A Budget Management Approach for Societal Infrastructure Projects

Authors

Kazuyoshi Nishijima and Michael H. Faber

Abstract

Life cycle costing analysis is broadly applied as a tool for decision support for civil engineering structures, whereby the expected total cost over the life cycle of the structure is advocated as the objective function to be minimized. The present paper takes the new perspective of considering the problem from a budgeting allocation problem where the aim is to optimize the allocation of budgets for the purpose of maintaining the operation of the portfolio of structures. Whereas all the consequences associated to the project must be taken into account in the life cycle costing analysis, it is important to distinguish the financial costs which must be paid from the user costs which represent the follow-up consequences, i.e., opportunity losses. This is because only the costs to be paid are related to the budget. The present paper proposes an approach to determine the optimal amount of budget and the optimal maintenance decisions, considering these two types of cost.

Published in/by

Structure and Infrastructure Engineering, in press