.1.4 This standard does not purport to address all of thesafety concerns, if any, associated with its use. It is theresponsibility of the user of this standard to establish appro-priate safety and health practices and determine the applica-bility of regulatory limitations prior to use.2. Referenced Documents2.1 ASTM Standards:2E917 Practice for Measuring Life-Cycle Costs of Buildingsand Building Systems2.2 Other Documents:TM-5-802-1 Economic Studies for Military ConstructionDesign—Applications (12/86)Federal Office of Management and Budget Guidelines andDiscount Rates for Benefit-Cost Analysis of FederalPrograms and State Documents for Guidelines or Require-ments3. Terminology3.1 Definitions:3.1.1 common costs, n—costs common to all alternatives innature and amounts such as initial planning fees or futureannual inspection costs.3.1.2 discount rate, n—the investor’s time value of money,expressed as a percent, used to convert the costs occurring atdifferent times to equivalent costs at a common point in time.3.1.3 drainage project, n—a project having a definable,functional drainage requirement that can be satisfied by two ormore design or construction alternatives.3.1.4 future costs, n—costs required to keep the systemoperating that are incurred after the project is placed in service,such as operation, maintenance, rehabilitation, or replacementcosts.3.1.5 inflation, n—the general trend or rising prices thatresult in reduction of the purchasing power of the dollar fromyear to year over time.3.1.6 initial cost, n—the total of all costs, such as designcosts, material purchase costs, and construction and installationcosts, that are specific to each alternative and are incurred tobring each alternative to a point of functional readiness.3.1.7 maintenance cost, n—the annual or periodic costs,such as inspection and cleaning, to keep a drainage structurefunctioning for the project design life but that do not extend thematerial service life.3.1.8 material service life, n— the number of years ofservice that a particular material, system, or structure willprovide before rehabilitation or replacement is necessary.3.1.9 project design life, n—the planning horizon for theproject, expressed as the number of years of useful life requiredof the drainage structure.3.1.10 rehabilitation cost, n—the total of all costs incurredto extend the material service life of a specific alternative.3.1.11 replacement cost, n—the total of all costs incurred toreplace a material before the end of the project design life.3.1.12 terminal value, n—the remaining value of thedrainage structure in place at the end of the project design life.1This practice is under the jurisdiction of ASTM Committee A05 on Metallic-Coated Iron and Steel Products and is the direct responsibility of SubcommitteeA05.17 on Corrugated Steel Pipe Specifications. This practice was prepared incooperation with Subcommittee B07.08.Current edition approved Nov. 1, 2014. Published November 2014. Originallyapproved in 1994. Last previous edition approved in 2009 as A930 - 09. DOI:10.1520/A0930-09R14.2For referenced ASTM standards, visit the ASTM website, www.astm.org, orcontact ASTM Customer Service at

[email protected] For Annual Book of ASTMStandards volume information, refer to the standard’s Document Summary page onthe ASTM website.*A Summary of Changes section appears at the end of this standardCopyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States14. Summary of Practice4.1 This practice outlines a procedure for conducting anLCC analysis of two or more drainage pipe alternatives usingcorrugated metal pipe over a specified project design life. Itidentifies the project data and general assumptions necessaryfor the analysis and the method of computation.5. Significance and Use5.1 LCC analysis is an economic method for evaluatingalternatives that are characterized by differing cash flows overthe designated project design life. The method entails calcu-lating the LCC of each alternate capable of satisfying thefunctional requirement of the project and comparing them todetermine which has (have) the lowest estimated LCC over theproject design life.5.2 The LCC method is particularly suitable for determiningwhether the higher initial cost of an alternative is economicallyjustified by reductions in future costs (for example, operatingmaintenance, rehabilitation, or replacement) when compared toan alternative with lower initial costs but higher future costs. Ifa design alternative has both a lower initial cost and lowerfuture costs than other