Replacement optimization of ageing infrastructure under differential inflation

Replacement optimization of ageing infrastructure under differential inflation

van den Boomen, M. (TU Delft Integral Design & Management)
Leontaris, G. (TU Delft Integral Design & Management)
Wolfert, A.R.M. (TU Delft Integral Design & Management)

2019

Ageing public infrastructure assets necessitate economic replacement analysis. A common replacement problem concerns an existing asset challenged by a replacement option. Classic techniques obtained from the domain of engineering economics are the mainstream approach to replacement optimization in practice. However, the validity of these classic techniques is built on the assumption that life cycle cash flows of a replacement option are repetitive. Differential inflation undermines this assumption and therefore more advanced replacement optimization techniques are required under these circumstances. These techniques are found in the domain of operations research and require linear or dynamic programming (LP/DP). Since LP/DP techniques are complex and time-consuming, the current study develops an alternative model for replacement optimizations under differential inflation. This approach builds on the classic capitalized equivalent replacement technique. The alternative model is validated by comparison with a DP model showing to be equally accurate for a case with characteristics that apply to many infrastructure assets.

Replacement decisions
asset management
differential inflation
optimization
public infrastructure assets

http://resolver.tudelft.nl/uuid:bdc7d9df-33d4-449a-b331-0c60c3b2cb18

https://doi.org/10.1080/01446193.2019.1574977

0144-6193

Construction Management and Economics, 37 (11), 659-674

Institutional Repository

journal article

© 2019 M. van den Boomen, G. Leontaris, A.R.M. Wolfert