NCHRP 23-06 [Active]
A Guide to Computation and Use of System Level Valuation of Transportation Assets
| Project Data
||Andrew C. Lemer
||Spy Pond Partners|
State transportation agencies are stewards for public infrastructure assets that are essential to economic vitality, public safety, and quality of life. Accurate, relevant, and reliable asset valuation is crucial for decision-making to ensure the effective, efficient, and economical management of these public assets.
Congress required, through the Moving Ahead for Progress in the 21st Century Act (MAP 21), enacted in 2012, that each state transportation agency develop and implement a risk-based transportation asset management plan (TAMP) that includes a valuation of pavements and bridges on the National Highway System (NHS). State transportation agencies are complying with the requirements through various approaches, but have struggled to incorporate asset valuation into their asset management practices and infrastructure investment and management decisions in a consistent, meaningful way. Practices have been developed and used internationally for incorporating asset valuation into an organization’s financial statements and decision-making processes, and some guidance has been produced in the United States, but such practices have not been much used in this country. Research is needed to make a detailed assessment of the issues and present practical guidelines and procedures for valuation of public-sector transportation assets in the United States and use of valuation in transportation system and asset management decision-making.
The objective of this research is to develop a guidebook that state transportation agencies and others can use for calculation and communication of the value of transportation assets, and for selecting valuation methods to be used in transportation asset management. This guidebook, applicable to transit as well as highway modes, should (1) present a standardized terminology for discussing asset value, (2) describe currently accepted valuation methods, (3) describe the merits and shortcomings of these methods to produce measures of asset value useful for communicating among stakeholders and making resource allocation decisions, and (4) present advice on determining which valuation methods will be most useful in communication and decision-making for a particular agency.
The guidebook shall include at least the following components:
- Terminology and definitions of asset value (a) determined by generally accepted accounting principles, considering initial acquisition or construction costs and depreciation, (b) based on engineering estimates to replace the asset (considering age, condition, obsolescence, and the like), (c) based on estimates of revenues that could be produced from the assets if they were operated as a business venture, (d) based on socio-economic returns to a region’s economy and wellbeing, or (e) other relevant definitions;
- Current best practices for computation and presentation of each of the definitions of value listed above, presented in a manner that can be used by transportation agencies;
- Analysis of the advantages and shortcomings of the value methods as factors to be considered in system-level resource allocation decisions, for example, investment planning, maintenance budgeting, lifecycle management, and presentations for public discussion;
- Identification and description of needs for data and information for value computations;
- A capability-maturity model that an agency can use to characterize its valuation practices and needs and strategies for improvement;
- Advice on incorporating valuation estimates into the agency’s asset management practices.
NCHRP anticipates that the guidebook may be published by AASHTO. It should be compatible with print and web-based versions of AASHTO’s Transportation Asset Management Guide.
The research should result in at least the following deliverable products and milestones:
- Interim Report 1 (IR1) presenting a critical review of (a) current practices in use for valuation of transportation assets in public and private sectors, in the United States and internationally, with particular attention to terminology, asset classes for which values are estimated, definitions of asset value, and methods used for estimating values; (b) key regulations, guides, and other publications that establish standards for how asset values are to be estimated or appraised and reported; and (c) how state transportation agencies and others currently use asset value in systemwide asset management, other resource allocation decision-making, and communication with stakeholders.
- Interim Report 2 (IR2) presenting (a) an annotated outline of the guidebook; (b) data and information an agency will need to utilize asset valuation as a factor in resource allocation decision-making; (c) a framework characterizing the valuation methods, users and other audiences for valuation methods, and system-level resource allocation decision-making situations or applications in which asset values are useful, for example, investment planning, maintenance budgeting, lifecycle management, and presentations for public discussion; (d) an analysis of the advantages and shortcomings of the valuation methods as factors to be considered in resource allocation decision-making; and (e) a capability-maturity model that an agency can use to characterize its valuation practices and needs and strategies for improvement.
- Interim Report 3 (IR3) describing (a) advice to agencies on incorporating valuation estimates into the agency’s asset management practices, and (b) a proposed plan for validation of the guidebook’s organization and methods in a selected group of state transportation agencies.
- The guidebook described by the project's objective.