A project's rehabilitation costs include the future cost of repairs and improvements beyond routine maintenance.
Paving a road with asphalt is being compared with repaving with concrete. The latter has higher initial costs but also has a longer life before it needs rehabilitation.
The decision must be made whether to include major rehabilitation within a project's scope or defer to a future date and address major rehabilitation through a separate benefit-cost analysis. If the cost of rehabilitation is generally predictable in advance and the nature of the rehabilitation is fairly well known, rehabilitation should be included as part of the original project, and the project life extended accordingly. Otherwise, the original project life should extend to the point where rehabilitation will be required and a separate analysis performed at that time.