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. (See Special Note A.)
Proposers are asked to describe a detailed research plan to accomplish the project objective. The following scope description is intended to indicate NCHRP’s expectations and provide a framework for that research plan. Proposers are expected to describe research plans that can realistically be accomplished within the constraints of available funds and contract time and will provide opportunities for NCHRP to review and comment on research progress. Proposers must present their current thinking in sufficient detail to demonstrate their understanding of the issues and the soundness of their approach.
The research should include at least the following deliverable products and milestones:
1. A 60- to 90-minute kickoff web conference with the NCHRP project panel, within 2 weeks of the contract’s effective date, to discuss the scope of guidance to be produced, work plan, and technical issues related to the research.
Note: For budgeting purposes, proposers may assume that NCHRP will make arrangements for all panel web conferences and will pay NCHRP project-panel members’ travel expenses for in-person meetings.
2. Interim Report 1 (IR1), draft and final, the draft delivered in electronic form only within 3 months of the contract’s effective date, 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.
Note: The NCHRP project panel suggests that all perspectives on asset value are important and useful in communication and decision-making, but state transportation agencies will derive greatest immediate benefit from improved practices for estimating replacement values adjusted for age and condition of system assets. The panel suggests that the Government Accounting Standards Board Statement 34 and the International Accounting Standards Board IFRS 13 are two examples of publications relevant to this research. NCHRP will require no less than 3 weeks for review of IR1 prior to the scheduling of a web conference meeting with the project panel. Based on panel comments on the draft and discussion in the web conference, the contractor shall prepare the final IR1.
3. Interim Report 2 (IR2) delivered in electronic form only within 6 months of the contract’s effective date, 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.
Note: NCHRP will require no less than 3 weeks for review of IR2 prior to meeting in person with the project panel. For budgeting purposes, proposers should assume the 1-day meeting will be held at the Keck Center in Washington, DC, but the location will be determined in consultation with the NCHRP staff officer. NCHRP will require no less than 10 weeks for planning of the in-person meeting. The contractor will be responsible for preparing a memorandum documenting the meeting’s discussions and decision made. NCHRP shall determine following the meeting whether work on the guidebook’s development shall continue.
4. Interim Report 3 (IR3) delivered in electronic form only within 9 months of the contract’s effective date, 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.
Note: NCHRP envisions the validation may engage staff from three or four state agencies that will be asked to apply the guidebook’s advice and methods to valuation of a sample of their transportation system assets. NCHRP will require no less than 3 weeks for review of IR3 prior to the scheduling of a web conference meeting with the project panel. NCHRP approval shall be required prior to commencement of the validation.
5. The preliminary draft guidebook delivered in electronic form only within 9 months of the contract’s effective date.
Note: NCHRP will require no less than 3 weeks for review of the draft guide, and envisions that the contractor will make revisions of the preliminary draft guide as appropriate prior to commencement of the validation.
6. A technical memorandum documenting the validation and a draft guidebook incorporating lessons learned in the validation, delivered in electronic form only within 12 months of the contract’s effective date, presenting principles and methodology for U.S. transportation agencies to implement asset valuation within the context of the capability-maturity model.
7. A revised final guide and a memorandum presenting responses to NCHRP comments on the draft and how each comment was addressed by revisions.
Note: For budgeting purposes, proposers should plan that NCHRP will require 25 printed copies each of the draft and final guidebook. Three months shall be required for NCHRP review and contractor revision of the draft guidebook.
A. The NCHRP project panel expects that this research will build on previous work by NCHRP and others. Proposers should be familiar with at least the following documents and relevant accounting practices:
B. The Research Plan, Section 4 of the proposal, must not exceed 12 pages in length; the typeface used must not be smaller than 12 points.
C. Proposals should include a task-by-task breakdown of labor hours for each staff member as shown in Figure 4 in the brochure, "Information and Instructions for Preparing Proposals" (http://onlinepubs.trb.org/onlinepubs/crp/docs/ProposalPrep.pdf). Proposals also should include a breakdown of all costs (e.g., wages, indirect costs, travel, materials, and total) for each task using Figures 5 and 6 in the brochure. Please note that TRB Cooperative Research Program subawards (selected proposers are considered subawards to the National Academy of Sciences, the parent organization of TRB) must comply with 2 CFR 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. These requirements include a provision that proposers without a "federally" Negotiated Indirect Costs Rate Agreement (NICRA) shall be subject to a maximum allowable indirect rate of 10% of Modified Total Direct Costs. Modified Total Direct Costs include all salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each lower-tier subaward and subcontract. Modified Total Direct Costs exclude equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each lower-tier subaward and subcontract in excess of $25,000.
D. NCHRP is a practical, applied research program that produces implementable products addressing problems faced by transportation practitioners and managers. The benefits of NCHRP research are realized only when the results are implemented in state DOTs and other agencies. Implementation of the research product must be considered throughout the process, from problem statement development to research contract and beyond completion of the research. Item 4(c), "Anticipated Research Results," must include the following: (a) the "product" expected from the research, (b) the audience or "market" for this product, (c) a realistic assessment of impediments to successful implementation, and (d) the institutions and individuals who might take leadership in deploying the research product. The project panel will develop and maintain an implementation plan throughout the life of the project. The research team will be expected to provide input to an implementation team consisting of panel members, AASHTO committee members, the NCHRP Implementation Coordinator, and others in order to meet the goals of NCHRP Active Implementation: Moving Research into Practice, available at http://onlinepubs.trb.org/onlinepubs/nchrp/docs/NCHRP_ActiveImplementation.pdf.
E. Item 5 in the proposal, "Qualifications of the Research Team," must include a section labeled "Disclosure." Information relevant to the NCHRP's need to ensure objectivity and to be aware of possible sources of significant financial or organizational conflict of interest in conducting the research must be presented in this section of the proposal. For example, under certain conditions, ownership of the proposing agency, other organizational relationships, or proprietary rights and interests could be perceived as jeopardizing an objective approach to the research effort, and proposers are asked to disclose any such circumstances and to explain how they will be accounted for in this study. If there are no issues related to objectivity, this should be stated.
F. Proposals are evaluated by the NCHRP staff and project panels consisting of individuals collectively very knowledgeable in the problem area. Selection of an agency is made by the project panel considering the following factors: (1) the proposer's demonstrated understanding of the problem; (2) the merit of the proposed research approach and experiment design; (3) the experience, qualifications, and objectivity of the research team in the same or closely related problem area; (4) the plan for ensuring application of results; (5) how the proposer approaches inclusion and diversity in the composition of their team and research approach, including participation by certified Disadvantaged Business Enterprises; and, if relevant, (6) the adequacy of the facilities.
Note: The proposer's plan for participation by Disadvantaged Business Enterprises should be incorporated in Item 12 of the proposal.
G. Copyrights - All data, written materials, computer software, graphic and photographic images, and other information prepared under the contract and the copyrights therein shall be owned by the National Academies of Sciences, Engineering, and Medicine. The contractor and subcontractors will be able to publish this material for non-commercial purposes, for internal use, or to further academic research or studies with permission from TRB Cooperative Research Programs. The contractor and subcontractors will not be allowed to sell the project material without prior approval by the National Academies of Sciences, Engineering, and Medicine. By signing a contract with the National Academy of Sciences, contractors accept legal responsibility for any copyright infringement that may exist in work done for TRB. Contractors are therefore responsible for obtaining all necessary permissions for use of copyrighted material in TRB's Cooperative Research Programs publications. For guidance on TRB's policies on using copyrighted material please consult Section 5.4, "Use of Copyrighted Material," in the Procedural Manual for Contractors.