**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

**Suggested Citation:**"Summary." National Academies of Sciences, Engineering, and Medicine. 2022.

*A Guide to Computation and Use of System-Level Valuation of Transportation Assets*. Washington, DC: The National Academies Press. doi: 10.17226/26667.

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Whatâs Important - regulators and investors. For TAM, presenting data on the value of physical assets, such as pavement, bridges, and facilities, communicates what an organization owns and what it must maintain. This helps inform government leaders and taxpayers. Furthermore, information about asset value and how it is changing can help establish how the organization is maintaining its asset inventory and helps support investment decisions. How the Guide Can Help The purpose of this guide is to detail how to calculate asset value and use it to support application in TAM. This guide is designed for use by all U.S. public agencies managing transportation assets, includ- ing state and local DOTs, transit agencies, port authorities, airport operators, and others. Spotlight on Asset Valuation Requirements Calculating asset value for TAM is not simply good practice; it is also required of state Departments of Transportation (DOT) by Federal regulations. Title 23 of the Code of Federal Regulations (CFR) Part 515 details requirements for State DOTs to develop a risk-based Transportation Asset Management Plan (TAMP). These regulations, initiated by the legislation Moving Ahead for Progress in the 21st Century (MAP-21), include a requirement for DOTs to calculate the asset value for National Highway System (NHS) pave- ment in their state. DOTs must also determine the cost required to maintain the value of their NHS assets. To comply with the Government Accounting Standards Board (GASB) Statement 34, agencies also - ment and the TAMP. . 1 A Guide to Computation and Use of System-Level Valuation of Transportation Assets This chapter introduces asset valuation concepts and describes the organization of the guide. Summary Chapter 1 Introduction

Define the Analysis Scope Establish Initial Value Determine Treatment Effects Calculate Depreciation Calculate Value and Supporting Measures Communicate and Apply the Results Whatâs Important asset valueâs many applications and perspectives. An agency may use the cost perspective, the market How the Guide Can Help There is no one right way to calculate asset value â the best approach to use depends on agencyâs perspective on what value represents, how the results of the value calculation will be used, and what data an agency has available. The guide presents a structured approach for considering these issues, Spotlight on the Asset Value Calculation Steps The process for calculating asset value includes six basic steps. The steps are the same regardless of perspectives, and they walk the analyst through the key decisions for calculating asset value. 2 A Guide to Computation and Use of System-Level Valuation of Transportation Assets both TAM and relevant accounting standards, and presents the basic steps in calculating asset value. Summary Chapter 2 Asset Valuation

Whatâs Important - portant to determine the primary use of the asset value calculation for supporting TAM. From there it is necessary to review the data available to support calculating asset value, determine what assets and systems to include, and establish whether it is necessary to perform the value calculation for asset components. How the Guide Can Help Carefully considering the scope of the asset value calculation helps ensure that the calculation is achievable, and that the results will best support an agencyâs needs. The guide discusses major drivers for calculating asset value to support TAM, and recommends approaches to consider for each step in the value calculation process based on the asset value driver. Also, it describes common approaches to structuring an asset hierarchy, and when an agency may want to perform the asset value calcula- tion at a component level. Spotlight on Asset Components For some TAM applications one may wish to perform a more detailed calculation of asset value by determining value by asset component. An asset that is com- monly represented using components is a bridge. In many cases agencies have calculated value separately for the bridge deck, superstructure and substructure, as times. 3 A Guide to Computation and Use of System-Level Valuation of Transportation Assets of the asset value calculation and establish an asset hierarchy to use for the asset value calculation. It discusses issues related to calculations at an asset or component level. Summary Chapter 3 Asset Value Scope

Whatâs Important Initial asset value, the value of an asset at the start of the analysis period, is a key component of the asset value calculation. What this represents, exactly, depends on the approach being used to make - quired, while in others, it may be the value at a particular point in time. How the Guide Can Help This guide describes four basic approaches to calculating initial value and provides guidance on select- ing one of these approaches. The approaches include: Current Replacement Cost â the cost of replacing the asset with its modern equivalent in todayâs dollars. Historic Cost â expenditure dollars. Market Value â established only if such a market exists. Economic Value â users. Spotlight on Current Replacement Cost For many TAM applications the recommended approach for calculating initial value is to use an assetâs current replacement cost. The guide describes six basic steps for calculating current replacement cost: Step 1. Determine Units of Measure Step 2. Collect Data on Replacement Costs Step 3. Step 4. Determine How to Group Assets Step 5. Calculate Unit Costs for Each Group Step 6. Apply Unit Costs 4 A Guide to Computation and Use of System-Level Valuation of Transportation Assets After establishing the scope of the asset value calculation, the value, and economic value. Summary Chapter 4 Initial Asset Value

