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CONCRETE ROADS – THE AFFORDABLE OPTION 01 Jan 2014

INFRASTRUCTURE INVESTMENT

The New Zealand concrete industry has on many occasions taken the opportunity to highlight the range of economic, environmental and safety benefits offered by rigid concrete pavements. As the Government continues to invest heavily in roading these benefits become more compelling.

Sustainable infrastructure development, particularly a modern roading network, is crucial to the country’s ability to secure economic growth.

The Government is spending around $12.2 billion in state highways over the next 10 years, including making further progress on the Roads of National Significance.

The emergence of the Public-Private Partnership (PPP) model, used to realise Wiri prison and planned for Transmission Gully, is seen as a way to use private sector innovation and funding sources, as well as increase certainty of project delivery by re-assigning risk.

The current environment is ideally suited for decision makers to embrace innovative and long-lasting roading building techniques that, as demonstrated by the Infometric’s analysis, offer significant cost savings.

ECONOMIC EVIDENCE

The Infometrics report - The Case for Concrete Roads - indicates that over a 30-year life span concrete roads can yield significant cost savings compared to those built using alternative materials. The adoption of concrete roads has the potential to cut hundreds of millions of dollars from the cost of major New Zealand roading projects.

The report’s findings took into account historical price trends for the outputs of the Petroleum Products and Non Metallic Mineral Manufacturing (NMMP) industries as proxies for the price trends in bitumen and concrete respectively. Likely future price paths were also examined, with the oil price in US dollars and the US$/NZ$ exchange rate informing bitumen price forecasts. The cost of carbon emissions was also considered.

The price volatility of bitumen compared with concrete was found to be a key factor in why roads constructed using concrete offer cost advantages. The price of concrete is generally stable, while bitumen, closely tied to global oil prices and the US/NZ exchange rate, tends to be unpredictable.

The likely future material prices trends look to further enhance the case for concrete roads. Petroleum Products prices have risen 180% since 1994 and will probably continue to increase annually at 5.8%. This is compared to a rise of just 44% in NMMP prices over the same period, with a projected annual increase of 2%.

To a large extent the Petroleum Products’ price premium reflects the costs associated with an uncertain overseas supply market. In contrast, the low annual price increase of 2% associated with concrete construction is due to the stable nature of domestic sources.

Overall the difference in CO2  emissions associated with concrete and asphalt roads was not deemed to be significant over a 30-year horizon.

This finding took into account evidence that rigid concrete roads generate less tyre rolling resistance, implying less fuel use, especially by trucks. They may also require less lighting at night due to greater reflectivity.

The report also considered the impact of escalation clauses for the price of bitumen or oil in roading contracts. Such clauses inherently favour asphalt solutions proposed during tendering, and can potentially be seen as type of subsidy for one construction material over another.

SCENARIO TESTING

The report concludes by testing a set of scenarios involving different discount rates and expected service lives for an historic SH20 Mt Roskill project. Two different pavement options were considered - Structural Asphaltic Pavement and Continuously Reinforced Concrete Pavement(with exposed aggregate finish).

In the baseline scenario with a discount rate of 8% and a 30 year service life the concrete option emerged 25.1% cheaper than the asphalt option. Lowering the discount rate by one percentage point raises the cost difference to 26.7%.

THE COMPLETE PACKAGE

Combined with a host of other advantages, including but not limited to, tailored skid resistance, enhanced driver comfort as well as reduced maintenance and associated traffic disruption, the economic argument presented by Infometrics demonstrates that concrete roads are the ‘complete package’.

With the Christchurch Motorways project, described as the most ambitious ever seen in the South Island’s largest city, gaining momentum, what better time than now to discuss how to deliver the best roading solutions available.

Please feel free to contact Cement & Concrete Association of NZ CEO Rob Gaimster (rob@ccanz.org.nz) if you would like to discuss the industry's work in the area of concrete roads.

Taken from the December 2013 NZRMCA Newsletter