One of the core techniques for the Pavement Management Systems (PMS) is the deterioration hazard model. The hazard models stochastically forecast the deterioration progresses of pavement based on its historical performance indicators over time. This paper introduces a class of hazard models, which consider the heterogeneity factors by a local mixing mechanism. Special attention is paid to the formulation of transition probability of condition state, which is subjected to follow Markov chain. The paper further introduces optimization approach for selecting best repair strategy based on discounted life cycle cost analysis. The application of the model targets to minimize exposing risks to road administrators. The usefulness and practicability of the model are examined through life cycle costs evaluation with real data of Vietnamese highway system.