The National Academies

ACRP 09-13 [Final]

Considering Life Cycle Costs in Airport Asset Procurement

  Project Data
Research Agency: CH2M Hill
Principal Investigator: John Fortin
Effective Date: 5/19/2015

“Total cost of ownership” (which considers the life cycle costs) is impacted by decisions during design/engineering, specification development, and procurement processes at airports. Airports can be constrained in their procurement options in the purchase of assets (i.e., facilities, systems, and equipment) as many airports are required to accept the low bid. The process typically does not take into account the total cost of owning the asset over time. These costs include not only the initial acquisition costs but also on-going operating and maintenance costs, depreciation, and disposal of the asset at the end of its useful life. In order to determine maintenance costs, it is necessary to understand the service level requirements or standards for that particular asset. For example, a heating, ventilation, and air conditioning unit may not need to have an uptime of 100%, but an access control system may. These service levels drive maintenance priorities that impact the total cost of ownership. In addition to facilitating procurement decisions, it is beneficial to understand the total cost of ownership prior to soliciting or negotiating agreements with tenants on facilities. This will result in a more thoughtful approach to the terms that will be required in the agreement, such as mandated preventative maintenance, capital investment, and improvements. If life cycle cost analysis is conducted or considered on an asset prior to procurement, and is required to be conducted and prepared in response to a bid or proposal request, it will result in a better understanding of the overall total costs and will lead to optimizing the airport’s limited monies. Airports need better guidance on the impacts of decisions made prior to and during the procurement process that can affect total life cycle costs.
The objectives of this research are to develop a guidebook to assist airports to (1) evaluate the life cycle costs (total cost of ownership) for all types of assets (facilities, systems or equipment) prior to, and as part of, the procurement process, and (2) make decisions that will result in the best use of airport monies (capital and operating) by working within existing specification development and procurement processes by identifying techniques for facilities, systems or equipment considerations. The guidebook should be accompanied by a software tool to help estimate total cost of ownership and compare different options.

The guidebook will includes the following:
  • Description and discussion of typical barriers to airports in the specification development and procurement process that discourage considerations of total cost of ownership;
  • Techniques and considerations to incorporate the total cost of ownership for assets as part of the specification development and procurement process;
  • Best practices from airports or other industries that are applicable to the evaluation of total cost of ownership for an airport asset, and how a Computerized Maintenance Management System (CMMS) is integral to tracking costs;
  • How design/engineering decisions, warranties, service level agreements, and other factors affect the total cost of ownership;
  • How the total cost of ownership should be a consideration for preventative maintenance and capital improvement obligations on tenants in preparing RFPs and lease agreements;
  • Examples from airports or other organizations that had a negative experience from purchasing an asset without considering the total life cycle costs;
  • Examples from airports or other organizations that had a positive outcome from having done a total life cycle analysis as part of the procurement process;
  • A glossary; and
  • Other resources.
STATUS: The guidebook has been  published as ACRP Research Report 172:  Considering Life-cycle Costs in Airport Asset Procurement.  The TCO tool and 5 instructional videos can also be found with the guidebook.  

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