Econometric Analysis and Forecast Model for Reclamation Corrosion Protection Costs

Project ID: 19155
Principal Investigator: Bobbi Jo Merten
Research Topic: Condition Assessment
Funded Fiscal Years: 2019
Keywords: None

Research Question

The primary research questions are:

1. What are the major cost drivers for the protective coating contracts, and how are they impacted by facility-specific variables, i.e., structure type, access, repair area, percentage of structure being repaired, etc.?

2. How can Reclamation appropriately budget for future corrosion protection expenses?

This research will attempt to answer question 1 by conducting an econometric analysis of historical corrosion protection costs and related variables for water infrastructure. The results of this analysis will inform the development of a forecast model for predicting future corrosion costs to be budgeted for—answering question 2. The research team hypothesizes that the econometric analysis will show that unit costs have increased over time in real dollars due to multiple factors, including safety regulations, environmental regulations, and escalating construction costs (beyond the rate of inflation). Further, the team hypothesizes that the corrosion protection costs forecast model will indicate that Reclamation's budget should be significantly greater than the cost actually budgeted for such projects.

Need and Benefit

Need: Reclamation steel structures benefited from effective protective coatings such as coal tar enamel for nearly
100 years. In recent decades, facilities began replacing these legacy systems with coatings that are providing 20-30
years of service, typically epoxies. The econometrics analysis proposed here will utilize historical data to identify
trends and forecast future costs. This is the first known econometrics approach to evaluate Reclamation's steel
infrastructure and project future costs.
Corrosion protection costs have increased over time in real dollars due to multiple factors, including safety regulations,
environmental regulations, and escalating construction costs (beyond the rate of inflation). It is hypothesized that
existing Reclamation budgets do not fully account for these rising cost items.
Benefit: Improved understanding of past and ongoing corrosion protection costs will lead to the development of better
guidance for future construction projects to recoat our steel infrastructure. A forecast model will predict future costs
and result in more accurate budgeting. Further, ongoing model adjustments will accommodate changes in future cost
trends.
Urgency: The costs associated with protecting steel infrastructure increased significantly in recent decades. More
accurate determination of future unit costs will ensure that Reclamation budgets are appropriate. The information
should also be communicated to stakeholders, particularly tasked with funding corrosion protection maintenance
projects on Reclamation's structures.

Contributing Partners

Contact the Principal Investigator for information about partners.

Research Products

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Last Updated: 4/4/17