The State of Nevada and Total Cost of Ownership
Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager
One of the most common tags and keywords in this blog is Total Cost of Ownership. It is usually applied to private sector businesses as the underpinning principal of professional procurement. However, governmental units, including the Pentagon and most recently, the State of Nevada have used TCO as the basis of awarding publicly bid construction projects. This win of TCO is likely to herald many more victories of concrete over asphalt pavements.
According to a story published 23 February, 2015 in ENR , the leading periodical in the construction industry, Nevada awarded a major paving contract to a higher bidder because it offered a lower TCO. “Citing long-term life-cycle costs”, Nevada DOT chose a contractor whose $83 million price was $3 million (3.5%) higher than the lowest bidder. Concrete pavement is superior to asphalt in reducing rutting and potholes.
TCO, Concrete, and Asphalt Pavements
Mary Martini, NDOT District 1 engineer is quoted in another press report as saying, “We opted to use concrete, which federally funded studies show costs 13% to 28% less in the long run than using asphalt.” The concept of life-cycle costs has long been known to state governments but they have been slow to adopt it.
The cement industry and concrete industry have long maintained that concrete roads and highways are less expensive in term so TCO. Some folks confuse cement with concrete. Cement is the ingredient (about 15%) that binds together and, aggregate, water, and additive to form concrete. concrete does not exist without cement. Understandably, the asphalt pavement industry has an opposite view. Based on the federal studies, it is fair to assume that concrete pavement will continue to make gains at the expense of asphalt.
There is also an argument raging over which material is more sustainable. Both sides mount formidable arguments but the concrete position is more persuasive.