Whatâs Important Treatments are the activities performed on an asset over its life. One must consider what treatments may occur over the life of an asset, and whether any treatments besides the initial acquisition or con- struction of an asset need to be explicitly considered in the asset value calculation. For each type of treatment that is explicitly considered in the calculation one must establish the treatmentâs cost and How the Guide Can Help value calculation and when doing this is not necessary. Also, it describes how treatment assumptions may impact the assetâs useful life and residual value, or value of the asset once it has reached its use- ful life. Spotlight on Treatment Assumptions asset value if renewal treatments are explicitly modeled: these add value and add life to the asset. The straight upper line shows how asset renewal treatments is approximated through a revised estimate of asset life. In this case, asset treatments are not explicitly modeled. The lower line is demonstrably incorrect. In this case, renewal treatments are not modeled, but the asset life has not treatments. This results in systematic understatement of asset value. Va lu e Time Intervening Treatments Modeled Intervening Treatments Not Modeled But Consider in Setting Asset Life Intervening Treatments Not Addressed 5 A Guide to Computation and Use of System-Level Valuation of Transportation Assets supports determining various parameters needed for the asset value calculation. Summary Chapter 5 Treatment Effects

Whatâs Important useful life. Three approaches are presented here for calculating depreciation. The most straightfor- ward approach is to represent depreciation as a function of asset age using a simple linear relation- ship. Where condition data are available, it may be preferable to supplement or replace asset age with consumption to establish a non-linear calculation of depreciation. How the Guide Can Help selecting an approach. Also, it outlines cases where making the calculation is not necessary, such as when the initial value of the asset has been established using a market value that accounts for past depreciation. Spotlight on Using Condition to Calculate Depreciation Where condition data are available, it is generally preferable to use this data to calculate depreciation. the following steps: Step 1. Step 2. Compile Data Step 3. Step 4. Calculate Depreciation An alternative approach is to perform a supplemental analysis to establish how the pattern of con- - pattern in which value declines more gradually initially, accelerating as the asset deteriorates. 6 A Guide to Computation and Use of System-Level Valuation of Transportation Assets - - tion, provides guidance on selecting an approach, and presents the steps for applying each approach. Summary Chapter 6 Depreciation

Whatâs Important Once one has established all of the parameters for the asset value calculation, the task remains to calculate value for individual assets or groups of assets. Where the calculation is made for groups of - sets. In addition to calculating overall value, one may calculate other supporting measures, such as the cost to maintain value, asset sustainability ratio, asset consumption ratio, and others. How the Guide Can Help The guide details issues in making the asset calculation for groups of assets, and discusses the nuanc- for TAM is to utilize current replacement cost and condition data for most applications, while in the related to asset value can supplement the calculation and support decision-making. The guide pro- Spotlight on Asset Sustainability Ratio The Asset Sustainability Ratio (ASR) is the ratio of annual asset expenditures to the cost to maintain ASR is a valuable measure for summarizing trends in asset spending. It can help identiy areas where more spending is needed to maintain value. Also, given ASR is a somewhat standardized measure, assets and agencies. In using ASR, it is important to be clear about which costs are included in the cal- culation of current expenditures and the cost to maintain current value. For instance, while the cost to maintain value may be approximated based on annual depreciation, use of an agencyâs management systems is recommended for obtaining a more accurate value. 7 A Guide to Computation and Use of System-Level Valuation of Transportation Assets - lished in previous steps to calculate asset value for an asset or measures related to asset value, and discusses issues in compar- Summary Chapter 7 Measure Calculation

Whatâs Important Once calculated, asset value and related measures can support a range of applications. These applica- tions are summarized through a set of six key questions which asset value and related measures may help answer. How the Guide Can Help The guide can help an asset manager use asset value and related measures to answer TAM-related questions including: 1. What is the overall value of the asset inventory? 2. What is the cost to maintain current asset value? 3. How much should we spend on our existing assets? 4. 5. Whatâs the best life cycle strategy for our assets? 6. What is the value generated by the asset? Spotlight on Applications of Asset Value The guide provides several examples in which measures related to asset value have been used to sup- for calculating bridge conditions and value, and examples of calculating value-related measures for transit taken from research performed for the Transit Cooperative Research Program (TCRP). 8 A Guide to Computation and Use of System-Level Valuation of Transportation Assets - porting TAM. It describes the use of value-related measures, and presents a set of practical examples of TAM applications. Summary Chapter 8 Using Asset Value to Support TAM Decisions

Whatâs Important used. The examples include calculation of asset value for: a highway agency based on cost and market perspectives; a transit agency based on a cost perspective; and a highway agency based on an eco- nomic perspective. The examples are drawn from a set of four validation tests performed using the guidance. The international examples help connect the guidance presented here to international best practice in TAM. How the Guide Can Help Agencies can review the worked examples and case studies to better understand the nuances in the asset value calculations, and better evaluate which approaches may be relevant for their applications. Spotlight on Highways England One of the two international cases studies describes how Highways England calculates asset value. - ciated Replacement Cost (DRC). The calculation is made separately for pavements, structures, tech- nology assets and land. Depreciation is based on the observed condition of assets. For pavement, condition is measured based on rutting. For structures, an Element Condition Score is obtained from structure inspections performed for each element of a structure. Highways England makes improve- ments to its valuation approach on a continuing basis. For example, in the future, Highways England plans to improve this depreciation calculation by including other pavement distresses, such as fretting and longitudinal cracking. Also, in the future the organization plans to perform a separate calculation for special structures on a case-by-case basis rather than using unit rates. 9 A Guide to Computation and Use of System-Level Valuation of Transportation Assets - ue calculation. Also, it provides selected international examples demonstrating application of similar concepts to those presented in the guidance. Summary Chapter 9 Examples and Case Studies