Life-cycle cost comparison of chip seal and striping: In-house workers versus private contractors

Purpose: To maintain road systems in the USA, state departments of transportation (DOTs) generally use in-house workers or private contractors. Limited studies have calculated the cost savings of hiring private contractors; however, most of them have not calculated cost savings based on life-cycle costs (LCCs). The purpose of this paper is to determine whether the LCC of chip seal and stripping maintenance activities performed by in-house workers are cheaper than those performed by private contractors. Design/methodology/approach: The paper collected the hard cost data of chip seal and stripping maintenance activities performed by state DOT in-house workers, as well as private contractors, from 2003 to 2016 from the Nevada DOT Maintenance and Asset Management division. Statistical tests were conducted to test the research hypothesis that the LCC of chip seal and stripping activities performed by in-house workers are significantly less than those performed by private contractors. Findings: The study results showed that the cost per unit and LCC of chip seal and striping work performed by in-house workers were significantly less than those performed by private contractors in Nevada. Research limitations/implications: The study only collected data from Nevada DOT, so readers should use caution in generalizing the findings of this study. Additionally, factors affecting the cost of these maintenance activities for private contractors are significantly different compared to in-house contractors. Therefore, these differences may be some of the potential reasons for cost difference between these two methods. Practical implications: The practical implications of this study are that state DOT engineers need to plan for outsourcing chip seal and stripping maintenance activities only to private contractors that are cost effective, based on life-cycle cost. Originality/value: The LCC analysis framework developed in this study will help state DOT engineers to determine cost savings by using in-house workers for road maintenance works.