Operating and maintenance costs must be forecast for the whole of the appraisal period. In forecasting future operating, maintenance and renewal costs, analysts should consider:
In order to gauge the profile of operating costs over time and allow the cumulative effects of the scheme to be assessed, it is recommended that estimates should be prepared for three separate forecast years (although this may vary with project type). Analysts will need to use their judgement to choose the number and timing of years to be considered. Interpolation and extrapolation should then be used to cover the whole appraisal period.
The appraisal period is the period up to 60 years after the scheme opening year. Section 9.5.1 provides further information on the appraisal period. The extension in the appraisal period from 30 years to 60 years requires streams of costs and benefits to be estimated over a longer period than has been the case in the past. In most cases, this can only be achieved by extrapolation and assumption. More detailed analysis for later periods is unlikely to be feasible or worthwhile. However, analysts should take care to ensure that their work is as robust as possible, and based on whatever evidence is available. All assumptions and supporting evidence should be fully documented.
For projects with long lives, the extension of the appraisal period from 30 to 60 years after opening may bring additional elements of major structural maintenance and/or renewal within the appraisal period. For example, road pavements and drainage may require renewal, as may rail track and rolling stock. Wherever possible, the timing, cost and duration of these major elements of cost should be estimated explicitly. Where this is not possible, these costs may be included in annual maintenance rates, though care must be taken to avoid underestimation.
For roads, useful information has been developed by the Highways Agency as part of its work on whole life costing methods. Typical maintenance profiles, cost, and durations for new roads are given in the QUADRO Manual (DfT, 2004). This information for new roads is provided for a 60 year period. For other modes, maintenance profiles, costs and durations should be forecast as discussed above and disaggregated to show the main determinants of cost.
The need for periodic major maintenance and renewal means that the maintenance costs profile over time is likely to be 'spiky' whereas the operating costs profile is more likely to be fairly constant over time.