alternatives, an LCC analysis is notnecessary to show that the former is the economically prefer-able choice.6. Procedures6.1 The procedure for performing an LCC analysis fordrainage pipe applications is summarized in the followingsteps:6.1.1 Identify the project objectives, alternatives, and con-straints (6.2).6.1.2 Establish the basic assumptions (6.3).6.1.3 Compile data (6.4).6.1.4 Compute the LCC for each alternative (6.5).6.1.5 Evaluate the results (6.6).6.2 Project Objectives, Alternatives, and Constraints:6.2.1 Specify the design objective that is to beaccomplished, identify alternative systems or designs thataccomplish that objective, and identify any constraints thatmay limit the options to be considered.6.2.2 An example is the design of a storm water drainagesystem for a residential development project. The system mustsatisfy mandated drainage system objectives such as specifiedrainfall intensities and storm water runoff limits. Availablealternatives, such as different pipe materials and varyingconfigurations of catch basins, ponds, or underground deten-tion chambers, may have different initial costs as well asexpected future costs. The system design may be constrainedby structural and hydraulic limits such as minimum andmaximum slopes and depth of burial, limits on surface flows onstreets, etc.6.3 Basic Assumptions:6.3.1 Establish the uniform assumptions to be made in theLCC analysis of all alternatives. These assumptions include theselection of discount rate, treatment of inflation, generalinflation rate, project design life, and desired comprehensive-ness of the analysis.6.3.2 Discount Rate—The discount rate selected shouldreflect the owner’s time value of money. That is, the discountrate should reflect the interest rate that makes the ownerindifferent about paying or receiving a dollar now or at somefuture time. The discount rate is used to convert the costsoccurring at different times to equivalent costs at a commonpoint in time.6.3.2.1 No single correct discount rate exists for all owners.Selection of the discount rate should be guided by the rate ofreturn on alternative investment opportunities of comparablerisk (that is, the opportunity costs of capital) or, in the case ofsome public organizations, on mandated or legislated federal orstate requirements.6.3.2.2 The discount rate may include general price inflationover the study period. This discount rate is referred to as thenominal discount rate in this practice. The discount rate mayalso be expressed as the real earning power of money over andabove general price inflation, referred to as the real discountrate.6.3.2.3 A nominal discount rate (dn) and its correspondingreal discount rate (dr) are related as follows:dr511dn11I2 1ordn5 ~11dr!~11I! 2 1 (1)where:I = rate of general price inflation.6.3.2.4 The same discount rate should be used when evalu-ating each design alternative. Table 1 contains a procedure tofollow when developing the discount rate. This procedure canbe applied by those who wish to select their own values as wellas those required to follow mandated or legislated require-ments.6.3.3 Inflation—This practice is designed to accommodateonly a uniform rate of general inflation. The LCC can becalculated in constant dollar terms (not including generalinflation) or current dollar terms (including general inflation).TABLE 1 Discount Rate Procedure1.0 General—This procedure is intended to guide the user in developing areal discount rate, that is, the long-term rate of return over and abovethe general inflation rate. This procedure can be used by those requiredto use rates specified by mandate or legislated requirement, as well asthose desiring to select their own values. This procedure does notrecommend any specific rates; that selection is up to the user andshould be made based on the considerations described in 6.3.2.1.1.1 Is there a discounted rate that must be used by policy, mandate, orlegislated requirements? (check one):1.1.1 ____ Yes. If yes, the discount rate is ____ %1.1.2 ____ No. Proceed to 2.1.2 ____ Does the discount rate in 1.1.1 include inflation? (check one):1.2.1 ____ Yes. If yes, the inflation rate is ____ % (proceed to 2.4)1.2.2 ____ No. The rate shown in 1.1.1 is the real discount rate (excludesgeneral inflation) and can be used as drin (Eq 3) and (4).2. If no discount rate is mandated, two approaches are possible:2.1 Select a long-term percentage rate of return on invested money, over andabove the general inflation rate. This value can be used as drin (Eq 3)and (4).2.2 Select a nominal discount rate (including general inflation): ____ % = (dn).2.3 Select a long-term rate of general inflation: ____% = (I).2.4 Calculate the real discount rate (dr) for use in (Eq 3) and (Eq 4).dr511dn11l2 1A930 − 09 (2014)2If the latter is used, a consistent projection of general priceinflation must be used throughout the LCC analysis, includingadjustment of the discount rate to incorporate the generalinflation (6.3.2.2). The percentage change in the GNP deflatorand producers price index are two broad indicators of generalinflation.6.3.3.1 If the user desires or is required to treat inflation onan incremental (differential) basis, or uniquely to each indi-vidual cost component (for example, energy costs), he or sheshould consult either TM-5-802-1 or Practice E917, respec-tively.6.3.4 Project Design Life—The project design life (3.1.9)should be established from mandated public policy, legislatedrequirements, or selection by the owner based on situationrequirements. The same design life must be used for eachalternative under comparison and for all cost categories underconsideration. The potential for future obsolescence, that is, thepotential that future changes may modify drainage systemrequirements, should be considered when selecting a projectdesign life.6.3.5 Comprehensiveness—The appropriate degree of preci-sion and detail to use in an LCC analysis is dependent on theintended use of the analysis. A less comprehensive or detailedanalysis may be sufficient for ranking many alternativesroughly, whereas a more comprehensive analysis may benecessary for selecting from among a few close alternatives. Inany case, omitting significant factors from an LCC analysisdiminishes the usefulness of the results.6.3.6 Sensitivity Analysis—No analysis can be more precisethan the accuracy of the data and assumptions used in thecalculation. The LCC can be calculated for a range of assump-tions when uncertainty exists regarding basic assumptions (forexample, cost estimates, design life, discount rate, etc.). Theresults of these calculations will show the user the extent towhich the results are sensitive to variations of the keyassumptions.6.4 Compilation Data—Compile the following data specificto each alternative under consideration:6.4.1 Initial Costs—The estimated dollar amount of all costsrequired to bring the alternative system to a point of functionalreadiness.6.4.2 Material Service Life—The number of years of serviceexpected of the alternate under study. Material service lifevaries depending on the pipe material, environment, effluent,and application. Potential changes in environmental conditionsthat may affect the material service life should be considered.Job site tests, published reports, manufacturer product data,and local experience can be used to establish the service life foreach material. If the material service life is shorter than theproject design life (3.1.9), the analysis must include the futurecost to extend the service life sufficiently through rehabilitationor replacement in order to at least equal the project design life.6.4.3 Future Costs—Cost estimates should be made for allsignificant items that are estimated to be required to allow thedrainage system to satisfy performance requirements over theproject design life. Common costs (1.1) may be excludedwithout affecting the relative ranking of the alternatives understudy. The cost estimates should be made in constant dollars(not including inflation) in the same time frame as the estimateof initial costs.6.4.3.1 Operating Cost—An estimate of the annual cost forlabor, power, and consumable materials and supplies requiredto operate a drainage system. Except for pumped systems, mostdrainage systems do not have significant annual operatingcosts.6.4.3.2 Maintenance Costs—Cost estimates and the fre-quency of any inspection, cleaning, and minor repair necessaryto keep the system operating at capacity during the projectdesign life.6.4.3.3 Rehabilitation Costs—The cost of major repairs toextend the material service life to equal or exceed the projectdesign life. The years in which the rehabilitation are plannedshould be noted if more than one rehabilitation is anticipated.6.4.3.4 Replacement Cost—The timing and cost estimate forcomplete replacement of any drainage system component. Careshould be taken to determine whether the service life of thereplaced material or component will at least equal the projectdesign life. If not, rehabilitation or further replacement will benecessary.6.4.3.5 Terminal Value—The value of the drainage system atthe end of the